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To select units, or not to select units

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Legal news
calendar 28 August 2022
globus Norway

Five employees who had been employed for several years were terminated due to redundancy. The employees were affected because of the selection units applied by the company. The main rule is that the selection unit is the company as a whole. However, in this case the Norwegian Court of Appeal found that the company had justified cause to separate two departments into two selection units.

Due to the coronavirus pandemic, a ground handling company had to reduce its employees and initiated a redundancy process. As a result, five employees were terminated.

During the process, the company selected the affected employees based on their seniority. The company consisted of two departments, one for employees working with outdoor activities and one for employees working with indoor activities. All five terminated employees worked at the indoor department.

The work in the two departments differed significantly, which is why the company chose to look at the two departments separately, creating two selection units. An indoor employee’s seniority would therefore only be up against the other indoor employees, and vice versa for the outdoor employees.

Despite their long seniority, the five employees were terminated instead of employees in the outdoor department with significantly lower seniority. If not for the two separate selection units, the five employees might have kept their employment based on their seniority.

The five employees later claimed that the two different selection units were unlawful and that their terminations were unjustified.

The two departments were apples and oranges

As a main rule, the selection unit is the company as a whole. Smaller selection units can normally be used when there is a significant reason to do so, and the selection has justified cause. In this case, the court found the selection units to be lawful. As a consequence, the termination of the five employees was justified.

In its assessment, the court pointed towards several distinctions between the departments, including different requirements to mandatory training, work shifts, management and working practice. Because of this, it was not possible for an employee in one department to easily perform the work tasks of the other department. The time-consuming process of training employees to perform work in the other department would have damaged the company’s operation. Given the critical situation caused by the coronavirus, the company had to act quickly.

In the outdoor department, employees with shorter seniority than the five indoor employees held critical roles for the company’s continued operation. Two different selection units were therefore necessary. The court also emphasized that the clear distinction of the two departments as well as the use of two different selection units was common practice within the industry.

IUNO’s opinion

The question of selection units is not that frequently discussed in court. In another judgement from the Norwegian Supreme Court on the subject, the selection units were unlawful because they in practice prevented the seniority selection criterion from being applied. In this case, the critical situation and industry practice played in favor of the company.

IUNO recommends that the use of selection units is practiced with caution and discussed with the employee representatives. The use of different selection units will require significant reason and a justified cause. Justified cause can for example be related to different geographical locations, or as illustrated by this case, in relation to different departments or divisions.

[The Norwegian Court of Appeal’s judgement of 1 July 2021 in case LF-2022-8753]

Due to the coronavirus pandemic, a ground handling company had to reduce its employees and initiated a redundancy process. As a result, five employees were terminated.

During the process, the company selected the affected employees based on their seniority. The company consisted of two departments, one for employees working with outdoor activities and one for employees working with indoor activities. All five terminated employees worked at the indoor department.

The work in the two departments differed significantly, which is why the company chose to look at the two departments separately, creating two selection units. An indoor employee’s seniority would therefore only be up against the other indoor employees, and vice versa for the outdoor employees.

Despite their long seniority, the five employees were terminated instead of employees in the outdoor department with significantly lower seniority. If not for the two separate selection units, the five employees might have kept their employment based on their seniority.

The five employees later claimed that the two different selection units were unlawful and that their terminations were unjustified.

The two departments were apples and oranges

As a main rule, the selection unit is the company as a whole. Smaller selection units can normally be used when there is a significant reason to do so, and the selection has justified cause. In this case, the court found the selection units to be lawful. As a consequence, the termination of the five employees was justified.

In its assessment, the court pointed towards several distinctions between the departments, including different requirements to mandatory training, work shifts, management and working practice. Because of this, it was not possible for an employee in one department to easily perform the work tasks of the other department. The time-consuming process of training employees to perform work in the other department would have damaged the company’s operation. Given the critical situation caused by the coronavirus, the company had to act quickly.

In the outdoor department, employees with shorter seniority than the five indoor employees held critical roles for the company’s continued operation. Two different selection units were therefore necessary. The court also emphasized that the clear distinction of the two departments as well as the use of two different selection units was common practice within the industry.

IUNO’s opinion

The question of selection units is not that frequently discussed in court. In another judgement from the Norwegian Supreme Court on the subject, the selection units were unlawful because they in practice prevented the seniority selection criterion from being applied. In this case, the critical situation and industry practice played in favor of the company.

IUNO recommends that the use of selection units is practiced with caution and discussed with the employee representatives. The use of different selection units will require significant reason and a justified cause. Justified cause can for example be related to different geographical locations, or as illustrated by this case, in relation to different departments or divisions.

[The Norwegian Court of Appeal’s judgement of 1 July 2021 in case LF-2022-8753]

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Etgen Reitz

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Aurora Braut Bache

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