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    Redundancy and dismissal

    Area of expertise

    Dalan has its own labour law team with comprehensive experience of redundancy, workforce reduction and dismissal cases.

    We represent employers and employees alike, with a client portfolio comprising employers in both the private and public sectors, as well as trade unions and employers’ associations.

    We represent employees in the private and public sectors in all categories of position. We possess procedural experience in courts at all levels, including the Supreme Court and Industrial Tribunals.

    An employment contract can be terminated by a voluntary severance agreement, by an employee handing in notice or rescinding his employment contract, or by an employer giving an employee notice of dismissal or by an employer summarily dismissing an employee.

    An employer’s dismissal of an employee must be objectively justified in order to be legal. Dismissal is governed by Section 15-7 of the Working Environment Act where the first paragraph states that employees may not be dismissed unless this is “objectively justified on the basis of circumstances relating to the undertaking, the employer or the employee”. This provision governs pure redundancies as well as redundancies with the offer of suitable alternative employment, i.e., where the employer makes changes to the employee’s position so that it loses its basic characteristics and the matter is removed from the employer’s management prerogative. The objectivity requirement in this provision is a judicial standard, the content of which has been developed through judicial practice. As is evident from the wording, dismissal may be justified by three different sets of circumstances: that of the undertaking itself, that of the employer, and that of the employee.

    As for an objectivity requirement justified by the current circumstances in the undertaking, the employer must demonstrate the probability that the economic situation of the company indicates the necessity for redundancies. This means that the number of employees selected for dismissal, and the criteria for selecting them, must be objective. In cases where dismissal is due to curtailed operations or rationalisation measures the employer must, in addition to meeting the objectivity requirement, offer other suitable work in the company to employees and also weigh the needs of the undertaking against the disadvantage caused by dismissal for the individual employee, cf. Section 15-7, second paragraph.

    As for the objectivity requirement when dismissal is due to the circumstances of an individual employee, then this question has been central to a great number of cases where precedents have been set concerning such matters as poor performance, invalid absence, breach of duty of confidentiality, etc.

    The Working Environment Act also contains provisions concerning the redundancy process, which will take on different forms depending on the reasons for it and the number of employees in the company. There are also formal requirements attached to the notice of dismissal, time limits as well as separate procedural rules, which must be complied with once notice of dismissal has been given.

    Summary dismissal, or immediate termination of an employment contract due to a serious breach of contract, is governed by Section 15-14 of the Working Environment Act which states that “an employer may summarily dismiss an employee if he or she is guilty of a gross breach of duty or other serious breach of the contract of employment”.

    Summary dismissal means that the employment contract is rescinded and immediately terminated. There is considerable judicial practice pertaining to summary dismissal, which is only justified by a gross breach of duty or another serious breach of the employment contract. There is also considerable judicial practice regarding summary dismissal in terms of whether it may be considered a justifiable reaction. In brief, it must be the case that a set of circumstances can be deemed a gross breach of duty for summary dismissal to be considered a reasonable reaction. Moreover, the employer must also act quickly.

    As is the case with notice of dismissal, there is a requirement for preliminary consultation and a formalised dismissal process, while certain procedural rules must be followed when dismissal becomes a fact.

    If a case concerning notice of dismissal or summary dismissal should come before the court, it is basically the employer who has the burden of proving that the decision he has reached is justified. It is therefore of the utmost importance that adequate documentation is provided and that the process is conducted in a proper manner.


    Svein Steinfeld Jervell
    Partner

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    Tonje Liavaag
    Partner

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