Termination of the employment relationship

An employment relationship may be terminated in various ways

The employment relationship is usually terminated by a dismissal/resignation by one of the parties. If the employment contract is materially breached by the employee, this may lead to summary dismissal.

An employment relationship may also be terminated by mutual agreement between the parties.

For an employee, losing his/her job in the form of a dismissal with notice, summary dismissal or suchlike is a serious issue, and may have dramatic consequences. It is therefore important for employees to be aware of their rights if they should end up in such a situation.

For both private and municipal employees, it is the Norwegian Working Environment Act which regulates questions relating to the termination of employment relationships.

Government employees are subject to separate rules concerning dismissal with notice/summary dismissal stated in the Norwegian Civil Service Act and Public Administration Act. Government employees have slightly stronger protection against unfair dismissal compared to the rules stipulated in the Working Environment Act. 

The employer must hold a discussion meeting with the employee before dismissing the employee

Before dismissing an employee with notice or summarily dismissing the employee, the employer must discuss the question of dismissal with the employee and possibly the employee’s elected representatives, see section 15-1 of the Working Environment Act. At this meeting, the employer is to give an account of the reason for dismissal being considered. The employee is to be given an opportunity to state his/her views. The employer must not decide on the dismissal until the employee’s views and information have been obtained and considered.

Government employees are to be given advance notice of any possible dismissal with notice or summary dismissal, see section 16 of the Public Administration Act. The employee must also be given an opportunity to state his/her views before the employer makes a decision, see section 18 of the Civil Service Act.

Special requirements as to form apply to a notice of dismissal

Section 15-4 of the Working Environment Act stipulates that a dismissal with notice or summary dismissal by an employer must be in writing and handed to the person or sent in a registered letter. The notice of dismissal must contain information on the employee’s right to demand negotiations and institute legal proceedings, right to remain in his/her job while the case is being heard in the courts and the deadlines relating to this. The notice of dismissal must also state the name of the employer and the proper defendant in the case of any dispute. Finally, the notice of dismissal must state that the employee has a preferential right to a new job if the dismissal with notice is due to a shortage of work.

If the requirements as to form are not complied with, no deadline for instituting legal proceedings applies. If the employee institutes legal proceedings within four months of receiving a defective notice of dismissal, the courts will normally rule this notice to be invalid. In practice, the employer will provide a new, formally correct notice of dismissal as soon as the employer becomes aware of the error.

The above requirements as to form do not apply if the employee resigns, but the notice of resignation must be in writing.

For government employees, sections 23 and 24 of the Public Administration Act stipulate that a notice of dismissal is to be in writing and state the reasons for the dismissal. In the private sector, the employee who is dismissed may later demand to be told the reasons for the dismissal with notice, see the Working Environment Act, section 15-4, no. 3. Public Administration Act, sections 23 and 24

The employer must have reasonable grounds for dismissing the employee

A dismissal with notice by an employer will be based on either the employee’s circumstances or the enterprise’s circumstances. In both cases, reasonable grounds must be stated for the dismissal and the employer must deal with the matter in a proper manner.

Dismissal with notice based on the enterprise’s circumstances

A dismissal with notice based on the enterprise’s circumstances will usually be due to a situation in which a reorganisation/restructuring of the operations leads to a need to downsize.

When assessing the reasonableness of this, several factors are important.

A government employee who has a continuous period of service of more than two years (temporary employees with a continuous period of service of more than four years) may only be dismissed with notice when the post is abolished or the work is discontinued, see section 10 of the Civil Service Act. An employee may also be dismissed with notice if he/she is permanently unfit for the post.

Before being dismissed with notice, a government employee is, if possible, to be offered other suitable work in the agency if he/she has a continuous period of service of at least one year (so-called internal preferential right).

It may also be relevant for the employee to receive severance pay from the Norwegian state.

Preferential right

An employee who has been dismissed with notice due to downsizing has a preferential right to a new post in the same enterprise, see the Working Environment Act, section 14-2. The employee must be qualified for the job, but it is important to

note that the employee does not have to be the best qualified applicant. Thus, the employer is not entitled to choose to hire someone who is better qualified instead of the person who has a preferential right.

The preferential right only applies to employees who have been employed by the enterprise for a total of at least 12 months during the previous two years. The preferential right applies from the date when notice of dismissal is given and for one year after the expiry of the period of notice.

If the employee does not accept an offer of a new post, the preferential right lapses. The deadline for acceptance is 14 days after receipt of the offer.

For government employees, the preferential right is regulated by section 13 of the Civil Service Act.  If the government employee is dismissed with notice, he or she must, in so far as possible, be offered another appropriate post in the Civil Service during the following 12 months provided he or she has a continuous period of service of more than two years or has been temporarily employed for more than four years.

A change dismissal with notice

It lies within the managerial prerogative to redeploy an employee if required. However, if the redeployment entails a significant change in duties or other conditions, the employee must be subject to a so-called change dismissal. This means that the employee is dismissed from his/her present job but at the same time offered the new job. Such a change dismissal is subject to the normal rules concerning dismissals with notice and must be based on reasonable grounds.

Dismissal with notice based on the employee’s circumstances This will be a case of a dismissal with notice due to misconduct at work. Examples of this are unauthorised absences, disloyal conduct or a lack of ability to cooperate. The level of misconduct is crucial to whether the employee is to be dismissed with notice or summarily dismissed. If the employee materially breaches the employment contract, he/she may be summarily dismissed, which is a far more serious reaction.

When assessing whether a dismissal with notice based on an employee’s circumstances is fair, one important element will be whether the employer has given the employee an opportunity to correct his/her conduct. The employer is thus required to provide clear feedback if the employer is dissatisfied with an employee.

Government employees with a continuous period of service of more than two years and temporary employees with more than four years of service cannot be dismissed with notice based on their own circumstances, see sections 9 and 10 of the Civil Service Act. The alternative here will be summary dismissal. 

Termination of an employment relationship before the employee starts work

Sometimes an employer no longer needs the employee after the employment contract has been signed but before the employee has started to work for the employer. This may especially be relevant when the agreed starting date is some time in the future. In the meantime, changes may have taken place in the market or other circumstances may have occurred which mean that the employer no longer wants the employee to start work.

In such a situation, the employer is bound by the employment contract. This means that the employer must give the employee an ordinary notice of dismissal and pay his/her salary during any period of notice after the agreed date when the employee was to start work. The employee will have a duty to work during this period. In practice, such cases can be resolved smoothly by the employer paying financial compensation to the employee without the employee having to start work.

If the employee does not want to start working for the employer after signing an employment contract, he/she is also bound by the contract. This means that he/she must give notice and also be prepared to have to work during the period of notice.

Periods of notice

The main rule is that a mutual period of notice of one month applies unless otherwise agreed on in the employment contract or a collective bargaining agreement, see the

Working Environment Act, section 15-3. In practice, members of Tekna (The Norwegian Society of Graduate Technical and Scientific Professionals) mainly have an individual agreement stipulating a three-month period of notice.

The period of notice starts on the first day of the month after the notice of dismissal has been received by the employee. If a period of notice of more than one month has been agreed on, it may be agreed that the period of notice is to be from date to date.

Extended period of notice

The period of notice increases with age and the continuous period of service. Employees are entitled to a minimum period of notice of two months if they have been employed by the employer for a continuous period of five years and to a minimum period of notice of three months if they have been employed by the employer for 10 years.

If the employee has been employed by the employer for 10 years, the period of notice is as follows at the following ages

  • 50 years old – 4 months
  • 55 years old – 5 months
  • 60 years old – 6 months

The employee may nonetheless terminate the employment relationship by giving three months’ notice.

For government employees, the period of notice is one month in the case of a continuous period of service of less than one year, three months in the case of a period of service of more than one year and six months if the employee has been permanently employed for more than two years or has been temporarily employed for more than four years. The employee may terminate the employment relationship by giving one month’s notice if the period of service is one year or less and by giving three months’ notice if the period of service is one year or more, see sections 9 and 10 of the Civil Service Act.

Period of notice during trial period The employer may hire an employee for a trial period. The maximum trial period is six months. It is important to be aware that an employee is a permanent employee from day one even if the parties have agreed on a trial period.

The period of notice during the trial period is 14 days unless otherwise agreed on. Tekna (The Norwegian Society of Graduate Technical and Scientific Professionals) recommends the use of a one-month period of notice. The employee’s protection against unfair dismissal is slightly weaker during the trial period but a dismissal must be based on the employee’s adaptation to the work, professional skill or reliability, see the Working Environment Act, section 15-6. Working Environment Act, section 15-6

For government employees, a three-week period of notice applies during the trial period unless otherwise stipulated in regulations or a collective bargaining agreement, see sections 8 and 11 of the Civil Service Act.

Termination of a temporary employment relationship A temporary employment relationship is terminated without any action being necessary when the agreed date arrives or when the specific assignment has been completed. However, the parties may agree that the employment relationship can be terminated by dismissal/resignation during the work period. If there is no such agreement regarding dismissal/resignation, the employee will be obliged to work until the end of the agreed period.

If the temporary employment relationship has lasted for more than one year, the employee is to be given at least one month’s notice of the date when the employee is to leave his/her post.

Protection against dismissal in the case of illness

An employee who is absent from work due to illness may not be dismissed for that reason during the first 12 months after becoming incapacitated for work.

It is important to note that the employee is not “protected” against dismissal on some other ground during this period. For example, the employer may dismiss the employee if there is a need to downsize.

Government employees may not be dismissed while receiving sickness benefit. In addition, it is usual to grant an unpaid leave of absence for a further year for a period of illness after the expiry of the sickness benefit period, i.e. a total of two years.

Protection against dismissal in the case of pregnancy, birth or adoption

An employer is not allowed to dismiss a woman because she is pregnant. The same applies to employees who are on a leave of absence in connection with a birth or adoption, see the Working Environment Act, section 15-9. This also applies to government employees.

If an employee has been lawfully dismissed on some other ground and is to leave the job on a date when the employee is on a leave of absence, the period of notice will be extended by the leave of absence period. If an employee is lawfully dismissed during the leave of absence, the period of notice will not start until the employee has returned to work.

Disputes regarding unfair dismissal

Members who are in doubt about whether a notice of dismissal they have received is fair should contact Tekna for a legal assessment of the case. Due to the short deadlines which apply in such cases, the member should contact Tekna as soon as he/she has received the notice of dismissal. 

Right to hold negotiations with the employer

An employee who receives a notice of dismissal is entitled to demand negotiations with the employer, see section 17-3 of the Working Environment Act. The deadline for submitting a demand for negotiations is two weeks after receiving the notice of dismissal. The employer, on its part, undertakes to offer to hold a negotiation meeting within two weeks of receiving the demand. A Tekna lawyer will be able to assist members at such negotiation meetings.

Government employees are not entitled to hold negotiations with their employer.

Deadlines for instituting legal proceedings

If the dismissal case is not resolved at a negotiation meeting with the employer, it may be relevant to institute legal proceedings against the employer to have the dismissal ruled invalid.

Legal proceedings must be instituted within eight weeks of the negotiations with the employer being concluded or of the dismissal taking place. If the employee does not want his/her job back but is only claiming damages, the deadline for instituting legal proceedings is six months from the date when the dismissal took place.

Government employees have a three-week period in which to appeal against the dismissal decision, starting on the date when information on the decision is received by the employee, see the Public Administration Act, sections 28 and 29. The employee may thereafter institute legal proceedings in order to test the legality of the Ministry’s decision. The same deadlines for instituting legal proceedings as those stated in the Working Environment Act apply here.

Right to remain in the job

The employee is entitled to remain in the job as long as the dismissal case is being dealt with by the courts.

Outcome of legal proceedings

If the court finds that the dismissal was unfair, the dismissal is to be ruled invalid. In such case, the employee still has his/her job. The employee is to be compensated for any financial loss he/she has incurred. In addition, the court may award damages for pain and suffering.

Senior managers with termination pay agreements may relinquish the employment protection rights granted to them by the Act

The chief executive of the enterprise may relinquish the employment protection rights granted to him/her by the Working Environment Act in return for a termination pay agreement, see section 15-6 of the Working Environment Act. This means, among other things, that the employee relinquishes the right to institute legal proceedings against the employer. In return, the employee will receive financial compensation in the form of pay after the termination of employment. The chief executive of the enterprise may also enter into agreements stating that disputes relating to the termination of the employment relationship are to be resolved by arbitration.

Risk involved in legal proceedings

Any assistance provided by Tekna to a member in legal proceedings will be free of charge for the member. However, it is important to note that if the member loses the case, the court may order the member to pay the opposite party’s costs (the employer’s legal expenses, etc). Tekna will not normally cover such costs.

Summary dismissal

An employer may summarily dismiss an employee, ordering the employee to leave the job immediately, if the employee has been guilty of a gross breach of duty or other serious breach of the contract of employment, see the Working Environment Act, section 15-14. In such a situation, no period of notice applies. A summary dismissal is a very serious reaction by an employer, both because the employee must normally leave the workplace immediately and because such a reaction can create problems for the employee’s further career. If there is no need for an immediate termination of the employment relationship, the employer should consider dismissing the employee with notice instead.

 An example of grounds for summary dismissal is if the employee is guilty of embezzlement.

Another example of grounds for summary dismissal is if the employee leaves the job without notifying the employer. This is called “walking out without giving notice”. If the employer suffers a financial loss as a result of the employee being absent from the job, the employee may also be held liable for damages.

In the case of a summary dismissal, the same rules as for a dismissal with notice apply on the whole as regards the requirements as to form, the requirement of proper procedures and the procedure involved in any dispute, but the employee is not entitled to remain in the job while the case is being dealt with in the courts.

Government employees may be summarily dismissed in accordance with section 15 of the Civil Service Act. The employee is entitled to appeal and to continue in the job until the appeal has been decided by the Ministry.

Breach of the employment contract by the employer

In the case of a material breach of the employment contract by the employer, the employee is entitled to terminate the contract with no period of notice. An example of a material breach is if the employer repeatedly does not pay salary on time. This may be due to the employer not being willing to pay (lack of willingness to pay) or it may be due to the employer being unable to pay (lack of ability to pay).

Contractually regulated winding up of the employment relationship – termination of employment contract

A termination of employment contract is a contract between the parties that regulates the conditions for a termination of the employment relationship. Typically, such contracts are entered into in connection with a dismissal with notice by the employer or as an alternative to such a dismissal. The employer will in such case offer the employee compensation for leaving the job “voluntarily” in return for the employee at the same time relinquishing the opportunity to institute legal proceedings against the employer.

The starting point is that agreed payments from the employer are taxable. Some payments may be tax-free, for example damages for pain and suffering, financial support for further education and the taking over of old/used equipment, such as PCs and mobile phones.

Tekna has created a “template” for a termination of employment contract which contains the most common elements of such contracts. Termination of employment contract

We would recommend that you submit the draft contract to Tekna's legal office for quality assurance before a contract is entered into.

Modified date: Monday, March 16, 2015