Introduction
Clarification of employee concept
New provision on "cut through" by circumvention
Changes in rules on temporary employees and hiring
Shared employer responsibility and extension of employer responsibility in group companies
Other amendments
Comment
On 23 June 2021, the Fougner Committee presented several proposals(1) that strengthen employees' rights and tighten the requirements for how employers organise their companies and workforces. It is expected that the new "red-green" government (so called as it is a coalition comprising the Labour Party, the Socialist Left Party and the Centre Party) will respond positively to several of the committee's assessments and proposals, and that these assessments and proposals could become a reality during their four-year term.
Clarification of employee concept
The majority of the committee proposed to change the concept of "employee" in the Working Environment Act. They believe that there is a need to clarify the boundary between employees and contractors in order to prevent circumvention of the regulations. They also believe that there is a need to reduce the number of people who are in a grey area between "employee" and "self-employed contractor".
In assessing whether a person is an employee or self-employed contractor, they proposed to legislate the most important aspects, which are:
- who provides the workforce;
- whether there is a personal duty to work and whether the person in question is subordinated through management; and
- leadership and control.
The majority of the committee also proposed to legislate a presumption solution where, when in doubt, an employee relationship shall be assumed, unless the client confirms that the worker is an independent contractor.
If this proposal is adopted, it will lead to more risk and responsibility being transferred to the employer. It will also lead to more people being able to receive employee status than is currently possible.
New provision on "cut through" by circumvention
For employees, it is of great importance that their protection under the Working Environment Act is not reduced by their employer circumventing the regulations. The Working Environment Act does not currently contain any rules on circumvention, but the courts can, on an unwritten legal basis, "cut through" and use the real relations between the parties as a basis if it is believed that the employer has circumvented the regulations.
The majority of the committee proposed to legislate this "cut through" rule without limiting tits scope. If the proposal is adopted unchanged, it means that the "cut through" rule will be applicable to:
- all types of employment (ie, temporary, full-time and part-time employment);
- agreements with other companies (ie, hiring of labour, use of contractors and business transfers); and
- internal dispositions (ie, reorganisations and group organisations).
This could lead to an increase in the number of lawsuits from employees. Therefore, companies should carefully consider how they organise the workforce and their activities, and what risk they run in doing so. The proposal will also make it easier for public authorities to crack down on rogue actors who deliberately circumvent the regulations
Changes in rules on temporary employees and hiring
The majority of the committee proposed to abolish the general right to hire someone temporarily for up to one year without there being a special basis for such. The reason is that this option has been used rarely since it was introduced in 2015. In addition, the majority of the committee proposed that the transition from temporary to permanent employment should take place after three years of continuous temporary employment (compared to the current three and/or four years) regardless of the basis for the temporary employment.
Furthermore, the majority of the committee proposed to legislate a definition of the term "hiring" in order to draw a clearer distinction between hiring and contracting. When whether hiring has taken place, they suggested that emphasis be placed on whether labour is mainly provided, whether the hiring is exercising the work management of the hired employee and whether the hiring has independent responsibility for the result. They believe that emphasis should also be placed on whether the work takes place in close connection with the client's activities and within the client's persistent labour needs and core activities.
The proposals place greater responsibility on the companies and increase, for example, the risk that the company's permanent employees will increase in number if careful assessments are not made when the workforce is engaged.
If the proposals are adopted unchanged, employers must first be more precise with both the basis for and the length of the temporary employment. In addition, companies must make a more detailed assessment of the relationship and commitment when using hired labour.
Shared employer responsibility and extension of employer responsibility in group companies
The majority of the committee proposed to legislate the unwritten legal doctrine of shared employer responsibility on a special basis. The proposal means that a legal entity other than the employer can be included in a shared employer responsibility in cases where it exercised employer functions to a significant degree.
The majority of the committee pointed out that an increased degree of group organisation in Norwegian working life means that more companies that are formally independent can be under the strong influence of other companies, and that this can have an impact on the employer's room for manoeuvre and management of working conditions.
The majority of the committee also proposed to extend the employer's responsibility in group companies in connection with the employment protection rules. The proposal means that the obligation to offer other suitable work and preferential rights to new employment will be extended to apply to the entire group, and not just the individual legal unit where the employee is formally employed. In addition, they proposed that in group companies, a framework be established for cooperation, information and discussion at group level.
The proposals place new restrictions and obligations on companies, especially in group companies. It could also mean that both the company and the client or contractor company are given employer responsibility for the hired party or consultant.
The committee proposed to extend the employer's duty to ensure a safe working environment to also apply to hired employees and independent contractors. In addition, the committee proposed that the duty to have a safety representative shall apply to all companies, and that the safety representative's tasks shall be extended to also include hired employees and independent contractors.
If the committee's proposals are implemented even to a small degree, they could have great significance for the development of Norwegian working life. Businesses and employers will be given greater responsibility and a higher risk associated with how they organise their business and what schemes they use to cover their labour needs. Group companies will also have to look more closely at their internal procedures relating to dialogue with employee representatives, the security service and obligations in cases concerning termination.
For further information on this topic please contact Ole Kristian Olsby or Nina Elisabeth Thjømøe at Homble Olsby | Littler by telephone (+47 23 89 75 70) or email ([email protected] or [email protected]). The Homble Olsby | Littler website can be accessed at www.homble-olsby.no.
Endnotes