Supreme Court decision
Case remanded to Court of Appeal
In its 2 June 2021 judgment in the 'Grefsenhjemmet case', the Supreme Court held that provisions on salary increases for long service in a collective bargaining agreement must be regarded as individual wage terms that become part of the individual's employment contract, and that they do not lapse following the termination of the collective agreement.
Many in the Norwegian labour law community have been anxiously awaiting the Supreme Court's ruling. Earlier proceedings in this case, particularly the Court of Appeal's ruling, provoked heated debate among the employment bar.
The question of whether expired collective agreements can remain effective in individual contracts must now be considered finally clarified by the Supreme Court. This implies a fundamentally important clarification of a question that has not often been fully tested before the Labour Court or the ordinary courts, but which nevertheless has great practical significance.
The dispute concerned the extent to which nurses at the Grefsenhjemmet retirement home could retain the benefit of salary-increase provisions that followed from a special agreement under the National Agreement for Health and Social Services between Virke – the federation of Norwegian enterprise – and the Norwegian Nurses' Association, after Grefsenhjemmet switched employer organisation to NHO Service in 2014.
Both the Oslo District Court and the Borgarting Court of Appeal ruled in favour of Grefsenhjemmet, and when the case was heard in the Supreme Court, a large number of working life organisations intervened as third parties to shed light on aspects of the case.
In its judgment, the Supreme Court reviewed the sources of law to illustrate that there are relevant sources in this area that are well established. The Supreme Court, on the way to its conclusion, stated that the legal sources provided a "solid basis" that the "normative provisions" in a collective agreement become part of the individual employment agreements between the parties bound by the collective agreement. Normative provisions are mainly those that apply to individual pay and working conditions, in contrast to mandatory provisions that apply to the relationship between the parties to a collective agreement.
After finding that neither the rules of the Labour Disputes Act on the after-effect of collective agreements nor the special regulation on the after-effect of collective agreements in the event of a business transfer decided the issue, the Supreme Court thoroughly reviewed the legislation's preparatory works, case law and policy considerations.
The Supreme Court concluded that the provisions of a collective agreement that have become part of an individual employment contract do not lapse as a direct consequence of the termination of the collective agreement. The Supreme Court also stated that a salary increase cannot be removed under the employer's right to manage.
Case remanded to Court of Appeal
Several interesting questions remain in this case. The Supreme Court decided only the question of the individual after-effect and did not rule on Grefsenhjemmet's other grounds for claiming termination. The Court of Appeal must therefore re-examine the case and decide whether there is still no room for after-effect when a collective agreement is replaced by a new collective agreement or the salary-increase provisions conflict with the current collective agreement.
What we in any case can establish after the Supreme Court's ruling is that provisions on individual pay and working conditions in a collective agreement become part of the individual employment contract, and that these provisions do not lapse automatically following the termination of the collective agreement.
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.