Termination of Employment: Rules, Rights and Procedures

Are you planning to terminate an employee and unsure about the legal requirements regarding the grounds for dismissal and the correct procedure? Have you received a notice of termination yourself and are wondering whether it is justified? Or do you simply need an overview of your rights throughout the process?

We provide an overview of the key rules relating to termination of employment, from the requirements for valid grounds and proper procedure to the deadlines that apply if a dismissal is challenged. We also explain the rights employees have throughout the process, which is just as useful for employers to understand as it is for employees.

In brief:

A dismissal by an employer must be objectively justified by circumstances relating to the undertaking, the employer, or the employee.
The threshold for dismissal is high, and the employer bears the burden of proving that the grounds are factual and justified.
The process must follow established steps: documentation of the grounds, a consultation meeting, written notice of dismissal, and compliance with applicable deadlines.
An employee who is dismissed is entitled to a consultation meeting, negotiations, and to remain in their position during any dispute.
An employee may resign from their position without providing a reason but must observe the applicable notice period.
A severance agreement may be a voluntary alternative to a formal dismissal.

What Does a Dismissal Entail?

A dismissal means that one of the parties to an employment relationship decides that the employment relationship shall come to an end. Once notice has been given to the other party, the employment relationship will terminate after the applicable notice period. This notice period is either agreed upon by the parties in the employment contract or follows from the provisions of the Norwegian Working Environment Act.

Both parties may terminate the employment relationship, and as a general rule no specific requirements apply to an employee’s resignation, including how it is communicated or the reasons behind it. However, if an employer wishes to dismiss an employee, Norwegian law imposes strict requirements both on the grounds for dismissal and on how the employer proceeds.

If an employer wishes to dismiss an employee, the dismissal must be objectively justified by circumstances relating to the undertaking, the employer, or the employee.

Dismissal should be distinguished from summary dismissal and temporary lay-off. Summary dismissal means that the employment relationship is terminated with immediate effect and without a notice period. Pursuant to Section 15-14 of the Norwegian Working Environment Act, summary dismissal requires that the employee has committed a gross breach of duty or another material breach of the employment contract.

A temporary lay-off, on the other hand, is a temporary measure by which the employer may effectively place the employment relationship on hold. Both the employee’s duty to work and the employer’s obligation to pay salary are suspended without the employment relationship coming to an end. Temporary lay-offs are based on non-statutory law and largely reflect the rules contained in collective agreements. The employer must have objective grounds for the lay-off, typically due to temporary operational difficulties such as a lack of orders or a reduction in available work.

Are You Dismissing an Employee? This Is What the Law Requires

The right to dismiss employees forms part of the employer’s managerial prerogative. However, this prerogative is subject to important legal limitations.

The Norwegian Working Environment Act stipulates that an employee cannot be dismissed unless the dismissal is objectively justified by circumstances relating to the undertaking, the employer, or the employee.

Regardless of whether the dismissal is based on circumstances relating to the employer or the employee, a balancing assessment must be carried out between the needs of the business and the disadvantages imposed on the individual employee.

The threshold for dismissing an employee is high, and the employer must be able to demonstrate sound reasons for doing so. The employer bears the burden of proving that the factual circumstances on which the dismissal is based are correct and objectively justified.

Do you need assistance with dismissing an employee? Our lawyers can help you assess whether a dismissal is legally justified and ensure that the process is carried out in compliance with the Norwegian Working Environment Act. Contact us for legal advice.

Dismissal Based on Circumstances Relating to the Business

Dismissals based on circumstances relating to the business are commonly referred to as redundancy or restructuring and involve the employer reducing the workforce due to economic, organisational, or operational circumstances.

In other words, the need for dismissal arises from circumstances affecting the business itself, rather than circumstances relating to the employee. This may typically be caused by declining profitability or changes in market demand. As a result, the employer may need to adapt or streamline operations, making workforce reductions necessary.

The requirements for ensuring such processes are objectively justified differ somewhat from dismissals based on circumstances relating to the employee.

Dismissal Based on Circumstances Relating to the Employee

The threshold for dismissal based on circumstances relating to the employee is high. Typical examples include inadequate work performance and breaches of the employee’s duty of loyalty and obedience.

A great deal is required before an employment relationship can be terminated on these grounds. The more severe the consequences for the employee, the higher the threshold becomes. Employers are expected to communicate expectations clearly and, depending on the seriousness of the situation, provide the employee with a genuine opportunity to improve.

How to Conduct a Dismissal Process Correctly

Even if a dismissal is objectively justified, it may still be declared invalid if the procedure has not been conducted properly.

The process can generally be divided into the following steps:

Document and Assess the Grounds
Identify and document the factual grounds for dismissal before any decision is made. Depending on the circumstances, the employee should be given appropriate follow-up and an opportunity to improve. Consider whether there are less intrusive measures available than dismissal.
Consult with the Employee
Before making a decision on dismissal, the matter must, as far as practicably possible, be discussed with the employee. The employee’s comments and views should be taken into account in the final assessment of what action is appropriate.
Issue a Written Notice of Dismissal
The notice of dismissal must comply with the formal requirements set out in Section 15-4 of the Norwegian Working Environment Act and must be delivered personally or sent by registered mail.
Comply with Deadlines and Negotiation Requests
The employee may request negotiations and, as a general rule, is entitled to remain in their position while any dispute is ongoing.

Notice Period: How Long Is It and When Does It Begin?

The notice period is the period between the notice of termination and the employee’s final day of employment.

As a general rule, the notice period runs from the first day of the month following the month in which notice is given, not from the date the notice is actually delivered. This differs from dismissals during a probationary period. During probation, the notice period normally runs from the date the notice is delivered, and the notice period is 14 days unless otherwise agreed in the employment contract.

During the notice period, the employee generally retains both the right and the obligation to perform work in accordance with the employment contract.

The length of the notice period depends on what the parties have agreed and follows either from the employment contract or from the provisions of the Norwegian Working Environment Act.