Nordic Employment Law Bulletin - February 2024

Should bonus accrue during family leaves?: In a recent decision by the Ombudsman for Equality, possible discriminatory provisions of an employer’s bonus scheme were assessed. According to the scheme in question, employees who are absent from work for more than 6 months (regardless of the reasons) were not at all entitled to a performance bonus for the year in question. Thirty days of maternity leave were, however, counted as equivalent to active employment.

From the perspective of the Act on Equality between Women and Men, the bonus scheme was considered discriminatory and thus in violation of mandatory law. The Ombudsman based its decision on the ruling of the Court of Justice of the European Union C-333/97 (Lewen case) and stated that the pregnancy leave of 40 working days (105 days prior to the family leave reform 2022) provided for in the Finnish Employment Contracts Act, i.e. the period for which the employee is entitled to the pregnancy allowance, must be counted as equivalent to active employment. In addition, with respect to other types of family leaves, the employee must have a right to a proportional share of the year's performance bonus according to the pro rata temporis principle. The Ombudsman did not take a stand on whether the bonus scheme would be discriminatory with respect to other leaves that family leaves.
 

Employee’s litigation costs paid by the employer considered as taxable salary: According to a decision by the Supreme Administrative Court, litigation costs paid by an employer on behalf of an employee shall be taxed as salary. In this case the employer had paid the employee’s litigation and legal advisory costs in a criminal case where the employee was suspected of a crime. The employee was a journalist and had been suspected and eventually prosecuted due to an article written by the employee and published by the employer. According to the Supreme Administrative Court, being prosecuted was not part of the employee’s work tasks even though it was a consequence of performing the employee’s tasks, and therefore the costs paid by the employer were taxable salary. This ruling applies in all situations where an employee is suspected of a crime in the work context, such as occupational health and safety offences. Several statements and initiatives have been taken to amend the tax laws for the employers to be able to pay for employees’ litigation costs under similar circumstances.

• The definition of an employee is clarified to make the distinction from independent contractors clearer. A new presumption rule is introduced according to which it shall be assumed that an employee relationship exists unless the alleged employer makes it highly probable that an independent contractual relationship exists.Certain employer obligations related to downsizing now apply to all companies that are part of a group. This means that companies within a group are obligated to offer other suitable employment and preferential rights to a new position to employees in other companies within the same group. Additionally, new rules regarding information and consultation with the employees representatives at group level is introduced.
   
• The right to permanent employment is strengthened, granting all temporary employees the right to permanent employment after three consecutive years of service, regardless of the basis for the temporary employment.
   
• The threshold for the obligation to establish a working environment committee has been lowered from 50 to 30 employees. Further, the threshold for the obligation to elect safety representatives has been lowered from 10 to 5 employees.  
   
• Clarification that protection against harassment in the Working Environment Act also encompasses protection against sexual harassment. New definitions of harassment and sexual harassment have been introduced, along with a clarification of the responsibilities of the safety deputy regarding the psychosocial work environment.
   
• New requirements for gender composition for the board of directors, stating that limited liability companies subject to gender representation obligations must have a board composition that meets specific criteria as outlined in the law. The changes and requirements are further detailed here.
   
• Changes to the employer's obligation to consult, requiring consultation with employees on the use of part-time work, temporary employment, and hiring if either party demands it. Furthermore, the employer's consultation obligation related to staffing should also apply to the use of independent contractors and purchase of services from other companies.

New approval scheme for staffing agencies: Amendments to the regulation on staffing agencies mandate that businesses engaging hiring out labor (staffing agencies) must obtain approval from the Norwegian Labor Inspection Authority (nw: Arbeidstilsynet) in order to operate legally.

It is illegal for businesses to hire labor from staffing agencies that are not approved. However, during the period from January 1 2024, to March 31 2024, hiring is allowed from businesses that have submitted an application for approval, pending review.
 

Too much overtime at Apotea?: The union Unionen is suing the online pharmacy Apotea because of the company's extensive use of overtime. Unionen argues that this is unlawful overtime and that the company does not have a staffing level that corresponds to its sales. According to Unionen, there are over 19,000 hours of unlawful overtime and they are claiming damages to the union of just over SEK 10 million for breach of the collective bargaining agreement.