The Norwegian Parliament has passed significant amendments to the Working Environment Act. These changes, coming into effect on January 1, 2024, will strengthen employee rights and may have major implications for many employers.

Key Amendments Include:

Clarification of the Term “Employee”

The distinction between an employee and an independent contractor is not always clear. In some cases, a person engaged as a contractor may in reality be considered an employee. This distinction is important when determining an individual’s statutory rights and obligations, as the Working Environment Act primarily applies to those defined as employees.

Through case law, a range of criteria have been established to assess whether a person should be considered an employee or a contractor. These criteria are now partially reflected in the amended law—without intending to alter the existing legal interpretation.

The current legal text (Section 1-8(1) of the Working Environment Act) defines an employee as “anyone who performs work in the service of another.” This will now be changed to: “anyone who performs work for and is subordinate to another,” thereby indicating the nature of the assessment required.

Additionally, a presumption is introduced that a person is to be regarded as an employee unless the client can make it highly probable that the relationship is that of an independent contractor.

As a result, businesses using independent contractors must demonstrate that a truly independent contractual relationship exists. If they fail to meet this burden of proof, the individual will be considered an employee and entitled to the protections granted under the Working Environment Act. This change could result in more individuals being classified as employees.

This issue of “employee” vs. “contractor” is especially relevant for individual athletes. Under current athlete agreements, they are generally classified as contractors. However, looking at the actual relationship and degree of subordination between federations and athletes, it is questionable whether some athletes should instead be defined as employees. Such a reclassification would significantly impact athletes’ rights and obligations under employment law.

Group Companies: Extended Obligation to Offer Alternative Employment

According to Section 15-7 of the Working Environment Act, an employee cannot be dismissed without just cause. If the dismissal is due to downsizing or organizational changes (economic reasons), the dismissal is not lawful unless the employer can offer the employee other suitable work within the company.

Currently, “company” is interpreted as the legal entity with which the employee has their employment contract. The new amendment extends this obligation to include the entire corporate group. If no suitable work is available in the same legal entity, the employer must assess whether alternative positions can be offered within other companies in the same corporate group. This is especially relevant during restructuring in only one part of a group.

Currently, an employee who is dismissed due to downsizing has preferential rights to new employment within the same company, assuming they are qualified for the new position. This right will now be extended to apply across the entire corporate group, not just within the original employer entity.

Temporary Employees Granted Right to Permanent Employment After Three Years

According to Section 14-9 of the Working Environment Act, permanent employment is the general rule. Temporary employment is allowed only in specific situations (e.g., temporary projects, substitutes). Under the current law, most temporary employees are entitled to permanent employment after three or four years, depending on the basis for the temporary position.

The new amendment grants all temporary employees the right to permanent employment after three consecutive years, regardless of the reason for the temporary contract.

This aims to reinforce the principle of permanent employment and simplify the legal framework.

Note: This amendment does not apply to athletes, coaches, referees, and other leaders in organized sports. These roles may still be filled through temporary employment beyond three years.

Requirements for Safety Representatives and Working Environment Committees

It is now mandatory for all companies with at least five employees to appoint a safety representative, and all companies with at least 30 employees must establish a working environment committee. This is a substantial change from the current thresholds of 10 and 50 employees, respectively.

Conclusion

With the significant legal changes taking effect on January 1, 2024, many businesses—and particularly corporate groups—will need to make substantial adjustments. If you wish to discuss the changes and how they may impact your organization, don’t hesitate to reach out to Advokatfirmaet SME.