Denmark: Nonrenewal of Contract Not Unfair Dismissal, Court Rules

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By Marcus Hoy

August 19—A manager's assurance that an employee would be offered a permanent work contract was not sufficient to support a claim of unfair dismissal, Denmark's Eastern High Court ruled recently. Detailed in an Aug. 9 opinion from the Norrbom Vinding law firm, the May 26 ruling (B-806-15) concerned a company's failure to renew the contract of an employee who became pregnant. While the court found that the action had been prompted by the woman's pregnancy, it deemed the company guilty of the lesser offence of unlawful discrimination.

Broken Promise?

The employee, who worked in a retail firm's sales department, was initially employed on an 11-month fixed-term contract. In keeping with company practice, she was told that she could expect to be offered a permanent position at the end of her initial period of employment. Six weeks before her contract was due to expire she contacted her supervisor via the company's internal messaging system to ask whether she could expect to be offered a permanent contract. The supervisor advised her that she could.

Shortly before the expiration of her contract, the employee informed her supervisor of her pregnancy, and soon afterwards she was informed that she would not be offered a permanent position. The woman's trade union sued the employer for unfair dismissal, arguing that the manager's statement and the fact that the transition to permanent contracts was common practice made the employer's action an unfair dismissal under Section 16 of the Equal Treatment Act (645/2011), which entitles employees found to have been unfairly dismissed to compensation of between six months' and one year's salary.

Acknowledging that the employer was unable to demonstrate that the woman's pregnancy was unrelated to its decision to terminate her, the court found that the situation could not be equated with dismissal from a permanent position. While the employee had received an informal assurance that her employment would continue, no binding commitment had been entered into. The court ordered the company to pay the former employee 25,000 kroner ($3,800), the standard award in cases of gender discrimination.

No Binding Commitment

The case demonstrates that failure to renew a contract cannot be equated with dismissal even in circumstances where a renewal is standard practice and informal assurances have been given, Norrbom Vinding said in an Aug. 9 statement.

While the ruling was “not controversial,” Norrbom Vinding attorney Yvonne Frederiksen told Bloomberg BNA Aug. 20, it demonstrated that companies should ensure clear internal guidelines exist on who communicates with job applicants and existing employees on HR-related issues.

“In Danish law, agreements have the same legal validity whether they are concluded orally or in writing,” Frederiksen said. “This also applies to employment law, where an oral promise of the renewal of a fixed-term contract will have the same validity as a written promise or an agreement.”

“However, this point of law does not change the judgment,” Frederiksen said. “Given the circumstances of the case, the High Court made an evidence-based assessment of whether the employer had entered into a legally binding commitment. The court came to the conclusion that a message from a manager via an internal chat system that is not normally used for HR-related correspondence was an informal statement that could not be characterized as legally binding.”

“The dispute in this case most likely occurred because a middle manager without HR competence made a formal statement via an informal channel,” Frederiksen said. “Over the past six months, the Danish Equality Board has taken a position on several similar cases where employees without HR competence have answered employment questions via Facebook, probably with the best of intentions.”

“Given this background, employers should seek to ensure a uniform and professional communication policy in the area of HR,” Frederiksen said. “This should refer to which channels are used to communicate with employees and job applicants and who is responsible for the communication.”

To contact the reporter on this story: Marcus Hoy in Copenhagen at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

Norrbom Vinding's statement is available in Danish here.

For more information on Danish HR law and regulation, see the Denmark primer.

The Eastern High Court ruling is available in Danish

here.

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