Norway: Redundancy Ruling Could Reduce Job Security, Norwegian Lawyer Says

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By Marcus Hoy

Jan. 21— A Dec. 8 Norwegian Supreme Court ruling (015/828) that allowed a retail chain to define a single employee as a redundancy pool could strengthen the position of employers when downsizing occurs, a Norwegian lawyer tells Bloomberg BNA. Per Arne Damm, an attorney at law firm Simonsen Vogt Wiig, said a Jan. 14 statement that the ruling (“A” v Gresvig Detaljhandel AS) would likely affect existing case law and could reduce the job security of senior employees.

Decisions and Appeals

Under Norway's Working Environment Act (2005/62), companies seeking to reduce their workforce are required to consider all employees working at the same legal entity as candidates for redundancy. The Supreme Court ruling dilutes this stipulation by broadening exceptions to the requirement.

The case involved a sports retail chain, Gresvig Retail AS, which operates a large number of stores across Norway. During a major reorganization and rebranding operation, a number of stores were shuttered including a small store with a single full-time employee referred to as “A.” In conjunction with his redundancy, “A” was offered a sales position in another store at a lower salary level, which he declined. “A” was subsequently deemed unsuitable for a vacant management position.

The employee filed a claim for unfair dismissal and on May 7, 2014, Kristiansand District Court ruled that the company's action was illegal because the employee was qualified for the management position. The district court ordered the company to pay costs and 108,000 kroner ($12,300) in compensation. The company appealed the ruling, and on Feb. 6, 2015, Agder High Court of Appeal found in its favor in a majority decision, the dissenting judge holding that the employee was suited for the management role.

“A” appealed the case to the Supreme Court, which was asked to rule on whether the employee should have been offered the management position and whether the company's decision not to include other employees in the redundancy pool could be justified under the Working Environment Act and established case law.

Administrative Burden

The company argued that the practice of limiting the pool to individual stores was necessary as the alternative of including employees from the entire retail chain would entail a disproportionate administrative burden. All its other stores had more than one employee, the company pointed out, arguing that the single employee's position was unique and his duties differed substantially from those of employees at other stores.

Previous case law allowed a number of exceptions to the “whole legal entity” in the redundancy pool, the Supreme Court noted. Such exceptions can be made if a wider pool would place a disproportionate administrative burden on the company, significantly undermine staff morale or hinder the retention of skilled employees. While it was relatively common practice for retail companies to limit redundancy pools to individual stores, however, a redundancy pool had never before been limited to a single employee.

Unique Circumstances

Given the unique circumstances of the case, the court concluded that the single employee could be classed as a redundancy pool, and the company was within its rights not to offer him a management position since his experience did not meet that required for such a position.

“This ruling develops existing case law on selection pools in Norway,” Damm told Bloomberg BNA. “Whereas previously it was questioned whether a selection pool could comprise as little as one person, this ruling has clearly stated that it can.”

While the ruling did not weaken the rights of trade unions, Damm said, it could imply less job security for employees who currently enjoy a particularly high protection from redundancy, such as those with a combination of a long length of service and seniority.

“Whereas a person in this category would not be a candidate for redundancy in a wider selection pool,” Damm said, he or she “could potentially be made redundant if the selection pool consisted of this person only.” To his knowledge, Damm said, EU case law does not address questions related to redundancy selection pools or selection criteria.

To contact the reporter on this story: Marcus Hoy in Copenhagen at

To contact the editor responsible for this story: Rick Vollmar at

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