Employment law compliance is more important than ever

In recent years, there have been significant changes in the field of employment law. In addition to making it more difficult for businesses to stay informed and ensure compliance, the penalties for violations have been significantly increased. From a financial perspective, it has therefore become much more important to adhere to employment law regulations.

New Sanctions

As of 1 July 2024, the upper limit for penalties for violations of the Working Environment Act has been changed from 15 G (1,860,420 NOK) to the higher of either 50 G (6,201,400 NOK) or up to 4% of the company's annual revenue. The regulation resembles the level of sanctions that apply and were introduced after GDPR in 2018, which led many businesses to significantly tighten their follow-up on privacy matters. Additionally, the Ministry has proposed to introduce a provision in the Working Environment Act that would give the Labour Inspection Authority the right to impose penalties on individuals of up to 25 G (3,100,700 NOK). Previously, this was not possible, and individuals would have to be pursued through criminal proceedings. The proposal is partly related to limited resources within the police.

Another trend is that legislation and courts are becoming more employee-friendly. In several cases, large compensation amounts have recently been awarded, for example, in reclassification from the status of self-employed contractor to employee.

One example is that contractors who have not taken vacation according to the Vacation Act have been awarded vacation and vacation pay by the courts, in practice without limitation, so that some have had claims established for up to 60 weeks of vacation with vacation pay. Reclassification cases also have an important tax aspect for the business, which can be activated regardless of claims from the self-employed contractor.

We also see in several traditional employment law disputes that board members and managing directors are being sued alongside the employer based on responsibilities arising from the Companies Act.

Some typical risk areas

The points may be central during inspections by the Labour Inspection Authority and can result in penalties for violations, and they may also pose a risk of lawsuits from employees. The points will typically also be important in transaction contexts and will be checked during due diligence.

Does your business record the working hours of employees, and do you have control over overtime usage?

Do you conduct written assessments of which employees meet the strict criteria for exceptions from the rules on working hours and overtime compensation?

Do you use self-employed contractors or consultants?

Have you conducted analyses of the risk of reclassification?

Do you use hired labour?

If so, are you consciously aware of whether the supplier is a staffing agency, and do you meet the strict requirements that apply to such hiring and equal treatment of hired employees?

Are employees in your business exposed to hazards that could cause serious personal injury?

If so, have you established good health, safety, and environment (HSE) routines, training, and dialogue with representatives about the hazards, and implemented measures to reduce them?

Are you consciously aware of whether you implement control measures against employees?

Are the conditions for such measures met?

Do you have a safety representative and a working environment committee after the threshold for the number of employees was recently reduced?

Do you engage in dialogue about significant changes affecting employees before making decisions in such matters?

Do you have legally mandated whistleblowing procedures?

Have these been discussed with representatives?

Measures

Thommessen has assisted a wide range of businesses in investigating whether they comply with employment law regulations. This is often carried out through so-called "due diligence" reviews of agreements and routines for the risk areas that are most relevant to the business. Depending on the purpose, we also examine more commercial aspects such as the protection of the business's intangible assets, protection against competitive actions from former employees, confidentiality agreements, etc.
Other areas may include assessing exposure related to the use of temporary employees and risks associated with vacation pay and pensions in bonus schemes.

Many businesses are now reviewing all external labour to ensure that classifications as hiring, contracting, and self-employed contractors are correct. The background is the authorities' focus on this issue, and not least the many lawsuits that have been brought before the courts in recent years. Central considerations often include not only financial exposure but also the business' reputation.
Thommessen also has extensive experience in assisting businesses in dialogue with the Labour Inspection Authority and other authorities in connection with inspections, investigations, and sanctions.