Expectations of change with a red-green government

The Fougner Committee presented its recommendation (NOU 2021: 9) on 23 June 2021. Several of the proposals strengthen employees' rights and tighten the requirements for the employer's organization of the company and the workforce. We expect that the new red-green government will be positive to several of the committee's assessments and proposals, and that these assessments and proposals could become a reality during the next four-year period.

1. Clarification of the employee concept

The majority of the committee proposes to change the concept of employee in the Working Environment Act. They believe that there is a need to clarify the boundary between employee and contractor in order to prevent circumvention of the regulations. They also believe that there is a need to reduce the number of people who are in the grey area between employee and self-employed contractor.

In assessing whether a person is an employee or self-employed contractor, they propose to legislate the most important aspects. The most important factors are who provides the workforce, whether there is a personal duty to work and whether the person in question is subordinated through management, leadership and control.

The majority also proposes to legislate a presumption solution where in case of doubt it shall be assumed that the relationship is an employee relationship unless the client makes it probable that the person who is to perform the work is an independent contractor.

If the proposal is adopted, it will lead to more risk and responsibility being transferred to the employer. It will also lead to more people being able to get employee status compared to today.

2. New provision on ‘cut through’ by circumvention

For employees, it is of great importance that their protection under the Working Environment Act is not reduced by the employer circumventing the regulations. The Working Environment Act does not currently contain any rule on circumvention, but the courts can, on an unwritten legal basis, "cut through" and use the real relations between the parties as a basis if the court believes that the employer has circumvented the regulations.

The majority of the committee proposes to legislate this “cut through” rule without limiting the scope of the rule. If the proposal is adopted unchanged, it means that the “cut through” rule will be applicable to everything from all types of employment (i.e., temporary, full-time, part-time), to agreements with other companies (i.e., hiring of labour, use of contractors and business transfers), and to more internal dispositions (i.e., reorganisations and group organization) etc.

This can lead to an increase in the number of lawsuits from the employee side. Therefore, companies should carefully consider how they organize the workforce and their activities, and what risk they run in doing so. The proposal will also make it easier for public authorities to crack down on rogue actors who deliberately circumvent the regulations

3. Changes in rules on temporary employees and hiring

The majority of the committee proposes to abolish the general right to hire someone temporarily for up to one year without there being a special basis. The reason is that this option has barely been used since it was introduced in 2015. In addition, the majority proposes that the transition from temporary to permanent employment should take place after three years of continuous temporary employment (compared to the current three and / or four years) regardless of the basis for the temporary employment.

Furthermore, the majority of the committee proposes to legislate a definition of the term hiring in order to draw a clearer distinction between hiring and contracting. In the overall assessment of whether there is hiring, they suggest that emphasis should be placed on whether labour is mainly provided, whether the hiring is exercising the work management of the hired employee and whether the hiring has independent responsibility for the result. They believe that emphasis should also be placed on whether the work takes place in close connection with the client’s activities and within the client's persistent labour needs and core activities.

The proposals place greater responsibility on the companies and increase e.g. the risk that the company's permanent employees will increase in number if careful assessments are not made when the workforce is engaged. If the proposals are adopted unchanged, employers must first be more precise with both the basis for and the length of the temporary employment. In addition, companies must make a more detailed assessment of the relationship and commitment when using hired labour.

4. Shared employer responsibility and extension of employer responsibility in group of companies

The majority of the committee proposes to legislate the unwritten legal doctrine of shared employer responsibility on a special basis. The proposal means that a legal entity other than the one that is the employer can be imposed shared employer responsibility in cases where it has to a significant degree exercised employer functions.

The majority point out that an increased degree of group organization in Norwegian working life means that more companies that are formally independent can be under the strong influence of other companies, and that this can have an impact on the employer's room for manoeuvre and management of working conditions.

The majority also proposes to extend the employer's responsibility in group of companies in connection with the employment protection rules. The proposal means that the obligation to offer other suitable work and preferential rights to new employment will be extended to apply to the entire group, and not just the individual legal unit where the employee is formally employed. In addition, they propose that in group of companies, a framework be established for cooperation, information and discussion at group level.

The proposals place new restrictions and obligations on companies, especially in group of companies. It could also mean that both the company and the client / contractor company are given employer responsibility for the hired / consultant.

5. Other amendments

The committee proposes to extend the employer's duty to ensure a safe working environment to also apply to hired employees and independent contractors. In addition, the committee proposes that the duty to have a safety representative shall apply to all companies, and that the safety representative's tasks shall be extended to also include hired employees and independent contractors.

6. Reflections

If the majority's proposals are implemented to a greater or lesser degree, they could have great significance for the development of Norwegian working life. Businesses and employers are given greater responsibility and a higher risk associated with how they organize their business and what schemes they use to cover their need for labour. Group companies will also have to look more closely at their internal procedures with regard to the dialogue with employee representatives, the security service and in connection with the obligations in cases concerning termination.