Sickness pay for temporarily laid off employee
On 22 November 2022, the Supreme Court handed down a judgment on the connection between the rules in the Mandatory Wages Act and the rules in the Ship Labor Act on the obligation to pay in case of illness.
The background to the case
The case concerned an employee who was employed as a receptionist in Hurtigruten. The employee called in sick and had been absent from work since 28 June 2019. As a result of the covid19 pandemic, Hurtigruten temporarily laid off a large number of employees in March 2020, including the receptionist who had reported in sick. The question was whether Hurtigruten still had an obligation to pay wages to the receptionist during a period when he did not receive benefits from the Norwegian National social insurance scheme.
According to Section 4-4 of the Ship Labor Act, employees who work on board Norwegian ships are entitled to pay for up to one year in the event of illness. According to this provision, the reported sick receptionist was entitled to wages until 27 June 2020. However, the wage claim was refused by the employer, who believed that the wage obligation had lapsed upon the temporary layoff. The employer referred to Section 3 of the Mandatory Wages Act, which exempts the employer from the obligation to pay in the event of temporary layoff after an employer's period of fifteen days.
The question for the Supreme Court was how the two sets of rules should be coordinated. The employee could not at the same time have a claim to wages (according to the Ship Labor Act) and not a claim to wages (according to the Mandatory Wages Act).
The Supreme Court's assessment
The Supreme Court came to the conclusion that the Ship Labor Act's rules on sick pay had to take precedence, so that the employee was successful in his wage claim.
Initially, the Supreme Court referred to the wording of the Ship Labor Act’s § 4-4 first paragraph, which states that the one-year wage obligation in case of illness applies "as long as the person is employed". It was pointed out that the person is employment also in the event of temporary layoff - where the parties are only temporarily released from their obligations following the employment agreement.
At the same time, the Supreme Court found that the rule in Section 3 of the Mandatory Wages Act, which gives the employer exemption from "obligation to pay", according to the wording also applies to wages in the form of sick pay. It was therefore none of the provisions alone that gave the answer to whether the receptionist was entitled to pay.
However, the Supreme Court emphasized that the Ship Labor Act is a protective law that cannot be waived to the detriment of the employee. Temporary layoff, on the other hand, is an instrument that should give companies the opportunity to get through difficult economic times. In the view of the Supreme Court, the Ship Labor Act's purpose and character of being a social protection law therefore dictated that the employee should be entitled to wages.
The Supreme Court also referred to an ILO convention on seafarers' working and living conditions, which stipulates that the employer must have a minimum responsibility for wages for seamen who become unable to work as a result of illness or injury. The Ship Labor Act § 4-4 is an implementation of this convention. The Supreme Court therefore was of the opinion that the consideration of fulfillment of the convention dictated that the rule on the obligation to pay should take precedence.
