clarifications for downsizing processes

Broadcasting case provides important clarifications for downsizing processes

BAHR has represented the Norwegian Broadcasting Corporation (NRK) in litigation against two employees, with 16 and 19 years of seniority, respectively, who were made redundant in a major downsizing process. NRK prevailed before the Labour Court (collective labour dispute), the Oslo District Court and the Borgarting Court of Appeal. One of the employees appealed the case to the Supreme Court. However, the appeal was not admitted.

By: Tarjei Thorkildsen, Partner, Rajvinder Singh Bains, Attorney, Hannah Osberg Andresen, Associate

NRK has in recent years had to undergo several comprehensive restructuring and downsizing processes because its licence fee revenues have not kept up with cost increases and because media/ technology developments mean that different skills are needed. In 2016, this meant that permanent staffing needed to be reduced by 3,450 person-years nationwide. In the Eastern Norway District Office, staffing was cut by 11.5 of about 60 person-years.

From left: Tarjei Thorkildsen, Partner and Chair of the BAHR Labour Law Group, Hannah Osberg Andresen, Associate, and Rajvinder Singh Bains, Attorney

A new organogram was drawn up on the basis of what functions were needed, due to media developments, in the New Eastern Norway District Office. The two plaintiffs were not included, despite having longer seniority than comparable colleagues.

The case has provided important clarifications with regard to the significance of seniority in defining the redundancy selection pool and in making selections from that pool, as well as the assessment of suitable alternative employment prior to dismissal.

The Labour Court – significance of the seniority principle in defining the redundancy selection pool

Before the Labour Court, the case concerned whether the seniority provision in Clause 36 of the Basic Agreement between the Norwegian Union of Journalists and the Employers’ Association Spekter prevented the redundancy selection pool from being limited to the Eastern Norway District Office. The plaintiffs argued that the affected employees also had to be considered in relation to relevant employees at the Marienlyst headquarters, i.e. a different unit. The seniority provision is similar to that found in other collective agreements, for example the Basic Agreement between the Norwegian Confederation of Trade Unions and the Confederation of Norwegian Enterprise.

In its judgment of 27 September 2018 (AR-2018-18), the Labour Court concluded that it was permitted to carry out downsizing within a defined unit such as the Eastern Norway District Office. With regard to the interpretation of the seniority provision in the Basic Agreement, the Labour Court concluded that the said provision, in addition to being applicable to the selection criteria, is also applicable to defining the redundancy selection pool. Consequently, the seniority provision had to be interpreted in conformity with the findings of the Labour Court in relation to the seniority provision in the Basic Agreement between the Norwegian Confederation of Trade Unions and the Confederation of Norwegian Enterprise in ARD-2016151 (Nokas). For businesses without binding collective agreements, the fair dismissal requirements under the Working Environment Act also imply that the pool and the criteria need to be fair, although seniority carries less weight than will typically be implied by collective agreements. The Supreme Court has in the wake of the NRK case addressed the issues of fair definition of the

redundancy selection pool and the significance of seniority in HR-2019-1986 (Telenor). In the Telenor case, the Supreme Court made the following references to the Labour Court’s previous rulings:

«In summary, a redundancy selection pool may be unfairly defined if the seniority principle was «completely deprived of its significance», cf. paragraph 86 of the Nokas judgment, or «materially undermined», cf. paragraph 62 of the NRK judgment.»

The Supreme Court also observes that the issue of whether the redundancy selection pool was fairly defined depends on «an overall assessment of multiple factors».

After the Telenor case, the question has been raised of whether the specific assessment as to what redundancy selection pool it would be fair to use shall be made in relation to each employee or in relation to the pool as such. BAHR is of the view that the Labour Court’s ruling in the NRK case, which is a key basis for the Supreme Court’s assessment in the Telenor case, would suggest that the fairness assessment can still be based on an evaluation of the pool as such, with limited weight being accorded to individual circumstances.

The Oslo District Court – selection within the redundancy selection pool

The case before the Oslo District Court concerned the validity of the two dismissals in the Eastern Norway District Office redundancy selection pool. A key issue was whether the selection of those employees who were made redundant was fair, in view of their seniority. The Court agreed that NRK has just cause for deviating from the seniority principle on grounds of inadequate skills. The dismissals were found to be valid. Weight was attached, in line with HR-2019-424-A (Skanska), to a prudent and verifiable assessment having been made. The following is stated in the judgment handed down on 12 June 2019:

«It would appear, based on the overall evidence, that NRK has made a conscientious, fair and prudent assessment.»

The Borgarting Court of Appeal – suitable alternative employment

One of the employees appealed the District Court judgment to the Borgarting Court of Appeal. The key issues before the Court of Appeal were NRK’s assessment of suitable alternative employment and the balancing of interests.

The Court of Appeal handed down its judgment on 4 February 2020 (LB-2019-140972). The majority concluded that NRK had considered the employee in relation to 41 advertised vacancies before deciding on the dismissal. Moreover, the majority concluded that NRK’s assessments in relation to the advertised vacancies had been «genuine and appropriate». Nor was there anything to suggest that there was any unmet labour need at NRK that should have been offered to the employee.

A key issue was whether NRK had an obligation to redeploy resources to find suitable alternative employment for the employee, especially in view of the seniority and age of the employee.

In making its specific assessment, one of the factors highlighted by the Court of Appeal was that NRK had already for several years been undergoing major restructuring of its operations to adapt to media developments:

«It would be exceedingly difficult to complete the type of necessary restructuring currently undertaken by NRK, the justification for which the Court of Appeal is in no position to question, if the right of redundant employees to suitable alternative employment would mean that NRK is obliged to construct duties tailored to previously required skills that are already in excess supply in its organisation.»

The majority thus concluded that NRK had complied with its obligations to consider suitable alternative employment, and that there was just cause for dismissal. The Court of Appeal ruling was appealed to the Supreme Court, but the appeal was not admitted.