On 28 February, the Supreme Court of Norway delivered its judgement in the so-called Skanska case. The case primarily concerned the understanding of the main collective agreement between the Norwegian Confederation of Trade Unions (LO) and the Confederation of Norwegian Enterprise (NHO), regarding the significance the length of service should have in the selection of redundant employees.

Following a workforce reduction in Skanska Norge AS in 2016, six of the redundant employees filed suit against the company claiming unlawful termination. The employees claimed that their terminations were invalid because they had longer tenure than employees who retained their jobs. The terminations were found to be invalid because of a flawed process. But the main question, ruled upon outside the specific reasons for invalidity in the particular cases, was the significance of the length of service. 

According to Section 15-7 of the Working Environment Act, a termination must be "objectively justified". The obligation also concerns the selection of redundant employees. Tenure is not a mandatory selection criteria by law, but it is a requirement pursuant to the collective agreement. Skanska was bound by the main collective agreement between LO and NHO ("Main Agreement"), and the Supreme Court confirmed that section 8-2 of the Main Agreement implies a requirement for the employer to consider the length of service in the event of redundancies, and that the initial order of selection for redundancy must start with the length of service.

Section 8-2 of the Main Agreement states that the selection can be based on other criteria than length of service if there is a valid reason for such deviation. The Supreme Court rejected that this implied a requirement of materiality in order to be able to put greater emphasize on other selection criteria. The valid reason to depart from the order of length of service may be satisfied even without significant differences in qualifications and skills. At the same time, the Supreme Court confirms that qualified reasons for departure may be required in certain cases, typically if the redundant employee has significantly longer tenure than employees not selected for redundancy.

The Supreme Court, however, held that the importance of seniority must be determined individually in every case. In particular, the Supreme Court emphasized that the importance of the criteria depends on an overall assessment of length of service and other criteria chosen by the employer, such as professional and non-formal qualifications, and the employee's social circumstances. The situation and specific needs of the enterprise might cause the significance of the factors to vary.

Key takeaways

In our opinion, the Supreme Court confirms the position of the length of service as a selection criterion in redundancies for enterprises bound by the Main Agreement. In such enterprises, the selection of redundant employees must begin with the employees' length of service.

At the same time, the Supreme Court clarifies that length of service is only one of several relevant criteria in an overall assessment. The employer may have valid reason to depart from the order of length of service without there being any significant differences in qualifications and skills. In other words, an enterprise bound the Main Agreement also has discretion to emphasize other criteria than length of service.

It is particularly important to document that length of service has been assessed and why the order of length of service has been departed. The judgment emphasizes the importance of a sound process and solid documentation. In particular, the Supreme Court further notes that the more discretionary and subjective criteria are used, the higher the standard for documentation. This emphasizes once again the importance of a thorough process and solid documentation, both before and during the redundancy process.