Compensation for Dismissal or Summary Dismissal

When an employer terminates an employment relationship without complying with the legal requirements, the employee may be entitled to compensation. This applies in cases of both dismissal and summary dismissal. The rules are laid down in the Working Environment Act (WEA), and compensation may cover both economic and non-economic loss. The amount of compensation is largely based on judicial discretion, and the court will consider the employer’s conduct, the employee’s situation and the specific circumstances of the case.

Read this article on our website Compensation for dismissal or summary dismissal

Dismissal or summary dismissal?

Under the Working Environment Act, a distinction is made between dismissal and summary dismissal as two different ways of terminating an employment relationship. The main difference lies in the grounds for termination, but also in the consequences for the employee.

A dismissal is regulated by section 15-7 of the WEA and means that the employment relationship is terminated after expiry of a period of notice set in accordance with section 15-3 of the Act. For a dismissal to be valid, it must be objectively justified on the basis of circumstances relating to the undertaking, the employer or the employee. This might, for example, be a need for downsizing, reorganisation, or persistent inadequate work performance. As a general rule, the employee is entitled to remain in the position during the notice period, cf. WEA section 15-11, and the dismissal must be in writing, cf. section 15-4.

A summary dismissal is regulated by section 15-14 of the WEA and means that the employee must leave the position with immediate effect. Summary dismissal may only be given if the employee has committed “gross breach of duty or other material breach of the employment contract”, cf. first paragraph. This is a stricter condition than for a regular dismissal and is used only in serious cases, for example refusal to follow orders, unauthorised absence, harassment or other improper conduct, as well as breaches of the duty of loyalty.

In summary, one can say that a summary dismissal may be based on the same circumstances as a dismissal related to the employee’s conduct, but the circumstances must be more serious for summary dismissal than for dismissal.

When may the employee claim compensation?

An employee who has been unlawfully dismissed may claim compensation under section 15-12 (2) of the Working Environment Act. The same applies to an employee who has been unlawfully summarily dismissed, cf. section 15-14 (4), which refers to section 15-12 (2). A dismissal means, as mentioned, that the employment relationship ends after a notice period, while a summary dismissal means that the employee must leave immediately due to “gross breach of duty or other material breach of the employment contract”.

The compensation provisions only apply where there is a dismissal or summary dismissal in the sense of the Working Environment Act. This follows from Supreme Court case law, for example Rt. 1997 p. 1506 (Stryn Apotek) and Rt. 2012 p. 983 (Stena-Songa). If the situation does not fall within the scope of the Working Environment Act, any claim for compensation must be based on general rules of contract or tort law.

In short, a dismissal will be unlawful under the Working Environment Act if it is contrary to sections 15-6 to 15-10. In summary, these provisions concern protection against unfair dismissal, dismissal during a probationary period, and special protection in connection with sickness, pregnancy and military service. Corresponding rules apply to unlawful summary dismissal.

If the dismissal or summary dismissal is unlawful, the employee is entitled, in addition to compensation, to be reinstated in the position, cf. Ot.prp.nr. 41 (1975–1976) p. 78. The right to reinstatement is important to ensure effective protection against dismissal. Without this starting point, a rule on compensation would in practice mean that an employer could get rid of employees simply by “buying them out”.

Typical situations that trigger liability for compensation

Typical situations where the employer may become liable for compensation include:

Unfair dismissal during or after a probationary period, cf. WEA sections 15-6 and 15-7
Dismissal in breach of special protection in connection with sickness, pregnancy or leave, cf. sections 15-8, 15-9 and 15-10
Breach of the right to remain in the position during a dispute, cf. section 15-11
Summary dismissal where the grounds do not meet the strict statutory requirements, cf. section 15-14
These rules are intended to protect employees against arbitrary or unlawful decisions and to secure strong job protection in line with the purpose provision in WEA section 1-1.

Assessment of compensation

The assessment of compensation in cases of unlawful dismissal or summary dismissal shall be made under section 15-12 (2) second sentence of the Working Environment Act. The provision reads:

“The compensation shall be fixed at the amount that the court finds reasonable, taking into account the economic loss, the circumstances of the employer and the employee, and the circumstances otherwise.”
The key point is that compensation shall be set at what the court finds “reasonable”. The Supreme Court has stated that the provision “prescribes an assessment based on broad considerations of reasonableness”, cf. Rt. 2001 p. 1253 at p. 1258. In this assessment, factors such as economic loss, the conduct of the employer and the employee, and other relevant circumstances will be weighed.

Section 15-12 (2) of the WEA allows compensation for both economic and non-economic loss. Non-economic loss is commonly referred to as “redress” (oppreisning). The compensation has elements of both damages for loss and ex gratia redress. It is not required that the employer has acted negligently – it is sufficient that the dismissal or summary dismissal is found to be unlawful, cf. Ot.prp.nr. 41 (1975–1976) p. 75.

Compensation for economic loss

The economic loss is the starting point for assessing compensation. The main rule is that the employee should be put in the same financial position as if the breach of job protection had not occurred. If the employee cannot be particularly blamed, compensation should normally not be lower than the economic loss the employee has suffered as a result of the dismissal, cf. Ot.prp.nr. 41 (1975–1976) p. 75 and Rt. 2012 p. 168.

Economic loss may include, for example:

Loss of income: If the employee has not remained in the position under section 15-11, the economic loss will normally correspond to the employee’s loss of income during the period out of work.
Future loss of income: This may be relevant where the employee has not claimed a judgment for invalidity, or where the judgment orders the employee to leave the position even though the dismissal/summary dismissal was unlawful, cf. section 15-12 (1) second sentence.
A frequently discussed question is whether other benefits received by the employee during the period out of work should be deducted. The starting point is that the employee is entitled to full compensation for lost wages, cf. Rt. 2001 p. 1253. The preparatory works emphasise that income from “other work” should not be deducted unless the employee has been “away from the position for a relatively long time”, cf. Ot.prp.nr. 41 (1975–1976) p. 78. The idea is that the employer should not benefit from the employee having obtained other income during the period out of work.

Compensation for non-economic loss (redress)

Compensation for non-economic loss (redress) is intended to compensate the employee for the consequences that the employer’s breach of job protection has caused. Redress does not require fault on the part of the employer, but fault will be an important factor when deciding the level of compensation. Breaches of fundamental procedural rules, unfounded accusations, and unnecessary publicity surrounding the dismissal are all factors that point towards higher compensation. Excusable circumstances on the employer’s side may, however, indicate that compensation should be reduced, cf. Rt. 1988 p. 959.

The general level of redress is relatively low in Norwegian law. In employment cases, the Court of Appeal practice usually lies between NOK 50,000 and 100,000. Examples from case law on the level of non-economic compensation include:

Dismissal based on the employee’s circumstances:

Rt. 2011 p. 74: NOK 50,000 in redress for dismissal based on absence due to remand in custody
LB-2018-4183-2: NOK 50,000 in redress for unlawful summary dismissal based on a criminal case in which the employee was later acquitted
LB-2019-74520: NOK 30,000 in redress for invalid dismissal based on alleged lack of qualifications
LA-2019-57978: NOK 50,000 in redress for dismissal declared invalid due to lack of workplace accommodation
LB-2021-175866: NOK 100,000 in redress for invalid dismissal based, among other things, on improper conduct towards younger female colleagues

Dismissal based on the undertaking’s circumstances:

Rt. 2015 p. 718: NOK 30,000 in redress for dismissal in connection with transfer of undertaking
HR-2019-424-A: NOK 50,000 in redress for dismissal based on the undertaking’s circumstances (the Court of Appeal’s assessment of compensation was not disputed before the Supreme Court)
LE-2023-40401: NOK 50,000 in redress based on the undertaking’s circumstances

Procedurally defective dismissals:

LE-2018-109639: NOK 40,000 in redress for procedurally defective dismissal
LF-2018-185451: NOK 90,000 in redress for invalid dismissal based on health-related circumstances
LA-2021-148081: NOK 100,000 in redress for procedurally defective dismissal
Invalid dismissal during the probationary period:

LB-2021-118220: NOK 40,000 in redress for invalid dismissal during the probationary period
LF-2020-175882: NOK 40,000 in redress for invalid dismissal during the probationary period
Change dismissal (endringsoppsigelse):

LB-2022-10228: NOK 50,000 in redress for unlawful change dismissal

Summary dismissal:

Rt. 2005 p. 518, Rt. 1999 p. 184 and Rt. 1992 p. 1023: No redress awarded due to the employees’ own contribution
LB-2020-135519: NOK 50,000 in redress
LH-2021-23943: NOK 60,000 in redress
LA-2021-56807: Redress set at NOK 20,000, with weight given to the fact that the employee could be blamed
Breach of preferential right to re-employment:

LB-2021-067403: NOK 15,000 in redress to each employee due to lack of consultation meeting, inadequate communication and the strain the case placed on the employees
LG-2023-42172: NOK 50,000 in redress due to seriously flawed case handling that caused significant personal strain for the employee

How to proceed

A claim for compensation following an unlawful dismissal or summary dismissal must be brought within specific time limits. Under section 17-4 of the Working Environment Act, the time limit for bringing a lawsuit in disputes concerning “dismissal [or] summary dismissal […]” is eight weeks. The eight-week time limit expires at the end of the same weekday on which the time limit starts running, cf. the Courts of Justice Act section 148 second paragraph and Rt-2011-1118 paragraph 20.

If the employee only claims compensation, the time limit is six months, cf. WEA section 17-4 first paragraph first sentence. This applies regardless of whether the claim concerns economic or non-economic loss.

It is important to note that the time limit also runs during judicial recesses, cf. HR-2016-1052-A. Judicial recesses are periods during the year when the courts largely do not hear cases and many procedural time limits are suspended. This does not apply to time limits for bringing actions for compensation.

Compensation in discrimination cases

Discrimination in employment is regulated separately by the Equality and Anti-Discrimination Act (EADA), which in section 38 provides special rules on compensation and redress for violations of the Act. This provision differs from the compensation and redress rule in WEA section 15-12 in several ways.

Under EADA section 38 first paragraph, a person who has been subjected to discrimination is entitled to compensation and redress. The scheme is distinctive in that it does not require fault on the part of the employer. It is sufficient to show that an unlawful discriminatory act has in fact taken place. Compensation shall cover the economic loss suffered by the discriminated person, while redress is intended to compensate for the non-economic harm that the violation itself represents. This means that redress has an objective character and is intended to be both restorative and preventive.

Under WEA section 15-12, which applies to unlawful dismissal or summary dismissal, the employee is also entitled to compensation and, where relevant, redress. Unlike the Equality and Anti-Discrimination Act, this provision presupposes an unlawful act in the form of a dismissal or summary dismissal contrary to the rules of the Act, but here too fault on the part of the employer is not a requirement. Compensation may cover both economic loss and redress.

The difference between the two sets of rules lies in both the legal basis and the purpose. While WEA section 15-12 is linked to breaches of the procedural and substantive rules on dismissal and summary dismissal, EADA section 38 has a broader purpose of protecting against discrimination and promoting equality. The latter provision therefore has a more rights-creating and principled character and provides particularly strong protection against discriminatory acts.

Legal costs

If the case is brought before the courts, liability for legal costs is regulated by the Dispute Act. The court will normally award costs to the party who wins the case. Legal costs incurred before legal proceedings are initiated may, however, be claimed as part of the economic loss.

How Verito can assist you

The lawyers at Verito assist both employees and employers in employment disputes. We assist from an initial assessment of the case through to possible court proceedings.

For employees:

Free initial assessment of your case
Assessment of whether there is a basis for a claim for redress
Collection of documentation and relevant evidence
Negotiations with the employer on your behalf
Litigation and follow-up of the case before the courts

For employers:

Free initial assessment of the case
Assessment of whether the dismissal or summary dismissal is unlawful
Guidance on how the case should be handled correctly
Assistance in conducting consultation meetings and negotiations
Legal representation in court
Have you been dismissed or summarily dismissed without valid grounds?

Or experienced retaliation, discrimination or other unfair treatment at work?

Contact us at Advokatfirmaet Verito AS for a non-binding and free initial assessment. We assist with reviewing documentation, assessing whether there is objective justification, advising in consultation meetings, drafting written objections and pleadings, as well as negotiations and representation in court if the case is not resolved earlier.

24 02 21 20 | post@verito.no

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Or visit our website Verito.no

See also:

Severance packages or termination

Employee rights during downsizing

Summary dismissal

Sources

Working Environment Act
https://arbeidsrett-advokat.no/erstatning-oppsigelse-avskjed/
Ot.prp.nr. 41 (1975–1976) On working hours, protection against dismissal, the Labour Inspection Authority etc. in the Act relating to worker protection and the working environment