In September 2006, the Norwegian Supreme Court made a ruling in a case involving the use of temporary employment in the form of stand-by duty employment contracts. The ruling reinforces the principle that temporary employees may not fill predictable vacancies in the workforce, and prescribes when so-called substitute or stand-by duty contracts may legitimately be used.
On 21 September 2006, the Norwegian Supreme Court (Norges Høyesterett) made a ruling in a case involving the use of temporary employment (in Norwegian) in the form of stand-by duty employment contracts. The court ruling reinforces the principle that open-ended permanent employment contracts are standard in Norwegian working life, and that long-term labour shortages or staffing needs ought not to be filled by the use of temporary employment.
The ruling also sets out the conditions under which employers may make use of ad-hoc call out arrangements, in other words, temporary substitute employment. The ruling makes it more difficult, or rather more risky, for employers to make use of substitute employees for predictable labour shortages, which is a practice often seen in various parts of private and public services, such as within health and social welfare.
Present regulatory framework
Temporary employment is regulated through the Act of 17 June 2005 (136Kb PDF) relating to the working environment, working hours and employment protection, known as the Working Environment Act. This legislation sets as a basis that open-ended employment contracts are to be the standard rule in Norwegian working life. However, the act also stipulates the conditions under which one may circumvent the general rule. Temporary employment may be used to fill temporary vacancies arising due to unforeseen circumstances, such as sickness absence and maternity leave. General and predictable fluctuation in production is not a reasonable ground for using temporary employment.
Supreme Court ruling
The Supreme Court ruling in September 2006 was made in connection with a case where an employee (the plaintiff) had been employed by the County municipality as a substitute on stand-by duty in the ambulance service. His contract stipulated that he was employed on a call-out arrangement with sporadic duty and no fixed working time, and the employee was free to accept or reject a call-out as he pleased. Each call-out was regarded as a time limited employment contract, which was terminated at the end of the call-out.
When the employer wanted to terminate the employment relationship, the employee refused to accept what was regarded as a dismissal from what, according to the plaintiff, should have been an ordinary permanent employment relationship. The plaintiff lost his case in two lower courts proceedings, none of which ended in a unanimous ruling by the courts.
The Supreme Court first considered the needs of the company to use temporary employment contracts in the form of substitute employment. It emphasised the principle that a permanent need for labour cannot be met by temporary employment, but by an increase in the permanently employed personnel base. The court stated that it was evident that the employer had a permanent need for labour when the four different stations within the ambulance service were considered together, which had not been done in the previous lower court rulings.
The employer’s claim was that sickness absence rates within the enterprise were of such a nature that it made it necessary to employ staff temporarily. The court found that, considering the size of the enterprise – a large hospital – the sickness absence rate was of a long-term and permanent nature, and as such could not be used as a reason to justify the use of temporary employment.
The second issue considered by the court was whether the employee had had a sufficiently permanent relationship with the enterprise. The court argued that the employee had worked approximately 44% of a full-time position during the course of his 14-month long employment relationship. Moreover, the employee had been on duty each month during this period and, as such, the plaintiff had sufficient grounds to claim that the temporary nature of his employment relationship could not be justified.
Commentary
The Supreme Court has not issued a ground-breaking verdict as it merely reinforces an already well-known principle in the legal framework: temporary employees may not fill predictable vacancies in the workforce. It does, however, shed light on an area of temporary employment which has been subject to some uncertainty in Norwegian working life, namely the use of so-called substitute or stand-by duty employment. Such contracts are widespread in certain parts of the labour market, including the healthcare and social sector and in areas of the private services sector. The ruling does not make the use of such substitutes illegal, but it sets certain boundaries for when such contracts may legitimately be used. The implication is that stand-by employment may only be allowed in cases where there is an immediate but temporary need for labour.
The Supreme Court also placed emphasis in its ruling on the more general employment needs of the enterprise, rather than the needs of the individual sections of the enterprise. Although such an emphasis may not be that relevant for the private sector, where judgement is always made in relation to the higher legal unit of the enterprise, it may be of relevance to public sector employers. Peaks or declines in the work flow as a result of predictable fluctuations or variations are not sufficient grounds for temporary employment; neither are enduring long-term sickness absence rates.
Håvard Lismoen, Fafo Institute for Labour and Social Research