Episode 8: The Fine Line of Performance Management and Termination in Norway

In this 10-minute episode, you'll gain valuable insights on:

• The high bar for performance-based terminations in Norway
• The importance of clear documentation throughout the employment relationship
• How to use warnings and PIPs effectively
• The legal requirements for the consultation meeting and termination letter

Transcript

Lill: 0:07

Hi, and welcome to a new episode of Norwegian Employment Law in 10 Minutes. My name is Lill Egeland, and I am a lawyer in the law firm Simonsen Vogt Wiig. Today, I'm lucky to be here with my colleague Thomas Tallén. Hello, Thomas.

Thomas: 0:20

Hi, Lill. Happy to be here.

Lill: 0:21

Yes, this is going to be good. And today's episode is going to be about terminations due to performance. What does it take for such a termination to be valid under Norwegian law? And since we only have 10 minutes, I can give a spoiler alert already. It's quite a high threshold for something to be valid under Norwegian law. Perhaps one of the highest in Europe?

Thomas: 0:42

Yeah, I think so.

Lill: 0:43

Yeah, if we disregard Sweden, perhaps that's quite a high threshold there as well. But, yeah, it's, it's not a straightforward process. However, it's fully doable if you do the right things. So if I'm going to make it simple, I would say. First of all, there are two elements really to whether or not a termination is valid. One point of it is how bad is the performance really? And I'm going to say something about that. And the second part of it is, have you followed up on the employee performance managed the employee and provided feedback that is sufficiently clear? And that's something you're going to talk about Thomas.

Thomas: 1:20

Yeah, definitely onboarding and managing the employment and following up on day to day management basically is really important.

Lill: 1:28

That's key. So let's start with the performance itself. How bad does it have to be in Norway in order for a termination to be valid? There's a distinction really between performance during the probation period and the threshold that applies in the probation period, and once you have completed the probation period. It's an easier, so to speak, way of terminating during the probation period. That's another episode. We'll refer to that episode about terminationism in the probation period. However, when you have completed the termination period, the lack of performance needs to be significantly below what you as an employer can expect. Which means that, you cannot simply have improvement potential or that this employee is below average. It needs to be significantly below what you can expect. Now, whether you are in a senior position, et cetera, would be relevant in this regard, but that's like the key element, significantly below.

Thomas: 2:29

Compared to a similar position or a similar person in that same position.

Lill: 2:33

Yes, absolutely. Secondly. This cannot be of a temporary nature. The lack of performance needs to be of a permanent character. So sometimes we have clients coming with employees that have been performing well for a number of years and suddenly there's a dip in the performance and then they ask, can we terminate them? And the answer to that is typically no. It needs to be a more permanent character.

Thomas: 2:59

It has to be consistent over some time to then follow up on and react on that. I mean in critical errors, one time only, then there are different measurements to follow up.

Lill: 3:12

Yeah, absolutely. And that's a good specification and clarification because what we're talking about today would be exactly not the one time errors, but the, consistent poor performance that you can face from employees. And just rounding off on what does it take from a performance level, it needs to be significantly below what you can expect, it needs to be of a permanent character and not temporary, and linking to that last one, you also need to check whether there could be elements of so called excuses, in the sense that, for instance, if it's something on your side as an employer, for instance, you've organized the work poorly, it you haven't provided sufficient training, et cetera. That's something that would indicate you cannot terminate. And secondly, also, if there are some excuses on the employee side in terms of going through a divorce, some life crisis, et cetera, that's also linked to the more temporary side of the non performance.

Thomas: 4:08

Definitely, personal issues is most often not discovered until after you then confront the employee with the issues.

Lill: 4:17

Exactly. And that brings us to your part of this, because what from a process and documentation point of view, are the highlights when you are in a termination situation?

Thomas: 4:29

I think definitely you have to, from basically day one, you mentioned the probation period is something of itself and we'll get back to that, but from day one you have to follow up and give sufficient training to make sure and provide documentation that you have provided this training so the employee is able to manage their tasks that they're given. Secondly, I think it's really important to follow up and give feedback. Maybe not on a daily basis, but on a frequent basis, regular basis. And also, this doesn't need to be done in like a formal matter, but you should be able to provide documentation that you have actually follow up and given this feedback, because at one point during this, when you see that this is a consistent underperformance, you have to let the employee know that, this can't go on without any consequence.

Lill: 5:33

Yeah. And that's the, one of the pitfalls we see as lawyers, obviously, that, the documentation is not good enough. And it's a human thing, right? You don't want to start something very negative, because obviously that can also influence the motivation and, the actual ability to, improve. But it is possible to find that strike that balance between actually documenting in a constructive way, informing the employees about what to do.

Thomas: 6:04

Exactly. And one way to go about it is, to, have a, an informal talk and then follow up with an email referring to the conversation.

Lill: 6:13

Exactly.

Thomas: 6:13

And then you can provide both the documentation that, the employee has received. documentation, but also you can actually provide documentation for what you've given feedback on.

Lill: 6:24

Exactly. And the way to do this, in a human way is to say, we have faith. We have faith that you are able to do this. We want to help you do this. And in order to do we need to have a track of what we are actually wanting you to improve on. So I'll send you this email and then let's use that as the starting point for working together. You can go back and look at it and we'll figure this out together. Of course, at some point after you've done that day to day stuff and you haven't figured it out together, the question then becomes, do you need to issue a warning or one or two or three warnings? And what is a warning? And is that a requirement for you to be able to terminate due to non performance?

Thomas: 7:09

Yeah, that's, important. The Norwegian regulations doesn't say anything about any written, warnings or notices, as a condition to then issue a dismissal. But, I think it's really important that the employee at some point, knows that it can't go on. And the potential outcome is that if the underperformance is consistent, then the employment will be terminated.

Lill: 7:40

Yes, exactly. So there's no like formal requirement, but both from a legal and a practical point of view we always recommend that. Where can we find that you've actually tightened the screw, so to speak, how, where can we find that you've told this employee that, listen, this is so serious that if you do not improve, we may have to consider terminating your employment and whether that is in the form of a formal document called warning, or if we can find it in, minutes from meetings, that doesn't matter. We just need to be able to document that you've actually set it straight. Okay.. Let's then assume that, that, a warning in some form has been given. Some time has passed and, a question is always, how long does that take? How long does it have to take between the warning and termination? There's no real answer to that, that we could put two lines under. However, if it's a non performance case, I would say we need to give the employee, at least in my head, three to four to five to six months, depending, of course, on how long the employee has been there and what kind of non performance it is. Yeah. but, but that's my take on it.

Thomas: 8:47

Yeah, I think so. And maybe, yeah, at least, several weeks and, and months. and during this period, if, at one point to give the warning. I think it would be useful to follow up with a performance improvement plan, which sets out some milestones and some conditions and issues to be addressed to follow up and then to conclude whether the situation has improved or not.

Lill: 9:12

And that's a very common concept in international companies. The PIP. And I agree that's a good plan. However, what you need to always be mindful of is two things. First of all, that performance improvements plans are not really something used by Norwegian companies. So if you take that to court, some courts may say, what is this? And secondly, what I see from the performance improvement plans is it's sometimes mixed up with a warning and then sometimes also the, you follow these milestones, but they are too narrow, the milestones. so the employee ticks off the box in terms of performance related to the PIP. However, the main issue is still there, for instance, lack of proactivity, et cetera. So fully agree. PIPs can be a good thing. It just needs to be used in the right way.

Thomas: 9:58

Yeah. And also this, makes the employee, aware of it and challenges the employee to address the issues, him or herself.

Lill: 10:08

Exactly.

Thomas: 10:09

So then you can't relate everything to the employer side.

Lill: 10:14

For sure. For sure. All right. with our like 10 minute ish, hard stop on the episode, what I will do now is say. We have had a warning in some sort. We are now closing in on a termination. What do we do? This is really where the Norwegian law says something about it. Before issuing a termination, you always need to invite the employee for a consultation meeting, informing the employee that we consider terminating your employment, and we would like to hear your views before doing so. You are allowed to bring a representative to the meeting. And then you should give at least a couple of days, notice before that meeting. And then you have this meeting, you tell the employee why you consider terminating. You allow the employee to come with his or her opinion about this, the feedback, the viewpoints. You should also then ask the employee whether there is anything particular from a social or economical or other point of view that would imply that the termination would be very difficult for the employee. Because that's something you need to take into consideration as an employer. Issue a protocol minute from the meeting. Then make your decision about whether or not to terminate. And when you do that, you need to comply with very strict requirements in terms of the termination letter.

Thomas: 11:29

Yeah, but these are set out in the regulations. So it's quite easy to,

Lill: 11:35

For sure. If you're a lawyer and if you are a company, then please seek legal advice. You don't have to contact us, even. I just want you to make sure that the format of the termination is okay, because if it's not, what happens then? Let's say the termination letter doesn't contain one thing, according to law.

Thomas: 11:55

If it doesn't have the formal requirements, it's void, so it doesn't count, and the employment is then still running.

Lill: 12:03

Yeah, we don't want to do that. Please make sure that the termination letter is correct. And one last thing on the termination letter needs to be sent either by registered mail or it needs to be delivered in person.

Thomas: 12:15

Yeah. One thing there is that there is a sort of a change there I've seen for the past few years. And if it's acceptable and common practice within the, company, an email may also be allowed as a way of distribution.

Lill: 12:33

Yeah, exactly. And we always recommend that you do send the email in addition to, for instance, the registered mail to make sure that the, termination reaches the employee before the end of the month. Because that's the last point we were making today is, the termination will always have effect from the first day of the month after it has been given.

Thomas: 12:54

Yeah.

Lill: 12:55

All right. But I think we've done, what we can in about 10 minutes ish. Thank you for being here today, Thomas. And, to you that has been listening, I hope you have had some, useful insights about performance termination in Norway, and we look forward to hearing you in our next episode.

Thomas: 13:12

Thank you, Lill.

Lill: 13:13

Thank you.