Adjust post-termination restrictions before January 1,
2017: A reminder that new rules were introduced last year,
which regulate post-termination non-competition and
non-solicitation clauses. Non-compliance makes the restriction(s)
The changes have retroactive effect so existing restrictions in
contracts agreed before 2016 must be amended to be valid. This is
critical for key employee contracts.
The changes include:
Non-compete and non-solicitation
provisions cannot apply for more than one year
An employee must receive compensation
for the duration of the non-compete, unless the employer actively
waives reliance in the required manner. The amount is: (a) 100% of
salary, up to 8 times the Norwegian National Insurance Basic Amount
(currently NOK 92 576); and above that (b) 70 % (reduced) of salary
up to 12 times the National Insurance Basic Amount.
A requirement to provide the employee
with a written statement within particular deadlines confirming
whether and to what extent the restrictions will be relied upon.
The statement must contain specific content.
Become familiar with the changes
and give HR training on how they work. Legal advice on the new
requirements is recommended; the changes are numerous and
complicated in parts.
Review existing contracts and
amend them to comply with the new rules as soon as possible. Legal
assistance is recommended as correct drafting is crucial for
Ensure template contracts are
updated, and include compliant wording in new hire contracts. Only
include non-competes where you consider them necessary to protect
the business. Inclusion triggers compensation (unless you
Keep a record of all contracts
including non-competes and non-solicitation provisions. This is to
ensure you comply with the statement deadline. Note that it is
possible to waive the non-compete, and therefore payment to the
employee, so tracking which contracts contain them is
Implementation of EU Directive: The Norwegian
Labour Inspection Authority will have additional powers to issue
orders and fines where employers breach the posted worker rules.
The Ministry of Labour and Social Affairs will also have greater
powers to implement specific posted worker regulations, including
regulating compensation for posted worker housing.
It is not clear when these changes will take place.
Action required:None at present,
but keep abreast of the current legal situation.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Court of Appeal has held that where a contract of employment lacks a provision for when notice of termination takes effect, it is effective from when the employee personally takes delivery of the letter containing notice.
There is a growing trend amongst employers towards rewarding key employees with share-based remuneration in place of cash bonuses.
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