For several years, two employees had been leased from the manning company Semco Maritime AS to the oil company Aker BP ASA. Aker BP’s permanent employees were paid a performance-based company bonus every year between 2014 and 2017. The agency workers were excluded from the bonus scheme. The question in the case was whether the agency workers were also entitled to a bonus on an equal footing with the permanent employees pursuant to the equal treatment rule in Section 14-12a, first paragraph, of the Working Environment Act.
The district court ruled in favour of the employees. The Court of Appeal came to the opposite conclusion, finding that the company bonus could not be regarded as salary and thus fell outside the scope of the equal treatment rule in section 14-12a, first paragraph, of the Working Environment Act. However, the result was reversed by the Supreme Court, which ruled unanimously that the hired employees were entitled to a bonus from Semco Maritime in line with the permanent employees of Aker BP.
In its assessment, the Supreme Court based its judgement on Section 14-12 a, first paragraph, of the Working Environment Act, which states that staffing agencies must ensure that leased employees are guaranteed at least the same conditions that would have applied if the employee had been a permanent employee, including with regard to “wages”, cf. Section 14-12 a, first paragraph, letter f.
The employer claimed that the bonus scheme fell outside the concept of salary in section 14-12 a, because the bonus was not linked to the individual’s work performance, but to the company’s goal achievement and results. However, the Supreme Court held that the bonus payment had to be regarded as “wages” because it was actually remuneration for labour.
In its reasoning, the Supreme Court referred to the main rule in section 14-9, first paragraph, of the Working Environment Act that employees must be employed on a permanent basis, a purpose that the Supreme Court considered to be an important interpretation factor in the understanding of the wage concept in section 14-12 a. Here, reference was made to statements in the preparatory works, which point out that an important purpose behind the rules on equal treatment is to prevent the scope and working conditions of hiring from undermining the objective of a labour market with a main emphasis on permanent and direct employment.
Furthermore, the Supreme Court referred to statements in the preparatory works that the concept of pay must include “all remuneration for work”. It was held that the EU Temporary Agency Work Directive (Directive 2008/104/EC) did not affect national legislation when it came to the definition of pay.
Regarding the real considerations that spoke in favour of company bonuses being included in the salary concept in section 14-12 a, first paragraph, letter f of the Working Environment Act, the Supreme Court stated that:
“The right of agency workers to equal treatment with regard to performance-based bonuses at company level will ensure that agency work is only used where there is a real need for the flexibility that such an organisation of the workforce provides. A wage concept that results in performance-based bonuses only being paid to parts of the workforce for the same contribution to the result will provide an economic incentive for hiring and violate the principle of equal treatment.”
The Court emphasised that equal treatment was only relevant insofar as the agency workers would have met the conditions for a bonus if they had been permanent employees. These conditions were met for the employees in question.
In the case, LO argued in favour of a legal position that the concept of salary had to include all remuneration that a permanent employee receives from the employer by virtue of the employment relationship, with the exception of pensions, but the Supreme Court did not agree that there was a basis for such a broad understanding of the concept of salary.
In any case, the judgement provides an important clarification of what constitutes “salary” within the meaning of the equal treatment rule. On the understanding of the concept of salary, the Supreme Court stated that:
“…the core of the concept of salary is whether the benefit is remuneration for work, possibly for a result or performance that the employee himself has been responsible for. Bonus schemes will also be covered as long as they are remuneration for labour. This applies irrespective of whether they are individual bonus schemes or schemes at group or company level.”
The Supreme Court’s decision means that staffing agencies must also pay bonuses to temporary workers as if they were permanent employees of the agency. Although this may in some cases cause practical problems for the staffing agency, any such additional work is not sufficient to justify the temporary worker being excluded from the agency’s bonus schemes.
According to the Supreme Court’s judgement, a company that uses hired labour from a staffing agency must be aware that it is obliged to provide the staffing agency with all necessary information about working and pay conditions, including information about any bonus schemes, so that the staffing agency can comply with the requirement for equal treatment under section 14-12 a, first paragraph, of the Working Environment Act.
Our article series Labour Law Practice provides you with an ongoing update of case law in the field of labour law.
The courts are constantly issuing new judgements in the field of labour law. These judgements contribute to the development of the law and clarification of important labour law issues. However, the case law is extensive and it can be difficult to keep track of it all. With Labour Law Practice, you get a continuous update of current rulings on individual labour law, which makes it easy to keep track of new case law in the area.
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