Background
Until 2014, Grefsenhjemmet was bound by collective agreements through its membership in the employer’s association Virke, including a special agreement that entitled nurses to a “stabilization supplement” in the form of a salary increase of respectively NOK 11,000 and NOK 15,000, differentiated by seniority of respectively 4 and 12 years.
In January 2014, Grefsenhjemmet switched its membership from Virke to NHO. The tariff binding associated with the membership in Virke ceased as of April 30, 2014. From May 1, 2014, Grefsenhjemmet became bound by NHO’s collective agreements. The stabilization supplement has no basis in NHO’s collective agreements, and a dispute arose about whether the salary supplement should be continued. Ten nurses filed a lawsuit against Grefsenhjemmet. They lost in both the district court and the court of appeals but prevailed in a unanimous ruling from the Supreme Court on June 2, 2021 (Grefsenhjemmet II).
The Supreme Court concluded that the stabilization supplement had become part of the nurses’ employment contracts, that the supplement as an individual condition in the employment contract did not cease as a result of the former collective agreement no longer being binding (so-called individual after-effect), and that Grefsenhjemmet could not unilaterally remove the supplement by virtue of managerial prerogative. We have previously detailed Grefsenhjemmet II. Read the case here.
However, the Supreme Court did not address whether the stabilization supplement is compatible with the collective agreement Grefsenhjemmet is bound by through its membership in NHO according to the Labor Dispute Act § 6, which states: “A provision in an employment contract that conflicts with a collective agreement that both parties are bound by is invalid.”
The Labor Court has now addressed the validity of the stabilization supplement in Grefsenhjemmet III, the Labor Court’s ruling of December 11, 2023.
Labor Court’s Ruling in Grefsenhjemmet III
Issue at Hand
Through its membership in NHO, Grefsenhjemmet was bound by the Care and Nursing Agreement (PLO), a minimum wage agreement that includes a table with various minimum wage rates based on job category and seniority, and detailed provisions about local wage formation.
The Norwegian Nurses Association (NSF) filed a lawsuit on June 1, 2022, demanding a judgment that the PLO does not invalidate the wage increase (stabilization supplement). In its response requesting acquittal, NHO also filed a counterclaim with a demand for a judgment for a general principle of extinction that a new collective agreement (here PLO) precludes the continuation of individual wage and employment conditions acquired through a previous collective agreement.
The Labor Court formulated the issue in the case as a question “whether a collective agreement that is made applicable to an enterprise after a change of employer organization precludes employment contract claims for wage supplements that followed from a previous collective agreement.” (paragraph 1)
Court’s Assessments
With this background, the Labor Court assessed whether the stabilization supplement is compatible with the PLO, according to the non-derogability rule in the Labor Dispute Act § 6.
NHO did not succeed in establishing that the PLO provides a general or specific basis for invalidating the employment contract terms about the stabilization supplement, and the Labor Court issued a unanimous ruling in accordance with NSF’s claim.
In paragraphs 108-110, the Labor Court summarizes its conclusions as follows;
“(109) Even though the Care and Nursing Agreement is a comprehensive regulation of wages and employment conditions, it does not necessarily preclude the continuation of employment contract conditions that follow from previous collective agreements. The question must be resolved based on the relevant employment contract provisions and their background, assessed against the new collective agreement’s provisions and assumptions. NHO cannot therefore succeed in its claim that the agreement is a comprehensive regulation that precludes the continuation of any wage and employment conditions that followed from a previous collective agreement. NHO cannot therefore succeed in the claim. (109)
(110) The stabilization supplement that 10 nurses have acquired the right to has such a special character that the Care and Nursing Agreement neither specifically nor generally provides a basis for setting it aside. The collective agreement is therefore not an obstacle to claims for a stabilization supplement on an employment contract basis. When the employment contracts on these points are not invalid under collective bargaining law, a judgment must be issued in accordance with NSF’s claim.”
