Financial settlement after misclassification of employees
Supreme Court judgment 20 December 2024, HR-2024-2368-A, (case no. 24-021196SIV-HRET), appeal against Eidsivating Court of Appeal's judgment 20 November 2023.
Recoveryakademiet AS (Counsel Karoline Findalen Myhre) (assisting counsel Anette Cecilie Kjørrefjord Eckhoff), Stendi AS (intervener) (Counsel Tarjei Thorkildsen) v. A,B, C (Counsel Kjetil Skeide Edvardsen, Counsel Morten Mønnich) D (intervener), E (intervener), F (intervener), G (intervener), H (intervener), I (intervener), J (intervener) (Counsel Sigurd Øyvind Kambestad)
Three healthcare workers who worked for Recoveryakademiet AS had been incorrectly classified as contractors, not employees. The Supreme Court addressed the principles for the subsequent financial settlement and the determination and limitation of claims for holiday allowance in this context.
The Supreme Court's majority of three justices concluded that in the case of misclassification of an employee, the mandatory rules of the Working Environment Act should be the basis for calculating any additional payments to which an employee is entitled, as long as nothing else is validly agreed upon. In the absence of an agreement compatible with the mandatory provisions of the Working Environment Act, this means, among other things, that work performed exceeding the normal working hours stipulated by law should be classified as overtime.
If the already paid amount fully or partially compensates for the claims made, deductions must be made to avoid overcompensation. Such deductions depend on an individual assessment in each case. The burden of proof for overcompensation lies with the employer.
A minority of two justices argued that the claim for additional payment should not be considered in isolation, but had to be evaluated in the context of what it supplements.
The Supreme Court unanimously ruled that the employees' claims for holiday allowance were not time-barred, but was divided into a majority of three and a minority of two justices on the issue of the amount.
In line with the majority's view, Recoveryakademiet's appeal against the Court of Appeal's application of the law was dismissed.
The judgment clarifies the principles for post-settlement in cases of misclassification of employees as contractors. It also clarifies issues regarding the determination and limitation of claims for holiday allowance.
Read the judgment from the Supreme Court (Norwegian only) (PDF)
Area of law: Employment law. Section 7 see section 11 of the Holiday Act.
Key paragraphs: 82, 92–93, 105, 113–117, 125–127
Justices: Indreberg, Matheson, Høgetveit Berg, Steinsvik, Hellerslia