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) invalid.
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:
(1) Non-compete and non-solicitation provisions cannot apply for more than one year post-termination.
(2) 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.
(3) 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.
(1) 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.
(2) 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 covenant validity.
(3) 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 waive).
(4) 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 essential.
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.