Sucker punch

A lawyer in a law firm cancelled his employment contract. The backdrop was a conflict with management after a major newspaper published a number of negative front pages about the company and the administrative manager, who had a criminal record. As chairman of the board, the employee had made several comments to the newspaper that the management did not like.

The conflict became heated, and the employee claimed that the administrative manager knocked him down. Although they agreed to put the conflict behind them, the atmosphere in the office deteriorated and several colleagues resigned.

There was a disagreement on whether the employee was paid the right salary. In addition, the employee felt that his whistleblowing was being ignored, that he was being kept away from tasks and that he was being frozen out. The tasks were particularly important as he only received a commission salary. As the employee felt the company had materially breached his contract, he cancelled it and claimed compensation.

Snitches get stitches

The Norwegian Court of Appeal concluded that the employee had not been entitled to cancel the contract. The company had not materially breached the contract to a sufficient degree.

Although salary theft would have been a material breach, it was not documented that the company had engaged in this. In relation to tasks, the company was not required to provide work tasks even if the employee had commission salary. However, it was required to allocate tasks fairly. The employee had not been given tasks because he had failed to meet deadlines, follow up on tasks, and because his colleagues had to take over his tasks in the relevant period.

The working environment was undeniably poor, but the court found that the employee had actively participated in making the environment what it was. Among other things, he had sent a long collective email in which he denied that the HR manager could decide anything about alcohol consumption during working hours, which caused reactions among colleagues. As for whistleblowing, the company had handled this reasonably.

IUNO’s opinion

When an employee cancels the contract, the employment relationship ends immediately. However, this assumes that the company has committed a gross breach of duty or material breach of the contract. The threshold for cancelling a contract is high, as with a company’s termination without notice. For example, something linked to the company's main obligation to pay salary, or in connection with bullying, harassment or sexual harassment. As this case illustrates, the employee's own role will also have an impact.

IUNO recommends that companies are always careful in complying with and keeping up to date on their obligations. When the employee has a right of cancellation, the company will, as a general rule, also have an obligation to pay compensation.

[The Borgarting Court of Appeal’s judgement of 19 August 2024 in case LB-2023-180774]