A severance agreement can bring an employment relationship to an agreed end and resolve a dispute. Its value depends on the whole package: the payments, the date employment ends, the freedom to start another job and the claims the employee gives up.
For an international employee, the agreement may also affect relocation plans and the basis for remaining in Norway. Those consequences should be reviewed before the agreement is signed.
Understand the position without an agreement
Start with the employment contract, any notice already given and the employer’s stated reasons for the proposed departure. Separate existing entitlements from the additional consideration offered for a negotiated settlement.
Prepare a timeline of meetings, correspondence and any formal decisions. If a dismissal has already been issued, ask about the applicable challenge deadlines immediately. A deadline in the employer’s settlement offer and a statutory deadline for pursuing a claim are different matters.
Use clear dates for work, employment and payment
The last working day need not be the date the employment relationship ends. An employee may be released from work while remaining employed and receiving salary. The agreement should explain the arrangement expressly, including the duties that continue and whether other paid work is permitted.
Record when the final salary and any additional compensation will be paid. If payment is spread over time, assess what happens if the employer does not pay or becomes insolvent. Clarify whether new employment or other income will reduce the agreed amount.
Check each part of the financial package
Salary during the notice period and any additional severance payment.
Accrued holiday pay and the treatment of remaining holiday.
Bonus, commission and performance-related payments.
Shares, options and any deadlines for exercising rights.
Pension, insurance and other benefits through the relevant end dates.
Expenses, relocation costs, equipment and any contribution to legal fees.
Avoid relying on a phrase such as “six months’ salary” without an agreed calculation. Specify whether the amount refers to base pay, includes other remuneration or is separate from payments already due. Check incentive plan rules alongside the agreement.
Review restrictions on the next job
Identify any non-compete, customer restriction or confidentiality provision that is intended to continue. Under the general rules in Chapter 14 A of the Working Environment Act, a non-compete clause is subject to conditions, including a particular need for protection, a written statement and compensation. Its duration cannot exceed one year after employment ends.
Ask for a clear written position on which restrictions will apply. For a company’s chief executive, special exceptions may be relevant where rights have been waived in return for severance pay. The person’s role and the actual agreements need to be checked; a senior job title alone does not answer the question.
Consider tax, benefits and residence separately
Severance payments are generally taxable. Compare gross amounts, payment dates and the intended reporting treatment, and seek specific advice where work, residence or payments involve more than one country.
NAV makes its own assessment of eligibility for unemployment benefits. The reason employment ends can affect that assessment; leaving without reasonable cause can lead to an 18-week period without benefits. The agreement should describe the circumstances accurately, and the employee should check the consequences with NAV before relying on a particular start date for benefits.
If the employee’s right to work or reside in Norway depends on the employment, obtain advice on the permit conditions and the steps required when the job ends. An agreement with the employer cannot determine an immigration authority’s decision.
Read the release of claims carefully
Identify exactly what is being settled, which parties are released and whether any matters should be expressly preserved. Consider unpaid incentives, pension matters, ownership interests and obligations that will continue after departure.
Agree the practical details as well: the reference or certificate, internal and external announcements, return of property and the handling of ongoing enquiries. Confidentiality provisions should allow the disclosures needed to obtain advice and comply with legal obligations.
Preparing for an independent review
Provide the draft agreement, employment contract, relevant incentive plans, correspondence and a short chronology. Identify your priorities, such as a clean departure, a particular payment date or the ability to join a new employer. Sterk Law Firm can discuss the scope and fee basis for reviewing the proposal and, where appropriate, negotiations.
Related reading
Unfair Dismissal in Norway: Objective Grounds, Procedure and Deadlines
Legal framework and official guidance
Working Environment Act, Chapters 14 A and 15
Norwegian Tax Administration: Severance pay
