“Nav Misinterprets Law for Years, Resulting in Underpayment for Employees: District Court Ruling”

Many may have received too little money from the wage guarantee scheme, according to a new judgment in the Oslo District Court. Nav itself acknowledges the error.

Nav has misinterpreted what employees are entitled to from the wage guarantee scheme. A recent district court ruling confirms that.

The wage guarantee scheme ensures that employees who work in a company that goes bankrupt can receive all or part of the salary and holiday pay they are entitled to when the employer cannot pay.

The error is due to a change in guidance from Nav, which has been sent to trustees – i.e. those who take control of the bankruptcy estate when a company goes bankrupt.

For a member of the Norwegian Engineering and Technology Association (Nito), it meant that he did not receive NOK 52,000 in unpaid wages. Nav mistakenly believed this to be outstanding holiday pay. The classification of whether an employee’s claim concerns salary or holiday pay is absolutely decisive for how far back in time an overdue claim can be covered.

After a long appeal process and a trial, lawyer Rannveig Arthur and paralegal Malin Endresen Rogne prevailed. Nav finally agreed that the law had been interpreted incorrectly, and that the former employee was entitled to pay.

It took three years.

– It is quite arrogant. Those who are first affected by an employer going bankrupt are in a vulnerable situation, Rogne.

Many may have received too little money

The mistake may have had major consequences for many people, the lawyers believe. There may be large sums that should have been paid out by Nav.

– We know that wages for untaken holidays were covered by the wage guarantee in 1998, because it is clearly stated in a guide to trustees from 1998. But in guidance to trustees written by NAV in 2009, it says the opposite – that wages for unused holiday must be considered holiday pay, says Arthur.

The lawyers therefore assume that the law has been interpreted incorrectly since at least 2009, but they point out that it can also be a matter of longer time. Nav took over responsibility for the wage guarantee scheme from the Norwegian Labor Inspection Authority in 2007, and it is possible that this is when the practice was changed.

No changes have been made to the Holiday Act or the State Guarantee Act for wage claims in 2007 or 2009.

Nav, for its part, believes that the error has only had an impact since 2014, when a change in the holiday law came into force.

The Nito lawyers react to the fact that Nav only uses its own erroneous guidance throughout an entire appeals process. The matter has also been referred to the Department of Employment and Inclusion on two occasions, without anyone having taken a proper look at whether the law has been interpreted correctly by Nav.

– It is frustrating that you only experience that Nav repeats its own messages without going into depth. Once they get into a rut, they don’t change their practice until someone else gets into it, says Arthur.

Only when the case ended in the district court did Nav turn around. The government attorney admitted that they agreed with the opposing party.

Expect Nav to clean up

What happens next in the case is not yet clear. Rogne and Arthur think Nav must do a clean-up job, and move away from the limitation period of three years.

– Obsolescence is not something you have to plead. If the state wants to make up for itself here, then they have the opportunity to go back 15 years and pay those who have received too little, says Rogne.

– Can we expect Nav to go after its own cases and correct mistakes?

– That should be expected. Nav itself acknowledges that they have made mistakes for many years, says Arthur, and points out that anyone who has had a complaint rejected where salary has been wrongly calculated as holiday pay should submit a new claim to Nav’s salary guarantee scheme.

– Too early to say

In a short interview with section manager Bente Thori-Aamot in Nav’s performance department, it is emphasized that Nav agrees with the other party in the case that the law has been interpreted incorrectly, but not that the interpretation may have had practical consequences since 2009.

Thori-Aamot ends the interview when it becomes clear that Nav needs more time to assess how the judgment in the district court may affect similar cases

Thereafter, the section manager only wishes to respond in writing via Nav’s press department.

– The individual case from the District Court concerns how the Holiday Act is compared to the Wage Guarantee Act. It is still too early to say how many other cases this may include. We know that this far from applies to all wage guarantee cases, and only cases that have been processed after 2014. We will now investigate cases processed after 2014, writes Thori-Aamot in an email to E24.

Nav believes that the mistake has only had consequences after a change in the law in 2014, when a time limit was introduced on how long ago you could get cover for holiday pay. Although the case concerns what is to be considered salary and what is considered holiday pay, Nav believes that the misinterpretation of the law had no consequences before this change, because those who applied for compensation from the wage guarantee scheme for holiday days that had not been taken then received compensation even if it was mistakenly counted as holiday pay.

Thori-Aamot points out that the guidance that has been sent out to executors is not the one that the case handlers in Nav have used. What is written in the guidelines for case managers, Nav does not state in any of the e-mails to E24. They state, however, that work has been initiated to create new circulars with the correct interpretation of the law.

– Will Nav deal with limitation periods in these cases?

– The cases that may be affected by this issue are not out of date, writes Thori-Aamot in an email.

She regrets that Nito’s lawyers have experienced Nav’s handling of the case as arrogant.

– It shouldn’t be like this. We agree with the other party that the case has not been assessed correctly. The treatment time can always be shortened. The total processing time has been too long in this case, writes Thori-Aamot.