Compulsory Arbitration and Settlements by the National Wages Board

Arbitration is a method of dispute settlement, where normally the parties to the dispute voluntarily refer the dispute to be solved by one or several persons. Their decision is binding for all parties.

Compulsory arbitration

Arbitration is a method of dispute settlement, where normally the parties to the dispute voluntarily refer the dispute to be solved by one or several persons. Their decision is binding for all parties.

The National Wages Board Act (Act No. 10 of 27 January 2012 relating to wage committees in labour disputes) is in principle intended for voluntary arbitration. The parties may refer to the National Wages Board a dispute on wages and labour conditions which is not covered by a collective agreement. The Board’s decision has the same effect as a collective agreement.

However, the National Wages Board has mostly been used for compulsory arbitration. To refer a dispute to compulsory arbitration, it is decided in each individual case by a separate act by the Storting, or by the Government by Provisional Ordinance if the Storting is not in session. In an act on compulsory arbitration in a labour conflict the dispute is referred for settlement by the National Wages Board.

The right to strike is a constitutional right in Norway, and there is no permanent legislation restricting this right, except for military forces and senior civil servants. The right to carry out a lockout is in Norway equal to the right to strike. The social partners are responsible for the wage settlements and the industrial peace. Consequently, society and third parties have to endure the inconveniences caused by a labour conflict. Interference in a labour conflict will only be considered if the conflict has consequences for life or health, or has other seriously damaging effects on society.

Norway has ratified several Conventions protecting the right to organise and the right to strike. The most important ones are the ILO Conventions, especially No. 87 concerning freedom of association and No. 98 on implementing principles for the right to organise and the right to collective bargaining, and the European Social Charter. It is important for Norway to fulfil the country’s international legislative obligations. Hence, Norway strives for the legislation and practice concerning compulsory arbitration to comply with our international obligations, according to the ratified Conventions.

The right to strike is not explicitly included in the ILO Conventions referred to. However, the ILO has through its case-law considered the right to strike to be protected by the Conventions concerning the right to organise and the freedom of association. According to ILO’s bodies, an intervention in the right to strike is only compatible with the principles for freedom of association when the strike obstructs essential services, so that life, health or personal safety for the entire or parts of the population is in danger. Furthermore, certain civil servants can be exempted from the right to strike. The European Social Charter in Article 6 explicitly protects the right to industrial action. Article 6 must, however, be seen in connection with Article G, which in the same way as the ILO Conventions opens for restrictions on the right to strike or lockout. For instance, the Article allows restrictions determined by law that are necessary to protect public interest, national security and public health or morals.

Settlement by the National Wages Board

The National Wages Board is a permanent arbitration body which is appointed for three years at the time, pursuant to The National Wages Board Act. As mentioned above, the National Wages Board is at the disposal for the industrial partners. If the parties in a dispute wish to solve the conflict by voluntary arbitration, they can use the National Wages Board, and the State will pay the expenses of the arbitration. The parties are free to use another arbitration body, but must then bear the expenses themselves. For civil servants without the right to strike the National Wages Board settles the dispute. Its decision is binding, according to the Public Service Disputes Act § 26a. Since the first National Wages Board Act was adopted in 1952, it has handled nearly seventy cases of voluntary arbitration. Such voluntary arbitration has taken place in both public and private sector.

In each individual case the National Wages Board has either seven or nine members. In disputes in private and municipal sectors, which are covered by the Labour Disputes Act, the Board shall have nine members. Five members are appointed by the Government for a period of three years, while four members are selected by the parties in the specific dispute, two from each of the parties. One of the members from each side has an advisory status, while the other member has the right to vote. In disputes covered by the Public Service Disputes Act, i.e. in the state sector, the Board shall have seven members. Here as well, there are five members appointed by the Government for three years, while two are selected by the parties in the specific dispute, one member from each side. The representatives for the parties will normally have the right to vote.

Among the five permanent members, there are one chairman and two neutral members. These are traditionally appointed from the ranks of leading lawyers, economists or others with special competence. Together with one member from each of the parties to the disipute, these three members are entitled to vote. In addition, two of the five permanent members should represent the interests of the employees and employers respectively, and have the widest possible knowledge of collective agreements and the national wage formation. They are selected from the most representative organisations, in private and municipal sectors this is typically the Norwegian Confederation of Trade Unions (LO) and the Confederation of Norwegian Enterprise (NHO). In the state sector the State is represented as an employer by the Ministry of Government Administration and Reform and the civil servants’ interests are looked after by LO Stat, which is the largest employee organisation. These members have an advisory status, and do not have the right to vote when the Board makes its decision.

The National Wages Board Act does not have any procedural regulations, but according to the Act § 4, the Labour Disputes Act regulations concerning the Labour Court should apply as far as they are suitable. The regulations aim to ensure that the procedures are as thorough and proper as possible. The parties first have the opportunity to give written statements. Subsequently there is an oral negotiation, where the parties often bring agents and have the opportunity to provide the Board with all the information they think is relevant to the dispute. The Board can on its own initiative obtain additional necessary information. Regarding the procedural situations/conditions that are not covered by the Labour Disputes Act, it is natural for the National Wages Board to use the principles of the Dispute Act. A dispute on whether the National Wages Board has followed proper procedures can be brought before the Labour Court.

According to the National Wages Board Act § 1 part 4 a decision by the National Wages Board has the same effect as a collective agreement. The Act has no formal regulations for the decision-making in the National Wages Board. In the preparatory works leading up to the Act, no such regulations were discussed, but it was assumed that the National Wages Board shall be an impartial, objective and independent body. The Committee for the Collective Bargaining System examined the procedure regulations and practice of the National Wages Board in the Official Norwegian Report 2001: 14 Vårens vakreste eventyr…?. It appears from the report that the principles as to the competence of the National Wages Board, mainly are drawn up by the Board’s rulings, in addition to statements made by the Labour Court in some cases regarding competence and procedure principles for the National Wages Board (NOU 2001:14 chapter 10.2.2):

  • The parties’ claims limit the questions that can be dealt with.
  • Questions of principle that the parties have not discussed prior to the Board’s treatment will as a main rule not be treated by the National Wages Board
  • Payment in arrears for employees that have been on strike will as a main rule be given from the moment the strike is terminated
  • When a recommended negotiation or mediation proposal is available, this proposal will as a main rule be confirmed by the Board.
    The Board’s practise is not invariable, but can be departed from in situations where this is considered suitable.

The Ministry of Labour and Social Affairs has the Secretariat for the National Wages Board.

Se also: The Labour Disputes Act - unofficial translation in English