Nscale
United Kingdom-based artificial intelligence infrastructure provider Nscale is facing a wrongful dismissal lawsuit in Norway. According to a report in Bloomberg, a former data center engineer has alleged in a lawsuit that the UK-based datacenter developer has utilized an illegal subcontracting setup.
The lawsuit, filed on October 16 in the Sr-Rogaland District Court and backed by local trade unions, names both Nscale and staffing subcontractor CloudBrothers as defendants.According to the complaint reviewed by Bloomberg, the engineer claims that while he was placed at Nscale’s Stavanger facility through CloudBrothers, Nscale acted as his de facto employer by directly dictating his day-to-day duties and shift schedules.
Under Norwegian labor law, subcontracting arrangements require staffing companies to manage personnel independently; end clients that treat subcontracted personnel as direct extensions of their own workforce are legally required to grant them full employee rights and compensation.The engineer alleges his June dismissal came as retaliation after he objected to employment practices at the facility. Tensions surfaced when CloudBrothers human resources reportedly told employees that two weeks of holiday pay would be withheld if vacation requests were submitted late.
"You cannot deduct our worked salary," the engineer replied in an email copying the entire team, the complaint states.After subsequently raising concerns regarding pay and labor conditions with the Norwegian Labor Inspection Authority, the engineer was terminated. While CloudBrothers stated the dismissal was prompted by repeated confidentiality breaches, the suit claims the firing was retaliatory. The engineer is seeking financial compensation, damages, and a formal judicial declaration recognizing him as an official Nscale employee.Nscale and CloudBrothers did not immediately respond to requests for comment from Bloomberg. Nscale previously confirmed it had cut ties in Stavanger with another contractor, Technimove, which had placed staff through CloudBrothers.
Lawsuit comes at Nscale gets ready for NYSE listing
The legal action underscores the mounting operational strains confronting Nscale as it scrambles to construct facilities to fulfill more than $100 billion in contractual obligations ahead of a planned initial public offering (IPO) in New York Stock Exchange.Nscale, which rents out computing power for training and running AI models, filed for its IPO in September. According to its IPO filing, it had $103.4 billion in signed and active contracts at the end of August this year. The company reportedly plans to list on the New York Stock Exchange under the ticker NSCL and raise up to $3bn.Norway serves as a key pillar in Nscale's European roadmap, driven by access to competitive hydropower.
Backed by major shareholder Aker AS, the company operates across sites in Stavanger, Glomfjord, Oslo, and Narvik. However, rapid scaling has brought complications; There have been reports of equipment malfunctions, cooling leaks, and safety issues at Nscale's Glomfjord location.Adding to the Nscale's woes, Microsoft has reportedly pulled out of a deal to be the main tenant at the company's planned data centre in Loughton, Essex. The software giant Microsoft reportedly made the decision to exit after grid operators said that they do not expect to supply power to the site until the 2030s.