COVID-19: Temporary layoffs for Norwegian employers
The Norwegian Parliament has in a sitting 19 March 2020, made changes in the legislation related to temporary layoff in order to make the Norwegian business better equipped to cope with the extraordinary situation which Norway is in because of the coronavirus. The legislation was enforced in the Cabinet meeting 20 March 2020. Most of the special and temporary rules are currently valid up until 1 November 2020.
What is layoff?
A layoff can be seen as a temporary "break" in the employment. In connection with temporary outages or operating restrictions, the employee may be exempt from the duty of employment and the employer exempt from the duty of wages. Formally, the employment still consists. The employee has both a right and a duty to resume work when the temporary layoff period expires and has a duty to return to work, in whole or in part, if the employer needs labor during the layoff period.
The right to layoff follows from collective agreements and non-statutory custom law. The Basic Agreement between LO and NHO must be regarded as an expression of non-statutory law. The rules of the Basic Agreement are therefore directional also for employers that are not bound by collective agreements.
Temporary layoffs due to Corona situation
An employer can initiate temporary layoffs if there is "a fair reason". There is a fair reason if the employer cannot dispose of the employees in a proper manner for a limited time. The Coronavirus is an unforeseen event, so-called force majeure, which can provide the basis for temporary layoff. The temporary lay off can be given for a working time reduction of 40% (minimum to be eligible for unemployment benefit) up to 100%.
The temporary layoff scheme implies that the employer sends notice of temporary layoffs to employees. The notice period is ordinary 14 calendar days, but may be reduced to 2 calendar days as a minimum in case of unforeseen events. The current situation may be considered as an unforeseen event and the minimum notice period may apply, but this requires an assessment. Ordinary salary is paid by the employer during the notice period. Thereafter, the employees shall receive an ordinary salary during the following 20 days. The first 2 days are employer’s cost and ordinary remuneration shall be paid by the employer. The following 18 days of salary will be paid by the authorities. Salary paid by the authorities during these 18 days will be based on the yearly salary up to a maximum of 6 times the Basic Amount (Grunnbeløpet). Currently, the basic amount is NOK 99 858, so the coverage from the authorities is limited to a daily salary based on a yearly salary of maximal NOK 599 148. The Basic Amount is adjusted May 1 every year and might be adjusted as of May 1, 2020.
As from day 21, the employee shall receive unemployment benefits based on ordinary social security rules. Currently, the unemployment benefit amounts to 80% of the yearly salary up to 3 times the Basic Amount, and 62,4% of the yearly salary between 3 times Basic Amount and 6 times Basic Amount. Yearly income exceeding 6 times the basic Amount will not be taken into the calculation of the unemployment benefit.
To summarize, the employer remains responsible for ordinary salary costs for the notice period and the first 2 days of the lay off period. Thereafter, the employees will receive their salary from the Norwegian National Insurance Administration.
Procedures for Temporary layoffs
Information and discussion with employees/elected employee representatives
Before the layoff is implemented, the employer shall inform and discuss the need for layoff with the employees/elected employee representatives. Among other things, the information shall be provided about the cause of layoff, the number of workers who will be affected, the selection, whether there will be a full or partial layoff, and the supposed period of the layoff.
If the employer does not have employee representatives in place, the employer may encourage workers to elect ad hoc representative(s) who may represent them in connection with the layoff.
A written protocol is required from the consultation meeting held. The protocol must state whether the employer and the elected representatives are in consensus regarding the following:
- that there is a fair reason for the layoff
- that the layoff is due to a lack of work or other matters that the employer may not affect
- that the employer has done what can reasonably be required to avoid the layoff.
If there is evidence of such agreement between the parties, NAV will generally provide unemployment benefits to the laid-off workers.
Before layoffs can be implemented, the employer must send layoff notices to the affected workers. The notice period for layoffs due to the Corona situation may, as set out above, be 2 calendar days (as a minimum). The ordinary noticer period is 14 calendar day. The notice must be sent employees before the end of the working day, and the following day is the first day in the notice period.
If the deadline for notification is breached, the employer must pay a regular salary until the end of the notification deadline.
The layoff notice must be in writing and shall indicate the probable length of the layoff. Workers who are laid off must receive written evidence of this from the employer, which contains information about the reason for the layoff and the probable length of the layoff.
Employer’s reporting obligation to the Norwegian National Insurance and Welfare Administration (NAV)
The employer shall notify NAV if at least 10 workers will be laid off without salary, or if their weekly working hours are reduced by more than 50 percent for more than four weeks. The notification is through NAV’s form, which is sent to the local NAV office where the business is located.
See the link to the form on nav.no: https://www.nav.no/soknader/nb/bedrift/permitteringer-oppsigelser-og-konkurs/masseoppsigelser
Employees must apply for unemployment benefits directly to NAV.
Unemployment benefit from NAV
NAV provides unemployment benefits to the laid-off worker for up to 26 weeks over a period of 18 months. The period has been extended for both temporary and ordinary laid-off works for those who exceed the normal period until June 1st.
The right to unemployment benefit during the temporary layoff is for a lay off with a working time reduction of 40% - 100%.
It is important that the employer informs the employee of opportunities for unemployment benefits so that the employee can apply well in advance.
In the application for unemployment benefit, the employee must attach the layoff notice and a confirmation that the applicant has been laid off.
The minimum requirement for unemployment benefit is that the employee has received a salary of at least 0,75% of the basic amount the preceding 12 months period.
Termination during layoff
If the employer sees that the operating restrictions or outages are no longer temporary, but permanent, the employer shall consider termination of the employment(s).
The employer must then comply with the ordinary rules for termination, including that there must be a factual basis for termination, a consultation meeting must be held, etc. The ordinary termination deadline applies, and the employee is entitled to a salary during the notice period. A notice period of 14 days may, however, be applicable under certain circumstances.
The employees that are temporary laid-off may terminate their employment with a notice period of 14 days, regardless of what is set out in their employment agreement, or otherwise stated in the law. As a general rule, the employer is not required to pay salary in this shortened notice period.
New layoff rules in connection with the coronavirus
Layoff is an important tool for Norwegian business in turbulent times. This is the reason why the layoff changes were enforced in the cabinet meeting on 20 March 2020. The consequences of the change in the law are that the Government takes a greater share of the cost of layoffs to give companies more liquidity to avoid mass redundancy.
We encourage everyone to monitor updates on the layoff rules at all times.
If you need further information, assistance or guidance related to temporary layoffs, please contact us.
På denne samlesiden om koronaviruset vil Deloitte Norge legge ut relevant informasjon fra ulike forretningsområder.Les mer her