What are you looking for?

Overview of regulations concerning temporary lay-off and corona virus

During the last few days, many businesses have been considering to lay-off some, several or all their employees. Some businesses have already started the lay-offs. Today the Norwegian Parliament introduced some important changes in the regulations on lay-offs. Below you will find a general overview of the regulations on lay-off as they will be after the change, based on the proposals the Norwegian Parliament has agreed on today.

Updated: March 27, 2020

Introduction

Businesses which are bound by a tariff agreement that contains regulations regarding lay-off, will have to follow the provisions of the tariff agreement. Businesses which are not bound by a tariff agreement will be able to lay-off their employees in accordance with non-statutory regulations.

Basis for lay-off

The basis for lay-off must be justifiable. Temporary employment problems may be such a basis. In summary it can be said that there is a justifiable basis for laying off employees when they, for a limited amount of time, cannot be employed by the employer in a reasonable manner. A reduction in the amount of work the business has due to the corona virus, and measures implemented by the authorities due to the corona virus, may be a justifiable basis for lay-offs.

If not all employees are to be laid off, there must be an objective selective process regarding which employees shall be laid off. In this process, the employer may refer to the needs of the business and the qualifications of the employees as a basis for the selection of whom is to be laid off.

A partial lay-off should be considered as an alternative to a 100 % lay-off. According to the present regulations, daily subsistence allowance may only be claimed when the lay-off is at least 50%, but the government has proposed to change this so that daily subsistence allowance may be claimed as early as 40% lay-off.

Discussions with employee representatives

Discussions with employee representatives must be conducted prior to a decision of lay-off. There is not a particular time limit for summons to such discussions. In the present situation, such discussions may be conducted using Skype or another meeting application.

A short written summary from the meeting should be made so that there is documentation that there have been discussions, as well as what the discussions were about.

Notice of lay-off

A written notice of lay-off must be sent to each employee, as the notice must accompany the employees’ subsequent application for daily subsistence allowance. The notice must specify, among other things, how long the lay-off is expected to last. However, the period may later can either be shortened or extended if the circumstances change. Employees cannot be laid off without pay for more than 6 months during an 18 month period.

To facilitate the processing of applications for daily subsistence allowance from laid off employees, NAV has asked that the notice of lay-off includes the following information:

  • Whether the parties in the work place agree that there is a basis for lay-off
  • Date of commencement of employment for the laid off employee
  • The employee’s employment fraction at the time of the lay-off

It must also be specified whether the employee is laid off 100% or partially (if partially laid off the perecentage of the lay-of must be written)

In normal circumstances, the law states that the notice of lay-off must be sent two weeks in advance. Upon unforeseen circumstances the notice period is reduced to two days. On the Norwegian Welfare Administration (NAV) webpage it is assumed that lay-offs due to corona virus may be unforeseen, so the notice may be given just two days in advance. Even though corona virus has been in the media for a while, it was difficult to foresee the scope of the implemented measures. However, this must be considered by each employer and discussed with the employees’ representatives.

Obligation to pay salary in the employer-financed period

According to the previous regulations the employer was required to pay salary for 15 days after the date of the notification period (which will be two weeks or two days, see above). As of March 20, 2020, the Parliament has reduced the obligation of the employer to pay salary from 15 to two days. Simultaneously, it has been decided that the government shall cover wages for a period of 18 days from this point. From the expiry of the notification period, the employees will thus have a claim of full salary for two days from the employer and then full salary for 18 days from the government. However, the government will not cover salary above six times the basis amount, which amounts to an annual salary of approximately NOK 600 000.

These changes are now implemented, and the new regulations also apply to lay-offs implemented prior to the date the proposal was approved in Parliament. Employers who laid-off their employees prior to the date of the new regulations, will therefore be able to invoke the new regulations when they entered into force. Consequently, the obligation for the employer to pay salary in such cases will lapse from the date of change, provided that there already has been an employer period of at least two days.

Notification to NAV

If the lay-off involves at least 10 employees, a separate notice must be sent to NAV. You can find further information on the Norwegian Welfare Administration’s website (only in Norwegian):

https://www.nav.no/no/bedrift/innhold-til-bedrift-forside/nyheter/permitteringer-som-folge-av-koronaviruset

Daily subsistence allowance

Laid off employees must themselves apply for daily subsistence allowance. Previously, this allowance was 63.4% of the annual salary, limited upwards to six times the base amount. This amounted to a maximum of NOK 7 190 per week before tax.

On March 20, 2020 the Parliament approved an amendment proposal so that employees, after day 20 during the lay-off period, are ensured an income of minimum 80% of the daily subsistence allowance basis up to three times the base amount (approximately NOK 300 000) and 62.4% of the daily subsistence allowance basis above three base amounts and up to six base amounts (approximately NOK 600 000). Further, the salary limit giving a right to claim daily subsistence allowance has been  reduced to 0.75 base amount.

Previously, daily subsistence allowance was not calculated for the Easter or Christmas holidays for lay-offs lasting less than six weeks. This exception has been repealed as of March 20, 2020.