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Coronavirus: Salary compensation scheme extended for return of temporarily laid off employees

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calendar 15 November 2020
globus Norway

This summer, a compensation scheme was made, giving companies who brought back their temporarily laid off employees or apprentices compensation for the months of July and August 2020. This fall, the Norwegian government proposed to extend the scheme for the months of October, November and December 2020. The proposal was adopted, and companies will be able to apply for compensation in February 2021.

Due to a large number of temporary layoffs caused by the coronavirus, the Norwegian government implemented a compensation scheme for July and August 2020, giving companies financial support for bringing back temporarily laid off employees. This was done as an attempt to prevent an excessive increase of unemployment, and to get as many employees back to work as possible.

Today, many employees are still temporarily laid off, and the increase of infection has made the situation uncertain for many companies. As an incentive for companies, an extension of the scheme has been adopted for the months of October, November and December 2020.

How much compensation can companies receive?

Companies must apply for compensation individually for the months of October, November and December or for all three months. Companies with a loss of revenue of 30 % or more will maximum be entitled to a compensation of NOK 15,000 per month per each returned fulltime employee.

For apprentices, compensation is limited to NOK 10,000. Support for companies with a loss in turnover under 30 % will be calculated based on (percentage of loss in turnover – 10 percentage points) * 75.000. However, the amount of compensation will be assessed based on the individual employee’s size of position at the time of the temporary layoff and the degree of the temporary layoff.

Conditions for applying for compensation

The following conditions must be met to receive compensation:

  • The company must have a loss of revenue of more than 10 %

  • The company’s activities must be legal

  • The company cannot be in bankruptcy proceedings

  • The employee in question must have been fully or partly temporarily laid off per 31 August 2020

  • The employee in question must have returned to the same size of position as prior to the temporary layoff

  • The employee in question must have been employed by the company for the entirety of the compensation period that the company applies for

Companies must be aware that the condition that it cannot be in bankruptcy proceedings entails that the company can neither have filed for bankruptcy nor be registered under liquidation in Foretaksregisteret (The Norwegian business index). It also includes that management cannot be subject to a bankruptcy quarantine and that the company’s creditors cannot have any preferential right to payments from the company’s accounts that would restrict the compensation from going to its intended purpose.

Companies must be aware that compensation is conditioned upon the employee not being temporarily laid off again, resigning or terminated before 1 February 2021.

Once the scheme opens for applications in February 2021, companies must apply online to Skatteetaten. In this connection, companies must also provide documentation of the complete ownership structure of the company.

IUNOs opinion

Several companies have temporarily laid off their employees due to the uncertainty caused by the coronavirus. In connection with the gradual reopening of Norway, such compensation can be crucial for companies when returning to normal operations. However, companies should be aware that compensation is limited to three months.

IUNO recommends that companies thoroughly read through the different conditions for applying the salary compensation scheme to avoid any claims for repayment or sanctions.

[The Norwegian Act on subsidies in the event of interrupted temporary layoff as amended 23 October 2020]

Due to a large number of temporary layoffs caused by the coronavirus, the Norwegian government implemented a compensation scheme for July and August 2020, giving companies financial support for bringing back temporarily laid off employees. This was done as an attempt to prevent an excessive increase of unemployment, and to get as many employees back to work as possible.

Today, many employees are still temporarily laid off, and the increase of infection has made the situation uncertain for many companies. As an incentive for companies, an extension of the scheme has been adopted for the months of October, November and December 2020.

How much compensation can companies receive?

Companies must apply for compensation individually for the months of October, November and December or for all three months. Companies with a loss of revenue of 30 % or more will maximum be entitled to a compensation of NOK 15,000 per month per each returned fulltime employee.

For apprentices, compensation is limited to NOK 10,000. Support for companies with a loss in turnover under 30 % will be calculated based on (percentage of loss in turnover – 10 percentage points) * 75.000. However, the amount of compensation will be assessed based on the individual employee’s size of position at the time of the temporary layoff and the degree of the temporary layoff.

Conditions for applying for compensation

The following conditions must be met to receive compensation:

  • The company must have a loss of revenue of more than 10 %

  • The company’s activities must be legal

  • The company cannot be in bankruptcy proceedings

  • The employee in question must have been fully or partly temporarily laid off per 31 August 2020

  • The employee in question must have returned to the same size of position as prior to the temporary layoff

  • The employee in question must have been employed by the company for the entirety of the compensation period that the company applies for

Companies must be aware that the condition that it cannot be in bankruptcy proceedings entails that the company can neither have filed for bankruptcy nor be registered under liquidation in Foretaksregisteret (The Norwegian business index). It also includes that management cannot be subject to a bankruptcy quarantine and that the company’s creditors cannot have any preferential right to payments from the company’s accounts that would restrict the compensation from going to its intended purpose.

Companies must be aware that compensation is conditioned upon the employee not being temporarily laid off again, resigning or terminated before 1 February 2021.

Once the scheme opens for applications in February 2021, companies must apply online to Skatteetaten. In this connection, companies must also provide documentation of the complete ownership structure of the company.

IUNOs opinion

Several companies have temporarily laid off their employees due to the uncertainty caused by the coronavirus. In connection with the gradual reopening of Norway, such compensation can be crucial for companies when returning to normal operations. However, companies should be aware that compensation is limited to three months.

IUNO recommends that companies thoroughly read through the different conditions for applying the salary compensation scheme to avoid any claims for repayment or sanctions.

[The Norwegian Act on subsidies in the event of interrupted temporary layoff as amended 23 October 2020]

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Anders

Etgen Reitz

Partner

Sofie

Aurora Braut Bache

Associate

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