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New compensation scheme for foreign employees

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Legal news
calendar 30 mai 2021
globus Norway

Due to strict entry restrictions, the Norwegian government has adopted a new compensation scheme. The compensation scheme will apply for foreign employees who are prevented from working in Norway due to the closed borders. Companies will be able to apply for reimbursement from 21 April 2021.

In order to prevent the spread of the mutations of the coronavirus, strict entry restrictions were implemented in Norway on 29 January 2021. As a main rule, only foreign employees who live in Norway can enter the country. Foreign employees who do not live in Norway and who were not in Norway on 29 January 2021 are now prevented from returning to Norway to perform their work, which has consequences for their salary.

As the entry restrictions can lead to resignations and loss of work force in Norway, the new compensation scheme was therefore adopted to prevent a loss of income for employees who work in Norway but live in another EEA country. At the same time, companies are also currently subject to a requirement to pay the employee a minimum amount of compensation although they are not entitled to their usual salary because they cannot perform their work. These obligations makes the new compensation scheme even more welcomed.

What level of reimbursement are companies entitled to?

The compensation scheme will apply for employees who commute to Norway but live in another EEA country. However, it is a condition that the employee is prevented from working due to the strict entry restrictions in Norway.

Paying compensation to the foreign employee is mandatory for the company, but the company will be reimbursed by the Norwegian Labour and Welfare Administration.

In accordance with the scheme, companies must pay the foreign employees a compensation amounting to 70 % of the basis for sickness benefit. However, this compensation is limited to six times the basic amount. Employees with a higher income will therefore, as a maximum, be entitled to approximately NOK 35.000 per month. The amount will therefore correspond to what temporarily laid off employees receive in unemployment benefits.

Companies can apply for the reimbursement from 29 January 2021 and until the strict entry restrictions are revoked. Companies that have paid salary to the employees before the compensation scheme was adopted can therefore also be reimbursed for 70 % of the basis for sickness benefits.

For the scheme to apply, the foreign employee must:

  • be a member of the Norwegian National Insurance Scheme
  • not be a Norwegian citizen
  • have a Norwegian national identity number or a D-number
  • have been employed by the company in Norway on 29 January 2021
  • live in another EEA country
  • be prevented from performing his or her work in Norway due to the entry restrictions
  • have been working for a company or receiving income from the Norwegian Labour and Welfare Administration at least four weeks before the date from which the company is applying for reimbursement

IUNO’s opinion

The compensation scheme is important both for the company and for the employee. For the employee, the scheme will secure an income until the entry restrictions are revoked and the company will avoid the employee’s resignation due to a lack of income.

IUNO recommends that companies thoroughly read and understand the conditions for applying for reimbursement to avoid any issues or sanctions. In addition, companies should stay up to date on the applicable entry restrictions in Norway.

[The Norwegian Act on national insurance of 16 April 2021]

In order to prevent the spread of the mutations of the coronavirus, strict entry restrictions were implemented in Norway on 29 January 2021. As a main rule, only foreign employees who live in Norway can enter the country. Foreign employees who do not live in Norway and who were not in Norway on 29 January 2021 are now prevented from returning to Norway to perform their work, which has consequences for their salary.

As the entry restrictions can lead to resignations and loss of work force in Norway, the new compensation scheme was therefore adopted to prevent a loss of income for employees who work in Norway but live in another EEA country. At the same time, companies are also currently subject to a requirement to pay the employee a minimum amount of compensation although they are not entitled to their usual salary because they cannot perform their work. These obligations makes the new compensation scheme even more welcomed.

What level of reimbursement are companies entitled to?

The compensation scheme will apply for employees who commute to Norway but live in another EEA country. However, it is a condition that the employee is prevented from working due to the strict entry restrictions in Norway.

Paying compensation to the foreign employee is mandatory for the company, but the company will be reimbursed by the Norwegian Labour and Welfare Administration.

In accordance with the scheme, companies must pay the foreign employees a compensation amounting to 70 % of the basis for sickness benefit. However, this compensation is limited to six times the basic amount. Employees with a higher income will therefore, as a maximum, be entitled to approximately NOK 35.000 per month. The amount will therefore correspond to what temporarily laid off employees receive in unemployment benefits.

Companies can apply for the reimbursement from 29 January 2021 and until the strict entry restrictions are revoked. Companies that have paid salary to the employees before the compensation scheme was adopted can therefore also be reimbursed for 70 % of the basis for sickness benefits.

For the scheme to apply, the foreign employee must:

  • be a member of the Norwegian National Insurance Scheme
  • not be a Norwegian citizen
  • have a Norwegian national identity number or a D-number
  • have been employed by the company in Norway on 29 January 2021
  • live in another EEA country
  • be prevented from performing his or her work in Norway due to the entry restrictions
  • have been working for a company or receiving income from the Norwegian Labour and Welfare Administration at least four weeks before the date from which the company is applying for reimbursement

IUNO’s opinion

The compensation scheme is important both for the company and for the employee. For the employee, the scheme will secure an income until the entry restrictions are revoked and the company will avoid the employee’s resignation due to a lack of income.

IUNO recommends that companies thoroughly read and understand the conditions for applying for reimbursement to avoid any issues or sanctions. In addition, companies should stay up to date on the applicable entry restrictions in Norway.

[The Norwegian Act on national insurance of 16 April 2021]

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Etgen Reitz

Partner

Sofie

Aurora Braut Bache

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