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Temporary layoffs under the corona crisis

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Legal news
calendar 1 May 2020
globus Norway

Due to the corona crisis and the negative economic impact affecting companies, the Norwegian government has made the rules on temporary layoffs (permittering) more lenient than under normal circumstances. Combined with several other measures, the Norwegian government is trying to mitigate the most severe negative financial effects for companies and employees due to the outbreak.

Several companies are currently facing great economic damage as a result of declines in productivity and earnings due to the outbreak of the corornavirus (COVID-19). In order to mitigate the negative consequences that are affecting companies and employees, the Norwegian government has implemented more lenient rules with regards to temporary layoffs. Combined with several other measures, the goal is to avoid unemployment, bankruptcy and a general negative impact on the Norwegian labour market.

Temporary layoffs in general

Temporary layoffs are not a new measure, but a temporary, non-statutory measure that was established through collective agreements and case law. Both companies that are bound by collective agreements and companies who are not can partly or fully temporarily lay off employees as a result of company conditions when the company cannot temporarily provide work tasks to employees in an economically sound manner. When an employee is temporarily laid off, the employee is still to be considered as an employee, but the employee will be liberated from work and the employer will be liberated from payment for the duration of the temporary layoff.

Prior to temporary layoffs, this must be discussed with the employee representative(s). NAV is to be informed as soon as possible. If the temporary layoffs do not affect all employees, the company must use the same selection criterions as during a redundancy process, for example seniority or qualifications. An employee can maximum be temporarily laid off for 26 weeks within a period of 18 months.

Temporary changes in the rules on temporary layoffs

In the event of temporary layoffs, the company will have a duty to notify the affected employees of the temporary layoffs in writing. The notification shall include the date for implementation, reason for temporary layoffs, percentage of temporary layoff, duration and the period of time where the company is obligated to pay salary. If the duration of the temporary layoff is unknown, the company should inform the probable length. Under normal circumstances, companies must notify the affected employees 14 days prior to implementation, but for unforeseen events the notification may be reduced to 2 days prior to implementation. In the period between notification and implementation, the company shall pay salary as normal.

Once an employee is temporarily laid off, the employee will be entitled to full pay for a certain period of time. Under normal circumstances, the company will be obligated to pay salary as normal for 15 days after the implementation. After this period, the employee may be entitled to unemployment benefits. On 16 March 2020, the Norwegian parliament adopted a temporary measure in where the company’s duty of payment is reduced to 2 days. After this, the employee will be entitled to full pay (up to six times the basic amount) for 18 days from the government.

Once the 20 days of the company’s and the governments payment duty is over, the employee may be entitled to unemployment benefits for the remaining period of the temporary layoff. On 16 March 2020, the unemployment benefit was increased to 80 % pay (up to three times the basic amount) and 62,4 % pay (up to six times the basic amount).

In order to receive unemployment benefits, the company must confirm to NAV that the employee in question has been temporarily laid off. In order to speed up the process, NAV recommends that the company gives information regarding the employee in questions position percentage, date of employment and whether the parties are in agreement of the temporarily layoff.

Further measures

Besides for the schemes intended to cover costs relating to employees, the Norwegian government has introduced several measures to help companies with covering other costs. You can read more on those schemes here.

Several companies are currently facing great economic damage as a result of declines in productivity and earnings due to the outbreak of the corornavirus (COVID-19). In order to mitigate the negative consequences that are affecting companies and employees, the Norwegian government has implemented more lenient rules with regards to temporary layoffs. Combined with several other measures, the goal is to avoid unemployment, bankruptcy and a general negative impact on the Norwegian labour market.

Temporary layoffs in general

Temporary layoffs are not a new measure, but a temporary, non-statutory measure that was established through collective agreements and case law. Both companies that are bound by collective agreements and companies who are not can partly or fully temporarily lay off employees as a result of company conditions when the company cannot temporarily provide work tasks to employees in an economically sound manner. When an employee is temporarily laid off, the employee is still to be considered as an employee, but the employee will be liberated from work and the employer will be liberated from payment for the duration of the temporary layoff.

Prior to temporary layoffs, this must be discussed with the employee representative(s). NAV is to be informed as soon as possible. If the temporary layoffs do not affect all employees, the company must use the same selection criterions as during a redundancy process, for example seniority or qualifications. An employee can maximum be temporarily laid off for 26 weeks within a period of 18 months.

Temporary changes in the rules on temporary layoffs

In the event of temporary layoffs, the company will have a duty to notify the affected employees of the temporary layoffs in writing. The notification shall include the date for implementation, reason for temporary layoffs, percentage of temporary layoff, duration and the period of time where the company is obligated to pay salary. If the duration of the temporary layoff is unknown, the company should inform the probable length. Under normal circumstances, companies must notify the affected employees 14 days prior to implementation, but for unforeseen events the notification may be reduced to 2 days prior to implementation. In the period between notification and implementation, the company shall pay salary as normal.

Once an employee is temporarily laid off, the employee will be entitled to full pay for a certain period of time. Under normal circumstances, the company will be obligated to pay salary as normal for 15 days after the implementation. After this period, the employee may be entitled to unemployment benefits. On 16 March 2020, the Norwegian parliament adopted a temporary measure in where the company’s duty of payment is reduced to 2 days. After this, the employee will be entitled to full pay (up to six times the basic amount) for 18 days from the government.

Once the 20 days of the company’s and the governments payment duty is over, the employee may be entitled to unemployment benefits for the remaining period of the temporary layoff. On 16 March 2020, the unemployment benefit was increased to 80 % pay (up to three times the basic amount) and 62,4 % pay (up to six times the basic amount).

In order to receive unemployment benefits, the company must confirm to NAV that the employee in question has been temporarily laid off. In order to speed up the process, NAV recommends that the company gives information regarding the employee in questions position percentage, date of employment and whether the parties are in agreement of the temporarily layoff.

Further measures

Besides for the schemes intended to cover costs relating to employees, the Norwegian government has introduced several measures to help companies with covering other costs. You can read more on those schemes here.

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Anders

Etgen Reitz

Partner

Sofie

Aurora Braut Bache

Associate

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