Corona temporary layoffs

Updated 20.03.2020: Changes to the act which regulates the employer’s mandatory salary during layoff (Lønnspliktloven) as an aid to those companies that are severely affected by corona virus are in effect as of today March 20. The amendment alleviates the employer's wage obligation on layoffs from 15 days to 2 days.

Furthermore, the 3 waiting days for unemployment benefit for those who are laid off are abollished. In addition, the requirement for working hours in order to receive unemployment benefits during layoffs is reduced from 50% to 40%.

Also read: Corona – Norway: Proposals to mitigate effects of the corona pandemic on the economy

In brief the following changes apply from March 20:

  • Employer's mandatory salary in the event of layoffs is reduced to 2 days, the State pays the rest
  • Full pay (up to 6G) for a minimum of 20 days from first day of lay off (an increase from 15 days)
  • The waiting days (3 days) are cancelled
  • Requirements for reduced positions during layoffs from 50% to 40%
  • The income limit for entitlement to unemployment benefit is reduced to 0.75 G

 

For the employer: Employer’s duty to pay wages reduced to 2 days in stead of 15 days during layoff

The Act of mandatory salary (Lønnspliktloven) obliges the employer to pay wages during layoffs for the first 15 days of the layoff period. Employer's duty to pay wages applies from the first day of lay off regardless of the notice period for lay off is 2 or 14 days.

The employer is as of March 20 responsible for paying wages for the first two days of the layoff period and that the period for mandatory salary is extended to 20 days. This implies that employer’s duty to pay salary is reduced to 2 days full salary and that the Norwegian Labour and Welfare Administration (NAV).  NAV will pay the following 18 days up to the maximum of 6 G which is approximately 600.000 NOK.

The change will result in better liquidity for the company by reducing salary costs quickly during a time when companies experience difficult times due to corona virus. This change will also seek to prevent companies from going bankrupt and maintaining jobs for employees.

However, the general rules on layoffs apply, as before, where layoff notice is generally issued with 2 or 14 days’ notice. Furthermore, a layoff must be justified by a reasonable need in the company. But in today's corona situation where many companies are experiencing difficulties in delivery, mandatory closing of businesses and culture of fear, there is good reason to believe that many companies, especially in the travel industry, hotel and restaurant business, are entitled to issue a 2 day notice and that the reasonable grounds for such lay off can be corona virus.

For employees: Increased unemployment payment

Employees who are laid off receive payment from NAV (limited to 6 G) from day 3 up to and including day 20. After the 20 days period, employees who are laid-off and unemployed can apply for unemployment benefit.

Benefits for laid-off persons and those who become regular unemployed are adjusted upwards and shall constitute 80 per cent of the unemployment benefit up to 3G and 62.4 per cent of the part of the unemployment benefit that is between 3G and 6G. This reduces laid-off and unemployed wage losses.

For employees: cancellation of 3 days waiting before unemployment benefit is paid

An employee who is laid off, whether with 2 or 14 days' notice, after the expiry of the employer's mandatory salary, must wait for 3 days before he/she can receive unemployment benefit paid by NAV.

In order to improve the financial situation of employees when being laid off, the Parliment has today agreed to remove the 3 days of waiting period. An employee who is laid off can therefore receive unemployment benefits immediately after the period of wages payment by the employer expires. This reduces the loss of income for employees. These amendments are made in Section 4-7 of the National Insurance Act and Regulations 16 September 1998 No. 890 on unemployment benefits under unemployment, Chapter 6 (Folketrygdloven).

For employees: Reduction in the requirement for working hours reduced from 50% to 40%

Lay off can be done for the entire employment position or for part of the position. If the layoff applies to less than 50% of the position, the employee will not be entitled to unemployment benefit. This reduces the employee's income in the event of layoffs. The calculation of the reduction of employment relates to the actual employment and not to 100 % employment.

To improve the employee's income when being laid off it is now decided to reduce the requirement for working time reduction from 50 percent to 40 percent during layoff. An employee’s employment which is reduced by 40% due to layoffs will lead to, according to the new rules, this employee’s entitlement to unemployment benefits from NAV.

For employees: Decrease of the earnings threshold to receive unemployment benefits to 0,75 G (approximately 75.000 NOK)

It is today agreed to secure the employees with low wages unemployment benefit. Hence the earnings threshold to be entitled to unemployment benefits is reduced from 1,5 G to 0,75 G which is approximately 75.000 NOK. Employees with low wages will therefor be secured an income of 80 % of their income up to 3 G when laid off.

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