NORWAY: New temporary rules on layoffs in light of Covid-19

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Many Norwegian employees have been (temporarily) laid off due to Covid-19.  The rules related to layoffs are generally based on non-statutory law, similar to principles agreed upon in collective wage agreements. An employer may, as a general rule, temporarily lay off its employees for a period of up to six months, if there are reasonable grounds for the layoff. A reasonable cause will typically be a temporary shortage of work due to industry shutdowns (e.g., hairdressers and beauty salons), but also due to cancellation of orders, delayed supply of goods, etc. During the layoff period, the employer is obliged to pay full salary for a certain number of days (the employer period), before the employee will be entitled to unemployment benefits from the National Insurance Scheme.

In order to mitigate the economic consequences of the extensive layoffs we now see due to Covid-19, the Norwegian parliament has adopted several new rules pertaining to layoffs:

  • Employees who are temporarily laid off are guaranteed full pay up to 6G1 (NOK 599,148) through day 20 of the layoff period. The employer's duty to pay wages upon temporary layoff is reduced from 15 to two days. The state assumes responsibility for paying employee wages for the last 18 days.
  • After day 20 of the layoff period, the employees who are temporarily laid off are secured an income of 80 percent of the unemployment benefit basis (normally the ordinary salary) up to 3G (NOK 299,574). For income from 3G to 6G, employees will be entitled to an unemployment benefit rate of 62.4 per cent. Income above 6G is not included in the unemployment benefit basis. Normally, the employee would only be entitled to 62.4 per cent up to 6 G.
  • The income limit – on a yearly basis – for entitlement to unemployment benefits is reduced from 1.5G (NOK 149,787) to 0.75G (NOK 74,893).
  • The requirement for reduced working hours for entitlement to unemployment benefit is reduced from 50 to 40 percent.

The new rules were adopted and came into force on 20 March 2020, but also apply to temporary layoffs that have been implemented before the law amendment.

 

Footnotes

​1 “G” is the abbreviation to represent the base amount, which is used as a basis for different calculations in the Norwegian National Insurance system. Currently, “1G” is equivalent to NOK 99,858 (adjusted annually effective from May 1).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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