Due to the COVID-19 pandemic, many companies have experienced a reduction in their workload and have had to temporarily lay off employees. However, because the rules are legislated only to a small degree and there have been several temporary regulations since the outbreak of the pandemic, it can be difficult for employers and employees to fully understand the rules on temporary lay-offs.
Temporary lay-offs are regulated in collective agreements, including the main agreement between the Norwegian Confederation of Trade Unions and the Confederation of Norwegian Enterprise, which also provides guidelines for businesses that are not directly bound by collective agreements. In addition to the unwritten rules, and as a result of COVID-19, several new, temporary regulations have been introduced that regulate certain special issues.
This article highlights the key terms and procedural rules relating to temporary lay-offs, providing an overview of the current rules and proposed changes.
What are 'temporary lay-offs'?
'Lay-off' means that the employer and employee are temporarily deprived of their duties and rights in an employment relationship. The employment relationship exists, but the employer's obligation to pay wages and the employee's obligation to perform work for the employer temporarily cease.
In order for employers to lay off employees, there must be a justifiable reason for the temporary lay-off (Section 7-1(1) of the main agreement). This means that employers must conclude that the company, for a limited period, cannot employ the employee in a way that is justifiable and proper for the company.
Temporary lay-off is relevant in cases where companies have a reduced need for labour. The prerequisite for temporary lay-off is that the need is considered temporary. If there is reason to believe that the conditions that justify reduced staffing will persist, the employee must instead be terminated through a downsizing justified by the company's circumstances.
Discussions with employee representatives
Before a temporary lay-off is implemented, employers must discuss possible temporary lay-offs with employee representatives (Section 7-2 of the main agreement). In the discussions, it should be considered whether there is an opportunity to implement other measures. It should also be considered whether terminations should be implemented instead of temporary lay-offs.
If employers cannot state the probable length of the temporary lay-off, they must continuously assess and discuss with employee representatives whether there is still a justifiable reason for the temporary lay-off. These new discussions must take place within one month after the temporary lay-off, and thereafter every month, if the parties do not agree on anything else (Section 7-4(3) of the main agreement).
Companies that are not bound by a collective agreement have no obligation to discuss the temporary lay-off in advance and along the way, unless the company has more than 50 employees. Nonetheless, it may make sense to discuss the temporary lay-off and evaluate the situation regularly in consultation with employee representatives or other elected employee spokespersons. This reduces the risk that the courts will subsequently conclude that the conditions for continued temporary lay-off were not met.
Employers should document the content of the consultations with employee representatives or other elected employee spokespersons.
If the conditions for temporary lay-off are met, employers must select which employees are to be temporarily laid off.
Employers must first decide on the sample circle (ie, which part of the workforce is to be temporarily laid off). The starting point is that the selection circle is the entire company, but exceptions are conceivable (eg, exceptions based on how the shortage of work affects the company's business).
Further, the selection must take place based on justifiable selection criteria. Companies that are bound by a collective agreement must base the selection on the seniority principle. Other criteria may also be important in the selection (Section 7-1(3) of the main agreement).
The seniority principle does not apply to companies that are not bound by a collective agreement. However, the selection in such companies must be based on justifiable criteria such as the company's need for labour supply, the employee's qualifications and social conditions.
If employers are to take employees fully or partially back to work during the temporary lay-off period, or increase the temporary lay-off rate, they must perform a new assessment of the selection.
Notice period for temporary lay-offs
Before temporarily laying off employees, employers must give written notice of the temporary lay-off (Section 7-3 of the main agreement). The main rule is 14 days' notice. In the event of unforeseen events, two days' notice may be given. The notice deadlines also apply to companies that are not bound by a collective agreement. If employers are to temporarily lay off more than 10 employees, they must also give written notice of the temporary lay-offs to the Norwegian Labour and Welfare Administration (NAV).
What may be considered as an unforeseen event must be considered and assessed specifically. In March 2020 several employers gave two days' notice due to a sudden reduction in demand for work due to COVID-19. However, given the pandemic's length of time now, COVID-19 will not in itself be considered an unforeseen event anymore.
However, it is conceivable that new and stricter restrictions could be considered as an unforeseen event (ie, an order to close stores for a specific period). The NAV will be able to review whether there is a basis for a shortened notification period.
Employers must issue a temporary lay-off certificate to those who are temporarily laid off. The certificate must state the reason for and the probable length of the temporary lay-off. The temporary lay-off notice can be used as a temporary lay-off certificate if the conditions are met.
Must a new notice be given for new or extended temporary lay-offs?
After employers have temporarily laid off employees, they may need to submit a new notice of temporary lay-off. This will be the case, for example, if they have specified a time limit for the temporary lay-off. In such cases, a new notice must be submitted before the first temporary lay-off period expires. Employers need not pay wages to the employee (the so-called 'employer period') in the event of extended temporary lay-off.
Another situation that may give rise to a need for a new notice is if employers have reduced an employee's temporary lay-off rate for a period but wish to extend the temporary lay-off rate again later. Employers must send a new notice before the temporary lay-off rate can be extended again. Employers need not pay a new employer period in such an extension.
A final alternative that may give rise to a need for a new notice is if employers take employees back to work in a full-time position for more than six weeks (Section 7-3 of the main agreement). If employers wish to temporarily lay off the employee after this period, they must send a new notice and pay new salary in a new employer period.
After the notice of temporary lay-off has expired and the temporary lay-off takes effect, there is an employer period in which employers must pay wages to employees. Before COVID-19, the employer period was 15 days. Following the outbreak of COVID-19, the employer period was reduced to two days for some time, before being increased again to 10 days on 1 September 2020. This 10-day employer period still applies at present.
After employers have temporarily laid off employees for 30 weeks, a new employer period of five days will apply (the so-called 'employer period II').
Duration of temporary lay-offs
At the beginning of the COVID-19 pandemic, the temporary lay-off period was limited to 26 weeks. On 1 November 2020 the temporary lay-off period was extended to 52 weeks. In January 2021 Parliament asked the government to extend the maximum redundancy period until 1 October 2021.
Wage support as alternative to temporary lay-offs
In Summer 2020 the government introduced wage support as an alternative to temporary lay-off in order to get more employees back to work. Until 1 March 2021, employers could apply for wage support for October 2020, November 2020 and December 2020. In order to be granted wage support, the company must have had a decrease in turnover of at least 10%. Moreover, employers must also have had temporarily laid-off employees since 31 August 2020.
Further, employees must return to at least the same job percentage as before the temporary lay-off. Employers cannot temporarily lay off other employees at the same time as they choose to bring back temporarily laid-off employees with wage support.
Requirements for receiving unemployment benefits during temporary lay-offs
The requirements for receiving unemployment benefits have been changed several times during the COVID-19 pandemic.
Before the COVID-19 pandemic, individuals were entitled to unemployment benefits if their working hours had been reduced by 50%. After the outbreak of COVID-19, the requirement was reduced to 40% before it was increased again to 50% on 1 November 2020. In January 2021 the government proposed to lower the requirement to 40% until and including 30 June 2021.
Prior to the pandemic, individuals were entitled to unemployment benefits if their income was 1.5 times the National Insurance basic amount (G) (NKr152,026.50) for the previous 12 months or 3G (NKr304,053) for the previous 36 months. After the outbreak of COVID-19, the limit was lowered for a period to 0.75G (NKr76,013.25) for the previous 12 months or 2.25G (NKr253,377.50) for the previous 36 months. On 1 November 2020 the limit was set at 1.5G and 3G again, but in January 2021 the government proposed to reintroduce the level of 0.75G and 2.25G.
Before the COVID-19 pandemic, unemployment benefits amounted to 62.4% of the individual's salary up to 6G (NKr608,106). Following the outbreak of COVID-19, the unemployment benefit amount increased to 80% of income below 3G and 62.4% of income between 3G and 6G. This rate has been extended several times and currently applies until 1 July 2021.
Prior to the pandemic, individuals had to wait three days for their unemployment benefits to be paid. Following the outbreak of COVID-19, the waiting period has been temporarily repealed. The repeal has been extended several times and is currently valid until 1 October 2021.
Before the COVID-19 pandemic, temporarily laid-off and unemployed individuals had a limited opportunity to combine unemployment benefits with education and training. Following the outbreak of COVID-19, students can combine education and training. This scheme is currently valid until 30 June 2021. If students also receive support from the Norwegian State Educational Loan Fund, the NAV must approve the education in order for the students to be able to receive unemployment benefits.
