Given that the employer has reasonable grounds to carry out layoffs in this situation, employers have until now been obliged to pay employees their full salary during the first 15 days. This is called the employer’s payroll period. After the employer’s payroll period, employers have until now, been exempt from the obligation to pay salary for up to 26 weeks within an 18-month period. During this period, employees affected by the layoffs have previously been entitled to receive unemployment benefits pursuant to the National Insurance Act from Norwegian Labour and Welfare Administration (NAV), provided that the conditions are otherwise fulfilled.
In the government’s new proposal, which was unanimously adopted by the parliament and given royal assent shortly thereafter, the employer’s payroll period has been decreased from 15 to 2 days. As of Monday 16 March 2020, employees subject to layoffs are now also entitled to compensation for lost salary up to six times the basic national insurance amount (“6G”, appr. NOK 600.000) from day 3 and until day 20.
At this point, it remains unclear what the correct legal classification for this actually is, but it seems to have the most in common with the general unemployment benefits. In other words, the government is, technically speaking, not really taking over what used to be the employer’s payroll period, but rather, is just providing for an improved unemployment benefit in the first weeks following the layoff.
The biggest difference, compared to the normal situation, is that employees with wages higher than 6G no longer receive a full compensation for the income lost in the first weeks following the layoff. According to the current regulations, employers cannot compensate their employees for this discrepancy, as this would be deducted from the unemployment benefit. At this point, many employers are asking how, legally speaking, they can promise their employees a stay on-bonus or other corresponding benefits without applying such deductions from their laid-off employees’ unemployment benefits. As of now, there are no clear answers.
Furthermore, the parliament has, as of 16 March, decided to grant the government an increased budget for unemployment benefits and by extension, the parliament in plenary has decided to instruct the government to increase the general unemployment benefit rate temporarily from 62.4 % of the former income, up to 80 % of the former income up to 3G and 62,4 % from 3G to 6G. in short, this means that the general unemployment benefit rate has been increased by approx. 10 %.
Among other measures, the period for government benefits for employees caring for their children has been doubled in length, from 10 to 20 days. Moreover, the government now covers the costs for these benefits from day 4 and onwards.
The COVID-2019-related directives were enacted in an effort to help companies and workers alike, who are struggling to survive this unprecedented global epidemic, and the restrictive schemes levied to contain it. The Norwegian government has already signaled its intent to endorse and impose further measures in the months ahead, subject to situational developments.
Storeng, Beck & Due Lund ANS (SBDL) attorneys are available to assist you with these and other workplace issues. For more information on these articles or any other issues involving labour and employment matters in Norway, please contact Kari Andersen (Partner) of Storeng, Beck & Due Lund: SBDL at email@example.com or visit www.sbdl.no.
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