An increasing number of employers need to implement layoffs due to the corona virus. On Friday March 13 2020, the Norwegian Government presented a proposition for new layoff rules to remedy the financial consequences of the corona virus. Please find an overview of the proposition below, and the requirements that employers must follow to implement layoffs.
New rules for the employer's duty to pay salary
The Government's proposition involves changes in the Act on the Obligation to Pay Wages during Layoffs. According to the previous rules, the employer was obliged to pay salary for an employer's period of 15 working days. Pursuant to the new rules, the employer's salary obligation is reduced from 15 to two days. The purpose of the change is to help companies that experience economic challenges in reducing their costs, and the State will as an effect contribute to a larger part of the expenses. The measure aims to prevent companies from going bankrupt and terminating employees.
The legislative amendment must be adopted by the Norwegian Parliament (Nw: Stortinget) and sanctioned by the Government thereafter. In practice, it will take a few days before the change is effective. It is expected that the new rules take effect as quickly as practically possible. The amendment shall apply to layoffs that have been implemented before the effective date, meaning that the employer's payment period is 'halted' on the number of days that are completed before the effective date, provided that it amounts to at least two days. For example, if six days of the employer's payment period have elapsed when the new changes are effective, the employer's payment period will be considered as completed. We recommend that employers in need of layoffs start the process as soon as possible. Employers will then be able benefit from the reduced payment period as soon as the change enters into force.
As a main rule, the employees must be given at least 14 days' advance notice before the layoff takes effect. In the event of unforeseen events, the notice period may be reduced to two days. Our advice is that a two days' notice is sufficient when the corona virus necessitates full or partial suspension of the business operations.
Administrative procedures and layoff notice
The decision to implement layoffs must be considered in concrete terms and requires certain administrative procedures. Consultations with employee representatives must be conducted before any layoffs are decided. The employer must inform and discuss both the need and background for the layoffs, the measures that has been taken to avoid layoffs, which positions that may be affected, the selection criteria and criteria for the selection circle, etc. Minutes of the meeting must be prepared and signed.
If ten or more employees are laid off, the employer must notify the National Welfare Service (Nw: NAV). The notification shall be given as soon as possible, and must contain information on the reason for the layoff, the number of employees who may be laid off, proposals for selection criteria, etc. Each affected employee must also receive a layoff notice, in which some specific information must be stated. Thommessen has templates for the documents that employers need in this respect, and we assist in several ongoing layoff processes. We note that special rules apply in the public sector.
If your business has questions or needs assistance with matters related to the abovementioned, our employment law department is at your disposal. Please feel free to contact us. If the corona virus affects procurement, contractual delivery, export, financing or other aspects of the business operations, we will provide assistance from relevant departments.
Do you have other questions related to COVID-19? Visit our Q&A for businesses. Here we have gathered over a hundred frequently asked questions and answers to help you navigate the precarious situation we are in the midst of.