What to do when considering layoffs and what it means for the employee

Updated March 29 

The coronavirus outbreak, stock market crash and oil price fall have created major challenges for the economy in the world and in Norway. This means that many industries are facing major challenges.

For many companies, layoffs will be the only way out when we are now in a financially precarious period. It can be difficult to follow all the rules and procedures that apply to layoffs.

Please note that changes are taking place all the time and that some of the points below have not yet been decided, so we will post updated information as soon as possible on our website.

Here are some specific advice

Do you meet the requirements for layoffs?

Requirements for layoffs:

• The reason for layoffs must be a lack of work, or other circumstances that the employer cannot foresee and adjust to. A factual reason is required.
• Necessary cost reductions, including labor costs, may be the basis for layoffs. The premise is that the need will be temporary.
• As a general rule, the terms of Section 4-7 of the National Insurance Act (folketrygdloven) are fulfilled if it can be documented that the parties agree that the basis for the layoffs is present.

With whom should this be discussed?

A company that is considering laying off employees should discuss this with the union representatives. There is no statutory duty to discuss between the employer and the employee representative in connection with layoffs, but the obligation may be set out in a collective agreement. The obligation to discuss therefore applies initially to tariff-bound companies, but it is recommended that all companies follow this procedure. NAV recommends the following:

The employer is responsible for submitting protocol from the negotiation meetings with the employees (this is a requirement with tariff-bound companies) or other similar documentation. It must be clear what the employer has done to avoid layoffs, and that the employer has in this way done what one reasonably can expect.

The notice period will not start until the discussion meeting has been held.

Who should I lay off?

The principle of seniority is to be used, based on the Main Agreement (LO and NHO). Other collective agreements may also have agreements to apply the seniority principle. However, there may be deviations from this based on the business needs of the company.

Companies that are not bound by the Main Agreement are not bound by the seniority principle, but must still make selection based on factual reason.

Can I make partial layoffs?

You can lay off employees partially / graded. Full lay-off completely exempts the employee from work duty. Partial lay-offs mean that the employee is working parts of his job percentage and is being laid off the rest.
Employees may be entitled to unemployment benefits for all or part of the layoff period.

The requirement for working hours reduction for entitlement to unemployment benefits for laid-off persons is reduced from 50% to 40% for lay-offs where the corona pandemic is the cause.

When should I send the notification?

The employer is obliged to notify employees in advance of impending layoffs. As a general rule, the notice period is 14 days. This is stipulated in the main agreement LO-NHO.

When laying off due to unforeseen incidents and acute loss of work - such as the coronavirus (cf. Section 15-3 (10) of the Working Environment Act), the notice period is two days.

How should I send the notification of layoff?

The notification must be in writing. For example, it can be delivered personally against signature, sent by e-mail or sent via Signant for signature by both parties.

The notification of layoff must contain:

• Information on the reason for the layoff
• Notification Date
• Date of implementation and the length of the layoff
• Name of the person being laid off
• Information about if it is full or partial layoffs.

In addition, as employer, we ask you to state the following in the notice:

• Whether there is agreement between the parties in the workplace about the layoffs (YES / NO)
• Percentage of employment of person to be laid off (current percentage)
• When the laid-off was employed by the company.

If the layoff notice contains this information, the feedback from NAV is that this is sufficient for them to process the unemployment benefit.

NAV will continuously update this information in its information material.

What must the employer pay? What does the employee receive? 

• Employer:

  • The general rule states that when you lay off people, the employer is obliged to pay wages for an employer period of 15 days, and this will apply from the first working day the layoff includes. When this period is over, the employer is exempt from pay duty for 26 weeks, then you switch to unemployment benefits from NAV.
  • Measures in connection with the coronavirus: The number of days with payment obligation in case of lay-offs is reduced from 15 to 2 days for employers. 
  • The employer pays for the first 3 days, the day you are notified and then two days. After that, NAV takes over. The employer does not prepay, employees must go through NAV's websites and apply for unemployment benefits.  

• Employee:

  • The main rule is that a worker who is laid off can register as a job seeker and apply for unemployment benefits at NAV. Note that the employer must confirm the reason for the dismissal. The laid-off may be entitled to unemployment benefits off for up to 26 weeks during a period of 18 months. The severance period applies to each employer and is calculated from the first business day after the pay days are over.
  • Coronavirus measures; The waiting days are canceled for unemployment benefit for those who are laid off. The requirement for working hours reduction for entitlement to unemployment benefits for laid-off workers is reduced from 50 per cent to 40 per cent

March 27, the government proposed two new measures: 

• Extended unemployment benefit period for layoffs (new proposal)
  For people who have been laid-off, an extension of the unemployment benefit period has been proposed by the Ministry of Labor and Social Affairs providing a temporary regulation to extend the period employers are exempted from payroll obligations for those who were laid off before March 1, 2020. This means that the state pays unemployment benefits for layoffs beyond the current 26 weeks. For the time being, this applies to the end of June.
• Disbursement scheme unemployment benefit (new proposal)
  The government opens for NAV to be able to offset the payment of unemployment benefits. Thus, those who have lost their income will be able to get money into their accounts quickly, without having to wait for the unemployment benefits application to be processed. The scheme applies to employees who are entitled to unemployment benefit in the event of unemployment and layoffs.

When should the employee return to work?

When the specified lay-off period is over, the employee is obliged to return to work. When the length of the layoffs is indefinite, the employee will normally be obliged to attend work again within one to two days after the employer gives notice. This means that work during the layoff period must be of a temporary nature and indefinitely.

Template for notification of lay-off 

If you have to send out layoff notice to employees, you can use this template (Word template).