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Eurofound's COVID-19 EU PolicyWatch collates information on the responses of government and social partners to the crisis, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for case NO-2020-12/720 Updated – measures in Norway

Temporary amendment to the regulation of layoffs

Endringer i permitteringsregelverket

Country Norway , applies nationwide
Time period Temporary, 20 March 2020 – 31 October 2021
Type Legislations or other statutory regulations
Category Supporting businesses to stay afloat
– Direct subsidies (full or partial)
Author Aasmund Arup Seip, FAFO and Eurofound
Case created 17 April 2020 (updated 19 October 2021)
Related ERM support instrument

Background information

The regulation of lay-off is amended to reduce employers' costs of lay-off so that they can better adapt to market failure and avoid permanent dismissals. Many businesses are required to shut down, and the ripple effects of measures to limit infection are significant. This has resulted in a very high number of layoffs in a number of industries. The amendment to the lay-off regulation reduce the cost for employers and increase the unemployment benefit for the unemployed. Part time lay-off can be applied if the employee work 40% or less (changed from 50%).

Content of measure

The lay-off regulations secure unemployment benefits to the individual employee if he or she is laid off. In this way, companies can quickly reduce their costs, while at the same time the working relationship can continue. The period where employers have to pay wages during lay-offs (the employer's period) is reduced from 15 to 2 days. The state carry the cost from day 3. The unemployment benefit starts when the unemployed person has been unemployed and has been registered as a real job seeker for at least three of the last fifteen days. These three days constitute the waiting period in the unemployment benefit scheme. To reduce the burden on workers the waiting time is removed for the laid off.

The temporarily dismissed are guaranteed 100% salary up to 6G (approx. €50,700) from day 3, when employer is exempted from paying wage, through day 20. Unemployment benefits for laid-off persons and those who become ordinary unemployed are adjusted upwards and shall constitute 80% of the former wage (dagpengegrunnlaget) up to 3G (approx. €25,350) and 62.4% of the part of former wage that is between 3G and 6G (approx. €50,700). The lower income limit for entitlement to unemployment benefit is lowered to 0.75G (approx. €6,340) over the past 12 months or 2.25G over the past 36 months. The requirement for reduced working hours for entitlement to unemployment benefits is changed from a minimum of 50% to a minimum of 40%.

Updates

The following updates to this measure have been made after it came into effect.

08 September 2021

The redundancy scheme and temporary unemployment benefit rules have been extended one month until 1 November 2021. The extension of the temporary regulation comprises:

  • Continuation of a temporarily increased unemployment benefit rate, so that the unemployment benefit is calculated at 80% of the basis up to three times the basic amount (approximately €32,300) and 62,4% above (up to €64,600).
  • Extension of the unemployment benefit period to 1 November for unemployment benefit recipients who would otherwise have used up the maximum unemployment benefit period in the period from 1 to 31 October 2021.
  • Continuation of the rules on grading unemployment benefits so that someone who receives unemployment benefits can work 60% of previous working hours without losing unemployment benefits (against the previous 50%).

The decision by the government to extend the scheme one month came after a period with political pressure. The Norwegian Confederation of Trade Unions (LO) and The Federation of Norwegian Enterprise, Virke, demanded prolongation. The Labour Party (Arbeiderpartiet) and the left-wing Red Party threatened to urgently convene the parliament, Stortinget, before the opening of the new convention, and force the government to extend the redundancy scheme. The government changed its view after a long meeting with LO, Virke and Confederation of Norwegian Enterprise (NHO), 8 September 2021, and extend the redundancy scheme by one month, until 1 November. This would give time for a new Storting to consider the situation.

The government found several disadvantages with the extension. In September, unemployment was declining quickly, and the government considered the prospect of the Norwegian economy much better. Confederation of Norwegian Enterprise (NHO) agreed with the government and was against an extension at this point of time. However, both the unions and Virke wanted extension. Virke organise many small and medium enterprises in trade, travel, and other service industries, still struggling economically after the COVID-19 pandemic.

09 July 2021

The two crisis measures, wage support to companies that take back laid off employees (Case NO-2020-27/1206 ) and payments to laid offs through extended periods (Case NO-2020-13/723 ), are administered by The Norwegian Labour and Welfare Administration (NAV) and directed toward the labour market.

18 April 2021

In an amendment to the Basic Agreement, Confederation of Norwegian Enterprise (NHO) and the Norwegian Confederation of Trade Unions (LO) have agreed to temporarily adjust the period laid offs can come back to work before the employer has to pay wages in a new ten-day employer period if the employee is laid off again. This period of interruption in the lay off is temporarily extended from six to ten weeks during a period lasting until September 2021. Before the parties entered into the agreement, the government assured the parties that an extension of the period would not affect the employee’s right to unemployment benefits in new redundancy rounds. The agreement was made specifically with a view to the food and beverage service industry which constantly was facing threats of closure.

26 March 2021

Temporarily scheme for holiday pay from unemployment benefit.

18 February 2021, the Storting asked the government to introduce a temporary right to holiday pay for unemployment benefit recipients for payment in the summer of 2021 and 2022. Under current regulation, an unemployment benefit recipient will not be regarded a real job seeker if the recipient takes a holiday form the job search and will not be entitled to benefits. On request from the Storing, the government proposed in the end of March to introduce a temporary scheme linked to the corona situation, as a hand to those unemployed that would be without any benefit during holiday 2021 and 2022.

29 January 2021

The government proposes to temporarily relax the entry requirements for unemployment benefits. From 19 February 2021 (Regulation FOR-2021-02-19-473), the minimum income limit for entitlement to unemployment benefits is lowered from 1.5G (€14,892) to 0.75G (€7,445) in the last 12 months or 2.25G (€22,338) in the last 36 months. This applies to both the laid off and the unemployed. In addition, the requirement that the benefiter must be laid off at least 50% of previous working hours is lowered to 40%. Hence, the right to unemployment benefit will not disappear before a laid-off person works more than 60% of previous working hours. The same special rules also applied for a period in 2020 but were discontinued on 1 November 2020 because there was an improvement in the labour market. They are now being reintroduced for a period up to and including 30 June 2021.

28 January 2021

Unemployment benefit extended to September 2021.

The government propose that those who have left the unemployment benefit scheme after 1 November 2020 can apply to re-enter it from 1 February. This will give several unemployed and laid-off people that have lost their right to unemployment benefits because they have reached their maximum period, an opportunity to apply for unemployment benefits again for a limited period. The period between 1 November 2020 and 31 January 2021 is not covered.

Those who reach the maximum period of unemployment benefits between 1 February and 30 September 2021 will have the maximum period extended to 30 September 2021. For others who are starting their unemployment benefit periods now, the usual rules for duration apply.

11 January 2021

On 11 January, the government proposed to extend the redundancy period to 1 July 2021. This decision came after pressure from the Norwegian Confederation of Trade Unions (LO) and the political opposition.

01 November 2020

From 1 November, the redundancy period was extended from 26 to 52 weeks. In addition, an employer period II of five days was introduced, taking effect after 30 weeks of redundancy from 1 March 2021. To get unemployment benefits you must be laid off at least 50% of your regular working time. (In the period from 20 March to 31 October 2020 you could be granted unemployment benefits when you were 40% laid off.) As of 1 November 2020, the requirement for earned income was raised from 0.75G (20 Mars to 31 October) back to 1.5G (approx. €714,732) in the last 12 months, or 3G in the last 36 months. The increased rate of unemployment benefits will be extended until 31 March 2021.

23 July 2020

The 23 June 2020, the parliament adopted amendments to the Lay-off Wages Act (repeal of temporary employer period introduced as a result of the outbreak of COVID-19). The period the employer has an obligation to pay for wages at the start of a new layoff is increased from 2 to 10 days from 1 September 2020. The government argues that it will be unfortunate if the cost of laying off is so low that unnecessarily many are laid off.

Use of measure

In the period from 9 March to 15 April, 342,228 people have applied for unemployment benefit. In accommodation and food and beverage services (NACE I) the unemployed constitute 57% of the employed in the industries. In industry (NACE C) and construction and building (NACE F), 12% is registered as laid off.

By June 2020, over 54,000 companies had received support through one or both of the measures. During 2020, 60,803 companies received money. Most companies (14,000) are found in wholesale and retail trade (NACE G), followed by 6,000 companies in construction industry (NACE F). Accommodation and food service activities (NACE I) and Professional, scientific and technical activities (NACE M) each had 6,000 companies receiving support through the wage support measure and/or payment to laid off employees. (See statistics on business policy instruments at Government’s web site: regjeringen.no ).

Target groups

Workers Businesses Citizens
Unemployed
Does not apply to businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
Public employment service
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Consulted Consulted
Form Direct consultation outside a formal body Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

  • Social partners jointly
  • Main level of involvement: Peak or cross-sectoral level

Involvement

The social partners have been consulted regularly during design and implementation of the measure.

Confederation of Norwegian Enterprise (NHO) and the Norwegian Confederation of Trade Unions (LO) has constantly been following the regulation on lay off and put pressure on the government to extend the duration of the exceptions in the regulation passed to amend the consequences of COVID-19. With an amendment of the Basic Agreement in April 2021, the social partners contributed, in an understanding with the government, to make it easier for employers to take back laid off employees although new layoffs could be necessary later.

The extension in September 2021 of the redundancy scheme and temporary unemployment benefit rules came after pressure from the unions, particularly The Norwegian Confederation of Trade Unions (LO). Confederation of Norwegian Enterprise (NHO) found an extension unnecessary at this point of time because the economy was improving. However, The Federation of Norwegian Enterprise, Virke, supported an extension.

Views and reactions

The social partners support the changes to the employer period made in June. However, the Confederation of Norwegian Enterprise (NHO) and the Norwegian Confederation of Trade Unions (LO) have written to the PM and the Minister of Labour and Social Affairs, and requested that the government extend the layoff period from 26 to 52 weeks when the temporary prolongation for those who were laid off in March and April expires at the end of October.

Sources

Citation

Eurofound (2020), Temporary amendment to the regulation of layoffs, case NO-2020-12/720 (measures in Norway), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.