A layoff means that an employee is temporarily released from the obligation to work in connection with cutbacks or operational stoppages. At the same time, the employer is released from the obligation to pay salary for a limited time.
Full or partial layoff
Layoffs can be implemented either over a continuous period (full layoff) or through the introduction of reduced working hours (partial layoff). Employees who are laid off retain their status as employees.
Conditions for layoffs
You must have reasonable grounds to lay off your employees. Examples of this include a lack of orders and full warehouses, loss of competitive bidding rounds, accidents and natural events. As employer, you must also have done what can be considered reasonable in order to avoid the layoff. Layoffs must be based on circumstances which are considered to be temporary in nature. If there are no reasonable grounds to believe that the employee will be recalled, the employee's employment must be terminated instead.
Who can be laid off
It is primarily people who are defined as employees who can be laid off. Owners of sole proprietorships are defined as self-employed persons and cannot lay themselves off.
Employees of own limited company
Employees of their own private limited company are considered to be employees and are normally entitled to unemployment benefit in the event of being laid off.
If you are the only employee in your own limited liability company and decide to lay yourself off with (more than 80 % partial layoff), you are generally not entitled to unemployment benefits. If you cease the business activity, you may be entitled to unemployment benefits when the notice period is over.
Maximum duration of layoffs
Employees can be laid off without salary for a maximum of 26 weeks within an 18-month period.
Discussion meeting prior to layoffs
Before you can lay off employees, you as employer must hold a discussion meeting with the elected representatives. During this meeting, you must explain why the layoff is necessary and which employees are affected. If the layoff does not apply to everyone, the selection procedure must be based on objective criteria based on the needs of the business (examples of criteria include seniority, suitability and skills). You must write minutes from this meeting and the minutes must state what the employer has done to avoid the layoff.
Notification of the employees
The employees must be given at least 14 days' advance notice before the layoff takes effect. In the event of unforeseen incidences the period of notice is normally two calendar-days.
The reason behind choosing a two-day period of notice should be stated in the notification. NAV generally does not overrule a shorter notification period if the situation is regulated by the Working Environment Act´s definition of accidents, natural disasters or other unforeseen incidences.
The notification must be dated and state the start date of the layoff, the reason for the layoff, the layoff percentage, the duration of the layoff and the number of days for which the employer will be covered by the statutory salary obligation. If the duration of the layoff is not known with any certainty, a probable duration should be stated. In such cases, the question of a further period of layoff must be discussed with the elected representatives within one month.
Obligation to notify NAV when laying off ten or more employees
If you, as an employer, are considering a mass layoff you are required to notify NAV as soon as possible, but no later than when you summon the employees to a discussion meeting. A mass layoff is when ten or more employees are laid off, without pay, or have their weekly working hours reduced by more than 50 % for four weeks or more. The notification obligation aims to ensure that NAV is able to assist the enterprise and the employees concerned.
Withdrawing notified layoffs
The commencement of a notified layoff can be deferred, but the employees must be notified accordingly as soon as possible.
A-melding and layoffs
In connection with layoffs, employees are not be de-registered from the Register of Employers and Employees (NAV's AA register), but you must specify in the a-melding that the employee has been laid off.
Obligatory salary days/Employers period
As an employer, you are required to pay salary during the first 15 days of the layoff period (obligatory salary days are days where the employee normally should have been working). If an employee is on sick leave before the layoff commences, you will not be required to make salary payments for obligatory salary days until the employee is declared fit for work again.
Unemployment benefits in connection with layoffs
In order to be entitled to unemployment benefits the employee must have had his or her weekly working hours reduced by more than 40 percent. If the employee has more than one employment, the combined working hours must be sufficiently reduced to be eligible for unemployment benefits.
If the employee attaches the layoff notice when applying for unemployment benefits, NAV will generally receive the necessary information required to process the application for unemployment benefits.
Employers are to pay full salary the first fifteen working days after the layoff is in force (obligatory salary days). Following this period, the employees may be entitled to unemployment benefits.