Covid-19 measures i Norway
Changes in the rules for temporary laying off employees:
It is possible under Norwegian law to temporarily lay off employees if certain conditions are met. In effect, the employment relationship is upheld, but the employer’s obligation to pay salary and the employee’s obligation to work is put on hold. In doing so, the employer needs to notify the employee with a 14 days’ notice (2 days in certain specific cases), during which the employee works as normal and receives full salary. Then, the employer needs to pay the employee for a certain period of time while the employee is laid off. This period is referred to as the employer’s period.
- Employer’s period reduced from 15 days to 2 days: Previously the employer’s period was 15 days. One of the measures has been to reduce this period to 2 days.
- Employees entitled to unemployment benefits if working hours reduced to 40%: When the employer’s period has expired, the state takes over and pays unemployment benefits to the employees. Previously it was a requirement to get unemployment benefits that the working hours were reduced to 50%. Another of the measures was to allow unemployment benefits if the working hours were reduced to 40%.
Postponed payment and reduced size of various taxes and employer costs:
- Sick leave payments: Normally the employer pays for the first 14 days of an employee sick leave. For corona related sickness, the employer now pays for only three days.
- Payments related to care for children: Normally the employer pays for 10 days when the employee is home caring for sick children under the age of 12. The employer now pays only for three days.
- Temporary reduction of VAT rate for certain industries: For certain industries (transportation of people, accommodation, national broadcasting and access to movies, sport, amusement parks and entertainment centers), the VAT rate is reduced from 12 to 7%.
- Temporary reduction of employer’s tax:It is proposed that the employer’s tax is reduced with 4% for a period of two months.
- Postponed payment of advance tax: The deadline for paying advance tax has been postponed from 15 April to 1 September 2020
- Postponed payment of VAT: The deadline for paying first annual VAT payment is postponed from 14 April to 10 June 2020
- Postponed payment of employer’s tax: The deadline for paying employer’s tax is postponed from 15 May to 15 August 2020.
- Tax losses: Companies that have a net loss in 2020 can carry that loss back against taxed profit for 2018/2019. Owners of companies that have a net loss in 2020 will get a delay in the payment of the wealth tax.
Proposal to compensate companies for inevitable expenses:
On 27 March 2020, the Government proposed that the state provides financial support to companies that have been heavily impacted by the public measures taken to reduce contagion to the Covid-19 virus. The details are not known yet and will be announced on 3 April. The following principles have been communicated:
- The scheme shall be effective and effects shall happen quickly
- The scheme shall be targeted: The compensation shall be given to companies that have had a substantial drop in turnover, but which in other ways is a viable company. The compensation amount is meant to cover parts of the company’s inevitable regular expenses (rent, interest rates for loans taken up before the drop in turnover, expenses to rent of equipment that cannot be terminated without substantial costs, some insurances and costs for accounting). Companies that have had to close directly due to the public measures will be compensated higher.
- The scheme shall be temporary: The compensation shall apply for the months that the income drop applies and is linked to the public measures. The starting point is two months, with the possibility of extension
- The scheme shall be wide reaching: The scheme shall be directed towards companies that suffer a significant reduced turnover as a direct or indirect result of the virus outbreak and public measures. The government however indicates that certain industries are kept out of the scheme; including the finance industry, the oil industry, international seafaring, the power industry, water supply and municipal companies. The scheme will not include companies that were under liquidation or did not have activity when the public measures to reduce contagion were initiated. A minimum and maximum threshold for support per business per month will be set up.
- The scheme shall be simple: It is an aim that the scheme shall be as simple as possible, both for the companies and for those who will process the applications.
- The scheme shall be in compliance with the national subsidy rules
- The scheme shall open for subsequent controls: The company itself shall be responsible for providing correct information and for ensuring that the compensation is used in accordance with the purposes of the scheme. The authorities will have the possibility to control that the requirements for getting the compensation were met and that the compensation is used correctly. Companies not meeting the requirements must re-pay the compensation.
Guarantee scheme to small and medium sized companies and investment in bonds in favour of larger sized companies:
- The Government has proposed to grant NOK 50 billion to a loan guarantee scheme pursuant to which the Norwegian state will issue guarantees in favour of financial institutions as security for their new loans to small and medium sized companies
- The Government has furthermore proposed to grant NOK 50 million for investments in bonds issued by Norwegian companies.
- More details can be read in this article
Increased support to internal company training:
- Companies can apply to the county municipality for funds to train own employees as an alternative to temporary or permanent lay-offs .The state support to county municipalities to fund such training is increased with MNOK50.
Support to start-ups:
- Around 5 billion NOK has been proposed allocated to support companies (and around half of that amount has been allocated to start-ups). The support package contains grants, different loans, investment capital and strengthening of business oriented research.
Changes benefitting employees that are temporarily laid off or in other ways affected by the Covid-19 outbreak:
- Increased unemployment benefits: Employees that are temporarily laid off would be negatively impacted by the reduction of the employer’s period from 15 to 2 days, as they would go from full salary for 15 days to full salary for only 2 days. To reduce this negative impact, the state covers full salary (up to around NOK 600,000) for a period of 18 days. Furthermore, whereas the unemployment rate was previously 62,4 % of the annual salary (up to around NOK 600,000), the employment rate is now 80% of salary up to around NOK 300,000 and 62,4 % of salary between NOK 300,000 and NOK 600,000. While employees previously had to wait three days from the employer’s payment ended to unemployment benefits were received, they are now entitled to unemployment benefits from the first day after the employer’s payment ended. Some additional minor changes to increase unemployment benefits have also been implemented.
- Payment to care for children: The government has closed kinder gardens and schools. Parents who need to stay home to care for children under the age of 12 are entitled to full salary for a period of 20 days each (previously 10 days to stay home to care for sick children). The days can be transferred from one parent to another. Parents with three children or more are entitled to full salary for 30 days each, and single parents are entitled to 40 days. Parents with chronically ill children are entitled 40 days each.
- Self-certificate for 16 days: Sick employees could previously provide self-certificate for the first three days of sickness. Absence due to sickness beyond the first three days had to be documented in the form of a doctor’s certificate. Sick employees can now provide self-certificate for the first 16 days.
- Advance payment of unemployment benefits: It is proposed that NAV can advance payments of unemployment benefits before the application for such benefits has been processed.
Simonsen Vogt Wiig follows the development of Covid-19 closely. We have established cross-functional task forces available at all times across all our offices. On this page we have collected all our updates on the Covid-19 outbreak.