Temporary lay-off – what does it mean?

A temporary lay-off is when an employee is temporarily relieved of his/her duty to work at the same time as the employer is temporarily relieved of its duty to pay wages. Temporary lay-offs may be used to some extent when the company has to curtail its operations for a period of time.

It may be in both the employer's and employee's interest not to permanently terminate the employment relationship with a dismissal with notice. In the case of a temporary lay-off, the employment relationship continues to exist and this means that the employer must dismiss the employee with notice or the employee must resign if they wish to terminate the employment relationship.

Legal basis – collective bargaining agreements and case law

Although temporary lay-offs have been common in working life for a very long time, there are no statutory rules which expressly give an employer the opportunity to temporarily lay off its employees. However, an opportunity to temporarily lay off employees is authorised in a number of collective bargaining agreements. The Basic Agreement between the Norwegian Federation of Trade Unions (LO) and the Confederation of Norwegian Enterprise (NHO) contains provisions concerning temporary lay-offs in chapter 8. This agreement has to a large extent been the pattern for other agreements and for case law.

Conditions for temporary lay-offs

Although the right to temporarily lay off employees is not regulated by law, employers cannot do what they please. Through both case law and the body of agreement, some conditions have been stipulated for when temporary lay-offs can be used.

  • In the first place, the temporary lay-off must be based on reasonable grounds. In this context, the selection of who is to be temporarily laid off must also be justified in a reasonable manner.
  • In the second place, the lack of need for staff must be temporary.
  • In the third place, there is always a requirement as to the procedure before temporary lay-offs can be implemented. A possible use of temporary lay-offs must be discussed with the employee representatives and 14 days' notice is to be given before temporary lay-offs can be initiated.

Reasonable grounds

Temporary lay-offs must be based on reasonable grounds. These may be the curtailment of operations due to difficulties in the market or production stoppages so that employees cannot be employed in a rational manner. Temporary lay-offs must basically only be used when the company has little to do and the employer cannot employ the individual employee in a sensible manner. This entails, among other things, a requirement of an individual assessment of each employee's function in the company. As a rule, a temporary lay-off will not be lawful if the function in question is not affected by the relevant situation. The fact that the company is not doing well financially is thus in itself not an independent ground for using temporary lay-offs.

The preparatory works to the Act relating to the duty to pay wages during a temporary lay-off period states that reasonable grounds may be:

"a lack of orders or full warehouses, a shortage of raw materials, accidents and other practical impediments to work, work conflicts, etc."

Temporary arrangement

The employment relationship continues to exist during the temporary lay-off period and it is a prerequisite that the employee is to return to work when conditions have improved. It is thus a key prerequisite that the temporary lay-off is due to a temporary curtailment of operations or a temporary production stoppage. If there is reason to believe that the curtailment of operations is permanent, a dismissal with notice will normally be the correct tool.

Requirement as to procedure and lay-off notice

In all agreement areas, it is important to remember that temporary lay-offs are a measure that the employer is to discuss with the employee representatives before it is implemented. It is in this context that the employee representatives assess whether or not there is a real basis for the use of temporary lay-offs. We recommend contacting Tekna's Legal Office for a legal assessment in connection with this.

Employees are to be given 14 days' notice and this notice is to be in writing and given to each employee. The notice must also state the probable duration of the temporary lay-off. Occasionally, employers send out a so-called conditional lay-off notice. Basically, this is not permitted. The temporary lay-off must not be linked to whether or not further defined events occur. The employer should state how long the temporary lay-off may be thought to last, but if this is impossible an employee may be temporarily laid off for an indefinite period. In such case, the employer must inform the employee of the uncertainty involved and ensure that the employees are kept informed of the company's situation.

If the temporary lay-off is not implemented after the expiry of the period of notice, the employer cannot later temporarily lay off employees with reference to the first lay-off notice. In such case, the employer must give you a new lay-off notice.

What are your rights as a temporarily laid off employee?

When temporarily laid off, an employee is normally entitled to daily unemployment benefit, but no daily unemployment benefit is payable for the first days when one is a job-seeker.

Read an article about daily unemployment benefit
In Norwegian Act no. 22 of 6 May 1988 relating to the duty to pay wages during temporary lay-offs, provisions are stipulated concerning an employer's duty to pay wages during a temporary lay-off. The objective of these rules is to counteract the use of completely short-term and long-term temporary lay-offs.

Act no. 22 of 6 May 1988 relating to the duty to pay wages during temporary lay-offs
In brief, these rules state that an employer must pay wages during an employer period after temporary lay-offs have been implemented, and that there are limits on the length of time for which temporary lay-offs can be used.

Ever since the Act came into force, both the employer period and the total length of temporary lay-offs have been subject to constant changes. In economic downturns, the employer period has been shortened and the temporary lay-off period extended, while this has changed when times have improved once more.

The employer period has thus varied from 10 to 3 days. The length of the period for which an employee can be temporarily laid off has varied correspondingly from 26 to 52 weeks.

Since 1 April 2009, the employer period in the case of full temporary lay-offs has been five days, while the maximum period for temporary lay-offs has been 52 weeks. In the case of partial temporary lay-offs, the employer period is longer.

The rules in the National Insurance Act have been amended correspondingly, so that you should be able to receive daily unemployment benefit during the period when you are temporarily laid off.

If you are still temporarily laid off when the maximum period expires, your employer once again becomes liable to pay you wages (irrespective of whether or not you start to work for the employer again) and your right to daily unemployment benefit ceases.

In the case of a partial temporary lay-off, you will be entitled to graded daily unemployment benefit. However, in relation to daily unemployment benefit, it is the case that your job must have been reduced by at least 40%. If your level of temporary lay-off is less than this, you will therefore not be entitled to daily unemployment benefit for that part of your job that you are temporarily laid off from.

Section 4-13 of the Norwegian National Insurance Act

The temporary lay-off ends – back to work It may be the case that your employer wants you back at work before the temporary lay-off period has expired. Basically, you will be obliged to resume work at short notice. The length of notice you can demand to be given must be assessed in each case. A period of 2-3 days must be acceptable.

However, an employee who is temporarily laid off has a duty to take other suitable work during a period when he/she is receiving daily unemployment benefit. So if you have taken other work or have been instructed to take work by the Norwegian Labour and Welfare Service (NAV) and are thus tied to another employer during the temporary lay-off period, your employer must accept that you cannot return to work until the notified temporary lay-off period expires or until after the expiry of the period of notice which applies in the other employment relationship.

Dismissal with notice/resignation Employees who are fully or partially temporarily laid off may resign from their jobs by giving 14 days' notice. This is stated in section 15-3, no. 9 of the Norwegian Working Environment Act. The right to this shortened period of notice only applies during the period when you are temporarily laid off. In other words, you cannot make use of this special rule during the period covered by the lay-off notice.

Section 15-3 of the Norwegian Working Environment Act
An employer may also dismiss an employee with notice while the temporary lay-off is in force, but naturally only provided there are reasonable grounds for a dismissal with notice. If your employer dismisses you, the employer's duty to pay wages resumes as from the date when the dismissal notice is given. The duty to work resumes as from the same date, so that you must be prepared to go to work again if your employer so wishes.

If you want to know more about temporary lay-offs, you can also visit the website of the Norwegian Labour and Welfare Service (NAV): http://www.nav.no 

Modified date: Monday, March 16, 2015