Protect employment in Sweden: what is changing? – Redundancy/dismissal
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In a far-reaching reform, the law on employment protection, a cornerstone of Swedish labor law that governs dismissal and other protection for employees, is being changed. What do employers need to know and do, and what happens next?
Grounds for termination
Before the reform, an employer had to have ‘objective reasons’ to terminate employment. These fall into two categories:
- personal reasons, such as misconduct or performance issues;
- changes in the business, such as redundancies, downsizing or labor shortages.
After the reform, “objective grounds” are now replaced by “objective reasons”. This only affects the “personal reasons” category. The distinction shifts the employer’s responsibility away from trying to assess the scope for improvement (or otherwise) in an employee’s behavior or performance in the future, towards an assessment of how
serious the breach of the employment contract is. An attempt at redeployment (to a new role or location) will be considered sufficient.
The aim is to make the assessment of dismissals for personal reasons more predictable.
It is possible to make exceptions to the new rules in a collective agreement.
Redundancy and last-in-first-out
In Sweden, employers have great freedom to terminate employment for business reasons.
Initially, the employer must investigate whether it is possible to redeploy affected employees, primarily to vacant positions within the organization (for which they are suitably qualified). Thereafter, dismissals shall follow a seniority list; last in first out. The exempted employees must have satisfactory qualifications and the termination process must include consultation with trade unions.
What changes?
Under the old rules, employers could make exceptions twoemployees to current priority rules (last-in-first-out) if they have no more than ten employees. According to the new rules, they can make exceptions three employees, regardless of the size of the organization. The employees must be of “special importance for the future business”.
If the employer makes an exemption, it cannot do so again within three months.
It is possible to make exceptions to these rules in a collective agreement.
Termination disputes
Under the old rules, where an employee contested their dismissal, they were entitled to remain employed and receive regular pay and employment benefits during the dispute.
According to the new rules, employment will end at the end of the notice period regardless of any dispute. It will no longer be possible for a dismissed employee to request reinstatement during the court proceedings.
It is not possible to make exceptions to this rule in a collective agreement.
Local union representatives are exempt from this rule and may remain in office in the event of a contested dismissal, but only if their role is of particular importance to union activities in the workplace.
But the damages for wrongful termination are increased:
- termination: from SEK 125,000 to SEK 190,000;
- termination: from SEK 80,000 to SEK 135,000.
Priority in case of reduced working hours
Under the old rules, employers could choose who would receive an offer to move to another role with reduced working hours without applying the last-in first-out rule.
According to the new rules, in the event of a reorganization that leads to reduced working hours for certain employees, employers must apply turn-taking rules: the employees with the least length of service must be offered the least number of hours.
The employees must work in the same department and have the same tasks, and the relocation must only involve a reduction in working hours.
An employee who accepts a reduced employment rate is entitled to a transition period. The transition period begins when the employee accepts the offer. It corresponds to the employee’s notice period but cannot be longer than three months.
It is possible to make exceptions to these rules in a collective agreement.
Special fixed-term employment
According to the old rules, fixed-term employment became indefinite two years. The new rules for “special fixed-term employment”. Employees in special fixed-term employment are entitled to permanent employment after 12 months either:
- over a five-year period; or
- during a period when the employee had continuous temporary employment, i.e. special fixed-term employment, temp or seasonal work.
Temporary temporary employment will still be until further notice
two years.
If an employee has been in special fixed-term employment for more than nine months in the last three years, he/she has a preferential right to re-employment in a new special fixed-term employment.
The period between the periods of employment will also be treated as one period of employment, if the individual has three or more periods of employment in the same month.
It is possible to make exceptions to these rules in a collective agreement.
Full-time work is the new normal
Employment is assumed to be full-time unless otherwise agreed. Employees may have an expectation of full-time work and where this is not possible, the employer must motivate the employee upon request. This information must be provided three weeks from the date of the request.
It is not possible to make exceptions to this rule in a collective agreement.
Office worker
Previously, there was a single obligation to inform employees about permanent employment with the client company.
According to the new rules, temporary employees must be offered permanent employment when they are employed by the customer for at least 24 months during a period of 36 months. The employer can set a deadline for an offer; but it must be reasonable.
If the employee accepts, the employment through the agency ends when the employee begins the new employment. The client company can choose to pay compensation of two months’ wages instead of offering employment. This payment must be made no later than when the employment offer would have been submitted.
It is possible to make exceptions to these rules in a collective agreement.
What next?
The new rules entered into force on 30 June 2022 and apply for the first time from 1 October 2022. There are special rules for fixed-term employment.
In the event of a dispute over a dismissal, the old rules apply until 1 October 2022, if the employer has sent a request for consultation or a notification of the intended dismissal. In the event of termination due to layoff, previous order of rotation rules apply if the employer has requested consultation before 1 October 2022.
Other new rules
As a result of the implementation of the EU directive on transparent and predictable working conditions, new information requirements also came into force on 29 June 2022, which means that new employment contracts must be amended.
Employers must now provide written information about all conditions that are essential to the employment relationship. The employer must, for example, inform employees about which rules must be followed when the employment relationship is to be terminated
The information requirements also apply to those who hold managerial positions (including CEO).
The employer cannot prohibit an employee from having employment with another employer during the period of employment with this employer, with certain exceptions.
Notes for employers
Employers should:
- examine any special rules that may apply if they are bound by collective agreements;
- implement and evaluate current procedures to ensure that procedures comply with legislation;
- review the new rules on special fixed-term employees and temporary employees;
- establish a process for coordination and information sharing within a legal entity, if the option to exempt employees from rotation has been used in the last three months.
The content of this article is intended to provide a general guide to the subject. Specialist advice should be sought regarding your specific circumstances.