It's the Final Countdown – the new amendments to the Swedish Employment Protection Act

We recognise that it might be challenging to keep up with legal developments. This is therefore a reminder not to worry, we got you all covered in relation to the upcoming amendments of the Swedish Employment Protection Act. The historic transformation of the Swedish labour legislation is only hours away of becoming effective. The overall goal and expectation are that the reform will establish an increased flexibility, adaptability, and security in the labour market by better adapting and balancing employees’ capabilities to business operations. Thus, with the final countdown we are introducing three checklists to support you:

Checklist: Terms and Length of Employment

  1. Observe the new enhanced information requirements

    Set up routines to ensure new enhanced written information requirements on principal terms of work, specific for each employee, are provided within the specified timeframes in the new regulation.

  2. Keep track of employment length in fixed-term employments

    Ensure there is a system in place to keep track of length of employment for fixed-term employees as the qualification time for employment until further notice has been reduced to 12 months within a five-year reference period.

  3. Review employee obligations in relation to secondary occupations

    Update relevant sections of the employment contract addressing secondary occupations. An employer can no longer prevent employees from taking additional employment elsewhere, unless such impairs the employees' ability to perform their responsibilities and duties, competes with the employer's business or is otherwise harmful for the employer.

Checklist: Termination of employment and wrongful dismissals

  1. Dismissals shall be based on objective reasons

    The current legislation is based on the concept that fair reason is required to terminate an employment relationship. This will be replaced by a new concept whereby a termination will be allowed due to objective reasons. The purpose of the change is to give employers greater flexibility when it comes to terminating employees for cause and to make the employment protection system more transparent. The ramifications of the change for day-to-day staff management are yet to be seen.

  2. Larger flexibility in the event of redundancies

    Terminations for business reasons will allow all employers, regardless of company size, to exclude three employees, who are deemed to be of special importance to the business, from the last in-first out principle.  The employees to be retained are chosen discretionarily by the employer. This means that normally, the decision cannot be legally questioned provided it is not based on a discriminatory basis or undue reasons. Thus, employers’ flexibility increases in comparison with previous legislation which required the employer to strictly follow the last-in-first-out-rule that only allowed employers with a maximum of 10 employees to exempt two people.
    Possibilities of making an exemption to the rule is however limited by a 3-month ban. An employer who has made use of the exemption is obliged to wait three months before further exemptions can be made.

  3. Procedural changes in wrongful dismissal litigations

    Under previous rules, employees were entitled to remain in employment with full pay for the entire duration of a litigation in which the employee claimed invalid dismissal. As a consequence, litigations of invalid dismissals became very costly for employers. Introduction of the new legislation discontinues the right for employees to continued employment during a litigation process. Instead, employees are referred to apply for compensation from an unemployment insurance fund to be able to obtain an income once the employment ceases.

    Due to the fact that an employment as a main rule terminates upon termination, the general damages have been increased in the event of a court annulling an incorrect termination (approx. SEK 135,000) or dismissal (approx. SEK 190,000). The size of the damages applies to all employers, regardless of the size of the company.

Checklist: Employee security

  1. Presumption of full-time employment

    The new regulation has clarified that employment will continue to apply full-time unless otherwise agreed. If an employee is not employed on a full-time basis, a written declaration will be required from the employer, and such is to be provided within three weeks from the date of request.

  2. Extended security for agency workers

    Client companies that hire agency workers will be obliged to offer the staffing companies' employees (i.e. the agency workers) permanent employment provided that the agency worker has worked for at least two years (during a reference period of three years) with the customer company. As an alternative, the customer company has a possibility to pay compensation corresponding to two months’ salary to the agency workers in the event that it does not want to offer the employee permanent employment.

  3. Adjustment and support to increase employment opportunities

    A new student grant has been introduced for employees who are in need of a stronger position in the labor market. The idea behind this new change is to make it possible to further develop and broaden expertise for all employees between the ages of 27 to 60 years old for a more sustainable and successful working life span in the future. An applicant may receive a grant of up to 80 percent of their salary with an opportunity to take an additional loan. 

Future predictions

The practical effects and impact of the new legislation remain to be seen and will be made clear after the 1st of October 2022 once the courts commence producing case law based on the new law. Expectations are that the amendments will provide for more balanced interests between employers and employees, as well as broader opportunities for adjustment and professional development.

With these checklists we are confident that you will be entering October fully prepared for what is to come. As always, if you have any questions – we are only a call away and happy to help! 

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