The Nordics: Implementation of the EU TPWC directive – amendments to the Danish Employment Contracts Act and similar measures in Finland and in Sweden

Adoption of the new rules

Based on the EU directive on Transparent and Predictable Working Conditions, the Danish Parliament is scheduled to adopt the bill amending the current act on employment contracts during the spring of 2023. The changes will be particularly relevant in relation to part-time employees as they will expand the scope of the act to include employees working 3–8 hours per week. However, the bill is also relevant to other employees as it, amongst other elements, introduces a ban against prohibiting employees from having a secondary employment relationship. Also new serious sanctions for incompliance will be introduced.

The new rules will apply to all employment relations as of 1 July 2023, however, the obligation to provide a written employment agreement or similar will only apply upon request from employees employed prior to the effective date.

The scope of the new act

The act would apply to all employment relationships where working hours exceed three hours calculated during a four-week reference period, as well as to employment relationships where no specific amount of work has been guaranteed before the commencement of the employment. The new regulation will have a broader applicability as it will also cover employees with 3–8 hours of work per week, which is currently not the case.

Enhanced “must-have” information obligations for employment contracts

The new regulation will also introduce enhanced information obligations, as the act introduces several additional “must-have” information items that must be included in the employment contract, inter alia:

• Identity of the user entities for temp agency employment relationships.
• If the work pattern is completely or predominantly unpredictable, the employer must notify the employee of:
  
  

  a) the principle that the schedule of work is variable, the number of guaranteed paid working hours, and payment for work carried out exceeding these guaranteed hours;

  b) the reference hours and days when the employee may be required to work; and

  c) the minimum notice period to which the employee is entitled before a work task is to be started, as well as a possible deadline for cancelling the work task.
  
  

• The right to education, which the employer may offer.
• Indication of which collective agreements or agreements regulate the working relationship. If it is a matter of collective agreements or agreements entered into by parties outside the company, it must also be stated who the parties to the relevant agreement are.
• Where it is the responsibility of the employer, the identity of the social security institutions that receive the social contributions linked to the employment relationship and any protection in connection with social security from the employer's side.

Introduction of new set of minimum employment terms and conditions

Compared to the existing legislation, the proposed bill also introduces a new set of minimum employment terms and conditions:

Maximum duration for probationary periods. The proposed bill sets out the maximum duration for probationary periods to 6 months. In addition, for fixed-term employment relationships, the probationary period cannot exceed a quarter of the employment period. Finally, no new trial period may be agreed upon in connection with the extension or renewal of a fixed-term employment relationship.

• Ban against prohibitions of secondary employment. With the adoption of the new rules, employers will not be allowed to prevent employees from taking up secondary employment unless the circumstances of the work in question, such as health and safety considerations, protection of trade secrets, integrity of public administration, or avoiding conflicts of interest, implies that the secondary employment will be incompatible with the existing employment relationship.
• Special work notification requirements for employees with unpredictable work patterns. Under the new rules, an employer will only be allowed to require an employee whose work pattern is completely or predominantly unpredictable to work if the work will take place within predetermined reference hours and reference days of which the employee has been notified in accordance with what has been agreed or stipulated in advance (cf. the above-mentioned new requirement to state this information). Presumption of minimum working hours for employees on on-call duty for more than 3 months. A new presumption rule is introduced in which it is presumed that the parties have entered into an employment agreement with a minimum number of paid hours corresponding to the work performed by the employee in the past 4 weeks.

Sanctions

Under the existing legislation, the employer may be held liable to pay compensation to employees if the employer has failed to provide an adequate and correct employment contract (or statement of the employment terms and conditions).

With the proposed new regulation, this is supplemented with a new sanction system in case of adverse treatment. An employee who has been subjected to unfavorable treatment because she/he has exercised her/his rights in accordance with this Act or has made a complaint to the employer to ensure compliance with these may be awarded a compensation.

Also, if an employee, including an employee representative, demonstrates factual circumstances which give rise to the presumption that she/he has been subjected to dismissal or measures with similar effect because she/he has exercised his rights in accordance with this Act or has made a complaint to the employer to ensure compliance with these, it is then the responsibility of the employer to prove that the dismissal or measures are not due to the employee having exercised these rights (dual burden of proof).

Effects on employers in Denmark

There is little doubt that these new rules will potentially have a significant effect on the employer’s compliance requirements. Not only will the formal requirements (the “must-haves” of the employment contract) be increased, but the introduction of the dual burden of proof in connection with complaints made by the employees about incompliance will also potentially be a significant factor in the future.

Under Danish law, similar legislation providing protection to employees that have lodged complaints relating to equal pay exists, but whether the size of the compensations under the new proposed legislation will be metered out according to the same principles remains to be seen. According to the preparatory work, the legislator has indicated that the starting point should be the somewhat lower level for compensation in case of unjust termination.

Implementation of the EU TPWC directive in the Nordics

Finland has also implemented the TPWC directive and issued legislative changes in 2022. The changes were not as extensive in Finland as they would seem to be in Denmark, as Finland already had similar provisions in place (for instance issuing a written clarification of certain terms of employment). But amendments were made, and to pick a few of the changes we would like to mention the amendments to the Finnish Employment Contracts Act, where for instance information obligations of the employer nowadays include issuing written clarification of the user company when renting employees (similar to Denmark), information of the training offered by the employer (similar to Denmark) and information of the insurance company where the employer has arranged the pension coverage or occupational accident insurance (similar to Denmark).

Similar to its Nordic neighboring countries, Sweden was no exception and implemented the TPWC directive through legislative changes in the Swedish Employment Protection Act (sw. lag (1982:80) om anställningsskydd) that took effect June 2022. Prior to the changes, Swedish employment law, like Finland, already provided an obligation of employers to inform employees on principal terms of employment. However, the new law introduced enhanced written information requirements to further promote transparent and predictable working conditions in the labor market and the employment relationship. The extended information obligation includes, among other things, information on training entitlements, arrangement of working hours, social security contributions and social security provided by the employer as well as enhanced information on employment terms and conditions for rented employees.