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Agreement between the social partners replaces proposed amendments to the Employment Protection Act

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Legal news
calendar 31 January 2021
globus Sweden

This autumn, the work on the Swedish Employment Protection Act continued, and in the beginning of December two Swedish trade unions joined the agreement containing changes to the Swedish labour law, that was previously reached between Svenskt Näringsliv and PTK. Consequently, the appointed committee’s proposed amendments are forfeited, and the new agreement becomes the starting point for the future legislative work.

Since the agreement has gained sufficient support, the social partners are now considered as having agreed on how to reform the Employment Protection Act. In accordance with the January agreement, this means that the appointed committee’s previously proposed amendments will be dismissed. We have previously summarized those proposed amendments here. Instead, the social partners’ agreement will form the basis for the legislative work that is expected to be finalized by the middle of 2022.

Among other things, the agreement includes the following proposals:

  • The requirement to have an ”objective ground” is replaced by “objective reasons” for termination of an employee. When assessing whether there are objective reasons, companies must consider if there has been a serious breach of the employment contract, and whether the employee has understood or ought to have understood this. This assessment should be based on current case law. The employee’s personal interest in retaining the employment is not considered nor is how the employee might carry out their future work. With the new amendments, companies will only have to offer relocation once

  • All companies, regardless of the number of employees, may exempt a maximum of three employees from the LIFO-list in the event of termination due to redundancy

  • During a dispute regarding annulment of a termination, the employment will as a main rule no longer continue. If the employee succeeds with their claim for annulment, the damages awarded will be increased, since the employment did not continue during the period of dispute

  • ”General fixed-term employment” is replaced by the new employment form “special fixed-term employment”. An important difference is that a special fixed-term employment is converted into a permanent employment when the employee has been employed for more than 12 months during a five-year period - half the time compared to what is required today. In addition, special fixed-term employment gives an employee preferential right to re-employment in a new special fixed-term employment after 9 months during a three-year period

  • If a company decides to reduce the working time for one or more positions within the same operating unit, the company must make a relocation offer to the affected employees in accordance with the list of priority. If an employee declines such an offer, there are objective reasons for termination due to redundancy. However, if an employee accepts such an offer, they are entitled to a transition period with unchanged salary and employment rate. The transition period is equal to the notice period the employee would have been granted in the event of termination, however up to a maximum of three months

  • The main rule of employment is full-time. If another type of employment is applied, the employee may request a written statement on why they have not been employed full-time

  • If an employee has been placed within the same operating unit at a client company for more than 24 months during a 36-month period, the client company must offer the employee a permanent employment. Alternatively, they must offer compensation corresponding to two months’ salary

IUNO’s opinion

The agreement between the social partners provides an overview of what will be the focus in the future reform of the Employment Protection Act. All amendments will be known when the Swedish government proposes their draft bill, which must then be passed by the Swedish parliament.

IUNO recommends that companies familiarize themselves with and stay updated on the changes to the Employment Protection Act. Companies should particularly pay attention to the how the changes will impact the employments and specific activities within the company. In case of doubt, the company should seek legal advice

[Minutes of negotiations between Svenskt Näringsliv and PTK of 4 December 2020]

Since the agreement has gained sufficient support, the social partners are now considered as having agreed on how to reform the Employment Protection Act. In accordance with the January agreement, this means that the appointed committee’s previously proposed amendments will be dismissed. We have previously summarized those proposed amendments here. Instead, the social partners’ agreement will form the basis for the legislative work that is expected to be finalized by the middle of 2022.

Among other things, the agreement includes the following proposals:

  • The requirement to have an ”objective ground” is replaced by “objective reasons” for termination of an employee. When assessing whether there are objective reasons, companies must consider if there has been a serious breach of the employment contract, and whether the employee has understood or ought to have understood this. This assessment should be based on current case law. The employee’s personal interest in retaining the employment is not considered nor is how the employee might carry out their future work. With the new amendments, companies will only have to offer relocation once

  • All companies, regardless of the number of employees, may exempt a maximum of three employees from the LIFO-list in the event of termination due to redundancy

  • During a dispute regarding annulment of a termination, the employment will as a main rule no longer continue. If the employee succeeds with their claim for annulment, the damages awarded will be increased, since the employment did not continue during the period of dispute

  • ”General fixed-term employment” is replaced by the new employment form “special fixed-term employment”. An important difference is that a special fixed-term employment is converted into a permanent employment when the employee has been employed for more than 12 months during a five-year period - half the time compared to what is required today. In addition, special fixed-term employment gives an employee preferential right to re-employment in a new special fixed-term employment after 9 months during a three-year period

  • If a company decides to reduce the working time for one or more positions within the same operating unit, the company must make a relocation offer to the affected employees in accordance with the list of priority. If an employee declines such an offer, there are objective reasons for termination due to redundancy. However, if an employee accepts such an offer, they are entitled to a transition period with unchanged salary and employment rate. The transition period is equal to the notice period the employee would have been granted in the event of termination, however up to a maximum of three months

  • The main rule of employment is full-time. If another type of employment is applied, the employee may request a written statement on why they have not been employed full-time

  • If an employee has been placed within the same operating unit at a client company for more than 24 months during a 36-month period, the client company must offer the employee a permanent employment. Alternatively, they must offer compensation corresponding to two months’ salary

IUNO’s opinion

The agreement between the social partners provides an overview of what will be the focus in the future reform of the Employment Protection Act. All amendments will be known when the Swedish government proposes their draft bill, which must then be passed by the Swedish parliament.

IUNO recommends that companies familiarize themselves with and stay updated on the changes to the Employment Protection Act. Companies should particularly pay attention to the how the changes will impact the employments and specific activities within the company. In case of doubt, the company should seek legal advice

[Minutes of negotiations between Svenskt Näringsliv and PTK of 4 December 2020]

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Anders

Etgen Reitz

Partner

Franziska

Brüggemann

Associate

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