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Coronavirus: New draft bill to extend short-time work allowance

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Legal news
calendar 20 December 2020
globus Sweden

The Swedish government has proposed a draft bill which will extend the possibility of access to short-time work allowance until 30 June 2021. If the draft bill is passed, companies that have already been granted support for 9 months or less, and are now subject to a waiting period, will be given the opportunity to apply for support for the period of 1 December 2020 to 30 June 2021.

The current short-time work scheme ceases on 31 December 2020. According to a new draft bill, the scheme will be extended until 30 June 2021, however with slight adjustments. You can read our previous newsletter on the short-time work scheme (previously referred to as short-term layoffs) here.

With the new draft bill, companies that have already been granted support and are, according to the current rules, subject to a 24-month waiting period, will be eligible to apply for support for the period of 1 December 2020 to 30 June 2021. The amount of support will continue to correspond to 75 % in January, February and March 2021. However, for April, May and June 2021 the support will decrease to 50 % of the costs for the reduction of working hours. Moreover, the draft bill states that:

  • For the support months falling between 1 December 2020 to 30 June 2021, the comparison month used to determine the amount of support will either be the previous comparison month used for 2020 or, if the employer has not previously been granted support, September 2020

  • If the salary amount for the comparison month exceeds SEK 400,000, the company must submit an opinion from an auditor along with the application for approval for support

  • In order to receive preliminary support for the new period, the company must be granted a new approval from the Swedish Agency for Economic and Regional Growth. In addition, new collective agreements or individual agreements must be concluded

  • Previously, it was a requirement that the company’s financial issues could not have been foreseen or avoided. This requirement will be removed for the new period, seeing as the corona pandemic has been a difficulty since March

  • It will constitute a hinder to receive preliminary support or additional support if the company is obligated to establish a balance sheet for liquidation purposes or is subject to bankruptcy, when the application for such support is assessed. However, it will not constitute a hinder if the company, after the approval for support, applies for and becomes subject to a business restructuring

  • The company is not entitled to the extended support for short-time work, if they decide to or act on a decision to distribute dividends, among other things, within the time period of 2 months before, to 6 months after the support period

  • The company must apply for preliminary support for the period of 1 December 2020 to 30 June 2021 by sending an application to the Swedish Agency for Economic and Reginal Growth. This must be done no later than three months after the end of the month that the company wants to receive support for. If the support period begins between 1 December 2020 and 30 June 2021, reconciliation must not be made until at the end of the support period

  • The draft bill is proposed to enter into force on 15 February 2021, and companies can therefore not apply for the new support until then. However, the support can be granted retroactively from 1 December 2020

In relation to the new draft bill, it has been emphasized that applications will be subject to stricter inspections. Furthermore, according to the budget bill for 2021, companies, which receive support for short-time work and arrange skill development opportunities for the employees’ during their time off, will also be eligible for compensation of up to 60 % of the costs for the skill development opportunities.

IUNO’s opinion

Many companies are welcoming the removal of the 24-month waiting period, which will allow those which have already received support to apply for the extended support as the corona-crisis continues.

IUNO recommends that companies get familiar with and stay updated on the proposed extension and adjustments to the short-time work scheme. Companies should also be attentive as to how an extension or re-implementation of short-time work can affect operations and employees. In case of doubt, companies should always seek legal advice

[Memorandum on support for short-time work in certain cases of November 2020]

The current short-time work scheme ceases on 31 December 2020. According to a new draft bill, the scheme will be extended until 30 June 2021, however with slight adjustments. You can read our previous newsletter on the short-time work scheme (previously referred to as short-term layoffs) here.

With the new draft bill, companies that have already been granted support and are, according to the current rules, subject to a 24-month waiting period, will be eligible to apply for support for the period of 1 December 2020 to 30 June 2021. The amount of support will continue to correspond to 75 % in January, February and March 2021. However, for April, May and June 2021 the support will decrease to 50 % of the costs for the reduction of working hours. Moreover, the draft bill states that:

  • For the support months falling between 1 December 2020 to 30 June 2021, the comparison month used to determine the amount of support will either be the previous comparison month used for 2020 or, if the employer has not previously been granted support, September 2020

  • If the salary amount for the comparison month exceeds SEK 400,000, the company must submit an opinion from an auditor along with the application for approval for support

  • In order to receive preliminary support for the new period, the company must be granted a new approval from the Swedish Agency for Economic and Regional Growth. In addition, new collective agreements or individual agreements must be concluded

  • Previously, it was a requirement that the company’s financial issues could not have been foreseen or avoided. This requirement will be removed for the new period, seeing as the corona pandemic has been a difficulty since March

  • It will constitute a hinder to receive preliminary support or additional support if the company is obligated to establish a balance sheet for liquidation purposes or is subject to bankruptcy, when the application for such support is assessed. However, it will not constitute a hinder if the company, after the approval for support, applies for and becomes subject to a business restructuring

  • The company is not entitled to the extended support for short-time work, if they decide to or act on a decision to distribute dividends, among other things, within the time period of 2 months before, to 6 months after the support period

  • The company must apply for preliminary support for the period of 1 December 2020 to 30 June 2021 by sending an application to the Swedish Agency for Economic and Reginal Growth. This must be done no later than three months after the end of the month that the company wants to receive support for. If the support period begins between 1 December 2020 and 30 June 2021, reconciliation must not be made until at the end of the support period

  • The draft bill is proposed to enter into force on 15 February 2021, and companies can therefore not apply for the new support until then. However, the support can be granted retroactively from 1 December 2020

In relation to the new draft bill, it has been emphasized that applications will be subject to stricter inspections. Furthermore, according to the budget bill for 2021, companies, which receive support for short-time work and arrange skill development opportunities for the employees’ during their time off, will also be eligible for compensation of up to 60 % of the costs for the skill development opportunities.

IUNO’s opinion

Many companies are welcoming the removal of the 24-month waiting period, which will allow those which have already received support to apply for the extended support as the corona-crisis continues.

IUNO recommends that companies get familiar with and stay updated on the proposed extension and adjustments to the short-time work scheme. Companies should also be attentive as to how an extension or re-implementation of short-time work can affect operations and employees. In case of doubt, companies should always seek legal advice

[Memorandum on support for short-time work in certain cases of November 2020]

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Etgen Reitz

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