New employment law reform on the way

Over the last years, the need to change the Swedish Employment Protection Act has been an ongoing discussion. Different types of draft bills and agreements have been reviewed, but finally, a draft bill has been submitted to the Swedish Parliament. We have previously written about the reform of the Act here and here.

According to the draft bill, the changes will enter into force as of 30 June 2022 and apply a bit later, as of 1 October 2022. The draft bill will change the Swedish employment law substantially, which is not unexpected in light of the discussions over the recent years.

Stricter rules for termination

Companies already have difficulty initiating a termination process under the current rules. The new rules will only make termination more difficult, as conditions will be clearer in favour of the employees.

More specifically, some of the most relevant changes include:

• Objective reasons will be required to terminate employees lawfully due to redundancy or reasons related to the employee, to make it easier to determine if the circumstances justify termination (currently, subjective reasons are accepted as a reason for termination)
• All companies will have the right to exclude up to three employees from the so-called LIFO list, exempting them from termination (currently, only companies with maximum ten employees can make exceptions from the list)
• Employment terminates at the end of the notice period regardless of an ongoing dispute and regardless of whether the termination is valid (currently, employees remain employed until the dispute is settled)
• A new employment form will be introduced “special fixed-term employment” which will allow companies to transfer employees faster to permanent employment (currently, the transition from a normal fixed-term employment to a permanent employment takes more time)
• Full-time employment will be the main rule for employment with the aim to, for example, make working life more equal (currently, there is no such norm)

IUNO’s opinion

Companies should follow the developments closely, as the changes in several aspects will change the approach from employment to termination. At the same time, companies should be aware that the new rules will include several limitations compared to now, for example, in relation to restructuring within the company and termination and hiring of employees.

IUNO recommends that companies keep track of the impending changes, such as the time limit with the special fixed-term employment and the possibility to exclude employees from the LIFO list. Companies should carefully review whether changes must take place within the organisation and with regard to the management of employment so that the rules are applied correctly.

[Draft bill 2021/22:176 on flexibility, adaptability and security in the labour market of 17 March 2022]