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 be applied 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 recent years.

New rules during termination

With the current rules, many companies feel as they have difficulty initiating a termination process on personal reasons. The new rules will make it easier for companies in a termination process, as conditions to termination on personal reasons will be clearer to some extent.

More specifically, some of the most relevant changes include:

• Objective grounds are to be changed to objective reasons. In assessing whether there are objective reasons for termination on personal reasons, companies no longer have to take into account the employee’s interest in retaining his or her employment. Nor do companies have to make a forecast of the employee’s likely future behavior. In addition, the company’s obligation to redeploy the employee when there are personal reasons for termination is being limited- an offer of redeployment will now, as a general rule, suffice. These changes aim to increase predictability and reduce disputes.
• 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 may except two employees 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, employment remains until the dispute is settled)
• A new fixed-term employment form will be introduced- The new employment form “special fixed-term employment” replaces “general fixed-term employment”. This employment form will transfer to permanent employment much faster (currently, the transition from a general fixed-term employment to 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 to both employment and 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, termination, and hiring of employees.

IUNO recommends that companies keep track of 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 organization 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]