Sweden: Legislative Changes to the Swedish Employment Protection Act

Author: Karolina Sundqvist

Legislative changes to the Employment Protection Act (Sw. Lag (1982:90) om anställningsskydd) consist of new regulations regarding, inter alia, termination of employment, exemptions from the order of priority, costs during disputes regarding the validity of a termination, general fixed-term employment and temporary agency work.

The following legislative changes to the Employment Protection Act will enter into force on 30 June 2022 and be applied from 1 October 2022.

An employer’s termination of employment will have to be based on objective reasons (Sw. sakliga skäl) instead of objective grounds (Sw. saklig grund). When assessing whether to terminate an employee for personal reasons, the employer no longer needs to consider the employee’s personal situation or interest in retaining the employment, nor do a forecast of the risk that the employee will repeat their behavior.

All employers will be entitled to exempt three employees when determining the order of priority for dismissal in a redundancy situation. Currently, an exemption of two employees is only available for employers with a maximum of ten employees. Further, an order of priority is introduced for situations where an employer intends to reassign an employee to a position with fewer working hours, which will entail that those employees with a longer aggregated period of employment should be last to be reassigned. Also, reassigned employees will be entitled to a transition period equivalent to their notice period with a maximum of three months.

In the event of a dispute regarding the validity of a termination, employers will no longer have to bear the risk of continued payments of the employee’s salary and benefits during the legal proceedings. Only if the court declares the termination invalid, the employer will be liable to retroactively pay the salary and benefits that the employee would have been entitled to during the legal proceedings as well as additional damages.

General fixed-term employments will automatically transfer into indefinite employments after twelve months instead of after two years of general fixed-term employment. Temporary agency workers assigned to the same company for at least 24 months during a 36 month-period, will be entitled to be offered a permanent employment at the company. As an alternative, the company may offer the temporary agency worker a financial compensation equivalent to two monthly salaries.

Key Action Points for Human Resources and In-house Counsel

Legislative changes to the Swedish Employment Protection Act entail, inter alia, that all employers may exempt three employees from the order of priority and that general fixed-term employments will transfer into indefinite employments after twelve months, instead of after two years.