Sweden: Possible Unfavourable Treatment of Employees on Parental Leave
Author: Elin Broman
On 25 September 2024, the Swedish Labour Court issued a ruling on potential unfavourable treatment of employees on parental leave. The case concerned a company that carried out a major reorganisation and offered employees redeployment to employments with a lower employment rate. Under the applicable collective agreement, an employee is, in such a situation, entitled to a certain period of adjustment. Two of the employees were on parental leave when they were offered redeployment. The dispute concerned whether the company violated statutory prohibition on unfavourable treatment of employees on parental leave by allowing the adjustment period (Sw. omställningstid) for the two employees on parental leave to commence and expire during their parental leave.
Under the applicable collective bargaining agreement, the adjustment period must correspond to the period of notice that would have applied if the employee had instead been terminated when the adjustment period commenced. The adjustment period entails that the employee is entitled to unchanged salary and other employment benefits and commences when the employee accepts the offer of employment at a lower employment rate. The new lower rate of employment shall apply at the end of the adjustment period. The two employees on parental leave accepted the redeployment offers while on parental leave and their adjustment periods then ran during their parental leave. They claimed that there unfavourably affected by the fact that their adjustment period ran during their parental leave and that their new employments with lower employment rates were applied while they were still on parental leave. The disadvantage has consisted in the fact that they have not received any adjustment period while maintaining their salary and other employment benefits at their previous employment rate. If they had not been on parental leave, they would have received such an adjustment period. Also, if they had chosen not to accept their redeployment offers, they would instead have been terminated from their employment due to redundancy and their notice period would then have commenced only after they returned to work after their parental leaves.
The employer parties argued that if the adjustment period had only started when they returned from the parental leave, they would have been treated more favourably than other employees and the collective agreement explicitly states that the adjustment period starts when the employee accepts the offer of employment at a lower level of employment. The provision in the Employment Protection Act, which states that the notice period only begins to run when a person on parental leave resumes or would have resumed his or her work, is applicable in the event of termination due to redundancy and is not possible to apply in the present situation.
The Court concluded that neither the collective bargaining agreement nor the Employment Protection Act on adjustment periods includes any exception due to parental leave from what is explicitly stated; that the adjustment period commences when the employee accepts a redeployment offer to an employment with a lower employment rate. An employee who is not on parental leave is paid during the adjustment period in the same way as before, and an employee who is on parental leave during the adjustment period continues to receive the compensation he or she has received during parental leave. Under such conditions, both the employee on parental leave and the employee not on parental leave remain in the same financial situation during the adjustment period as before. Furthermore, the court stated that there are several reasons behind the provision on deferred notice periods for employees on parental leave in the event of a redundancy, such as the fact that an employee on parental leave is not entitled to salary and other benefits during parental leave because he or she is not at the employer’s disposal, and that the deferred notice period reduces the risk that the employee’s priority right to re-employment will cease to apply once the parental leave has ended. Several of the reasons cannot be applied to the adjustment period in the case of redeployment to a position with a lower employment rate. For example, an employee on parental leave does not need to use his or her adjustment period to look for a new job and the question of priority right to re-employment is not relevant.
Hence, the majority opinion of the court was that the company had not treated the employees on parental leave unfavourably by allowing their adjustment periods to run during their parental leave. Thus, there was no violation of the prohibition on unfavourable treatment.
Key Action Points for Human Resources and In-House Counsel
Even though this case concerned adjustment period under a collective bargaining agreement, the Swedish Employment Protection Act includes a similar provision on adjustment period whereby the outcome would likely be the same if a similar case is made with reference to the statutory adjustment period.
