Sweden: The Labour Court Concludes that Separation Agreements May Trigger Consultation Obligations
Author: Karolina Lie
In AD 2026 no. 40, the Swedish Labour Court considered whether Storytel Sweden AB, an employer not bound by a collective bargaining agreement, had breached its consultation obligation under the Swedish Co-Determination in the Workplace Act (MBL) by offering separation agreements to employees without first consulting the relevant trade union.
The employer was part of a group whose parent company had adopted a budget requiring an efficiency programme, including a 13 percent workforce reduction. For the Swedish entity, this meant that 45 employees were affected. The employer offered selected employees separation agreements and informed the union on the same day as the restructuring decision was announced.
The Labour Court held that the consultation obligation must be interpreted in light of the EU Collective Redundancies Directive (98/59/EC). The concept of dismissal is not to be interpreted narrowly and may include all situations where an employment contract ends without the employee’s genuine initiative or consent. Although the employer argued that the employees had been selected for personal performance-related reasons, the Court found that the real reason for the offers was redundancy, since the workforce reduction resulted from the adopted budget and efficiency programme.
According to the Court, the consultation obligation applied as soon as it became clear that there was a possibility that employees could be dismissed due to redundancy. At the latest, this was when managers were instructed to identify employees who could be offered separation agreements. Since the employer had not consulted the union before entering into the agreements, it had breached the Co-Determination Act and was ordered to pay SEK 125,000 in general damages.
The Court further held that the information concerning the project was, in principle, covered by the employer’s statutory information obligation under MBL. However, since the workforce reduction concerned redundancy dismissals, the relevant information should have been provided as part of the primary consultation obligation. The employer was therefore not separately liable for breach of the statutory information obligation.
The Court also rejected the employer’s argument that the information could not be provided because it constituted inside information. The employer was required to comply with both the market abuse rules and the Co-Determination Act, for example by making use of the possibility to request confidentiality undertakings under MBL.
Key Action Points for Human Resources and In-house Counsel:
Employers planning workforce reductions should assess consultation obligations at an early stage, including where the intended approach is to offer voluntary separation agreements rather than conducting formal redundancy terminations.
