Sweden: The 24-Month-Rule in the Agency Work Act will Now Become Effective in Practice
Author: Karolina Sundqvist
On 30 June 2022, new employment law rules entered into force in Sweden, introducing several changes to not only the Employment Protection Act (1982:80), but also to other employment legislation. The changes started to apply from 1 October 2022.
One of the changes introduced by the reform was a new provision in the Agency Work Act (2012:854). The Act applies to employees employed by temporary work agencies for the purpose of being hired out to client companies to work under their control and direction. The Act sets out a number of obligations for the temporary agency and the client company, respectively. The new provision adds to the obligations of the client company. For the Act and the new provision to be applicable, the hiring of personnel must pertain to temporary agency work, as opposed to, for instance, independent consulting assignments.
For an employee that has been placed with a client company on the same operating unit for a total of more than 24 months over a period of 36 months, the client company is now obliged to either (i) offer the employee permanent employment, or (ii) pay the employee an allowance equivalent to two months’ worth of salary. The offer of permanent employment or payment of the allowance must be made no later than one month after the 24-month limit has been exceeded. If the employee is offered permanent employment and accepts the offer, the employment with the temporary agency ends without any notice or period of notice. If the employee does not accept such an offer, the client company is considered to have fulfilled its obligation, and there is no obstacle to continuing to hire the employee.
If the client company does not offer the employee a permanent employment or pay the allowance of two months’ salary, the client company risks having to pay financial and general damages to the employee.
As the new provision in the Agency Work Act became applicable on 1 October 2022, the provision will become effective in practice for the first time starting 1 October 2024.
Key Action Points for Human Resources and In-House Counsel
Starting 1 October 2024, it will be important for companies hiring personnel to assess whether the personnel meet the criteria to be covered by the Agency Work Act and, as such, are entitled to be offered permanent employment or two months’ worth of salary under the new regulation in the Act. Note that if the Act is applicable, there are also other obligations for both the temporary agency and the client company to consider.
