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2. State Aid

Government subsidies and special relief resources allocated to support employers, and workers, in their efforts to maintain employment and pull through the crisis.

The Swedish Government has adopted specific regulations regarding short time working arrangements that shall apply during 2020. Short time working arrangements subject to these specific regulations are referred to as short-term layoffs and entitle employees to retain more than 90% of their salary, even if their hours of work are reduced by 20%, 40% or 60%. During May, June and July 2020, the working hours can be reduced by 80% as a temporary measure. The short time working arrangement is an alternative to dismissal and means that the business, and its employees, agree that the employees shall, temporarily, have reduced hours of work and salary. The state funded financial support covers most of the costs for the reduced working hours during this period, which entails that businesses may temporarily cut their salary costs by half (approximately). In order for a business to receive state funded financial support when utilising short time working arrangements, employers will have to submit an application to, and for approval from, the Swedish Agency for Economic and Regional Growth. The financial support paid by the state is calculated based on the employee's ordinary salary, however, without consideration of any salary in excess of SEK 44 000 per month. The financial support will mainly be paid out for a period of up to six months, but an extension of support for up to three months will be possible should the financial difficulties persist. The new regulations entered into effect on 7 April 2020, but may be applied retroactively from 16 March 2020. As such, the new regulations on short time working arrangements and so-called short-term layoffs will provide businesses with alternatives to dismissal, should it be necessary to temporarily discontinue operations.

Allocation of costs for short time working arrangements according to the Swedish Ministry of Finance

Level Reduction of working hours Reduction of salary Employer State Employer's reduced cost of labour
1 20% 4% 1% 15% -19%
2 40% 6% 4% 30% -36%
3 60% 7,5% 7,5% 45% -53%
4 80% 12% 8% 60% -72%


Any questions

Ask our member firm Cederquist in Sweden