Proposed modernisation of Swedish labour law

Introduction
Scope of investigation
Comment


Introduction

In accordance with the substantive political agreement entered into by Swedish political parties in January 2019 following the latest general election, the government has decided to appoint a special investigator to explore the possibilities of modernising some of the basic regulations of Swedish labour law. The investigation will consist of four sub-assignments, which will be submitted to the government in May 2020. The investigator will cooperate with an expert group of economists and consult a reference group consisting of representatives from parties to the labour market and small and medium-sized companies.

The investigation aims to explore how Swedish labour law can be modernised and adapted to meet current market needs while maintaining the fundamental and historical balance between the various parties to the labour market. This could result in controversial changes to the Employment Protection Act, which can be labelled as relatively employee-friendly legislation. The suggested changes should be implemented in 2021 at the latest.

Scope of investigation

The investigation directives state that, as one of the four sub-assignments, the investigator will present legislative proposals to extend the scope of exceptions to the rules on the order of priority for notice on the termination of employment. The rules regarding the order of priority under the Employment Protection Act entail that the company must establish an order of priority for employees if some employees in an operational unit will be terminated but others will be retained. At present, as a general rule, the Employment Protection Act provides employees with a longer employment period of priority for continued employment provided that the employee who is being retained has sufficient qualifications for the position in question. The sufficient qualifications requirement does not mean that the employee in question is the most suitable person for the position, but merely that they – after a reasonable period of adjustment – meet the minimum requirements established. Companies determine which positions are available and the requirements set for these positions. At present, the only exception to the order of priority under the Employment Protection Act is that companies with not more than 10 employees may exempt two employees who are of particular importance to the business from the order of priority. Further, some collective bargaining agreements may permit parties at the local level to agree on an order of priority which deviates from the statutory provisions.

It remains to be seen how the proposed new exemptions will be framed. The number of people who can be exempted will possibly be increased or companies with more than 10 employees may also be allowed to use the exemption. Another eventuality is that the rules regarding the order of priority will be abolished in favour of rules based on competence. In any case, the changes will – according to the investigation directive – take into account the need for company flexibility and the possibility for parties to the labour market to deviate from the rules regarding the order of priority through collective bargaining agreements.

According to another sub-assignment of the directive, the investigator will present legislative proposals to make employers responsible for developing employee competence and adaptability. Further, the investigation will aim to make it less expensive for employers to terminate employment contracts, especially with regard to the size of damage for personal reasons which have been declared invalid by the court. However, the legislation must maintain the principle of legal certainty and protect against arbitrariness.

Finally, the legislative proposal will contain a regulation regarding the different types of employment and the relevant conditions thereof. Under the Employment Protection Act, the main type of employment at present is a post with conditional tenure. However, it is possible to agree upon different types of fixed-term employment contract (eg, general fixed-term and temporary substitute employment). The investigator's proposal will aim to create a better balance regarding employment protection for employees with various terms of employment.

Comment

In general, the investigation and its legislative proposals may lead to significant changes in Swedish employment law. However, these matters are politically controversial and keenly debated. Considering the aftermath of the Swedish election, the outcome of the investigation is uncertain and difficult to predict. Hence, it remains unclear if any measures towards a modernisation of Swedish employment law may not take place in the near future. In any case, any business with employees in Sweden should keep in mind that the regulations concerning employee rights are comprehensive and sometimes difficult to comply with. Companies should seek assistance from a person with experience of Swedish labour law before taking any measures concerning their employees.

For further information on this topic please contact Jörgen Larsson or Frida Toveby at Wistrand by telephone (+46 31 771 21 00) or email (jorgen.larsson@wistrand.se or frida.toveby@wistrand.se). The Wistrand website can be accessed at www.wistrand.se.