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06 January 2006
In order to implement EU Directive 2002/74/EC - which amends the EU Wage Guarantee Directive (80/987/EEC) - the Swedish Parliament has amended the Wage Guarantee Act. The amendment came into force on October 7 2005.
The amendment stipulates that governmental wage guarantee compensation will be paid to employees even if the insolvent employer is domiciled in another member state of the European Union or the European Economic Area (EEA), provided that the employee has carried out most of his or her work in Sweden. The insolvent employer must also be covered by an insolvency procedure described in the Wage Guarantee Directive. Therefore, the Wage Guarantee Act is now equally relevant to employees from other EU and EEA member states and to domestic employees. Before the amendment, the wording of the act included in the wage guarantee system only bankruptcy procedures which took place in Sweden or one of the other Nordic countries (Denmark, Norway, Finland and Iceland).
For the act to apply, insolvency procedures in the other EU or EEA member state must provide for a right to wage guarantee compensation under the domestic legislation. According to the directive, all member states are obliged to report to the European Commission on whether their internal insolvency procedures provide for this right under domestic law. Up to now, Sweden had presented only the bankruptcy procedure to the commission. However, following a further amendment on June 1 2005, company reorganization is also included in the act. A supplementary report on this matter is expected in the near future.
For further information on this topic please contact Margareta Andersson or Jörgen Wistrand at Wistrand Advokatbyrå by telephone (+46 31 771 21 00) or by fax (+46 31 771 21 50) or by email (firstname.lastname@example.org or email@example.com).
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