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03 March 2006
The Wage Guarantee Act guarantees that employees will receive their annual salary - up to a maximum amount of Skr160,000 - if their employer is declared bankrupt. Swedish employees are disqualified from compensation under the act if, during the previous six months, they owned a significant number of shares in the company and had a substantial influence over the company.
The Svea Court of Appeal has recently stated that the six-month disqualification rule is contrary to EU Directive 2002/74/EC (which amends the EU Wage Guarantee Directive (80/987/EEC)). As the directive has direct effect and the six-month rule is not in the directive, the directive supersedes the act. Employees shall therefore be entitled to compensation under the act. Arguably, a condition for compensation should be that the employee did not own a significant number of shares in the company at the date on which the company was declared bankrupt.
The decision may have serious consequences for the future application of the act, since the financial claims of former owners of bankrupt companies often relate to their personal employment in the company. The decision is also interesting with regards to court rulings made after October 2002 - where claims from former owners have been rejected - as it may now be possible to amend these rulings.
The decision may be appealed to the Supreme Court.
For further information on this topic please contact Margareta Andersson or Henrik Gallus 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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