Delphi insights: A major reform of Swedish employment law

Several changes have been introduced in Swedish employment law during the summer and when Swedish employers now are facing the autumn, they must review both their employment agreements and their routines. In this article, we are summarizing the biggest changes that are important for employers to keep an extra eye on.

On 8 June 2022, the Swedish parliament voted for a major reform of Swedish employment law. The new rules will apply from 1 October 2022 and the reform entails, for example:

  • A shortening of the qualification period for transition from a fixed-term employment to a permanent employment. The qualification period is reduced from 2 years, to 12 months.
  • The requirement of “objective grounds” for termination is changed to “objective reasons”. According to the preparatory work, this does not imply any change in what is required for objective reasons to exist, but will make the law more predictable for both employers and employees.
  • The right to exempt employees from the priority list in a redundancy situation is extended from 2 employees to 3. Also, the exemption rule will no longer only apply for employers with a maximum of 10 employees, but will instead apply regardless of the number of employees in the company.
  • An employment will be assumed to be a full-time employment, if nothing else is agreed. Furthermore, if an employment is not a full-time employment and the employee requests an explanation, the employer is obliged to state the reasons why the employee cannot obtain a full-time employment.
  • If the validity of a notice of termination is subject of a dispute, the employment will no longer continue during the period of litigation. Instead, the employment will be terminated as usual and if the court would conclude that the termination was invalid, the employment relationship is revived, and the employee is entitled to retroactive salary and other benefits.
  • A special study subsidy is introduced with the aim of expanding the opportunity for an adult to study and strengthen his or her position in the labor market.

In addition to these new rules, other changes take effect due to the implementation of the EU Directive on Transparent and Predictable Working Conditions in the European Union. The changes were entered into force on 29 June 2022 and the implementation entails, for example, that:

  • The employer’s obligation to provide information regarding the employment is extended. For example, the employer will be obliged to inform about the employee’s right to education during the employment, that employer contributions are paid to the state and information on the protection of social security provided by the employer, the regulations that must be followed if the employer or the employee wishes to end the employment relationship, whether overtime payment is paid and any conditions for a probationary employment.
  • Certain groups of employees that are currently completely exempted from the application of the Swedish Employment Protection Act, shall be subject to certain specific provisions in the law. This applies, for example, to employees with managerial positions and employees belonging to the employer’s family.
  • As a general rule, an employer may not prevent his or her employees from taking a parallel employment at another company. However, this does not apply if the second employment (i) prevents the employee from carrying out his or her work for the employer, (ii) competes with the employer’s activities and cause damage to the employer or (iii) damages the confidence of the employer or the employee.

Lastly, another EU Directive, namely the EU Directive on Work-Life Balance for Parents and Carers, has been implemented. The changes were entered into force on 2 August 2022 and aims to create a more flexible working life for parents and employees who takes care of a sick family member. The requirements in the directive are already largely met by Swedish legislation. However, the implementation entails, for example that;

  • An employee may request flexible working arrangement (such as distance work or flexible working hours) for caring reasons. If an employee makes such a request, the employer must respond to the request within a reasonable time. If the request is rejected or postponed, the employer shall justify the decision.
  • If a flexible working arrangement has been made and the change in the working pattern is valid for a fixed period of time, the employee is entitled to return to the original working pattern when the time expires. If the employee, due to changed circumstances, requests to return to the original work pattern before the time has expired, the employer must also respond to such a request within a reasonable time.

Due to the new rules Swedish employers must, for example, review their employment contract templates for new recruitments, keep and extra eye on the qualification period for fixed-term employees and create or update their routines for requests of flexible working arrangement.