Objective reasons instead of objective grounds for terminations
The current requirement for “objective grounds” when terminating an employment will be replaced by “objective reasons”. The purpose of the amendment is to increase the predictability of how and when an employer may terminate an employment due to personal reasons.
The amendment also aims to clarify that the focus in case of terminations due to personal reasons is the severity of the breach of contract; no consideration shall be given to the employee’s personal interest in remaining employed. Nor should any prognosis be made regarding how the employee may behave in the future. Additionally, under the new rules, an employer is considered having fulfilled its relocation obligation through only one offer of relocation, unless there are special reasons indicating otherwise.
The amendment from “objective grounds” to “objective reasons” does not, however, imply any changes regarding terminations due to redundancy.
Extended exemption from the seniority rules
In the event of termination due to redundancy, all employers, regardless of the number of employees, will be able to exclude up to three employees who are of special importance from the seniority list. In case an employer exercises this right, no further exemptions may be made in case of redundancy terminations occurring within three months of the first termination. Currently, only employers with up to ten employees may make use of the exemption from the seniority rules.
General fixed-term employment is replaced by special fixed-term employment
The employment form general fixed-term employment is replaced by the new employment form special fixed-term employment.
Under the new rules, a special fixed-term employment is converted into an indefinite employment when the employee has been employed for (i) a total of more than twelve months during a five-year period or (ii) during a period when the employee has had a special fixed-term employment, a substitute employment or a seasonal employment and the employments have followed one another. When calculating length of service in a special fixed-term employment, the time between employments shall also be taken into account for employees who, during the course of a calendar month, have had three or more special fixed-term employments.
Thus, the amendments to the EPA imply that a special fixed-term employment is converted into an indefinite employment more quickly compared to the current regulations. Currently, a general fixed-term employment is converted into an indefinite employment when the employee has been employed on a general fixed-term basis for a total of more than two years during a five-year period (and in certain other situations).
Another change is that an employee who has had a special fixed-term employment for more than nine months during the past three years will have a preferential right to re-employment in a new special fixed-term employment.
Full-time employment as the norm
Under the amendments to the EPA, full-time employment will be the main rule unless the parties have explicitly agreed otherwise. If an employment is a special fixed-term employment, the employer must inform the employee of this in writing when the employment is entered into; as well as the reasons for this. These new rules are intended to improve the working situation for fixed-term employees.
Dispute regulation in case of termination of employment
Unlike the current rules, where an employment remains in force during a dispute regarding the validity of a termination, an employment will be terminated at the end of the notice period even if disputed. This means that the employer does not have to pay salary costs or other employment benefits during an ongoing dispute regarding the validity of a termination. However, if the court deems that the termination was indeed invalid, the employee is entitled to compensation for his or her salary and other employment benefits for the time the dispute was ongoing.
The change entails a significantly reduced risk for an employer in the event of termination due to personal reasons, as a protracted dispute today often involves significant salary costs during an ongoing dispute, regardless of the outcome.
However, since an employment will no longer be in force during the dispute, the punitive damages for incorrect terminations or dismissals that are found to be invalid will likely increase. Additionally, an employee who disputes the validity of a termination will not be suspended from the right to unemployment benefits.
Reduction of working hours
Under the new rules, an employer must observe a special order of priority rules when reorganizing an operating unit where employees with equal tasks are offered re-regulated employment rates (i.e. reduced working hours).
Furthermore, employees who are offered and accept a re-regulated employment rate shall be entitled to an adjustment period. During the adjustment period (a maximum of three months), the employee retains the previous employment rate and employment benefits.
Hiring agency workers
As part of the same labor reform, amendments have also been made to the Staffing Agency Act, which governs the use of workers employed by staffing agencies. Under the new rules, such workers shall be offered an indefinite employment directly with the customer company after having been placed at the same operating unit at that company for at least 24 months during a 36-month period.
If the employee accepts the offer, the employment with the staffing agency will cease. However, the customer company may also choose to offer the employee compensation corresponding to two monthly salaries, rather than an indefinite employment.
Additional financial support in case of unemployment/studies
In addition to the changes in the EPA, the collectively agreed adjustment support for individuals who lose their jobs shall be reinforced. Further, employees who are not covered by CBAs shall be entitled to a new public adjustment and competence support.
A new parallel reorientation student finance is also introduced. The reorientation student finance will apply as of 1 January 2023. This grant is intended to promote competence development during working life with the help of student aid, etc.
Extended information requirements on employment terms and conditions
We have previously written about another proposal that entails changes to the EPA based on an EU directive (in Swedish: Arbetsvillkorsdirektivet – föreslagna förändringar i lagen om anställningsskydd). The proposal will enter into force on 29 June 2022 and consists of expanding existing provisions in section 6 c of the EPA, on what written information an employer is obliged to provide employees when an employment begins. It is therefore recommended to review existing employment contracts to ensure that the new and expanded requirements are reflected in the employment contracts.
If you have any queries on how the new EPA may affect your business, please do not hesitate to get in touch.
This article is also available in Swedish here.
