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Workforce Flexibility and Government Incentives in times of Covid-19 - Sweden

Short-term State Aid

Covid-19 Questionnaire

Are there any regulations in place providing an employer with possibility for flexible workforce planning such as part-time work/temporary leave which are triggered in a situation similar to a pandemic outbreak as Covid-19?

Yes

If YES on question 1, please describe which type of regulation. Please confirm if and to what extent such leave can be supported by state aid and/or other extra-ordinary governmental support.

The introduction of a system enabling short-time work with governmental support has however been proposed by the Government and will enter into force on 7 April 2020; however with retroactive effect as of 16 March 2020. A certain procedure must be followed; which depends on if there is a collective bargaining agreement in force or not. Reduction of workforce is either on 20%, 40% or 60%; and the costs are divided between the state, the employer and the employee.

On 14 April 2020, the Swedish government announced a new level of short-time work enabling employers to partially release employees from work up to 80 percent; while the employees receive 88 percent of their monthly salary. Similar to the levels described above, the costs are divided between the employer, employee and the state however the actual cost split will be confirmed within the coming weeks. This new level of short-time work will be available as of 1 May up until 31 July 2020.

if YES on question 1, please describe which contacts that may need to be initiated with trade unions and/or works councils. Must a special process be followed?

An introduction of short-time work requires prior trade union consultations with the trade unions parties to the relevant CBA . If no CBA applies, individual agreements must be entered with at least 70% of the workforce.

Are there any governmental programs if a company needs to close totally or partially for a certain time period?

Yes, as mentioned above under Question 1. The cost is shared between the government, the employer and the employees – and the proposal means that the employer’s salary costs may be reduced by half while the employee receives more than 90 percent of the salary.

If state aid and/or other extra-ordinary governmental support is available, please describe the necessary prerequisites to qualify for such state aid.

Companies that can prove difficulties in coping with the financial challenges that arise in the wake of COVID-19 can apply for the state aid. However, the financial difficulties must have been caused by a relationship outside the employer’s control and specifically negatively impacting the company’s business operations. All employers, with the exception of certain governmental entities, may receive support in the event of short-time work if the requirements for the support are fulfilled.

n order to qualify for preliminary support, the employee’s working hours must be reduced by 20, 40 or 60 percent of the regular working hours. This governmental aid is not sector specific as such however the rules differ slightly depending on whether there is a central CBA in place or not. In order for employers who are bound by a central collective bargaining agreement re short term work to be eligible for the support, they also have to enter into a local CBA in which the detailed conditions for the application of short-term work have been established.

Employers who are not bound by central collective bargaining agreements re short term work can apply for support provided that there is a written agreement between the employer and each of the employees affected by the short-term work. Additionally, at least 70 percent of the employees at the operating unit are required to participate in the short-term work during the period covered by the support.

State aid is capped at monthly salaries up to SEK 44,000. Any exceeding amounts are borne by the employer.

If state aid and/or other extra-ordinary governmental support is available, please describe the application procedure for such state aid (e.g. how and when is the application filed with the government etcetera; what shall such application include).

  • For employers who are bound by collective bargaining agreements => check if you are covered by collective bargaining agreements on short-term work.

For employers who are not bound by collective bargaining agreements => draft and enter into written agreements with at least 70 percent of the employees at the relevant operating unit.

  • Submit the application for support to the Swedish Agency for Economic and Regional Growth (Sw. Tillväxtverket). The Swedish Agency for Economic and Regional Growth examines the application against the conditions laid down for the support. If necessary, the agency may request information supplementing the application. The application can be submitted at the same time as steps according to step 1 are taken.
  • Support is provided after approval by the Swedish Agency for Economic and Regional Growth (Sw. Tillväxtverket)
  • An employer who has received preliminary support is required to make a reconciliation, which involves a comparison and assessment of whether the average working hours and salary reductions applied are in accordance with the specified levels in the law and the agreements concluded. An obligation to repayment may arise if the employer has received too much preliminary support.

Please note that the COVID-19 scenario is constantly changing and that this information is current as of 16 April 2020. This publication should not be regarded as offering a complete explanation of the legal matters referred to and is subject to changes in the law and other applicable rules.