Out-Law Guide

Restructuring – redundancy procedure in Sweden

Swedish employment lawyer Åsa Erlandsson explains the ‘do’s and don’ts’ when restructuring in Sweden 

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  • Transcript

    What does Swedish employment law require of employers when it comes to making redundancies? It is an important question if you're a business with a presence in Sweden where, just like the rest of the world, mass redundancy exercises are commonplace as businesses restructure in an effort to survive the pandemic. We will come on to the procedure shortly, but first the background. You may recall that Sweden took a very different approach in its response to Covid-19. Sweden stood out in the global pandemic by avoiding lockdown and seemingly aiming for herd immunity. So rather than contain the spread of disease, a country could achieve herd immunity by allowing a proportion of the population to be infected. That approach seemed to work in the first few months but the country is now seeing a sharp rise in cases. Euronews reports that by November Sweden was introducing ever tighter restrictions to halt surging coronavirus cases and that Sweden now appears to be changing course. In December the prime minister was saying Sweden's health officials 'misjudged' COVID-19 resurgence. As for businesses, Statista shows the number of dismissals across Swedish industry from April to September. A total of 26,773 individuals lost their jobs in Sweden in April 2020, after the coronavirus outbreak. The coronavirus outbreak has made it hard for several industries to survive. The highest number of dismissals in April was within the manufacturing industry, where the number amounted to around 4.7 thousand. The number within the same industry was nearly 1.4 thousand in September 2020. The bulk of those dismissals were redundancies and in most cases they were the result of mass redundancy exercises which were the result of businesses either closing or restructuring.

    Earlier in the year we were due to hold a webinar on this subject, looking at a number of countries across Europe including Sweden, but because of the pandemic we had to cancel that. Nonetheless everyone involved was keen to adapt and the result is a series of programmes we will be releasing as HR Guides, covering each of those countries, hearing from lawyers based in each one. 

    Sweden’s lawyer, who we will hear from in a moment, is Asa Erlandsson. She is a partner at law firm Setterwalls in Stockholm and very experienced in all areas of Swedish employment law and a regular speaker on the circuit. The theme of the webinar for all countries was to set out 5 do’s and 5 don’ts when it comes to restructurings. So let’s hear from Asa – the 5 do’s first:

    5 Do's
    Asa Erlandsson: "The first thing to do when restructuring is to be careful to plan the contemplated restructuring very carefully. You should think about the reasons for the redundancy, you should think about the effects on the employees, the timeline, you should prepare scripts for information, whether exit agreements will be offered, etc. The second thing that you should do is to consult your plans to restructure with the trade unions and that should be done before you decide to actually go ahead with the restructure and therefore you need to be very careful to plan sufficient time for trade union consultations. The third thing to think about is that you do not have to worry too much about whether a court or the trade unions etc will approve of this restructuring because you could, in fact, in Sweden rest very safe in that after consultation it is the employer that decides if there is a need for restructuring or redundancies - there is no legal definition in Sweden of redundancy and, as I said, whether or not there is a redundancy could normally be tried by a court. The fourth thing that I want to mention is that when making redundancies in Sweden you should apply a 'last in first out' principle and as much as I am aware that that makes people very worried, one should be aware that there is a very, very important reservation to the 'last in first out' principle and that is that it does not apply to the extent the employees do not have what we call 'sufficient qualifications' for jobs left after the restructuring and, in fact, this particular notion, sufficient qualifications, gives employers in Sweden quite a lot of leeway and flexibility when it comes to selecting what employees to be made redundant. The last thing that I would like to remind you of is that before you go ahead with a restructuring you should make an assessment of the risks for the working environment that could happen if the restructuring is carried out and such assessment of the risk for the working environment should always be made in cooperation with the employees, and normally you do it via the health and safety representative."

    5 Don'ts
    Asa Erlandsson: "The first thing that you do not want to do when you restructure in Sweden is to involve what we call 'personal issues' with employees when selecting who to be made redundant and with personal issues I mean for example, poor performance, misbehaviour, etc, you should be careful to keep the redundancy very clear. Another thing that you should not do when you're restructuring Sweden is to pay special redundancy payments to the employees that you are making redundant and the reason is that we simply do not have redundancy payments under Swedish law. An employee who is made redundant will be made redundant with notice and during the notice period he or she, the employee that is, will, of course, be entitled to salary and other benefits and he or she will also be obliged to work unless the employer agrees to release the individual from work, but that's it, so no special redundancy payments under Swedish law. If you are going to make five or more employees redundant, or at least if five or more employees are at risk of being made redundant, well, then you should not forget to inform the public employment agency about the potential redundancy situation. Information should be given in between two or six months in advance and that depends on the number of employees that are affected. Another important don't is to forget to check if there are vacant positions that can be offered to employees whose positions are becoming redundant, because if you have vacant positions then you should check if the redundant person is interested in that position, but you should also note that vacant positions must be offered only if the redundant employees have sufficient qualifications for the vacancy. So the very last don't that I want to mention to you is that you shall not forget that redundant employees will have a priority right to new jobs that come up during the notice period and also for a period of nine months after the employment has ended, but, first of all, it is only if they have sufficient qualifications for the new job that such priority right applies and also they should be employed for at least 12 months."
    You can find more about Asa Erlandsson and the firm she founded, Setterwalls, by visiting the firm’s website. There is a useful article on Coronavirus and the Swedish government’s package to support businesses. We have put a link to that in the transcript of this programme.

    - Link to article on Coronavirus and the Swedish government’s package to support businesses

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