EMPLOYMENT PROTECTION

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Sweden
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SWEDEN
ANSTÄLLNINGSSKYDD
EMPLOYMENT PROTECTION

Term denoting the statutory protection of employees against arbitrary or unjustified dismissal. General legislation on the subject in Sweden nowadays consists in the 1982 Employment Protection Act (widely referred to by the initials LAS), which represents a further development of original legislation dating from 1974.

The statutory protection regulated by the Act is essentially designed to ensure that the normal case is for employees to be in what is called employment of unspecified duration, that an employee in such permanent employment cannot be dismissed by way of termination with notice unless the employer is able to prove just cause (see just cause for dismissal) and that an employee who has been dismissed without proof of just cause can take legal action to have the dismissal ruled invalid, which means that the employment relationship continues as if no notice had been given.

The Act applies to all employees, save the four exceptions listed in its section 1. The first of these covers employees who are classed as managerial executives or occupy an equivalent position. In accordance with the travaux préparatoires this exception, which envisages, for example, the managing director (verkställande direktör) of a joint-stock company, must be given a narrow interpretation in order to ensure that somebody who performs managerial functions without also benefiting from the pay and other conditions normally enjoyed by managerial executives is not excluded from the Act's protection. The other groups excluded are the employer's family members, employees who are employed specifically to work in their employer's personal household (and are covered by the 1970 Domestic Work (Working Hours, etc.) Act: see domestic work) and individuals who are given a job under certain government-funded schemes to combat unemployment.

The Act also applies to employers of all kinds, failing any special legislative provisions. Particular note should be taken of the fact that, in contrast to Germany's Kündigungsschutzgesetz, which exempts employers with no more than five employees (see the Glossary volume for Germany), it even applies to small businesses. However, as from 2001 a new rule has been introduced for small businesses in relation to the order of selection for redundancy: see discussion of Redundancy below. The Act likewise applies to public authorities and other employers in the public sector, although there are certain statutory rules for the state sector.

In principle, the Act applies from the very first day of employment, thus differing from the rules in, for example, German and UK law which stipulate that general protection does not commence until a certain length of service has been completed.

Most of its provisions constitute mandatory rules in the employee's favour, meaning that any contract or agreement which removes or limits the employee rights they establish is invalid. However, certain provisions listed in its section 2 may be derogated from by collective agreement, some only through sectoral agreements but others also through local agreements provided other matters at the workplace concerned are covered by an industry-wide agreement (see semi-discretionary law). In the case of certain statutory rules, namely those which implement EC acts, the freedom of the parties to collective bargaining has been restricted by what is referred to as the EC bar.

In accordance with the Act, the general rule is permanent employment which is valid indefinitely and cannot be terminated by the employer unless there is just cause for doing so. Failing any special statutory rule or collective agreement which provides otherwise, contracts for fixed-term employment are permitted only in the cases listed in sections 5, 5a and 6 of the Act. In cases of doubt as to what has been agreed between the parties on the form of employment, the legal presumption is that it constitutes permanent employment of unspecified duration.

Although an employment relationship of unspecified duration may be ended by either party through termination with notice, when it is the employer who wishes to do so there must be just cause (section 7 of the Act). Termination with notice means that a specified notice period has to elapse before the employment relationship effectively comes to an end. Where an employee has committed a serious breach of contract, there are special provisions whereby the employer is able to terminate the contract of employment with immediate effect by way of summary dismissal.

In accordance with the Act, no just cause for dismissal exists if the employer can reasonably be required to find the employee concerned alternative work within the company (see transfer).

The Act distinguishes between two main categories of reasons for dismissal with notice: redundancy/shortage of work and reasons relating to the individual employee concerned.

Redundancy

“Shortage of work” (arbetsbrist), as it is termed in the Act, constitutes just cause for dismissal as a matter of principle. However, the literal term is actually a misnomer in that it encompasses not only situations where there is no work for employees but also other cases where dismissals are occasioned by decisions made by virtue of the employer's right to manage the business, for economic, organizational and other reasons. The courts do not examine business assessments made by employers which lead to decisions to reduce their workforce, unless there is reason to suspect that a dismissal is due not to business considerations in the sense envisaged by the Act but to reasons which in reality relate to the individual employee concerned (see fictitious redundancy). Even in situations constituting redundancy within the meaning of the Act, however, the employer cannot arbitrarily decide who is to be dismissed but must follow a specified order of selection for redundancy (section 22 of the Act). A separate selection category is normally defined for each production unit (e.g. factory or shop) and each area of collective agreement coverage, which means that manual workers and white-collar workers normally belong to different selection categories. Within each selection category, the position of individual employees in the order of priority in selection for redundancy is based on seniority, i.e. their personal length of service with that employer. If employees can be provided with continued employment only by being transferred (and thereby supplanting others with a shorter length of service), the criterion for giving them preference is that they must possess adequate skills for the alternative job concerned. A different order of priority may be chosen by collective agreement, but case-law indicates that there are limits to bargaining freedom in this respect: a collectively agreed redundancy list must not be contrary to good practice or otherwise improper. Under an amendment to section 22 of the Act introduced in January 2001, in the interests of retaining necessary skills in small businesses employers may exempt from the procedure of selection for redundancy a maximum of two employees who are of key importance to the business.

Those who are made redundant retain, for the following nine months, a preferential right to re-employment in the enterprise in which they were formerly employed (sections 25-27 of the Act).

Reasons relating to the individual employee concerned

In the case of this second main category of reasons for dismissal the case-law of the Labour Court regarding what constitutes just cause within the meaning of section 7 of the Act cannot be summed up simply, since the latter presumes that the opposing interests of the two parties will be weighed against each other and allows a wide variety of circumstances to be taken into account. Generally speaking, dismissal is justified only if the employee is guilty of a breach of or failure to fulfil a contractual obligation which is of material interest to the employer and whose existence or importance has been made known to the employee. The Court's assessment is based not merely on the course of events in the situation giving rise to dismissal but, more particularly, on the inferences that can be drawn from what has happened as regards the employee's suitability for continued employment in the future. Accordingly, isolated instances of misconduct, provided they do not involve gross negligence, have in many cases been deemed not to constitute grounds for dismissal, whereas in cases of repeated offences the Court has not infrequently taken a sterner view, especially if the culprit has already been reprimanded by the employer. Theft and other forms of dishonesty are viewed severely by the Court.

As a rule, illness does not constitute just cause for dismissal unless it permanently reduces an employee's capacity to work to such a degree that he or she is no longer able to perform any really useful job. Employers are under an extensive obligation to assist in the rehabilitation of employees suffering from ill health. The Court treats chronic alcoholism (see alcohol) as an illness. Where an employee's capacity to work is impaired for reasons other than illness, the employer must make efforts to solve the problem by, for example, transferring the individual concerned, but if all reasonable efforts fail the situation may constitute just cause for dismissal, particularly if the costs incurred by the employer are demonstrably greater than the value of the employee's contribution to the business. Serious problems affecting co-operation in the workplace can constitute grounds for dismissal, but only if a less drastic solution such as transfer has been tried first.

Normally, an employer who wishes to dismiss an employee for reasons falling within this category may not invoke events dating back more than two months (see two-months rule).

A number of statutes other than the Employment Protection Act prohibit dismissal on specifically named grounds such as gender or exercise of the right to take parental leave. Although dismissal on such grounds is also prohibited under the Act, one of the reasons why this additional statutory protection is provided is that the Act itself does not cover all categories of employee.

Procedural rules

The Act contains a number of procedural rules on dismissal whose infringement by an employer incurs liability in damages. An employer contemplating dismissal for reasons relating to the individual employee concerned must inform the latter at least two weeks in advance (see individual advance notification), and if the employee is a union member the relevant local union must be informed at the same time (see individual advance notification). Following this, the employer is obliged to engage in consultation if the union or the individual concerned so requests. This gives the employee and the union an opportunity to discuss with the employer whether the dismissal can somehow be avoided altogether. In cases where, on the other hand, the action contemplated involves a cutback in operations, i.e. redundancy, the employer must enter into negotiation on managerial decisions in accordance with sections 11-15 of the 1976 Co-determination Act, an amendment made in implementation of the EC Collective Redundancies Directive.

Dismissal must be effected by giving written notice stating, among other things, the procedure to be followed by the employee if he or she wishes to claim that it is invalid. At the employee's request, the employer is obliged to specify the circumstances being invoked as grounds for dismissal.

Sanctions and remedies

A dismissal is ruled invalid by the court at the employee's instance if the employer is unable to prove just cause, but this does not apply where a dismissal is merely in breach of the rules on order of selection for redundancy. Short limitation periods are imposed within which an employee must inform the employer of the intention to lodge a claim and initiate legal proceedings (Employment Protection Act, section 40). It should be noted that the onus is on the employee (possibly with union backing) to take the initiative in instituting proceedings. When a dispute has arisen over the validity of a dismissal, the employment relationship continues to exist until it has been finally settled. While negotiations are in progress and then during any legal proceedings, under section 34 of the Act the employer may not normally exclude the employee from work (see exclusion). Nor is exclusion permissible after a dismissal has been ruled invalid by the court. The normal outcome here is for the employer to accept the judgment and take back the employee into employment. As a last resort, however, employers are able to extricate themselves from an employment relationship by paying compensation ranging, in accordance with section 39 of the Act, from 6 to 48 months' pay depending on the employee's length of service and age.

In cases of unjustified dismissal the employer also incurs liability in damages towards the employee concerned even if the latter does not contest its validity. Damages may be awarded both for financial losses and for the non-material injury suffered. An unlawfully dismissed employee who chooses to let the dismissal stand is entitled to receive, in addition to the normal pay due up to the expiry of the notice period, compensation for financial losses possibly suffered as a result of a reduction in income following dismissal, subject to certain restrictions (sections 38 and 39 of the Act); in calculating the amount of such compensation, deductions are made to allow for any sum which the employee has since earned from employment elsewhere or could reasonably be expected to earn. Compensation for the non-material injury caused, known as general damages, is assessed on a case-by-case basis but at present normally amounts to around 50,000 kronor (approximately 5500 euros).


Please note: the European industrial relations glossaries were compiled between 1991 and 2003 and are not updated. For current material see the European industrial relations dictionary.