Government defeated on change in redundancy rules

In October 2000, the Swedish parliament defeated the government and passed an amendment to the rules in employment protection legislation concerning the order of priority in redundancy situations. Companies with 10 or fewer employees will have the right to exclude two employees from the normal "last in, first out" rules.

On 11 October 2000, parliament adopted an amendment to the 1982 Employment Protection Act (anställningskyddslagen, SFS 1982:80) with the effect that, in companies with 10 or fewer employees, two employees can be excluded from the Act's rules on the order of priority to be observed in redundancies. Parliament defeated by 151 votes to 150 a government proposal drawn up after it was defeated on this issue in April 1999 (SE9905158N) by the Green Party (Miljöpartiet de Gröna), the Liberal Party (Folkpartiet Liberalerna), the Christian Democrats (Kristdemokraterna), the Centre Party (Centerpartiet) and the Conservatives (Moderaterna). The minority Social Democratic Party (Socialdemokratiska Arbetarepartiet) government usually achieves a parliamentary majority with the cooperation of the Left Party (Vänsterpartiet) and the Green Party.

Following the October vote, the new redundancy rules will come into force 1 January 2001. The amendment will grant employers a right to make exception to the normal "last in, first out" rules in redundancy situations (SE9912111F). They may exempt one or two employees whom they regard as being of "special significance for further activities".

The current rules in the Employment Protection Act (section 22) state that the order of priority in a redundancy situation shall be determined on the basis of employee seniority. Workers with longer service should have priority in keeping their jobs over more recent recruits. In spring 2000, the government presented the bill required by its parliamentary defeat in April 1999 (proposition 1999/2000:144). It proposed that two employees could be excepted from the redundancy rules in all companies, regardless of size. One motive for this approach was that a general rule would avoid unnecessary complications. Moreover, it was seen as fair that all companies should have the same right.

However, the parliamentary Labour Market Committee overruled this proposal. It proposed instead the rule (later adopted) that the right to exempt two employees should be limited to companies with 10 or fewer employees. The representatives of the Greens, Liberals, Conservatives, Christian Democrats and Centre Party on the Labour Market Committee were all agreed on this point and parliament followed the Committee's proposal.

Håkan Meijer, a union secretary at the Swedish Trade Union Confederation (Landsorganisationen, LO), said that he was opposed to the parliamentary decision, on the grounds that the change in the seniority rules would mean a deterioration in the employment protection and legal rights of employees working in companies with 10 or fewer employees. LO believes that the former rules did not stop employers from keeping competent workers, as local collective agreements can always be concluded on the order of priority. The new rules mean that small employers may give notice to a worker in a redundancy situation for any reason, or may give no reason at all, stated Mr Meijer. He sees the new rules as an undesirable "change in the Swedish labour market: employees in small companies already have much less security than those in large companies, and it is unacceptable that workers' employment security should depend on how many fellow workers they have".

The Swedish Confederation of Professional Employees (Tjänstemännens Centralorganisation, TCO) had stated in March 2000 that the change in the rules would mean a greater risk of arbitrariness in redundancies, especially in small companies, as well as a decreased predictability of the legal rules. The Swedish Employers' Confederation (Svenska Arbetsgivareföreningen, SAF) is positive about the change. However, SAF's head of labour law, Kent Brorsson, sees the amendment as minor and instead advocates a wider reform of labour law, as SAF proposed in 1999 (SE9905158N).