Commission proposes stronger protection for fixed-term employees and workers on parental leave

In November 2002, a government-appointed commission that had been examining Swedish legislation on job security and parental leave issued its recommendations. It proposes less complicated rules, stronger employment protection for fixed-term employees and workers taking parental leave, and new principles governing consultation between employers and individual employees.

On 13 July 2000, the Swedish government commissioned the National Institute for Working Life (Arbetslivsinstitutet, ALI) to conduct a study to examine a possible overhaul of several important aspects of labour law legislation related to job security (SE0008158N). Subsequently, in October 2001, the government added to the remit of ALI's work a review of the legislation on parental leave, concerned that workers taking such leave lacked sufficient job protection (SE0111103N).

ALI conducted the study through a labour law commission (Arbetsrättsutredningen). An external working group representing the social partners was assigned to support the commission, alongside an internal group of working life researchers. However, the commission, led by Professor Niklas Bruun, was not dependent on any of the outside groups in the final decisions over its proposals. The government's overall message to the commission was that it should consider workers' demands for security and influence within the constraints of a flexible and efficient labour market.

The labour law commission presented its report (Dnr 2002:56) on 13 November 2002. It examined reform in the following areas:

• the concept of 'employee' and the scope of application of labour legislation;

• the various fixed-term employment contracts;

• cooperation and loyalty between employers and employees;

• the current distinction in the notice of termination of employment contracts between notice due to shortage of work and notice on personal grounds; and

• the need for, and ways of, strengthening employment protection for workers on parental leave.

Limited fixed-term jobs

Several amendments are proposed to the legislation governing fixed-term employment contracts. The commission proposes a new simplified and clarified model, based on the belief that some kind of fixed-term employment is necessary and legitimate on a modern labour market. However, open-ended jobs and indefinite employment should remain the main form of employment in the future. The commission proposes that:

• it should be made easier for young people to enter the labour market by allowing fixed-term jobs for very limited periods, for example periods of additionally high employer demand for labour. This can be achieved by removing the current list of about 10 acceptable reasons for fixed-term employment contracts set out in the current Employment Protection Act (Lagen om anställningsskydd, LAS, 1982:80). The paragraph in question should be replaced by a general rule indicating that fixed-term jobs lasting no more than 18 months (over a period of five years) are allowed. Exceptions should be made for 'substitute contracts'- ie contracts where a stand-in employee is recruited while a permanent employee is away on some form of leave for a maximum period of 36 months;

• to compensate workers employed for a long time on fixed-term contracts, employers should be obliged gradually to move such employees into open-ended employment. This should be achieved by an enhanced right for fixed-term workers to be given preference for open-ended vacancies arising with their employer, starting after six months of fixed-term employment, rather than the current 12 months; and

• there should be a new system aimed at making it financially attractive for an employer to employ a worker on an open-ended basis. A special payment of at least three months' pay for each worker in question should be imposed on employers who employ workers non-permanently for more than 18 months. Employers would also have to make the same kind of payment if they fail to offer open-ended vacancies to fixed-term employees. No payment would be due if a fixed-term worker is offered open-ended employment by the employer.

Interaction between employer and employees

The commission proposes a new, general rule converning the mutual 'duty of loyalty' (lojalitetsplikt) between employer and employees, to be added to the Employment Protection Act. The rule would have an impact on the interpretation of how employers and employees may exercise their rights and obligations under the Act. For example, before any major changes occur at the workplace that may affect an individual employee, the employer would have to consult with the employee on the issue. Furthermore, the employers' decisions would have to rest on 'acceptable' grounds, which is a principle that has not yet been codified. At the same time, the employer's current primary duty to negotiate with the relevant trade union over such change should be abolished. There would, however, be an option for both parties to conduct negotiations instead of individual talks, and information on any individual talks should always be given to the trade union by the employer.

The commission also proposes a new rule limiting the use of so-called 'competition clauses'- primarily clauses in employment contracts forbidding employees who leave their jobs to start a business that competes with their former employer within a specific period of time. This type of clause has been misused, above all in the information and communications technology (ICT) sector in recent times. The proposed new rule would set a general limit of one year for non-competition, a period that builds on principles used in collective agreements in manufacturing industry. The issue of competition clauses has not yet been codified in Swedish labour legislation.

Stronger protection for workers on parental leave

The commission proposes a special ban on discriminating against workers on parental leave. The ban would be constructed in the same way as the gender discrimination ban set out in the Equal Opportunities Act. The social partners and the Equal Opportunities Ombudsman (Jämställdhetsombudsmannen, Jämo) should take responsibility for the supervision of such new legislation.

It is also proposed that, if a worker on parental leave is given notice of dismissal, the notice period should not start until the worker returns to work again. Furthermore, certain (unspecified) measures should be taken in order to prevent long-lasting fixed-term employment for women of child-bearing age.

Other issues

The commission also examined the concept of 'employee' and the distinction between notice of dismissal on grounds of shortage of work and on personal grounds. On both points, the commission states that there is no need for new legislation.

Commentary

The commission states that its primary aim has been to create stable legal regulation. Modern labour law must be able to adapt to the increasing pace of change in the labour market. The law should function in 'good times' as well as in 'bad times'. It should not have to be dependent on changes in the parliamentary political situation, and should be informative and transparent.

Immediately after the presentation of the Commission's report, two of the leading social partner organisations responded, for once united in their criticism. A representative of the Swedish Trade Union Confederation (Landsorganisationen, LO) expressed a fear that the situation would become intolerable if the priority right to open-ended employment for fixed-term employees were to come into effect after six months' work, rather than the present 12 months. This, it is claimed, would mean than more workers would be employed on shorter fixed-term contracts than at present, leading to more fixed-term employment in the future. For the Swedish Confederation of Enterprise (Svenskt Näringsliv), a representative stated that both sides will lose out if the proposal for an earlier right to priority for open-ended employment is adopted

Thus, it seems as if a stumbling block in the coming discussion over the proposals of the Labour Law Commission will relate to the suggested changes to the employment protection legislation. (Annika Berg, Arbetslivsinstitutet)