Amendments to the LAS (Employment Protection Act)

Amendments to the LAS (Employment Protection Act) Now in the spring of 2022, the bill on new rules regarding employment protection has been adopted by the Swedish Parliament.

Most of the amendments to the law will enter into force on 30 June 2022 and will take effect from 1 October 2022. Below, I will highlight the most important changes and something about their significance in a Swedish labor law system of individual agreements, collective agreements and legal rules, which is difficult for at least international conditions.

Deviations from the law can be made through collective agreements, which significantly reduces the importance of the reform. The bill is thus essentially focused on employers without a collective agreement.

The concept of “objective reasons” replaces the old concept of “factual basis”. The practical difference is as small as the linguistic one.

The concept of “factual basis” for dismissal for personal reasons has primarily been given its content through practice from the Labor Court. According to the bill, the applicable law should not be changed with regard to the question of what constitutes a serious breach of the employee’s obligations under the employment contract and thus provides grounds for dismissal – “factual grounds” for dismissal.

What was previously defined as a “factual basis” will probably be the same as the new concept of “factual reasons”, but this will be interpreted in more detail in practice.

The rules mean fewer difficulties for clearly and clearly fewer difficulties for employers in the event of dismissal due to personal reasons. In the event of dismissal due to personal reasons, the question of whether there are grounds for dismissal will eventually be decided on the basis of the event itself (more or less only), without considering the employee’s interest in retaining his employment or personal situation, which the employer may not even know.

 The employer no longer needs to make a forecast of the risk of the employee repeating his behavior, nor does the employer need to offer a reassignment to an employee who has already committed a breach of the employment contract and has therefore been reassigned.

The changes in the LAS will mean a relief for employers, although it is still unclear to what extent.

 A crucial difference with regard to rules for dismissal due to personal reasons is that employers no longer have to bear the wage costs after the notice period has expired, during the time that a dispute about the validity of a dismissal is ongoing. However, the employer will have to bear the wage loss if the dismissal were to be declared invalid, but then this is something that is tried in the court process.

From above all a tactical perspective, the employer’s position of strength will change in a negotiation with an employee when an agreement is discussed as an alternative to dismissal. Current rules where the employer is responsible for the wage cost until a judgment means that dismissal is very rarely an option. The position of strength between the parties changes sharply in favor of the employer. Termination due to personal reasons has not been a possible alternative historically. However, the employee is not without full income because the unemployment insurance fund enters after the notice period has expired.

Several employees can now be excluded from the priority list, which is one of the more controversial changes. It is possible for all employers to exempt employees from the order in the event of dismissal due to lack of work, and to be able to exempt more people than before. As before, employers must be able to justify why a person who is excluded from the priority list is considered to be of particular importance for future activities.

The difference with the new rules is that all employers are proposed to be able to exempt three employees from the priority rules, compared with two employees who today can be exempted from companies with a maximum of ten employees.

 The new rules provide significantly more room for maneuver for employers bound by collective agreements. Organized employers can, in agreement with the union, exempt up to 15 percent of the staff who are threatened with dismissal, but never more than 10 percent of the number of employees at the operating unit.

The expansion will be important, especially in small companies with few employees. The rule can also be important for medium-sized and large organizations. This is because an employer who makes an exception to the rotation can make further exceptions in the event of a new dismissal three months later.

An employer who wants to handle a major reorganization can tactically treat each area of ​​competence separately at three-month intervals, e.g. carry out a restructuring of a certain department first and another department after three months. This can create new opportunities for employers to choose which employees are allowed to keep their jobs should a reduction be necessary.

 However, rules of rotation and statutory adjustment time in the case of “planing” make it more difficult for employers. It is proposed that employers should observe rotation rules when reorganizing that involve a reduction in the employment rate of one or more employees with the result that the scope of employment in hours decreases, so-called “planing”.

Under the current rules, the employer has had a great deal of freedom to choose which employee to offer reassignment. According to the proposal, the rotation circle would include employees with similar duties, and relocation would be offered to the person with the shortest length of service. In addition, an employee who accepts an offer shall be entitled to a so-called “conversion period” of up to three months.

The proposal means that reorganisations, for example to streamline and reduce production costs, will be more complicated and more time-consuming and protracted to implement. However, the proposed rules clarify what applies to “planing”, which has otherwise been dealt with in a number of court cases from the Labour Court.

Another clarification is that the order of succession in the event of a reduced employment rate is to be applied before the order of dismissal due to lack of work is actualized. This is applied when the company carries out a reorganization that includes both “planing” and redundancies at the same time.

In reality, employers are now given an opportunity to lay off employees for personal reasons, which in practice did not exist before. Employers are also given greater flexibility in the event of a need for reorganisation and staff reductions.

May 2022

Claes Ottosson, LL.M and MS.c

CEO Independia Law Firm AB