The Swedish Government has recently presented its proposal for new legislation concerning fixed-term employment to the Swedish Council on Legislation (Sw: Lagrådet). The proposed legislation is intended to come into effect as of 1 May 2016.

The proposal is a result of long standing complaints from the European Commission that, since the introduction of general fixed-term employment (Sw: allmän visstidsanställning), Swedish legislation does not fulfill the requirements set forth in Directive 1999/70/EC (the so called "Fixed-Term Work Directive"). Under the current legislation, a general fixed-term employment that has lasted for, in total, more than two years during a period of five years will be converted into an employment until further notice (Sw: tillsvidareanställning). This is also the case for substitute employment (Sw: vikariat). The gist of the Commission's complaints has been that Swedish legislation allows, in theory at least, for the perpetual continuation of fixed-term employment, by way of combining terms of general fixed-term employment, substitute employment and seasonal employment (Sw: säsongsanställning) in various ways, which is in breach of the Directive.

Under the proposal, a new possibility to convert a general fixed-term employment into an employment until further notice is introduced into the Swedish Employment Protection Act (Sw: lag om anställningsskydd). A conversion will take place if a general fixed-term employment has lasted for, in total, more than two years during any period in which the employee has been continuously employed on fixed-term contracts (regardless of the type of fixed-term employment). An employee is considered to have been continuously employed on fixed-term contracts if the period between the end of a period of fixed-term employment and the beginning of the next period of fixed-term employment does not exceed six months. Furthermore, fixed-term employees' rights to information will be expanded. Under the proposal, the employer must, upon request, provide details of the start date, the end date and the type of fixed-term employment, for all periods of fixed-term employment that are relevant when determining whether the fixed-term employment may be converted into an employment until further notice.

If the proposed legislation is enacted, the European Commission's complaints may finally be addressed. The practical impact may be limited for many companies, as collective bargaining agreements often contain different provisions that prevail over the provisions of the Employment Protection Act. However, companies not bound by collective bargaining agreements should carefully check how the various forms of fixed-term contracts are applied, in order to avoid having such contracts converted into employments until further notice.

Comments on the bill from a Finnish perspective:

The Finnish system is different from the Swedish one in that that there is only one type of fixed-term employment which must always be based on reasonable grounds in order to be deemed fixed-term only. In 2011, the Finnish Employment Contracts Act was amended in order to regulate consecutive periods of fixed-term employment in more detail. According to the amended section, the employer is not deemed to have reasonable grounds for entering into a fixed-term employment contract when the number of contracts, duration of the contract or fixed-term employment relationship as a whole demonstrate that the employer needs employees on a permanent basis.