Carl-Fredrik Hedenström, Advokat and Partner at the Stockholm office of Magnusson, defines under which circumstances an employer may lawfully dismiss an employee from the Swedish legal perspective.

The Swedish Employment Protection Act states that the termination of an employee by the employer must be based on “just cause”. Without this, the termination may be declared void and the employer may be ordered to pay damages to the employee. Just (i.e. objective) cause for dismissal can be two categories: (i) personal reasons, or (ii) shortage of work (redundancy).

Dismissal due to personal reasons

In order to terminate an employee for personal reasons (with notice which by law is 1-6 months) the employer must show that the employee is unfit for the job. The employer has a far-reaching duty to try to correct any misconduct by providing the employee with a chance to remedy the situation. The burden of proof lies with the employer. Just cause will not be established if it is reasonable to require that the employer finds alternative work within the company for the employee. Moreover a dismissal must not be based solely on circumstances which were known to the employer for more than two months before notice was given.

Immediate termination without notice is permitted in cases of gross personal misconduct for example, where the employee has committed a criminal offence or breached a non-compete regulation. In these cases, a formal legal procedure must be followed.

Dismissal due to shortage of work

A reduction in the workforce due to reasons such as a plant closing, reorganization or other business related reasons, will generally establish just cause, justifying the termination (with notice) of redundant employees.

However, just cause will not be established in situations where it is reasonable to require the employer to provide alternative work for the employee. For example if there are vacant alternative positions which would be suitable for the employee in question.

In a redundancy situation the employer is required by law to observe an order of priority between the employees, based on the length of service (last in first out). In order to get priority, the employee in question must also possess sufficient qualifications.