Introduction
Overview
Exceptions
Comment
The implementation of the EU Transparent and Predictable Working Conditions Directive (2019/1152) entered into force in Sweden on 29 June 2022. One of the main changes in the legislation is a prohibition against prohibiting a worker from taking up a parallel employment with another employer outside the work schedule established with the original employer. The change also includes a prohibition against subjecting a worker to adverse treatment for taking a parallel employment. This article describes some of the main points on the Swedish implementation of the prohibition.
Article 9 of EU Directive 2019/1152 prescribes a prohibition against prohibiting a worker from taking up parallel employment or adverse treatment of said worker. This was recently implemented in the Swedish law through a new section in the Swedish Employment Protection Act. One of the main purposes behind the prohibition is to enable workers with a part-time employment or an employment without established working hours to achieve an income corresponding to a full-time employment, which in itself required changes to the act The directive is, however, applicable to all workers – as the Employment Protection Act previously exempted workers in company managerial positions, the Act was also changed to ensure that the prohibition also applies to them.
The point of departure is that all workers have the right to take up a parallel employment and a right to not be treated in an adverse manner when exercising their right. However, there are three exceptions when the employer can prohibit a worker from taking up a parallel employment. These exceptions are when the parallel employment:
- is hindering the work under the first employment;
- is competing with the employer in a way that may cause harm to the employer; or
- may in another way cause harm to the employer's business.
Each exception is subject to case-by-case assessment. Since the legislation is new and the preparatory works do not include any closer or complete guidance on how the boundaries for the exceptions are to be set, it can needed to be determined by case-law.. However, previous case law from the Labour Court regarding termination and dismissal of workers that have dedicated themselves to competing businesses or that have acted in breach of the duty of loyalty can be expected to be of guidance when interpreting the exceptions in the new legislation.
Hindering work of original employment
The preparatory works to the change of the Employment Protection Act provide some guidance on how to assess whether the parallel employment is hindering the first employment. If the extent of the parallel employment is so comprehensive that the worker will not be able to perform their duties satisfactorily under the first employment, the employer is permitted to prohibit the worker from taking up parallel employment. The extent of the first employment can also be considered as some employments are not possible to combine with a parallel employment.
Competing business that may cause harm to employer
The exception to prohibit parallel employment based on the risk of harm caused by competition originates from the duty of loyalty between employee and employer. A risk of causing harm to the employer should be enough for the exception to apply. The risk must also be concrete, and the assessment must be done objectively. The worker's position in the company is of great importance when assessing the risk of causing harm. The reason behind the demand for a risk of causing harm is that employers shall not be allowed to restrict workers in a low position with no access to trade secrets from taking up employment at a competitor. Consequently, employers should have bigger leeway when restricting workers in senior management positions from taking up employment at a competitor.
May in another way harm employer's business
The third exception to allow the employer to prohibit the worker from having a parallel employment (even if it is not hindering the first employment or are competing with the employer with risk of harm) is based on potential harm to the employer in any other way than under the first two exceptions. The harm may be either financial or non-financial. It may be a harm to the reputation of the employer or to the confidence in the employer or in the worker.
Prohibition in employment agreement or when parallel employment is in question
The Act does not explicitly say whether it is allowed to prescribe a prohibition against parallel employment in the employment agreement or if it has to be an assessment whenever a parallel employment is in question. However, the preparatory works to the Act do suggest that it could be possible to prescribe a prohibition already in the employment agreement, especially with regards to the first exception and for more senior positions that cannot be performed in satisfactory way if they are combined with a parallel employment due to the extent of the first employment. This is an example of what can be needed to be clarified through case-law.
This article has provided an overview of the implementation of article 9 of Directive 2019/1152 in the Swedish Employment Protection Act, focusing on the new prohibition in Swedish law for employers to prohibit parallel employments. It remains to be seen what effects the amendments will have, maybe most interesting regarding its effects company leaders and the possibilities for companies to prohibit them from engaging in other business.
For further information on this topic please contact Viktoria Hybbinette at Wistrand by telephone (+46 31 771 21 00) or email ([email protected]). The Wistrand website can be accessed at www.wistrand.se.