All questions

Discontinuing employment

i Objective grounds for termination of an employment

According to the Act on Security of Employment, dismissal of an employee must be based on objective grounds, which can consist of either personal reasons or shortage of work, which includes redundancy.

An employer who breaches the Act shall not only be liable to pay salary and other employment benefits to which the employee may be entitled, but also to pay damages. Damages may be payable not only for loss suffered (economic damages) but also for the offence that the violation may have caused (general damages).

ii Dismissal

Dismissal is the termination of a contract based on grounds related to the individual employee, and may be given with or without a notice period. Dismissal without a notice period may be justified only if the employee has grossly neglected his or her obligation to his or her employer – even then, it may not be based solely on circumstances known to the employer for more than two months before sending the obligatory information to the employee and the local union.

Dismissal of union members for gross misconduct, like other terminations, cannot be implemented while negotiations with employee representatives are taking place. When an employee is dismissed, with or without a notice period, a considerable burden of justification rests with the employer. Reasonable grounds for dismissal do not exist if it is considered reasonable that the employer relocate the employee.

Factors to take into account for objective grounds for dismissal are the nature of the business, the nature of the employee's assignment (especially if the employee was in a position of trust), the nature of the offence, the harm done to the employer, and the employee's age, length of service, prior performance and likely future conduct.

The courts also consider the measures taken by the employer to remedy the problem, for example by informing the employee of his or her chances to improve. As a rule, these warnings can be delivered by the employer on his or her own initiative. Objective grounds for dismissal recognised by the courts over the years include the following:

  1. wilful violation of work rules or legitimated orders;
  2. repeated negligence;
  3. disloyalty to the employer, for example by competing secretly with him or her or revealing important business secrets;
  4. inability to cooperate with colleagues;
  5. criminal activities at or outside work; and
  6. incompetence.

An employer who wishes to dismiss an employee by reason of circumstances that relate to the employee personally must notify the employee to this effect in advance. In cases of dismissal without notice, written notification shall be given at least one week in advance and for dismissal with notice, two weeks. If the employee is a member of a trade union, the employer shall also give notice to the local organisation of employees to which the employee belongs.

The employer must give the employee written notice of termination, which contains the date, the name of the employer and the employee, the reason for the termination, an explanation of how the employee shall act if he or she wants to declare the termination null and void, and information about preferential rights.

Where a declaration that the dismissal itself is invalid is not sought, but damages are, the employer must be told no later than four months after the events for which damages are claimed.

iii Redundancies

In general, when an employer decides to restrict its operations, it is accepted as redundancy. Therefore, the employer alone normally decides when redundancy exists as it freely makes decisions with regard to its own organisation.

Even if grounds exist for redundancy, there are steps to be taken before formal grounds exist. Prior to any redundancy dismissal, the employer must first try to relocate or transfer the employee to another post. Other free posts within the company must be offered to the employee, with the condition that the employee has sufficient qualifications for the post. If the employee is transferred, he or she should receive this offer in writing from the employer. If the employee declines the offer, the employer has fulfilled its transfer duty. If no offer can be made, the employer must be prepared to prove that an effort has been made to find a free post.

If there are no other free posts within the company and there are several employees who must leave, then the employer must set up a 'short list' concerning order of priority. The Swedish general rule states that the person who has worked the longest within the company may stay. Employees with a shorter time within the group of companies will instead be given notice. There can, however, be different rules in a collective agreement.

The order of priority right covers all the tasks for which the affected employee is competent to carry out held by employees who have worked for a shorter time within the company. Examples of an operation unit include a factory or a restaurant. A unit of this kind has a geographical nature and cannot exist at several venues. Within every operation unit there has to be a short list established for every collective agreement area, which consists of both organised and unorganised employees. If the employer has a collective agreement there will normally be one list for blue-collar workers and one list for office staff.

The redundancy can be either mathematical in nature or related to one person's tasks. At a workplace with 50 employees and where 10 per cent of the production has to be reduced, and the employees can replace each other, the last five employees will be given notice. If the lack of work applies to one person's work tasks then the transfer question must be focused on that person.

If the employee has worked for a long time within the company and there are others within the company who have worked less time, the employee – if he or she has sufficient qualifications – must be offered one of these jobs. The order of priority right covers all the tasks that the affected employee is competent to carry out and the employment held by employees who have worked for a shorter time within the company.

The term 'sufficient qualifications' means that the employee is able to carry out the work tasks immediately or after a short period of learning (up to three or four months).

According to the Co-Determination in the Workplace Act, employers have a general and extensive obligation to inform and consult with the workforce via the unions. There is no specific regulation that applies to undertakings with a certain number of employees. The union will be awarded substantial damages if the employer fails to consult with the union in the prescribed manner.

The employer must give the employee written notice of termination that contains the date, the names of the employer and the employee, the reason for the termination, an explanation of how the employee shall act if he or she wants to declare the termination null and void, and information about preferential rights.

During the period of notice the employee will receive a salary as if he or she was still working. An employee may not be given garden leave without his or her consent. The minimum statutory period of notice for both the employer and the employee is one month. The employee is entitled to the following minimum periods of notice:

  1. up to two years' employment: one month;
  2. two to three years' employment: two months;
  3. four to five years' employment: three months;
  4. six to seven years' employment: four months;
  5. eight to nine years' employment: five months; and
  6. 10 or more years' employment: six months.

There can be different rules about the length of the period of notice in a collective agreement or in the employment agreement. In the latter case, only deviations in favour of the employee are binding.

An employee who has left the employer because of shortage of work has the right of precedence, within his or her unit and collective agreement area, for nine months from the end of the employment. This right of precedence presupposes that the employment has lasted for at least 12 months, the employee has informed the employer about his or her interest and also that he or she has suitable qualifications for the new job.

The employer is obliged to notify the Labour Office of cutbacks in operations that will affect at least five employees. Certain formalities are required, and if the employer omits to notify the Labour Office it must pay a penalty fee.

If the employer claims shortage of work as the objective ground but the employee believes that other reasons have been taken into consideration instead, the employee can claim that the termination should be declared void. An employee who believes that the employer is in breach of the rules concerning the order of priority can only claim damages. If the violation consists of an employer's refusal to comply with a judgment, in which a court has declared a dismissal or summary dismissal invalid, then compensation must be paid according to the fixed sums stated in the Employment Protection Act, which vary according to the duration of the employment and the employee's age.

Employment disputes are often ended by a settlement agreement, where severance is paid because there is no objective ground for terminating the employment. Another relevant method is to negotiate the contents of the short list with the unions. Redundancies are very often settled by way of negotiated notices.

iv Protected categories

There is a special order of priority for union representatives, which is of great importance to the union.

In addition, employees who have been given special employment because of reduced work ability shall, in the case of dismissal owing to lack of work, be given priority to further work irrespective of the order of priority.