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REDUNDANCIES AND REORGANISATIONS

2018-09-26

As a general rule, an employer in Sweden has the right to reorganise its business as it sees fit. A reorganisation may have an impact on the workforce and as a result, employers may need to dismiss redundant employees.

A redundancy situation as a result of a reorganisation is generally considered a so-called “just cause” (a legal requisite) for termination of employees under Swedish labour law.  There is generally no burden of proof on the employer to prove redundancy.  The right is, however, not without certain conditions.

Firstly, there cannot be a “just cause” for dismissal due to redundancy if it is reasonable to require that the employer offers potentially redundant employees other work within the company.  In other words, the employer must consider whether there are other positions within the company that the employee in question could be transferred to and if so, give the employee a replacement offer.  The replacement offer should typically be for a position within the company for which the employee is already qualified.  Adequate qualifications imply that the employee should be able to perform in accordance with the demands of the new position within four to six months after moderate, on-the-job, training.  A rule of thumb is that the employee’s capabilities when commencing the replacement position should be what one would expect from a new hire for that same position.

If there are no vacant positions, or if it is not reasonable to require the employer to offer any positions available, the employer may proceed to dismiss the redundant employees.  When doing so, the employer must adhere to a certain order of dismissal.  This order is called the “last-in-first-out” principle, and means the last hire is the first to be dismissed in the case of a reorganisation.  The purpose of the principle is to protect employees with seniority and to prevent the employer using a restructuring of the company as a pretext to terminate certain employees.  Please note that there are exceptions to this principle, for example for employees with special competences as well as for smaller businesses.

Recently, there has been some clarifications from the Labour Court regarding what implications a replacement offer may have.  Recent developments have shown a shift from strong employment protection to a focus on the right for companies to reorganise the business at their own discretion.  In the Labour Court’s judgment AD 2016 no 53, an employee had accepted a replacement offer for a position with a lower salary but argued to keep the previous salary until the notice period, as set forth in the employee’s employment agreement, had expired.  The argument was that the acceptance of being transferred had been involuntary and as such, it was to be seen as a de facto dismissal with a subsequent notice period.  The employer, on the other hand, wanted to implement the conditions attached to the new position directly after the transfer into the replacement position had taken effect.  The Court stated that the objective of replacement offers is to protect the employee’s rights to keep their employment, and not to protect the rights to certain conditions attached to a position which has been made redundant.  A replacement offer to a position with a lower salary cannot automatically be considered as a dismissal.

 

Related People: Carl-Fredrik Hedenström

Related Service Areas: Employment

Related Countries: Sweden

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