Sweden Updates Employment Protection Act

The Swedish labor market makes for a very interesting case study as it is primarily governed by collective bargaining agreements between the employers and trade and labor unions. Both parties are responsible for maintaining peace by basing agreements on a comprehensive framework provided by the Government, which it updates as necessary. Here we discuss the changes to Swedish labor law in 2020.

Over the past year, the Swedish Government has proposed multiple changes to stabilize the labor market, reduce the chances of undue disturbance in the future, and increase productivity.

Extension of Employment Protection
The Swedish Government first implemented the Employment Protection Act in 1982. Its primary purpose was to provide job security to all employees until the age of 67. As per the Act, an employer could not terminate an employee unless for a justifiable cause and age was excluded from the list of justifiable reasons for termination.

The parliament passed a new bill pertaining to the Employment Protection Act on June 18, 2019, that made amendments to the Act. As per the new stipulation, an employer cannot terminate an employee aged 69 and below without a justifiable cause. The new stipulations, effective as of January 1, 2020, ensure employees have the right to hold their positions until the age of 69, after which they become eligible for retirement.

Special Investigation
To increase the efficacy of the Swedish labor market, the Government assigned sub assignments to investigators. The assignments are to conduct research and present improvement proposals in four fields.

  • Competence development as employers responsibility
  • Employee adaptability
  • Lowering of termination costs
  • Draft proposals to bring balance to the Employment Protection Act

The current Swedish labor law is biased towards protecting employee rights, which has become a significant reason for unrest among employers. The Government has set up an investigative body to present legislative proposals to create balance. The proposals will focus on reducing the burden on employers for employee competence development and training. The changes also aim to transfer responsibility for employee adaptability to the worker and reduce termination costs for the employers. The changes will be proposed in 2020 and implemented in 2021.

Limiting Industrial Action
To ensure the prevalence of peace in the labor market, the Swedish Government has laid out stipulation restricting industrial action. The law clearly states that no party can take industrial action to exert pressure on the other. For any action to be justifiable, it must be:

  • Over a violation of the collective bargaining agreement
  • To make amendments to the existing agreement
  • To draft a new collective bargaining agreement.

The trade union must also have discussed the demands with the employer before pressing for action. The new rules were implemented in August 2019 but are part of the Swedish Governments’ latest initiatives to ensure the prevalence of peace in the labor market.

There aren’t many changes to Swedish labor law in 2020 besides the extension of employment protection act to employees until the age of 69. However, we see the Government becoming increasingly active in creating a well-balanced and fair labor market.

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