What’s the background to the reforms? 

Sweden’s Social Democrat-led government in 2019 agreed to “modernise the Employment Protection Act” as part of the January Agreement it struck with the Centre and Liberal Parties. 

The Left Party then threatened to topple Prime Minister Stefan Löfven if the reforms went through, while Social Democrats risked losing the support of the Centre and Liberal Parties if they reneged on the deal. 

In the end, the government squirmed out of this seemingly impossible situation by getting Sweden’s unions to agree to a new set of laws with employer organisations. 

This so-called LAS-avtalet, or Employment Act deal, significantly weakened and watered down the initial proposals, but were accepted by both the Left Party and the Centre Party.  

How do the new reforms change Sweden’s last-in, first-out labour laws? 

Under the new rules which come into force this month, employers will be allowed to exempt up to three employees from the “last in, first out rule”. That is more than under current regulations, which allow small companies with no more than ten staff to exempt up to two employees.

Under the government’s original proposal, five employees would have been exempted and companies with less than 25 employees would not have had to follow the “last in, first out rule” at all. 

For foreigners working in Sweden, the new rules will nonetheless still make your employment a little less secure if you are one of the longer term employees at a small to medium-sized company, as it will give your employer leeway to retain three employees who have been employed more recently than you, while letting you go. 

On the other hand, if you are a more recently hired employee (which foreigners are perhaps more likely to be) it may make your position more secure, as you have a chance of being selected as one of the three essential employees the company wants to retain. 

According to Sofie Rehnström, under the new law, it’s not possible for employees who are made redundant while staff employed after them are retained to challenge this decision. 

“It’s not possible for the union to have a dispute in the Labour Court [arbetsdomstolan], because it’s up to the employer to decide,” she says.  

Sofie Rehnström is a lawyer at the Swedish Trade Union Confederation (LO). Photo: LO

READ ALSO: What you need to know about the ‘biggest reform of the Swedish labour market in modern times’

What is the background to Sweden’s Employment Protection Act? 

Sweden’s Lagen om anställningsskydd, or Employment Protection Act, imposes strict controls on how employees can be sacked or made redundant, requiring employers to give a minimum notice period, and only to sack staff with good reason (such as misconduct or simply being bad at their jobs), or for business reasons, such as a market downturn or a change in company strategy. 

In the latter case, the law requires workplaces to fire their staff according to a list of seniority (Swedish: turordningslista).

Given similar tasks, the last employee to be hired will be the first to be fired. Among employees hired at the same time, priority is given to older employees.

“One category is when it’s for organisational reasons, maybe you want to change the company structure, and then you have the other category, which is when they want to actually get rid of you because you have underperformed,” Rehnström explained. 

Laying off workers for organisational reasons is normally referred to as “shortage of work”, or arbetsbrist, under the law. 

How will the last-in, first-out principle work now? 

If a company is scaling back on the number of employees doing a certain task because of lower demand for its products, under the Employment Protection Act, the more junior employees would always be laid off first. 

The way the new law works is that the employer can select three employees from the seniority list drawn up of staff who they believe are “especially important” for their business. 

“Maybe you have 25 people, and the employer says, I want to terminate ten of them. Normally, you go the ten that is at the bottom of the list,” Rehnström explains. “Now, they can say, “I want to take three of them off the list, because I believe they are especially important for my business”.

The ten that are then made redundant will then be the bottom ten after these three employees have been taken away. 

Which employees will be most affected? 

According to Rehnström, this change will have the most impact on people working in smaller companies. 

“If you’ve got a small number of employees, it’s an enormous difference,” she says. “It’s designed to make smaller employers better able to follow their own wishes, so you will be weakening the protection for workers in a smaller company. Will it make a difference for big employers? Of course not.” 

According to Rehnström, the last-in, first-out principle already only applies in some situations. If a company is shutting down a whole unit or exiting an entire industry, it can already often lay off everyone, regardless of seniority. 

“To be able to stay in your position, you must be able to do the work you are assigned,” she says. “If there’s an reorganisation – maybe your job is doing one thing, and they want to do things a different way – that can change the way the law is applied.” 

Say you are an aluminium welder, and your company decides to exit the welding business, then all welders can lose their jobs, even if they have been at the company longer than specialists in the next door rivet division which the company is retaining. 

“You can divide employees into different groups, and if it’s a whole department, then you can get rid of all of them.”

Employers do in this case have a duty to try to relocate employers to other divisions where their skills can be used, but this, Rehnström notes, is often not possible. It’s often a case, she says, of, “we have a position in the office. Can you do that work? No, you can’t. Ok, then bye bye.”

How does the law change short-term contracts? 

The law replaces the old “general fixed-term employment” or allmän visstidsanställning category of job with a new “special fixed-term employment”, särskild visstidsanställning category. 

While both are short-term contracts, the new law means that employees will earn the right to a permanent contract more rapidly. 

Whereas before an employee would win the right to a permanent job if they had worked for two years out of a five-year period, they now only need to work for one year. Employees also get a “preferential right to re-employment”, in a new short-term contract with the employer if they have worked for nine months out of the last three years. 

The way the time in employment is counted for this purpose is also changing. If an employee has three or more short-term contracts in a single month, then the entire period from the start of the first contract to the end of the last counts towards getting a permanent contract. 

So, for instance, if you have a short-term contract to work two days between January 2nd and January 3rd, another between January 10th and January 11th, and another from January 29th-30th, then you would count 28 days rather than six. 

“You can earn your days and years until a permanent position faster,” Rehnström argues. “They are not able to use this hour-by-hour employment in the way they used to.” 

This is potentially a significant improvement for foreigners working in short-term contracts in Sweden, although it remains to be seen how it will affect the phenomenon of ut-LASning, in which employers carefully monitor to the amount of days those on short-term contracts are employed so that they are never forced to hire them permanently. 

In certain fields, such as journalism and academia, this has in recent years meant those without full-time employment bounce between short-term contracts with different rival companies, working at each only so long as is possible without earning the right to permanent employment.

How does the new law change what happens in the event of a dispute over loss of employment? 

If an employee who has been sacked or made redundant takes their employer to the Swedish Labour Court for unfair dismissal, employers are now no longer required to continue to either employ them or pay their salaries while the dispute is ongoing. 

The employment ends at the end of the notice period given by the company, regardless of the case, and the court cannot order the employer to continue to employ the person during the court process (as was the case until October 1st). 

The only exception to this is if the person being sacked is a union official who is “of particular importance to union activities at the workplace”, in which case a court can order the employer to take them back for the duration of the case.