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

What you need to know about the 'biggest reform of the Swedish labour market in modern times'
One of the main changes related to Sweden's 'last in, first out' rule regarding lay-offs. Photo: Melker Dahlstrand/imagebank.sweden.se
The Swedish government is putting forward a proposal to change the country's labour laws, following long-running negotiations that sparked a significant political crisis.

The law under review is the Employment Protection Act, called Lagen om anställningsskydd in Swedish and usually referred to as LAS.

One of the key principles is “last in, first out” when it comes to redundancies. If a company needs to restructure or cut jobs, the most recently hired person should generally be first to go. There are exceptions, such as if that employee performs a key role that can’t easily be done by someone else, but the proposals would make this even more flexible.

Under the new proposals, employers would be allowed to exempt up to three employees from the “last in, first out rule”. That’s more than under current regulations, which allow small companies with no more than ten staff are allowed to exempt up to two employees.

“Having employees with the right skills is becoming ever more important,” Labour Market Minister Eva Nordmark told a press conference on Tuesday morning, presenting the proposals which she called “the biggest reform of the Swedish labour market in modern times”.

The centre-left government agreed to “modernise the Employment Protection Act” as part of its 2019 deal (the January Agreement) with the Centre and Liberal Parties, where these centre-right parties were given considerable influence in policies in order for the Social Democrats and Green Party to be able to govern.

So the government ordered a review of the law, presenting its first results in June 2020.

Under those proposals, the changes suggested were even more significant than those put forward this week: up to five employees would be exempted from the “last in, first out” rule, and it would not be possible for any dismissal from a small company (up to 15 employees) to be declared invalid.

The ruling Social Democrats criticised these proposals, as did many trade unions, so talks began between politicians, trade unions and employers’ organisations. But these collapsed, which meant that under the January Agreement, the responsibility fell to the government to put forward a new set of proposals.

That’s what it is now doing.

Another big change in the new proposals is that in the case of disputes over unfair dismissals, the employer would not always have to pay the salary of the affected employee until the issue is resolved, as is the case today (if a court rules that the dismissal was unfair, the employee would then receive their salary for the time the dispute was ongoing).

It would become more difficult in general for employers to dismiss employees for so-called personal reasons. And there would be greater opportunities for employers to get funds for adjustment and skills support for staff, even when they are not covered by collective bargaining agreements.

These proposals are currently set to become law on June 30th, 2022, and companies and organisations will be able to start applying the new rules from October 1st, 2022. However, they will need to be passed by parliament first.

There is broad consensus in favour of the latest proposals among employers’ organisations and trade unions, Swedish newswire TT reports, though smaller businesses and some unions represented by blue-collar trade union confederation LO have criticised the government’s suggestions as too inflexible for smaller companies.


Member comments

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  1. Was part of the intention of LAS to help keep employers from firing their most highly paid employees (because getting rid of them would offer the greatest savings in labor cost)?

    Also, do these changes to LAS actually help this problem? –

    – “I didn’t speak any Swedish when I moved here so I got the first English-speaking job I could find, two months after landing here, in customer support for a tech startup in Stockholm. They laid me off two weeks before my six months were up, with no warning or cause.

    – “I thought that was obviously a one-off thing — shady company, shady people, bad luck, what have you. Two weeks later I got another English-speaking job, in Uppsala. Another tech startup but much longer established. The job was in one of my actual fields (marketing). A month after I started, another girl started as well, same department. It was a great job, an awesome place with lovely people all around. I loved it,” she said.

    – “Two weeks before my six months were up, they laid me off, citing costs and the pandemic. A month later, they also laid off the girl that started after me, also two weeks before her six months were up. *One month after we were both gone, they hired someone else.*

    All of the quotes are from this Local article:
    https://www.thelocal.se/20201023/either-in-or-out-why-swedens-strict-labour-laws-hurt-foreigners/

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