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Short-term working and redundancies – what are the rules?

Most businesses are being adversely affected, directly or indirectly, by the rapid spread of the coronavirus. This is forcing many companies to take drastic actions. So how can you go about reducing your company’s workforce and staffing costs in the right way during these difficult times?

The coronavirus, covid-19, or SARS-CoV-2 are all names for the virus currently spreading across the globe. No industry is left untouched, with the hospitality industry faring especially badly, not to mention the aviation industry which has been brought to screeching halt. Many other industries are not being left unscathed either.

The Swedish government is working to alleviate the pressure on Swedish companies to enable as many as possible to ride out the storm. Yet in spite of this, more and more companies are announcing redundancies due to the bleak short-term economic outlook, while many companies are at risk of going under if the tide does not turn soon. The government has relaxed the rules on short-term working to avoid mass redundancies and hopefully save as many companies as possible; maybe even yours.                           

Short-term lay offs

The new rules on short-term working come into effect on 7 April but apply from 16 March. In practice, short-term lay offs will halve employer payroll costs while ensuring employees receive about 90 per cent of their salary. The remuneration offered can cover salaries of up to SEK 44,000 per month, which means that those with higher salaries can receive remuneration corresponding to a monthly salary of SEK 44,000.

The purpose of short-term working is to enable companies to retain their staff and get going again quickly once the situation improves. The Swedish state will cover three-quarters of the cost of staff whose working hours are reduced, which is a huge difference companied with short-term working, where the cost is shared equally between the state, the employer, and the employee.

Redundancies due to a lack of work

As an employer, you determine whether there is a lack of work. A lack of work is always an objective reason for redundancy, and the employer’s assessment is the one that applies. After determining that there is a lack of work, as an employer you have an obligation to manage this correctly. 

There are many steps to go through, and the redundancy process must be managed correctly and in the right order. In this situation, it is important to consider the following points:

  • The obligation to offer relocation prior to redundancy
  • Priority rules
  • Special rules for small businesses
  • The obligation to negotiate with the union
  • The obligation to give notice

The right to re-employment

As an employer, you need to be aware of the rights that the staff who you make redundant due to a lack of work have in respect of re-employment. The right of re-employment or preferential right applies throughout the redundancy period and nine months thereafter. 

We have rules, laws, and collective agreements to ensure that this process is managed correctly. As an employer, you have an obligation to familiarise yourself with these and to act correctly.

If you feel you need support on these issues, Azets can help. Contact us