Warning of job loss, redundancy, termination of employment

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1 Warning of job loss, redundancy, termination of employment organisational changes in the private sector The Swedish Union of University Graduates of Law, Business Administration and Economics, Computer and Systems Science, Personnel Management and Social Science

2 Warning of job loss, redundancy, termination of employment organisational changes in the private sector Is there talk of staff cutbacks at your workplace? Has your employer issued a warning about job losses? Have you been given notice with absolutely no warning? The labour market is in a constant state of flux, no matter what the state of the economy happens to be. Constant technological and economic development means that everyone, even people who seem to have a high degree of job security, can expect to feel the effect of organisational changes at some point in their working life. Jusek s aim is to provide its members with information about the rules that apply when a company intends to downsize its workforce. You also need to know about your rights and the economic safety net that is in place. You can find out more by visiting our website at or by contacting Jusek s members hotline on

3 Laws and Agreements An employer who intends to axe jobs is bound by a comprehensive system of rules. Most of these rules can be found in the Swedish Co-Determination in the Workplace Act (abbreviated as MBL in Swedish) and the Swedish Employment Protection Act (abbreviated as LAS in Swedish). When companies have entered into collective agreements, the provisions of these agree ments supplement the statutory rules. The collective agreement may contain regulations that supersede certain statutory requirements. Varsel An employer planning to shed jobs must notify the Swedish Public Employ ment Service (Arbetsförmedlingen) if at least five employees will be affected. How much advance notification the Public Employment Service should be given will depend on the number of employees affected by the employer s plans: No more than 25 employees affected More than 25 but no more than 100 employees affected More than 100 employees affected 2 months 4 months 6 months As a general rule, the actual organisational change may only be implemented once the warning period has come to an end. In practice, this means that no employees should leave their employment before both the warning period and the notice period have expired; accordingly, their salaries should be paid throughout this time. Please note that warning of job loss and notice to terminate employment are two different things. The employer s plans may change during the warning period; if 100 people are warned that they may lose their jobs, this does not necessarily mean that all of them will eventually lose their jobs. The employer must enter into negotiations Under the provisions of the Swedish Co-determination in the Workplace Act, any employer planning staff cutbacks is obliged to enter into negotiations with the local trade union organisations before making any decision on this issue. Accordingly, the employer must take the initiative to request negotiations when warning the Public Employment Service of job losses. At companies where there is no local trade union representative a graduates union or a designated contact who can represent you as a 3

4 member, Jusek s representatives can negotiate on your behalf and safeguard your rights. Which trade union federations are called to negotiations will depend on whether there is a collective agreement at the workplace, as well as the relation ship between the parties to this agreement. Any trade union federation that is a party to the collective agreement will be called to negotiations. If there is no collective agreement at all, the employer should negotiate with all the trade union federations that have members at the workplace. That is why it is important to let your employer know that you are a member of Jusek when asked this for organisational change purposes. If Jusek is not a party to the collective agreement in force at your workplace, it is unlikely that we will be called to negotiations. However, Jusek can always request negotiations with your employer in order to safeguard your rights in your individual case. All aspects of the company s business should be thoroughly discussed and analysed during local negotiations. Employee cutbacks might not be the best solution in either the short or the long term. All the alternatives to job losses must be investigated. In this respect, the employer s negotiation obligation means that the trade union organisations should be given a genuine opportunity to influence the planned transition. The employer should provide written information to the trade union federations involved, setting out the reasons for the planned redundancies and how many employees will be affected, in plenty of time before negotiations begin. According to the Co-Determination in the Workplace Act, the employer also has an obligation to provide ongoing information to the trade union organisations about the company s business development; this also applies to companies with no collective agreements. Consequently, trade union organisations should have been alerted at an early stage that a transition of the company s business or organisation might be on the cards. The meaning of the concept of redundancy In order to be able to dismiss an employee, the employer must show that termination of employment is based on just cause. Redundancy (work shortage) constitutes just cause for termination of employment. That said, 4

5 It is important to let your employer know that you are a member of Jusek when asked this for organisational change purposes. there is no legal definition of the concept of redundancy: it comprises all those reasons not specific to the individual as grounds for termination of employment. The employer s decision to phase out all or parts of the business, use staffing companies, restructure, change business focus, transform the business on profitability grounds or simply discontinue the business due to lack of interest are examples of situations included in the redundancy concept. A business does not necessarily have to be unprofitable for redundancy to be called into play, nor does there need to be a lack of work to perform. In this context, an employer is not allowed to use redundancy as grounds for termination of employment of an individual employee if the real reason is personal grounds. The employer s obligation to redeploy Before an employee may be made redundant, the employer always has an obligation to try to redeploy anyone risking redundancy because of the organisational change. There will be no just cause for termination of employment if the employer can reasonably be required to offer the employee another position. 5

6 In practice, this means that your employer must carry out a thorough investigation of any vacant positions that might be suitable for you. The employer should investigate the possibilities of redeployment anywhere in the business. Even operating units in other locations belonging to the same company may be taken into consideration. The offer of redeployment should be made to you personally. In order to be considered for redeployment, you must be sufficiently qualified for the job in question. Sufficiently qualified means that you should possess general qualifications in terms of the education and experience necessary for the position; however, you are entitled to a training period. The order of priority rules If there are no redeployment options and the organisational change leads to redundancies, the employer is obliged to apply the order of priority rules in the Swedish Employment Protection Act. Your position in the order of priority is determined on the basis of the total length of time you have been working for your employer. Longer-serving employees take precedence for continued employment over employees who have joined the company more recently (the last-in-first-out principle). If Your position in the order of priority is determined on the basis of the total length of time you have been working for your employer. 6

7 the periods of employment are identical, the older employee will take precedence. If keeping your job under the order of priority rules necessitates redeployment, the stipulation that you must be sufficiently qualified for the position will still apply. Please refer to the previous page for an explanation of the sufficiently qualified concept. Contact Jusek s member hotline for advice Before deciding the order of priority, an employer with a maximum of ten employees can exempt two employees he feels to be necessary for running the business. An order of priority should be established for each operating unit. Operating unit refers to those parts of a company that are located in one and the same building or within one and the same enclosed area. If the employer is bound by collective agreements, a separate order of priority should be established for each contract territory. This usually means that two order of priority lists are established: one for white-collar workers and one for blue-collar workers. If the employee works from home, this should not be regarded as a separate operating unit purely for this reason; the organisational connection between the employee and the main workplace should also be factored into the assessment. A joint order of priority can be established for all an employer s operating units in one and the same location if a collective agreement is in place and a signatory trade union federation requests this measure. If the employer is bound by a collective agreement, the local parties can agree to exemptions from the statutory order of priority provisions; this is known as a collectively agreed redundancy list. The aim of this is to allow local parties to consider the skills the business needs and to make running a competitive business possible even after staff cutbacks. If you find out that a collectively agreed redundancy list may be drawn up at your workplace, you should contact Jusek for advice. Termination of employment If neither redeployment rules nor application of the order of priority rules result in an offer of continued employment, you may be issued with a termina tion notice as soon as negotiations are complete. The termination notice should be in writing and should usually be given to you in person. 7

8 Please note that a verbal termination will still be valid, even if the formal requirements for the termination notice to be in writing have not been met. In the termination notice, the employer must state what you should do if, for any reason, you want to claim unfair dismissal or request damages. Please refer to the information about unfair dismissal below. The termination should also state if you have the right of priority for re-employment. Unfair dismissal claim must be lodged within two weeks If you want to contest a verbal or written termination notice you have received, it is important to contact Jusek immediately so that we can in vestigate your dismissal. It may be a case of unfair dismissal if there is no just cause. If this is the case, your employment will continue on the same terms as before until the dispute is settled. A claim for unfair dismissal must be lodged within two weeks of receiving termination notice, which is why it is very Contact Jusek immediately if you suspect there is no just cause for your dismissal important to contact Jusek without delay if you suspect that there is no just cause for your dismissal. The fact that the employer has broken the order of priority rules will not in itself support a claim of unfair dismissal. The employer may incur a liability to pay compensation, however. In certain cases, the employer may incur a liability to pay compensation for any failure to comply with the formal requirements relating to termination notices. Length of the notice period The length of the notice period you are entitled to is regulated by your employment contract, the Swedish Employment Protection Act or collective agreement. If there is no collective agreement, the statutory regulations will be mandatory. This means that the employer s notice period can never be shorter than the statutory notice periods. That said, you are allowed to agree to a longer notice period for your own dismissal. If there is no collective agreement and no agreement for a longer notice period, by law you are always entitled to one month s notice from your employer. 8

9 If your contract of employment was entered into on 1 January 1997 or later, the notice period your employer must give you relates to the total length of time you have been employed, as follows: Length of service Employer s notice period 0 2 years 1 month 2 4 years 2 months 4 6 years 3 months 6 8 years 4 months 8 10 years 5 months at least 10 years 6 months If your employment contract was entered into before 1 January 1997, your employer must give you the following notice periods: Age Employer s notice period 25 years 2 months 30 years 3 months 35 years 4 months 40 years 5 months 45 years 6 months There may be longer notice periods for both employer and employee at workplaces governed by collective agreements. Notice periods vary between different sectors. In the case of redundancies, for example, certain collective agreements stipulate that the employer must extend a white-collar worker s notice period by six months if he/she has reached the age of 55 years and has been employed for at least 10 years. Contact Jusek if you are uncertain about your notice period entitlement. Notice of termination during parental leave If you are on parental leave on maternity leave prior to giving birth or on full-time parental leave with or without parents allowance and are made redundant, your notice period will not commence until you return to full or part time work or until the time you were supposed to have returned to work according to the parental leave application valid at the time the notice of termination is issued. 9

10 Notice of termination of fixed-term employment One of the first measures that an employer often takes when organisational changes result in redundancies is to refrain from offering prolonged employment to employees on fixed-term contracts. Strictly speaking, this is not termination of employment as the employment contract runs its course as per agreement. As fixed-term employment contracts are entered into for a set time only, the contract usually does not stipulate any notice period. The employee and the employer are bound by the employment contract for the contractual period and any organisational change may mean that there are no specific tasks to perform. The employer will still be obliged to pay the employee s salary for the remainder of the contractual period. If your fixed-term employment contract does specify a notice period, the employer may terminate it on redundancy grounds. Individual employment contracts Your employer may suggest that you enter into an individual employment contract with the company in anticipation of an impending organisational change. The reasons for proposing a contract vary depending on the situation in each individual case. Always contact Jusek for advice if your employer suggests a contract like this. During the notice period The employee will usually remain under an obligation to work during the notice period. You are entitled to your salary and other employment benefits during the notice period, even if your employer releases you from the obligation to work. If you are being made redundant, you are entitled to attend employment interviews, visit the job centre and suchlike during the notice period with no salary deductions. The employer may not schedule holidays during the notice period if the notice period is shorter than six months. You should also receive any holiday entitlement paid out in the form of holiday pay no later than one month after your employment ends. If you have been released from your obligation to work or received severance pay from your employer but do not have another job, you should register as 10

11 You are entitled to your salary and other employment benefits during the notice period, even if your employer releases you from the obligation to work. a job seeker at your local job centre immediately, even if you have an income for the time being. You should do this to protect your right to income-related sickness benefits, which otherwise is only protected during the time you are earning a salary. To find out more about this, please contact the Social Insurance Office (Försäkringskassan). Before your last day at work, you should remind your employer to fill out an employer s certificate. You will need this certificate to apply for un employment benefit from your unemployment fund (A-Kassa). The form is available on your unemployment fund s website. It is also important to request a testimonial before you leave the workplace. Remember to review your insurance coverage and your pension arrangements when your employment comes to an end. The payment of pension premiums usually ceases when you leave your employment. The collective agreements contain insurance coverage lasting for three months after employment ends. There is more information about this on the PTK website. The right of priority for re-employment You will have the right of priority for re-employment in the business for which you previously worked if your total length of service with that employer in the last three years amounts to more than twelve months. 11

12 Job Security Councils are tasked with supporting affiliated companies and their employees as they deal with redundancies. That said, you must be sufficiently qualified for the vacant position. The right of priority is valid during the notice period and for nine months after your final day of employment. You must actively inform your employer if you want to assert your right of priority. The employer is under an obligation to consider individuals with the right of priority when hiring new employees. However, we recommend that you actively monitor which posts are advertised during the right of priority period. Swedish Job Security Councils (Trygghetsråden) Many of Jusek s private-sector members will be able to access Job Security Council services by virtue of collective agreements. Job Security Councils are tasked with supporting affiliated companies and their employees as they deal with redundancies. Your employer must register you with the Job Security Council in question. Employees receive individual help and, in certain cases, supplementary income support as well. You will find more information about your particular Job Security Council and the help it can provide on its website. 12

13 Unemployment fund and complementary income insurance As a working member of Jusek, you should be a member of the Akademikernas Erkända Arbetslöshetskassa, AEA Unemployment Fund. In order to qualify for unemployment benefit, you must fulfil the unemployment fund s membership and employment terms and conditions. If you want to apply for unemployment benefit from the unemployment fund, you must register with your local job centre (Arbetsförmedlingen) on the first working day that you are unemployed. The AEA website contains more information on unemployment benefit rules and how to apply. As a working member of Jusek, income insurance is included in your member ship subscription. You will qualify for complementary income insurance compensation if you lose your job, provided that you have been a member of the union for at least 18 months prior to your dismissal and you fulfil the terms and conditions for compensation from the un employment fund. Income insurance compensation gives you 80 percent of your income up to an amount of SEK 80,000 for 120 working days. You can also take out a voluntary supplementary insurance which extends the length of time you receive income insurance. You will find more information about compensation rules on Jusek s income insurance website. After you have been given notice In our experience, the vast majority of our members who have been made redundant manage very well. For many of them, losing their jobs has triggered an often positive career transformation. Jusek can help you during this phase and provide support and assistance to improve your situation. Once you have been given notice, it is vital to use your notice period productively to find a new job. You should actively look for work, take advantage of your networks and develop your skills. You could also consider options like starting your own business or taking a temporary job. You are always welcome to contact Jusek if you have questions about looking for work, your career and your situation on the job market. Read more at 13

14 Checklist Get in touch with your local trade union representative or Jusek if you find out that your employer is planning a organisational change. If you are given notice without any prior information or negotiation, contact Jusek immediately. Make sure that your Jusek and unemployment fund membership details are up-to-date and that all dues have been paid. Prepare yourself for any redeployment or order of priority discussions by updating your CV and making sure that your employer has up-to-date information about your qualifications. Check with Jusek before signing any written agreements. Start looking for other work immediately if you suspect that you might lose your job. Contact your Job Security Council and job centre as soon as you receive notice of termination; do not wait until the period of notice has ended. Submit an application for re-employment to your employer if you are interested in asserting your right of priority. Register at your local job centre to safeguard your right to incomerelated sickness benefits. Make sure that you have received your employer s certificate and any testi monial from your employer before you finally leave your work pl a c e. Register at your local job centre on your first day of unemployment once your period of notice expires if you intend to apply for unemployment benefits from your unemployment fund. The employer s certificate should be sent to your unemployment fund. Income Insurance receives information from the unemployment fund and will contact you automatically if you are entitled to compensation. 14

15 Make sure that you receive the correct final salary and holiday pay from your employer. If re-employment is an alternative be ready to assert your right of priority. Let Jusek s membership register know that you a job seeker; this entitles you to a reduced subscription. Review your insurance coverage and your pension arrangements. When you receive an offer of a new job, contact Jusek for advice about terms and conditions of employment and salary statistics. Let Jusek s membership register know that you have returned to paid employment. Contact list Jusek Telephone Jusek s Income Insurance Akademikernas erkända arbetslöshetskassa Telephone Swedish Public Employment Service (Arbetsförmedlingen) PTK pension and insurance issues Job Security Council (Trygghetsrådet TRR) Job Security Council (Trygghetsrådet TRS) Job Security Council (Trygghetsrådet Fastigo) Swedish Social Insurance Office (Försäkringskassan) 15

16 Jusek at a glance Jusek is the Swedish Union of University Graduates of Law, Business Administration and Economics, Computer and Systems Science, Personnel Management and Social Science. Jusek is a member of the Swedish Confederation of Professional Associations (Saco) and has no particular political affiliation. Jusek has approximately 80,000 members and is one of the largest university graduate unions in Sweden. Jusek. Box 5167, SE Stockholm, Sweden Tel.: Fotoskrift AB T0034EN ex Billes Tryckeri AB

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