Short-term work allowance

On Monday 16 March 2020, the Swedish government issued actions regarding short-term layoff to help companies through the difficult situation caused by COVID-19.

Please note that the advice below presumes that the company is not bound by a collective bargaining agreement. However, even if the company is not bound by such agreement, the employees may still be tied to a trade union, which may lead to that the employer must involve the trade union before certain decisions are made.

The employer cannot change the terms of employment unless the employee and the employer agree on new terms for the employment. The employees are entitled to their normal salary even if the company decides to shorten the employees working hours. Hence, layoff (Sw. permittering) without pay is not allowed.

However, on 16 March, the government launched a support package for short-term layoffs (Sw. korttidspermittering) to help companies keep their employees and be able to quickly bring them back to work when the situation shifts back to its normal stage.

The support package means that the employees’ working hours can be reduced by 20 %, 40 % or 60 % while the employees are receiving approx. 90 % of their salary.

The government will cover up to three-quarters of the cost (up to monthly salaries of SEK 44,000). The remaining quarter is shared between the employee and the employer, meaning that the employer’s cost can be reduced with up to 53 %. The reduction in salary for the employee will be either 4 %, 6 % or 7,5 %, depending on the reduction in working hours.

The period for which a company can receive the support is limited to six months, with a possible extension for another three months. The support is available from the 16 March 2020 until the end of 2020. However, the application process will open first on 7 April.

To be able to receive the support, the company must be able to show that the financial difficulties occurred as a result of external events that could not have been possible to avoid, such as the effects of the corona virus. The company must also show that the business is normally profitable and will be competitive in the long term. This can be shown by reporting of historical financial figures etc.

Additionally, to be able to receive the support, the company must have used other available measures to reduce employee costs, such as dismissal of non-critical staff who are not permanently employed.

The support from the government will only cover salary costs. No support will be paid for other types of allowance or benefits.

The short-term layoffs must also be supported by at least 70 % of the employees in a written agreement. The agreed reduction in working hours and salary shall be the same for all participating employees within the operating unit. It is possible to change the reduction in working hours during the short-term layoff, provided that this is agreed upon in a new agreement.

At Synch, we are happy to guide you through the necessary steps of this process and assist you with the application and provide you with the documentation needed for short-term layoff.

If you want to learn more please contact your Synch contact or send an email to jennie.gunnarsson@synchlaw.se