Sweden Revises the Employment Protection Act (EPA)

Sweden Revises the Employment Protection Act (EPA)

Sweden Revises the Employment Protection Act (EPA)

January 30, 2023


Picture of INS Global



Picture of INS Global



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Key Takeaways

  1. An employee’s desire to remain employed is now irrelevant under Swedish employment law
  2. Temporary workers who work at a company for 24 months during a 36-month period now have the right to become permanent employees
  3. Under the new changes, employers do not have to keep employees on contract while a termination dispute is underway

Keeping track of changes in employment law is an essential part of keeping your company operations legally compliant and secure. Employment protection laws cover many different areas of employment, including contracts, payroll, termination regulations, and more. Sweden recently adopted new revisions to the Employment Protection Act (EPA) 

The changes came into effect on October 1, 2022, and cover various aspects of employment law and regulations in the country. Here, we detail the key aspects of the changes and how they may affect you as an employer. 


What are the Employment Protection Act Changes? 


There are four main changes made to Sweden’s employment protection law. These are :


Objective Reasons Replacing Objective Grounds for Contract Termination


The EPA revisions change the requirement for employee termination to ‘objective reasons’. This allows for more consistency in the termination process. It also highlights the fact that termination most often focuses on a breach of contract or workplace rules. Because of this change, an employee’s desire to remain employed is now irrelevant. In addition, this limits the chances of employees repeating the problematic behaviors in the future.


Up to Three Exemptions Allowed from Seniority Rules 


Sweden practices “last in, first out” employment, which is explained further in the section below. In brief, those who have worked with the company for the shortest time should be considered first for redundancy.  

The new employment law changes allow a company to exempt up to three employees when deciding employees’ seniority status during termination.  

For example, suppose an employer determines that one to three employees offer invaluable skills regardless of their seniority within the company. In that case, the employer can exempt them from the “last in, first out” rule to avoid losing their skills.


What is “Last in, First Out” Employment? 


“Last in, first out” is a policy applied to collective layoffs in many countries. It refers to prioritizing senior employees and dismissing junior employees or those who have been at the company for less time.  

The new changes to the Employment Protection Act let an employer dismiss long-time employees in favor of newer employees who may be essential to the company’s operations. 


Special Fixed Terms Instead of General Fixed Terms


The contract form for general fixed-term agreements has been changed to special fixed terms.  

Additionally, the revisions shorten the maximum amount of time before fixed-term employment becomes indefinite employment. Previously a fixed-term contract would become indefinite when an employee works for an employer for two years during a five-year period.

Under the new regulations, fixed-term employment automatically becomes indefinite after twelve months of work in a five-year period. 

Temporary workers who work at a company for 24 months during a 36-month period now have the right to become permanent employees. 

Unless both parties agree to a fixed-term contract, full-time agreements should be the standard. Employers must state special fixed-term agreements in writing, including a valid reason for the arrangement.

Employee Termination Disputes and the EPA


Under the new changes, employers do not have to keep employees on contract while a termination dispute is underway. The employee will be terminated at the end of the notice period, even if it is under debate. This allows employers to save on paying employee compensation and benefits during the dispute period. 

However, if the dismissal is ruled invalid, the employer will have to compensate the employee with both the salary and benefits they would have received during the disputed period. 



Manage Your Employees in Sweden Easily with INS Global 


It’s not easy to apply new employment changes correctly and quickly. This is especially true if you have company branches in several countries and have to follow legal updates for more than one system.  

Making errors regarding employee rights, contracts, and termination regulations can result in having dispute claims filed and complications. These errors can end up costing you not only in fees and fines but in damage to the trust and reputation of your company. 

Global expansion should be a safe, smooth process, and with INS Global, we can make this a reality for you. Whether you want to expand to Sweden or any other country, our PEO (Professional Employer Organization) and EOR (Employer of Record) services can ensure that your recruitment, hiring, and payroll processes align with local labor laws and requirements.  

We also offer HR services and the long-term assistance of legal advisors and counselors. That way, you can move closer to your market goals while guaranteeing the satisfaction and security of your employees. 


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