Sweden

    1.1 In what circumstances does the employee transfer law apply?

    The employee transfer law applies when a business or a part of one transfers from one employer to another. A transfer of business is defined as the transfer of an autonomous economic unit which preserves its identity after the transfer.

    The following factors are decisive:

    • the nature of the business or activity; 
    • whether material tangible or intangible assets has been transferred;
    • whether most of the staff have transferred;
    • whether customers have been transferred;
    • the degree of similarity between activities before and after the transfer;
    • the duration of any interruption in performance of the activities.
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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    1.2 Does the employee transfer law apply to (a) a sale of a business or (b) outsourcing?

    (a) Sale of a business

    The employee transfer law applies to the sale of a business, where the assets of a business, such as premises, equipment, customers, staff and goodwill are sold and the business is continued, the law will normally apply. The law apply to leases, rentals, mergers, acquisitions and gifts, provided the general criteria for transfers are met.

    As a general rule share sales are not covered by the legislation.

    (b) Outsourcing

    The employee transfer law applies to outsourcing situations, provided the general criteria for transfers are met.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    1.3 In outline, what are the implications of the employee transfer law?

    If the employee transfer law applies:

    • Employees employed by the transferor are entitled to transfer to the transferee.
    • Transferred employees’ rights and benefits deriving from their employment with the old employer transfer with the exception of invalidity, survivor and pension benefits. Pension benefits transfer if they form part of a transferred collective bargaining agreement. Generally, non-collectively agreed pension plans do not transfer but it is legally uncertain whether this means that the transferee must pay pension premiums based on the individual employment agreement signed by the transferor and employee.
    • The transferor and transferee are jointly liable for obligations arising before the transfer.
    • The transfer law prohibits any termination of employment as a result of the transfer itself.
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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    2.1 Who transfers?

    The employee transfer law only protects employees who are employed within the transferring undertaking. Should the transfer only concern part of the transferor’s business, the law will only apply to employees ‘assigned’ to the relevant organised grouping of resources or employees transferred. Whether an employee is assigned depends on:

    • the proportion of time spent within the transferring entity as compared to other parts of the business - i.e. which entity the employee has mainly been associated with;
    • the employee’s job description and
    • where it is most natural for the employee to continue his or her employment.

    An overall assessment should be made.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    2.2 Can employees object to transferring?

    Employees have a right to object to being transferred. Hence, it is not possible for the transferor and transferee to agree upon whether or not the employees will transfer. An employee who, within reasonable time, objects to being transferred, will remain in the employment of the transferor. An objection can be implicit. Should the employee remain in the transferor’s employment, the transferor can give notice to the employee in accordance with the general rules for terminating employment for redundancy.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    2.3 What happens to terms of employment contracts?

    The transferee ‘steps into the shoes’ of the transferor for most purposes, as if it had always been the employer of the individual concerned. All rights and obligations under the employment contract transfer to the transferee except those relating to retirement, invalidity, or survivor benefits.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    2.4 What about other employee benefits?

    The transferee is obliged to provide the employees with the same terms and conditions as they enjoyed with the transferor. If this is not possible, they should be compensated or provided with an equivalent benefit. Any such changes should be agreed upon between the transferee and the employees (or with the trade unions if the terms and conditions are provided in a collective bargaining agreement).

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    2.5 What happens to pension rights?

    Where the transferor has a collective bargaining agreement, all pension rights and obligations to pay premiums according to the collective agreement will automatically transfer.

    However, supplementary pension schemes do not transfer. It is uncertain from a legal point of view whether this means that the transferee is obliged to pay pension premiums or not under an individual agreement signed by the transferor with an employee.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    2.6 What liabilities transfer?

    The transferor and the transferee will be jointly as well as individually liable for economic obligations as well as damages relating to the time prior to the transfer, with no exception. Criminal liability will, however, not transfer.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    2.7 Do collective agreements transfer?

    If the transferor is bound by a collective agreement but the transferee is not, the collective agreement of the transferor will transfer. The transferee will be bound by the collective agreement and must apply it to all employees falling within the scope of the agreement (i.e. even the transferees’ existing employees). This can cause issues if the transferee is not aware that the transferred business is bound by a collective agreement. However, the transferor can give notice to terminate the collective agreement prior to the transfer.

    If the transferee is already bound by another collective agreement that applies to transferred employees, that agreement will apply to the transferred employees after a one-year prohibition period during which the transferee must apply the terms and conditions of the transferor’s collective agreement (if any) to the transferred employees. This protects transferred employees against detrimental changes during the first year of the transfer.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    2.8 How does the transferee obtain information on transferring employees?

    There are several ways for the transferee to find out who will transfer and their terms. Usually, the transferor will provide this information as a part of the purchase negotiations. If the transferee is bound by a collective bargaining agreement and the trade union that signed it is also involved with the transferor, the transferee may also receive information through that trade union.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    3.1 Can employers make changes to employment contracts?

    In situations were neither the transferor nor the transferee is bound by collective bargaining agreements, changes to employment contracts can only be made with the consent of the employees. If no consent can be reached the employer may, under certain circumstances, give notice of termination by reason of redundancy, together with an offer of a new employment contract. This can be done immediately after the transfer.

    If the transferor is bound by a collective agreement (and the transferee is not) the collective bargaining agreement transfers to the transferee. In this case, the transferee may generally only make changes to the employment contract with the consent of the employee and provided that the changes are more favourable than the provisions in the collective bargaining agreement.

    If only the transferee or both the transferee and the transferor are bound by collective bargaining agreements, the transferee may generally only make changes to the employment contract with the consent of the employee and provided that the changes are more favourable than the provisions of the collective bargaining agreement. 

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    3.2 When can employers safely dismiss employees before or after a transfer?

    Neither the transferor nor the transferee may terminate employment as a result of the transfer itself.

    However, an employer is not prevented from giving notice of termination of employment for economic, technical or organisational reasons that include changes to the workforce (ETO reasons). These ETO reasons may occur as a consequence of the transfer. Generally it is safer in Sweden to terminate employment after the transfer rather than before. ETO reasons can include any changes to the workforce that the employer thinks are necessary and that are not made for personal reasons to do with individual employees.

    Terminations of employment made by reason of the transfer itself may be declared ineffective by a court upon request by dismissed employees. Both financial damages (for loss of income) and general damages (ranging from between EUR 5,000 and 13,000) may be imposed as a result of an unlawful dismissal.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    4.1 Who must employers consult?

    Both the transferor and the transferee must inform and consult with the employee organisations before the decision to transfer is made.

    Where a collective agreement applies at the workplace, the duty is to inform and consult the trade union representatives who are party to the collective agreement. If neither transferor nor transferee is bound by a collective agreement, they must inform and consult every trade union that has members affected by the transfer.

    If there is no applicable collective agreement and all affected employees are non-unionised, consultation is not necessary.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    4.2	What information must they provide?

    There is no legislation stating explicitly what information employers are required to provide upon the transfer of an undertaking. However, the information should include, for example, details about the transfer and any, proposed restructuring of the organisation.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    4.3	What does consultation involve?

    The employer must make an honest effort to consider the arguments made by employee representatives. The employee representatives cannot declare a decision made by the employer void, or prevent it being implemented. If the parties cannot agree, the employer’s views will prevail.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    4.4	How long does consultation last?

    Consultation with employee organisations can sometimes last for many weeks, and during this time the employer’s decision will normally be postponed. If the organisation is bound by a collective bargaining agreement, the consultation may be held in two phases (i.e. a local and central consultation), which may extend the process to between one and two months.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    4.5	What happens if an employer fails properly to inform or consult?

    Failure to inform and consult may render the employer liable to damages or fines. For example, according to case law of the Swedish Labour Court, the failure of an employer to consult with employee organisations before making a decision about restructuring may make the employer liable to pay damages to each affected organisation up to a maximum of approximately EUR 30,000. No criminal penalties exist, and there is no provision for the employees themselves to be compensated.  Note also that failures of this kind will not prevent the transfer from going ahead.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    5.1	Identify up to three issues in this country of which employers should be aware?

    Employees have the right to object to being transferred and so the transferor and transferee cannot agree between themselves which employees transfer. If they do not comply with this, employees may claim continued employment with the transferor or, under certain circumstances, raise claims for unfair dismissal against the transferee. 

    The scope of the Directive has been vastly extended within Swedish law by the application of the employee transfer law to transfers within the public sector. The transfer of a public body to another public body along with privatisations within the public sector, constitute transfers falling within employee transfer law. This expansion has created some uncertainty.

    There is also uncertainty about how to interpret the exemptions to the prohibition on redundancies, in other words, when terminations for economic, technical or organisational reasons may be permitted. 

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    5.2	Would the employee transfer law apply on a cross-border transfer into or out of this country?

    An employee affected by a cross-border transfer of an undertaking out of Sweden should be offered continued employment in the new workplace. If this does not occur, the employee can turn to a Swedish court with claims against the transferee in accordance with Swedish employee transfer law.

    An employee affected by a cross-border transfer of an undertaking into Sweden should be offered continued employment in Sweden in accordance with the employee transfer directive. However, Swedish employee transfer law does not apply in this case. Hence, if the transferee does not offer continued employment in Sweden, the employee will need to make any claims against the transferee in the courts of the country where he or she is currently employed.

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

    6.1	What are the main national laws protecting employees upon transfers of businesses?

    Provisions concerning the protection of employment in connection with transfers of undertakings are contained in sections 6b, 7 and 25 of the Employment Protection Act and in section 28 of the Co-Determination in the Workplace Act.

    Provisions concerning the obligation to inform and consult are contained in sections 10 – 22 and 28 of the Co-Determination in the Workplace Act.

    There may be supplementary provisions in collective agreements that must also be observed.

     

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    Author: Elmzell Advokatbyrå AB

    Date: January 2017

     

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