Termination of employment – shortage of work/redundancy

Termination of employment due to shortage of work/redundancy can occur when the employer needs to reduce the number of employees. It may be the result of an organisational restructuring, rationalisation or change in the direction of the business.

It is up to the employer to decide which activities are to be conducted and how they are to be organised. It is therefore also the employer who decides when there is a shortage of work in the business, i.e. there is a redundancy situation.

If your employer has a collective agreement, it will probably contain rules and benefits for employees that you need to know about in the event of terminations of employment due to shortage of work/redundancy. You may need to consult your employer organisation for advice.

Before being entitled to terminate someone’s employment, the employer is obliged to negotiate with the relevant trade unions. These are the trade unions that have concluded any collective agreements with the employer, or the trade unions to which the employees belong. You also need to explore the possibility of redeploying employees. For more on both the obligation to negotiate with and redeploy employees, see the page on Termination of employment – rights and obligations.

Order of priority rules in the redundancy process

According to the Employment Protection Act, employees are made redundant according to an order of priority, the ‘last in – first out’ principle, i.e. the employee with the shortest period of employment has their employment terminated first. The order of priority list is drawn up after the redeployment list has been investigated. An employee who has refused a reasonable offer of redeployment is not protected by the order of priority rules.

An employee’s place in the order of priority is determined by their total length of service with the employer. If two employees have the same length of service, the one who is older has precedence to continue to be employed.

Where there is a collective agreement, order of priority lists must be drawn up for manual and non-manual workers, and by physical workplace (operating unit). The employer can agree with the relevant trade unions to derogate from the order of priority rules through a collective agreement.

Exceptions from the order of priority list

Under the Act, an employer with no more than ten employees may exclude two employees from the order of priority list if they are of particular importance for the continuation of operations.

Employees in managerial positions or who are members of the employer's family are examples of workers who are not covered by the Employment Protection Act (LAS). They are therefore not included in the order of priority list.

A trade union representative can also be excluded from the order of priority list if it is of particular importance for trade union activities that the person stays.

An employee who has been given a particular job because of reduced capacity to work can also be excluded.

Conditions for preferential treatment

An employee who has been employed for a total of twelve months in the last three years has a right to preferential re-employment.

The same applies to a seasonal worker who has been employed for more than six months in the last two years or has been employed for two consecutive seasons.

Information on preferential treatment and appeals

The written notice of termination given to employees whose employment is to be terminated must contain information that the employee:

  • can have the termination reviewed by the courts
  • can ask for the notice of termination to be declared invalid
  • can claim damages
  • should declare any interest in re-employment

Briefly about the LAS, the Employment Protection Act

The LAS is a protective piece of legislation that regulates the relationship between the individual employee and the employer, such as permissible forms of employment, requirements for objective grounds for termination of employment and the length of notice periods.

The LAS applies to employees in all sectors. Public sector employees are also subject to the Public Employment Act (LOA).

For those in managerial or similar positions, only the provisions on the right to information about conditions that are material to the employment relationship apply.

Read more about the Employment Protection Act on the Swedish Parliament website