Transferring employees on an outsourcing in Sweden: overview

A Q&A guide to outsourcing in Sweden.

This Q&A guide gives a high level overview of the rules relating to transferring employees on an outsourcing, including structuring employee arrangements (including any notice, information and consultation obligations) and calculating redundancy pay.

To compare answers across multiple jurisdictions, visit the Transferring employees Country Q&A tool.

This Q&A is part of the global guide to outsourcing. For a full list of jurisdictional Q&As, visit www.practicallaw.com/outsourcing-guide.

For the general rules relating to outsourcing, visit Outsourcing: Sweden overview.

Contents

Transferring employees

Transfer by operation of law

1. In what circumstances (if any) are employees transferred by operation of law?

Initial outsourcing

The transfer of employees is regulated by section 6b of the Employment Protection Act (1982:80). The Act does not apply to a transfer by way of a sale of shares. The Act applies if the following conditions are met:

  • The outsourcing is made by way of a transfer of assets.

  • There is a transfer of an undertaking or part of an undertaking.

  • The undertaking transferred has kept its identity (that is, a transfer as a going concern), which is assessed by looking at the circumstances of the transfer as a whole.

Employees who object to their transfer cannot be transferred.

Change of supplier

On a change of supplier, there is generally no transfer by operation of law to an incoming supplier, unless the conditions of the Employment Protection Act are met (see above, Initial outsourcing).

Termination

On termination of an outsourcing, there is no transfer by operation of law from the transferee back to the transferor.

 
2. If employees transfer by operation of law, what are the terms on which they do so?

General terms

Under section 6b of the Employment Protection Act (1982:80), all the rights and liabilities of the transferor at the time of the transfer are transferred to the transferee (that is, the supplier). The customer's employees have the right to keep their employment terms and conditions unchanged.

The customer remains jointly liable with the supplier for any economic liabilities relating to the period before the transfer. This can be varied by the parties in the outsourcing agreement, which is usually the case.

Pensions

The customer remains responsible for any accrued benefits of the employee, unless the supplier agrees to assume responsibility for them, and the employee consents.

However, all other benefits and obligations under the employment contracts are assumed by the supplier (see above, General terms).

Employee benefits

See above, Pensions.

Collective agreements

Section 28 of the Act on Co-Determination at Work (1976:580) contains the following rules regarding collective agreements:

  • Where the transferor but not the transferee is bound by a collective agreement, this agreement binds the transferee, unless the transferor terminates the collective agreement by giving a 60 days' notice. The employees can also terminate the transferor's collective agreement within 30 days of being informed of the transfer.

  • Where both the transferee and the transferor are bound by a collective agreement, the transferee's agreement applies to transferred employees.

  • Where the transferee's collective agreement has not yet come into effect, the transferee must apply the transferor's collective agreement for one year after the transfer.

Redundancy pay

3. How is redundancy pay calculated?

There is no redundancy pay under Swedish law. An employee is entitled to unchanged salary and benefits during the termination notice period. The employer can deduct any income that the employee receives, or could have obviously received, from another employer during the notice period.

A transfer of assets or business is not in itself a valid ground for termination. Termination based solely on an outsourcing constitutes a wrongful termination, which can have the following consequences:

  • The termination can be declared void.

  • The employer can be liable to pay damages.

Harmonisation

4. To what extent can a transferee harmonise terms and conditions of transferring employees with those of its existing workforce?

Transferring employees have the right to transfer on their current employment conditions. The transferor's collective agreements may also apply (see Question 2, Collective agreements).

However, a transferee can enter into new employment contracts with the consent of the employees.

Dismissals

5. To what extent can dismissals be implemented before or after the outsourcing?

An employee can be dismissed on valid grounds, such as technical, financial or organisational changes, that are not related to the transfer of employment. If there has been a decision to proceed with the transfer, the transfer itself will be presumed to be the reason for termination.

National restrictions

6. To what extent can particular services only be performed by a local national trained in your jurisdiction?

There are few limitations on services being performed by a local national that are relevant to an outsourcing situation. For example, duties involving the exercise of authority and the protection of national interests can be reserved to Swedish nationals.

Secondment

7. In what circumstances (if any) can the parties structure the employee arrangements of an outsourcing as a secondment?

If the outsourcing is subject to section 6b of the Employment Protection Act, an employee has the right to transfer its employment to the transferee (see Question 2, Initial outsourcing). However, an outsourcing can be structured as a secondment if the employee consents.

Information, notice and consultation obligations

8. What information must the transferor or the transferee provide to the other party in relation to any employees?

There is no legal requirement to provide any specific information.

 
9. What are the notice, information and consultation obligations that arise for the transferor and the transferee in relation to employees or employees' representatives?

If the transferor is bound by a collective agreement, it must consult with the relevant trade union(s). Where the transferor is not bound by any collective agreement, it must conduct consultations with the trade unions that have members affected by the transfer.

Consultation must take place before the transferor decides on the change of business. The timing of the consultation varies. However, these are generally finalised within two months before signing the agreement. Failure to observe the obligation to consult with the trade unions may lead to the transferor's liability for the losses caused.

 

Online resources

The Post and Telecoms Authority (PTA)

W www.pts.se

Description. Official website of the PTA. Contains resources and information on the outsourcing of telecommunication services.

The Financial Services Authority (FSA)

W www.fi.se

Description. Official website of the FSA. Contains resources and information on outsourcings in the financial sector.

The Swedish Data Inspection Board (DIB)

W www.datainspektionen.se

Description. Official website of the DIB. Contains resources and information on data protection.

Swedish Parliament

W www.riksdagen.se

Description. Official website of the Swedish Parliament. Provides access to official legislation (in Swedish).

Swedish Government

W www.regeringen.se/sb/d/1910

Description. Official website of the Swedish Government. Contains translations of certain acts (in English).

The Swedish Competition Authority

W www.kkv.se

Description. Official website of the Swedish Competition Authority. Contains resources and information on public procurement.



Contributor profiles

Jim Runsten

Synch Advokat AB

T +46-761 761 999
E jim.runsten@synchlaw.se
W www.synchlaw.se

Professional qualifications.LL.M, 1996

Areas of practice. IT; telecommunications; outsourcing; corporate and commercial.

Languages. Swedish, English

Professional associations/memberships. Member of the bar association since 2002.

Charlotta Emtefall

Synch Advokat AB

T +46-761 761 909
E charlotta.emtefall@synchlaw.se
W www.synchlaw.se

Professional qualifications.LL.M, 2000

Areas of practice. IT; telecommunications; regulatory and commercial.

Languages. Swedish, English, French

Anders Hellström

Synch Advokat AB

T +46 761 761 990
E anders.hellstrom@synchlaw.se
W www.synchlaw.se

Professional qualifications. LL.M, 2003

Areas of practice. IT; telecommunications; data protection; outsourcing; commercial.

Languages. Swedish, English

Professional associations/memberships. Member of the bar association since 2009.


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