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Changes to the Swedish Employment Protection Act (LAS) – How does this affect temporary labour supply chains?

On the 1st of October 2022, Sweden introduced changes to the Swedish Employment Protection Act (LAS). How does this affect the temporary worker, recruitment business and ultimate end client?

Since the introduction of the changes to the Swedish Employment Protection Act (LAS), the time in which an individual can be deemed a temporary employee has been reduced from 24 months to 12 months.

After the initial 12-month period, indefinite employment is automatically in effect along with all the additional benefits and termination period as required with permanent employment. It is therefore very important for the supply chain to understand the notice period required from all parties, should the temporary worker-run past the initial 12 months.

These new changes also bring with them new obligations to the ultimate end client utilising the labour.

How do the new rules affect end clients?

If outsourced employed labour is utilised for 24 months, the supplied worker must be offered either permanent employment directly from the ultimate end client, or, instead, they can offer to pay the supplied worker 2 months’ salary in full. This salary is payable within 1 month after the 24th month has been exceeded.

The good news is that for any temporary employee that started before the 1st Oct 2022 and had also concluded contracts before this date, the 24-month period during which the client has the above-mentioned obligations starts effectively from the 1st Oct 2022. Therefore, the earliest the client would need to offer permanent employment, or, 2 months’ salary to a worker, would be the 1st Oct 2024.

Due to these points, it is extremely important to keep open communication between end clients, recruitment businesses and the outsourced employer (Swedish Umbrella Company).

The Swedish Employment Protection Act (LAS) is wholly and specifically concerning employed individuals. Contractors working within Sweden under their own company (AB) or as a self-employed individual are not affected.

However, before suggesting any long-term temporary employees set up their own businesses to circumnavigate these changes, we would suggest seeking independent legal advice to understand the miscategorising of labour (disguised employment) and the tax risks to the supply chain by doing so.

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