Sweden: Restructuring your team? Here’s how
With inflation on the rise and budgets being squeezed, it is no secret that companies are having to review the efficiency of the organisation and make savvy decisions in order to survive and thrive. Managing resources such as employees becomes a delicate balance in such situations. Companies should take great care in exploring the following options in order to achieve their short term as well as long term goals:
Retraining (upskilling) employees
This is often an overlooked option. The cost of replacing staff is astronomical and retaining existing talent to fill any gaps in the organization would increase employee engagement, boost morale, develop deeper commitment and increase productivity. In short, it sends the right message to the employees and maintains the company’s reputation.
As an employer you are entitled to change work tasks for employees and also obliged to try to relocate employees to new positions and work-tasks before considering a reduction in workforce. It is therefore important to explore reorganisation or relocation of employees as alternatives first. Do not forget that such changes would usually require a negotiation process if any of your employees are members of the union.
Offering pay cuts
According to a recent study, 74% of employees say that they would take a pay cut for a new job with a thriving culture that is ideal for growth. This suggests that, as long as your company keeps morale high and has a realistic long term growth plan, employees may be willing to stay on at a lower salary. An employer is entitled to change terms and conditions of employment under such circumstances, but this needs to be negotiated if the employee is a member of a union. It is also important to evaluate whether a decision like this is the best way to attract and retain employees in the long-run.
Reduction in workforce
This decision should never be taken lightly. However, it is sometimes the inevitable outcome. In such cases, employers should be aware of the following statutory restrictions / formalities that must be be observed in order to avoid financial and reputational penalties:
Before deciding on reorganisations or reductions in workforce, the company should first negotiate with the relevant unions, if an affected employee is a member of a union. Use PocketLaw to create your summons to the unions (“Förhandlingsframställan”) and a brief notification of the meeting (“Förhandlingsprotokoll”) within minutes.
In Sweden we have the last-in-first-out principle. An employer needs to make a list of all employees, covered by the Employment protection Act. As a practical step, the list could, for example, be created in an excel-file: with the first employee being numbered as “1” and the latest hire listed as last.
If you negotiate and decide after the 1st of October 2022 an employer is entitled to keep any 3 employees (disregarding the last-in-first-out principle) from this list. You are only allowed to use this “exception” once every three months. When you have gone through the process, reductions in workforce must be made in the order of last-in-first-out from the list.
If a reduction in workforce remains the final decision after you have taken all of the necessary considerations and steps, you should ensure that a formal notice (“Besked om uppsägning arbetsbrist”) is served on the affected employees.
Breaching any of the above (and other parts of the stringent process) could result in substantial financial consequences for employers. It is therefore important that you understand the complicated requirements and stay in control. Use tools like PocketLaw to guide you and create your legal documents in minutes.
To find out more about how to deal with your reduction in workforce, click here to speak to one of our friendly experts!