The government has issued a proposal to temporarily strengthen the existing system for short-time work. The new system means that the salary cost for an employee can be reduced by more than 70%, while the employee may retain almost 90% of ordinary salary.
The Swedish government introduced a short-time work allowance program ('korttidspermittering') in response to the COVID-19 pandemic, effective as of 16 March. Under that program, which is discussed in detail here, employers can reduce employees' hours and reduce their salaries, and the government covers much of the cost.
New level for short-time work
In a new proposal from the government, the system for short-time work is proposed to be temporarily strengthened. Short-time work means that employers can agree with their employees on a reduction of working time for six months, with a possible extension for three more months, due to the COVID-19 crisis. The costs for such reduction are divided among the state, the employer and the employee. Up to now under the existing program, employers have been able to reduce the working hours for employees by up to 60% and the employees receive 92.5% of their salary during this period.
The new proposal adds a new level, meaning that employers can reduce the working hours of employees by up to 80%, from 1 May until 31 July 2020, and that the state bears most of the costs. The employer needs to reach an agreement with the employees if it is not bound by a collective bargaining agreement, or if it is bound by a collective bargaining agreement, with the trade unions from the date the reduction of hours enters into force.
The new system means that the salary cost for an employee can be reduced by more than 70%, while the employee retains almost 90% of his or her ordinary salary.
Updated chart of the levels of contribution
|
Level |
Reduction of hours | Salary decrease | Employer |
Government - contribution |
The employer's reduction of costs for the workforce |
| 1 | 20% | 4% | 1% | 15% | -19% |
| 2 | 40% | 6% | 4% | 30% | -36% |
| 3 | 60% | 7,5% | 7,5% | 45% | -53% |
| 4 (May -July) | 80% | 12% | 8% | 60% | -72% |
Application to the Swedish Agency for Economic and Regional Growth
According to the Swedish Agency for Economic and Regional Growth, employers that have already applied for and received a prepayment for four months of short-time work should be able to adjust the subsidy payment when the new law enters into force. The same applies to those employers who apply from now until the law enters into force (i.e. the application should be made according to the existing system and then adjusted afterwards). Updates on how to seek support will be updated by the agency.
Controls
The government has been informed that the system for short-time work is being abused by employers. Because of this, extra resources will be added to control employers that apply for support. Inspections will be carried out by 130 employees from the Swedish Tax Authority.
Originally published May 11, 2020.
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