Hamilton Perspectives Nyhetsbrev

Raised retirement age as of 1 January 2020

On 16 October 2019, the Swedish Parliament vo­ted in fa­vour of the Government’s pro­po­sal re­gar­ding a ra­i­se of the age li­mit for the na­tio­nal pub­lic pen­sion (Sw. all­män pen­sion), and for amend­ments to the Employment Protection Act (Sw. la­gen om an­ställ­nings­skydd) (the “EPA”) re­gar­ding the right to re­main in employment. The amend­ments will en­ter in­to for­ce on 1 January 2020.

Purpose of the amend­ments

According to the Government bill, the li­fe ex­pectan­cy in Sweden is incre­a­sing. The incre­a­sed li­fe ex­pectan­cy en­tails that the na­tio­nal pub­lic pen­sion must co­ver a long­er pe­ri­od of ti­me. In or­der to main­tain a pro­per le­vel of re­mu­ne­ra­tion, it is requi­red that the wor­king li­fe is pro­long­ed by incre­a­sing dif­fe­rent pen­sion re­la­ted age li­mits. There is no ge­ne­ral re­ti­re­ment age in Sweden, ho­wever, the­re are pen­sion re­la­ted age li­mits in dif­fe­rent re­gu­la­tions which will af­fect an employee’s de­ci­sion on when to re­ti­re. In this re­gard, the age at which the na­tio­nal pub­lic pen­sion can start be­ing drawn will be ra­i­sed from 61 to 62 ye­ars as from 1 January 2020. Furthermore, the­re are pro­vi­sions in the EPA which will ap­p­ly when an employee re­aches a cer­tain age, which will be amen­ded following the ra­i­sed age li­mit re­gar­ding na­tio­nal pub­lic pen­sion.

Amendments to the Employment Protection Act

The EPA is ap­pli­cab­le to employe­es of all ages. However, the­re are pro­vi­sions in the cur­rent EPA which will ap­p­ly when an employee re­aches the age of 67. According to the cur­rent pro­vi­sions, an employee has a right to re­main in employment up un­til the age of 67. It is not per­mitted to for­ce an employee to re­ti­re be­fo­re the age of 67. As of 1 January 2020, an employee will ha­ve a right to re­main in employment un­til the age of 68, and as of 1 January 2023, this age li­mit will be ex­ten­ded to the age of 69.

Under the cur­rent pro­vi­sions, an employer desi­ring an employee to le­a­ve their employment at the age of 67 shall gi­ve the employee a writ­ten no­tice. As of 1 January 2020, an employer must pro­ceed with a ter­mi­na­tion of the employment re­la­tions­hip when the employee re­aches the age of 68 (and 69 in 2023). However, the employer may ap­p­ly a simp­li­fi­ed pro­ce­du­re in re­la­tion to the ter­mi­na­tion of employment due to re­ti­re­ment.

There is no requi­re­ment to ini­ti­a­te ne­go­ti­a­tions with any tra­de uni­on ac­cor­ding to the Employment (Co-Determination in the Workplace) Act (Sw. lag om med­be­stäm­man­de i ar­bets­li­vet) in the­se si­tu­a­tions. However, the employer shall in­form the employee in ad­van­ce and ini­ti­a­te con­sul­ta­tions (Sw. över­lägg­ning) with the tra­de uni­on. If an employer has al­re­a­dy ini­ti­a­ted ne­go­ti­a­tions ac­cor­ding to the Employment (Co-Determination in the Workplace) Act pri­or to the ter­mi­na­tion of employment due to the employee’s age, e.g. in a po­ten­ti­al re­dun­dan­cy si­tu­a­tion, the employer is not requi­red to ini­ti­a­te new con­sul­ta­tions. The ap­pli­cab­le no­tice pe­ri­od will re­main one month, and the employee will ha­ve no pri­o­ri­ty right to re-employment.