Hamilton Perspectives Newsletter

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.