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.