Short-time work allowance means that an employer’s personnel costs can be reduced by up to 50% and at the same time the employee receives 90% of his or her salary. The State covers up to three-quarters of the cost. This is a measure that many help companies under severe pressure due to the COVID-19 outbreak.
What does short time work allowance (korttidspermittering) mean?
A short time work allowance is when employees’ working time is reduced for a limited period and the salary is decreased during the same period. The proposal is for a state contribution where the government will be paying up to 50% of employees’ salaries.
How can an employer be eligible for the new contribution?
First of all, the short time work allowance requires an agreement in order to obtain the state contribution. The company therefore has to agree with employees about the reduced hours and salary.
That means that if the employer is bound by a CBA, the reductions must be agreed in a central and local CBA. If the employer is not bound by a CBA a minimum of 70% of the employees at the geographical workplace must have agreed in writing.
Application to the Swedish Agency for Economic and Regional Growth
A condition for contribution is that the employer applies to the Swedish Agency for Economic and Regional Growth. If the contribution is accepted, the following cumulative conditions must be fulfilled:
More details regarding what the application needs to include will be issued through a decree. This has not yet been communicated, but it will include what kind of information the employer needs to prove the financial problems among other information. Note that the employer must be able to show that it is possible to go back to business as usual. That means that the problems have to be of a temporary nature. The employer should, for example, provide in the application reasonable evidence that the intention is to go back to full production with regular working time after the period of short time work allowance.
Point 4 above should be be highlighted in particular. According to the government, these different alternative measures may include changes in the work schedule but also dismissal of employees who are not permanent employees and who are not deemed to be critical to the business, i.e. consultants, hired staff or temporary employees. This assessment must be made on a case-by-case basis by each employer. It is important that an employer that applies for approval can describe why a certain measure is or is not available given the nature of the business.
What is the level of contribution?
In summary, the proposal means the following in cost savings and distribution of costs for employers, employees and the government:
Reduction of hours
The employer’s reduction of costs for the work force
1 20 4% 1% 15% -19% 2 40 6%
30% – 36% 3 60 7.5% 7.5% 45% – 53%
The contribution can be paid for six months. This may be extended for three months.
The levels above are fixed and cannot be changed through a central or local CBA or agreement.
What can employers do now?
Visit our Corona Virus Resource Page and find the information and tools you need to help you manage your international workforce in these times of crisis.