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Short time working – how does it work?

<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >Short time working – how does it work?</span>

In an attempt to save Swedish jobs and companies in connection with the corona virus, the Swedish government has introduced a number of financial aid packages. Among them is the new rules concerning short-time working (short-time layoff). But what exactly does short-time working mean? How are pensions affected? How about the vacation? And is it voluntary for employees or not? We help you to iron out your questions. Update September 23, 2020: New version of Branschkod för korttidsarbete from Srf konsulterna, section For those who would like to know more. Short-time working means that employees temporarily reduce their working time – but still receive up to about 90 per cent of their wage. It’s the central government that steps in and assumes the major part of the employers’ costs when employees reduce their working time. The purpose is that affected companies should be able to retain their employees instead of laying them off and to be able to gear up quickly again when the situation improves. The current rules entered into force on April 7; however, it will be retroactively applied to as early as from March 16.

Short-time working and short-time layoffs – what is the difference?

The current support for short-time working is based on a law from 2013 which was changed in April 2020 due to the corona pandemic. The measure was previously called short-time layoff (“korttidspermittering”), but the term currently used is short-time working (“korttidsarbete”). Compared with the previous system, the new system also entails a significantly higher subsidy share covered by the central government.

What are the valid amounts and levels?

At the moment, there are there fixed levels for reduction of working hours, resulting in the following reductions in pay for the employees:

  • Level 1 (20 per cent reduction of working hours): 4 percent wage reduction
  • Level 2 (40 per cent reduction of working hours): 6 percent wage reduction
  • Level 3 (60 per cent reduction of working hours): 7,5 percent wage reduction
  • Level 4 (80 per cent reduction of working hours): 12 percent wage reduction

For the employer’s part, the short-time work allowance means that wage costs can be cut with about 50 per cent according to the current rules. The support is calculated on the basis of the employee’s ordinary pay up to a maximum of 44 000 SEK – the so-called salary ceiling. For employees that earn more than that, the employer is responsible for the excess part. If you have further questions concerning how the employees’ wages and the employer’s costs are affected, we advise you to use this short-time working calculator (only available in Swedish).

Which criteria must be fulfilled by the company to be eligible to receive the support?

The support for short-time work is directed towards companies that suffer from temporary and serious economic difficulties as a consequence of an unforeseen crisis, the corona pandemic being one such example. Employers who wish to take part of the support need to submit an application to the Swedish Agency for Economic and Regional Growth . Depending on whether or not the company has a collective bargaining agreement, different rules apply concerning the introduction of the measure. For companies bound by a collective bargaining agreement, there need to be support for short-time working in central and/or local agreements. If there is no collective bargaining agreement, there should instead be a specific agreement in which at least 70 percent of the employees give their consent to participate in short-time working. To be granted support the employer must also have made use of other available measures to reduce its labour costs, such as the dismissal of consultants and temporary agency workers.

Is participation in short-time working voluntary for employees?

Yes and no. The collective bargaining agreement governs if this applies. Otherwise, an approval and consent is required in an agreement with the respective employee.

Is the pension affected?

Yes, the pension is affected. However, according to Swedish Agency for Economic and Regional growth this effect is estimated to be marginal as the short-time working is only for a brief period of time over the course of one’s working life.

What happens with the annual leave days?

Qualification for leave should, according to most agreements, remain unaffected during the period of short-time working. However, there may be differences between agreements. Therefore, you should verify what is stipulated in your agreement.

What applies for employees who are already working part-time?

For part-time workers, the reduction of working time and salary paid is to be calculated on the basis of the extent of the part-time work and the ordinary part-time salary. For instance, if you have a 75 % part-time employment, 30 hours a week is your ordinary working time. On the basis, your working time is cut with 20, 40 or 60 per cent and your salary with 4, 6 or 7,5 per cent. For those who would like to know more: On the website of the Swedish Agency for Economic and Regional Growth there is extensive information about all conditions surrounding short-time working and a comprehensible Questions and Answers section. Are you working with payroll and HR and have questions concerning the practical management in your personnel system? Srf konsulterna has made the guide Korttidsarbete – Branschkod för praktisk lönehantering (information in Swedish). For users of Flex Applications time and payroll systems we have made an instruction that tells you what you need to do to make sure that the management is correct (information in Swedish). Temporarily reduced employer contributions, abolished qualifying deduction, disease carrier allowance… Do you find it hard to gain an overview of all the new rules due to covid-19 affecting the personnel administration? We have put together all the rule changes in this quick guide. A world in flux requires a flexible payroll system. Read more about Flex HRM Payroll – your payroll system in the cloud. Sources: Tillväxtverket Regeringen

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