New ruling strengthens TechSweden's advice on the Rental Act
Malmö District Court has ruled that an IT and technology consulting company is not covered by the definition of a staffing agency in the Swedish Agency Workers Act. The decision is in line with the advice TechSverige has given its member companies.
- "It is gratifying that Malmö District Court, in line with TechSverige's advice, makes the assessment that consulting companies with mixed forms of delivery are not to be regarded as staffing companies in the sense of the Swedish Agency Workers Act, as they do not employ consultants for the purpose of being hired out to client companies under their control and management," says Karolina Löf, General Counsel at TechSverige.
The background to the judgment is that a client company (Bjärnum) brought an action to clarify whether the client company could recruit a consultant, employed by the consulting company (Sigma), who worked for the client company without violating a recruitment ban in the business agreement between the parties. Since the question of the validity of the recruitment prohibition depends on the question of whether the Letting Act should apply to the consultancy assignment, the parties agreed that the following questions should be examined:
1. Is Sigma a staffing agency (i.e. does Sigma have employees for the purpose of hiring them out to client companies for work under the control and direction of the client company)?
2. Is the Consultant employed for the purpose of being hired out to client companies for work under the control and direction of the client company (Bjärnum)?
Malmö District Court answered the first question in the negative and found that Sigma was not to be regarded as a staffing agency within the meaning of the Letting Act.
Malmö District Court stated in summary:
The assessment of the circumstances gives a picture that essentially supports Sigma's claim that the company is not a staffing agency, even if there are circumstances that point in a different direction. Even if Sigma's employees to some extent may work under the client company's control and management when it comes to reinforcement resources, it has not been shown that they are employed for the purpose of being hired out to client companies for work under the client company's control and management. Overall, the District Court considers that it has been shown that Sigma is not a staffing agency according to the definition found in Section 5 of the Agency Work Act via the Staffing Directive.
The grounds for the judgment also highlight the following circumstances that indicate that the IT and engineering consultancy is not a staffing agency within the meaning of the Agency Workers Act:
The purpose of the Staffing Directive and the nature of the workforce
- While the Temporary Agency Workers Directive protects workers who need job security, Sigma's employees are highly educated, skilled and well paid.
- The employment conditions do not indicate that the staff need the protection envisaged by the Temporary Agency Workers Directive.
Organizational and operational structure
- Sigma is a member of an employers' organization that does not organize temporary employment agencies.
- The company's articles of association specify project and consulting activities, not staffing.
- The registration with Statistics Sweden shows no link to staffing.
Recruitment process and tasks
- Job advertisements indicate that staff work in mixed delivery modes (project and reinforcement resource), not solely agency, which means that the consultancy does not employ agency staff for the purpose of hiring them out.
- Employment agency advertisements usually specify that the employee will work directly for a named client company.
- Time sheets show that employees work both in projects and as reinforcement resources.
Corporate culture and staff relations
- Sigma organizes social activities (e.g. AW, conference trips), which strengthens the internal community - something that is unusual for staffing companies.
Division of labor within Sigma
- 60% of the activity consists of project commitments, where employees are not under the management and control of the client company.
- Employees work for several client companies and in different forms of work, which contradicts the idea that they were hired solely for temporary work.
- "The District Court's assessment is in line with current law from the European Court of Justice regarding the scope of the Staffing Directive and the Agency Workers Act," says Karolina Löf. "It remains to be seen whether the judgment will be appealed, but my assessment is that the outcome should also stand up in the higher court.
With that assessment, the district court did not really need to answer the second question of whether the individual consultant was employed for the purpose of being hired out under the control and direction of the client company. However, the District Court found that this question should also be answered in the negative, as it was clear from the employment contract that employees are hired for the purpose of working in different forms of delivery that may vary depending on the client's preferences and needs. The evidence also showed that the consultant had carried out work for client companies other than Bjärnum.
- This provides reassurance to many of our member companies that have non-solicitation clauses in their business contracts. Such clauses can therefore continue to be used and are valid. The Rental Act cannot be used as a pretext by the client company to recruit skills from the consulting company.
Read more:
Malmö TR T 4977-24 Judgment 2025-02-14