Information about when the new rules in the Swedish Agency Work Act are applicable
New rules in the Swedish Agency Work Act came into effect on 1 October 2022. The Act applies to workers who are employed by staffing agencies for the purpose of being assigned to client companies to work under the client company’s supervision and direction. The new rules in the Agency Work Act were part of the agreement regarding a new Main Agreement and amendments to the Swedish Employment Protection Act which the Swedish Confederation of Enterprise, LO and PTK entered into in 2020.
The new rules mean that a worker who has been hired from a staffing agency for more than 24 months must be offered employment at the client company or, alternatively, must receive 2 months’ salary in compensation from the company that has hired the worker. Consequently, application of the new rules cannot take effect until 1 October 2024 at the earliest. More information about the new rules is provided below in the section entitled “Advice for companies that hire workers from staffing agencies”.
When is the Swedish Agency Work Act applicable?
The introduction of the new rules raises the issue of the scope of application of the Agency Work Act.
The Agency Work Act is only applicable to workers who are employed by staffing agencies for the purpose of being assigned to client companies to work under the client company’s supervision and direction.
The following conditions must be met in order for the Act to be applicable.
- The agency from which the worker is hired runs a business that involves the assignment of workers to clients to work under the client’s supervision and direction, i.e. a staffing agency according to the law.
- At the time of entering into the employment relationship with the staffing agency, the purpose of the worker’s employment is to be assigned to clients to work under the client’s “supervision and direction”.
- The purpose of the individual assignment is that of staffing under the client company’s supervision and direction.
- The assignment is not permanent.
- The business agreement is intended for staffing assignments, which are typically characterised by the fact that the supplier has no liability in relation to delivery and/or work results, and the client thus only has limited – if any – possibilities to make claims due to improperly performed service delivery or lack of professionalism.
A specific negotiation obligation falls on the client company in connection with the hiring of workers from staffing agencies; this is regulated in section 38 of the Swedish Co-Determination in the Workplace Act and is commonly found in certain collective agreements with LO associations. How this has been handled historically at the client company can be of indicative guidance.
Since the Swedish Agency Work Act constitutes an implementation of an EU directive, it is ultimately the Court of Justice of the European Union that decides which situations are to be considered agency work according to the law. All situations have not yet been tried, and it is therefore not possible to guarantee the outcome of a possible dispute in court.
As a general rule, consulting firms are not subject to the Swedish Agency Work Act
It is TechSverige’s assessment that, as a starting point, traditional consulting firms – a classification that applies to many of our member companies – are not subject to the rules in the Agency Work Act. The reasons for this are as follows.
A consulting firm delivers a service, and the consulting firm’s staff are employed for the purpose of being part of this delivery. Even if a member of staff is out working from time to time at the premises of a client company, this does not mean that it is a matter of agency work in the sense of the law.
For staffing agencies, the purpose of the employment relationship is for the worker to be assigned to a client to work under the client’s supervision and direction. A staffing assignment is characterised by an individual filling a vacancy at the client.