Order of Priority Rules

When terminating employment due to redundancy, the employer is required to follow order of priority rules as stated in section 22 of the Employment Protection Act "LAS" (1982:80). If there is a collective agreement at the workplace, the order of priority can instead be determined through an agreement between the employer and the trade union organization holding collective bargaining status.

Since October 2022, all employers have the possibility, regardless of the number of priority circles, to exempt up to three employees, who, according to the employer's assessment, are of particular importance for the continued operations, before the order of priority is determined. The term "particular importance" is intended to prevent arbitrary assessments by the employer of which employees should be exempted. However, according to the preparatory works of the Employment Protection Act, it is stated that employees cannot successfully claim that the employer has made a misassessment of who is of particular importance for the continued operations. However, the employer's assessment can be challenged if it violates anti-discrimination legislation or if it has infringed the right to association (see Government Bill 2021/22:176 p. 453 and AD 2005 No. 32).

If exemptions from the order of priority have been made, no further exemptions can be made in the event of redundancy within three months after the first termination.

The starting point for the order of priority for employees who have not been exempted is determined by taking into account each employee's total length of service with the employer. Employees with longer length of service have priority to remain in employment over those with shorter length of service. The order of priority rules are usually summarized by the principle of "last in, first out". If two individuals have the same length of service, the one with the highest age has priority.

The employer establishes an order of priority list based on the employees' total length of service, but competence is also important in determining who will be terminated. Competence refers to formal competence - the employee that the employer prefers to retain in employment is not necessarily the same.

Before an order of priority list is determined, the employer must conduct a redeployment investigation according to section 7 of the Employment Protection Act. If there are other vacant positions in the organization that the employee is qualified for and it is reasonable to offer the employee, the employee should be offered the relevant position. If the employee refuses a reasonable redeployment offer, there are normally valid reasons for redundancy due to redundancy.

What is a Priority Circle?

Priority circles are determined based on so-called operational units. Operational units are determined geographically. This means that operational units are determined by looking at which building, which office will be affected by the redundancy. It is not a question of which organizational affiliation is affected. This is stated in the preparatory works of the Employment Protection Act (Government Bill 1973:129 p. 260).

Within each operational unit, there may be a further division of employees into different priority circles in certain cases. Separate priority circles normally apply to workers and employees. A trade union organization carrying a collective agreement can request that the priority circle be made up of all establishments within the collective agreement area that the employer has in the locality.

In summary

  • Redundancy can occur for various reasons, such as lack of work tasks, redundancy due to reorganization, or lack of economic conditions to continue certain operations.
  • Seniority rules and their application: In case of redundancy, seniority rules according to the Employment Protection Act (LAS) apply, where the employer must follow specific rules in the selection of employees to be laid off.
  • Exemptions from seniority: The employer has the possibility to exempt up to three employees from the seniority rules, provided that they are of particular importance for the continued operations.
  • Seniority and redeployment assessment: The order of seniority is usually based on employees' length of service, but competence is also taken into account. Before the seniority list is finalized, the employer should conduct a redeployment assessment and offer any redeployments to vacant positions within the organization.
  • Seniority circles and geographical affiliation: Seniority circles are determined based on operational units, which means they are determined geographically rather than organizationally. There may also be further divisions of employees into different seniority circles depending on their status and any collective agreements.

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