As of October 1, 2022, significant amendments to the Swedish Agency Work Act (Lag om uthyrning av arbetstagare) have come into effect, with full enforcement starting on October 1, 2024. These changes are poised to impact businesses that engage temporary agency workers, making it crucial for companies to understand the new Swedish labor law and its implications on temporary staffing and consultancy services.

What is the new Swedish law on temporary agency workers?

The recent amendments to the Agency Work Act in Sweden require that any temporary agency worker assigned to the same operating unit within a client company for over 24 months within a 36-month period must be offered permanent employment. This requirement will be fully enforceable by October 1, 2024. Alternatively, client companies may opt to pay compensation equivalent to two months' salary (or three months under certain collective agreements) instead of offering permanent employment.

Why the new law matters for businesses using temporary staffing

The primary aim of these legislative changes is to ensure job security and fair treatment for temporary workers in Sweden. However, this also means increased administrative responsibilities and potential costs for businesses that rely on temporary staffing solutions. Companies must now carefully monitor the duration of their temporary workers' assignments to avoid legal complications.

Who is impacted by the new law?

This new regulation primarily affects staffing agencies and their employees who are hired out to client companies. However, there is growing concern within the industry about how this might impact consultancy firms as well. Companies that blur the lines between staffing and consultancy services, especially those where consultants work under the direct supervision of the client, might find themselves subject to these new rules.

Key compliance requirements for Swedish businesses

1. Tracking Employment Duration: To comply with the new Swedish labor laws, businesses must meticulously track the time agency workers spend at their company. Once a worker surpasses the 24-month threshold, the company must act within one month.

2. Clarifying Contracts: Ensure all contracts clearly differentiate between consultancy and staffing arrangements. This clarity will help mitigate the risk of consultancy services being reclassified as agency work.

3. Strategic Workforce Planning: Evaluate whether your reliance on temporary staffing aligns with your long-term business goals. Consider the benefits of permanent hires versus temporary workers.

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Implications for Swedish Industry Sectors

This law will have far-reaching consequences for industries such as technology, healthcare, and finance, where the demand for specialized temporary workers is high. The increased administrative burden and potential costs may lead companies to reconsider their staffing strategies, possibly shifting towards more permanent hiring solutions.

Preparing for October 2024: What your business should do

As the full enforcement of these amendments approaches, it is crucial for businesses to take proactive steps to ensure compliance. This includes reassessing current staffing and consultancy agreements, ensuring accurate tracking of workers’ employment durations, and seeking guidance on the implications of the Agency Work Act.

Conclusion

The amendments to the Swedish Agency Work Act represent a significant shift in how businesses must manage their temporary workforce. By understanding the nuances of this law and preparing accordingly, companies can avoid potential legal pitfalls and ensure a smooth transition to compliance by October 2024.

What now?

Is your business ready for the changes brought by the new Swedish labor law? Contact Fill to learn how our platform can help streamline your recruitment process while ensuring full legal compliance. Let's work together to navigate this complex regulatory environment with confidence. contact us or book a demo to learn more.