The Swedish Agency Work Act was amended in October 2022 to give temporary workers the right to permanent employment after two years. But what does this change mean for agencies and employers in Sweden? We’ll explain everything you need to know in this article.
What is the Swedish Agency Work Act?
The Swedish Agency Work Act is a legal act that came into effect in January 2013, implementing the EU Directive on Temporary Agency Work. Its purpose is to ensure fair treatment for workers hired by temporary work agencies and leased out to client companies. A new law amending the act and providing temporary agency workers with additional rights came into effect in October 2022.
Who does the Swedish Agency Work Act apply to?
The Swedish Agency Work Act applies to workers employed by temporary work agencies (staffing agencies) and assigned to work for client companies on a temporary basis.
For the avoidance of doubt, the act provides specific conditions that must be met in order for it to be applicable:
- The agency must be a business whose function is to assign workers to clients so that those workers can work under the supervision and direction of the client company.
- The purpose of the worker’s employment with the temporary work agency must be to be assigned to client companies.
- The assignment of workers to client companies must be temporary in nature.
- The business agreement between the agency and the client company must be intended for staffing assignments, and the agency must have no liability in relation to deliverables or the results of the work performed by the workers.
Because of these requirements, the act does not apply to consultancy firms, self-employed consultants, independent contractors, or workers hired through an employer of record (EoR).
Key provisions of the Swedish Agency Work Act
The aim of the Swedish Agency Work Act is to provide fair working conditions for workers hired through temporary work agencies. To achieve this goal, the act imposes certain obligations on both staffing agencies and the companies that use their services.
Equal treatment principle
Under the Agency Work Act, workers hired through temporary work agencies have the right to equal treatment with other workers in the same company. Essentially, they must receive the same treatment as if they were hired directly by the client company instead of assigned to them by a temporary work agency.
This applies to:
- Remuneration
- Working hours, overtime, rest periods, night work, holidays and public holidays
- Protection for children and young people, pregnant women, new mothers and breastfeeding women
- Protection against discrimination on the grounds of gender, transgender identity or expression, ethnic origin, religion or other beliefs, disability, sexual orientation or age
Temporary work agencies are responsible for guaranteeing their workers equal treatment in these areas. Unlike in some other countries, agency workers in Sweden have this right from day one of their assignment with a company.
Right to permanent work
The Agency Work Act also prohibits temporary work agencies from preventing their employees from accepting a permanent job with a client company after an assignment. Any clause to this effect included in contracts between agencies and workers is therefore null and void.
Additionally, client companies must inform temporary agency workers about any vacant permanent positions that arise within their organisations so that they can seek permanent employment if they want to. Employers can choose to do this by making the information generally available within the organisation, for example by sending out an email.
Access to collective facilities
User companies must grant temporary agency workers access to any collective facilities or amenities that they provide for their permanent workers. This might include things like break rooms, canteens, vending machines, transport or parking.
Prohibition on charging fees to workers
The law also prohibits temporary work agencies from charging their employees a fee for placing them with a client, or for finding them a permanent position if they end up being taken on by the client company as a direct employee.
Damages for temporary work agencies and client companies
If a temporary work agency or a client company breaches any of the rules outlined in the Agency Work Act, they can be required to pay damages to the employee in question. Which party is held responsible for the breach depends on the rule that was broken. For example, it is the client company’s responsibility to ensure agency workers have access to shared facilities, while agencies must see that their contracts comply with the regulations.
New rules in Sweden as of 2022
In November 2022, a new law amending the Agency Work Act came into force. The most important change that the new law brings about is the right to permanent employment with the client company after a certain period.
Specifically, when a worker has worked for the same client company for at least 24 months within a period of 36 months, the client company must offer them a permanent position. If they are unable to do so, they can choose to pay the worker two months’ salary instead.
Under the new rules, employees don’t have to accept a job offer if one is made. If they reject the offer, the employer is considered to have met their obligations and can then continue to hire the employee through the temporary work agency (or hire them again at a later date).
The offer made by the employer doesn’t have to be for a full-time position, and the salary doesn’t have to match the remuneration the worker received for their temporary assignment. However, the employer may not introduce terms into the job offer that are specifically intended to dissuade the employee from accepting.
Because of the two-year requirement, the new rules will really become effective from October 2024, when employers will have to begin making job offers for any agency workers that have been assigned to their company since October 2022.
Understanding Sweden’s rules in a wider EU context
The Swedish rules about temporary work agencies were passed to implement the EU Directive on Temporary Agency Work, which came into effect in November 2008. The directive provides a general framework for the working conditions of temporary agency workers across the EU, guaranteeing them a minimum standard of protection. Its aim was to contribute to the development of the temporary work sector as a flexible alternative to traditional employment for both employers and employees.
What the directive says
Under the EU directive, a worker can’t be discriminated against for their status as a temporary agency worker and must be given the same basic conditions of work and employment as they would have as a permanent employee. The directive also requires user companies to keep temporary workers informed of any open permanent roles and prohibits agencies from including clauses that prevent workers from accepting permanent employment with a user company. Lastly, it makes it illegal for temporary work agencies to charge fees to their workers for finding them work.
Differences in the law between EU countries
The directive has now been transposed into national legislation in all EU member states. And, although it provided the minimum standards that each county had to follow, there are some differences in the ways the rules have been implemented.
For example, in Sweden (as well as Hungary, Ireland, Malta and the UK), temporary agency workers do not have the right to equal pay if they are permanent employees of the temporary work agency and continue to be paid when they are between assignments.
Another difference in Sweden’s legislation compared to other EU countries is that it allows collective bargaining agreements to deviate from the principle of equal treatment. Other countries including the UK only apply equal treatment rules after a certain period (in the UK, workers only qualify for this right after 12 weeks of work with a client company).
The importance of compliance in global talent acquisition
Even within the EU, the rules concerning temporary agency workers differ from one country to the next. And each country also has its own set of laws, regulations and guidelines that apply to all aspects of talent acquisition, hiring and workforce management.
For companies hiring in multiple countries, keeping up with the rules can be a challenge — especially as they change so frequently. This becomes particularly complex when companies engage various different types of workers, such as temporary agency workers, direct employees, independent contractors, consultants and EoR employees.
However, ensuring compliance with national labour laws and regulations is crucial to safeguarding your business. Consequences for non-compliance vary from one member state to another (and depend on the law that has been breached), but they can include fines, penalties and other legal repercussions. Employers that become known for breaching labour laws and thus depriving their workers of important rights can also suffer significant reputational damage.
Using an employer of record (EoR): an alternative to temporary work agencies?
At first glance, employers of record (EoR) and temporary work agencies might appear quite similar. And it’s true that both are organisations that engage employees to work for other companies.
However, legally speaking, EoRs and temporary work agencies are not the same thing. That means that hiring workers through an EoR could be a valuable alternative to hiring temporary agency workers for businesses that want to access talent without going through the administrative and legal processes that usually entails.
Working with an EoR is a particularly useful strategy if you want to hire workers in a country where you don’t currently have a corporate presence, without the hassle and expense of setting up a legal entity there. When you hire employees through an EoR, they will:
- Draft compliant employment contracts for your workers
- Act as your workers’ legal employer
- Provide HR services like payroll, benefits and more
And, crucially, EoR providers are typically not covered by regulations applying to temporary labour agencies, which means there is no EU-wide limitation on the duration of contracts signed through an EoR (though individual countries may have their own rules).
Want to find out more about how working with an EoR could help your business comply with international labour laws? Contact our team to get started.