Insights | November 2, 2020

New case from the Swedish labour court concerning unfavorable treatment of employee on parental leave

An employee, who at the time of their parental leave is employed on a probationary basis, may be entitled to an extension of the probationary period if the employer has been unable to assess the employee's performance due to the parental leave. Otherwise, the employer risks being in violation of the prohibition of unfavourable treatment of employees on parental leave under the Swedish Parental Leave Act. In practice, this means that the probationary period may exceed the maximum length of six months under the Swedish Employment Protection Act. This has been ruled in a new judgement by the Swedish Labor Court.

Background

An administrator employed by the Swedish Social Insurance Agency (Sw. Försäkringskassan) was informed by his employer that his probationary employment was terminated on the grounds that the employer had an insufficient basis to assess his performance due to the fact he was on parental leave during the probationary period. The administrator became a parent approximately one month into the probationary period and had to be on parental leave for longer than expected due to his wife’s postnatal depression. When the employee’s parental leave was further extended due to his wife’s illness, his employment was terminated by the employer.

Discrimination on the grounds of sex or unfavorable treatment of a person on parental leave?

The Swedish Labor Court held that, whereas the employer’s termination did not constitute direct discrimination on the basis of sex under the Swedish Anti-Discrimination Act, it amounted to unfavorable treatment due to parental leave under the Swedish Parental Leave Act.

The Swedish Equality Ombudsman (Sw. Diskrimineringsombudsmannen), representing the employee, argued that the termination amounted to unfavorable treatment of a person on parental leave in accordance with the Swedish Parental Leave Act. The Swedish Labor Court agreed. In principle, the prohibition of unfavorable treatment of employees on parental leave covers all situations that may arise between an employer and an employee. Whether or not there is any intention on the part of the employer to treat the employee unfavorably is irrelevant; it is the effect or result that is the crucial factor.

The employer had terminated the employee’s employment on the grounds that the employer did not have a sufficient basis to determine whether the employee should be offered permanent employment due to the fact he was on parental leave. Therefore, the court stated that, as the employer in this case could have rectified the matter by offering the employee an extension to his probationary employment instead of terminating his employment, the decision to terminate was not a necessary consequence.

Furthermore, with reference to a ruling from the European Court of Justice, the Swedish Labor Court stated that the employee should have been entitled instead to an extension of his probationary employment for a period corresponding to the time he was on parental leave.

Conclusion

As a result of this judgement, it has now been further clarified that employers cannot terminate an employee on probationary employment on the grounds that the employer was unable to “assess” the employee during the parental leave, as this constitutes unfavorable treatment under the Swedish Parental Leave Act.

The judgement also suggests that the statutory maximum length of the probationary period of six months in the Swedish Employment Protection Act is not entirely as black-and-white as one might have thought, as was the general position before this judgement. That said, the general rule is still that an extension of the six-month period is not permitted as this is considered to have an adverse effect on the employee. The purpose of the six-month period is to protect the employee from being exploited and trapped in a cycle of continuous probationary periods of employment, instead of being offered permanent employment.

From a practical perspective, this new judgement suggests a relaxation and a somewhat more flexible approach, which is much welcomed. That said, it is not clear whether the justification for extensions as suggested in the judgement extends to any areas other than cases of parental leave. Also, it shows that employers must be very careful when handling these situations in order to avoid violating the unfavorable treatment rules, but at the same time ensure that probationary periods are not accidently converted to permanent employment. It will be very important that clear, written agreements are entered into with employees in these scenarios in order to avoid such risks going forward.