Insights | March 29, 2021

New legislation regarding short-term work allowance

The Swedish Government has adopted new legislation regarding short-term work allowance, with new rules with respect to dividends and group contributions. The new legislation entered into force on 15 February 2021 and applies to short-term work allowance for the period 1 December 2020 – 30 June 2021 which is applied for after 31 December 2020.

The new legislation (Lag (2021:54) om stöd vid korttidsarbete i vissa fall) regarding short-term work allowance is similar to the former rules in many respects, but contains some important differences with respect to the prohibition against dividends and group contributions for companies receiving the allowance and their affiliates.

New features of the prohibition against dividends and group contributions

According to the former rules regarding short-term work allowance, companies receiving short-term work allowance were not allowed to pay dividends or make other transfers of value, including group contributions. The prohibition against dividends and transfers of value under the former rules did not apply to affiliates of companies that received the allowance.

Under the new rules, both companies receiving short-term work allowance and their direct and indirect parent companies are prohibited from paying dividends and making other transfers of value. It may be noted that this prohibition also applies in relation to foreign parent companies. However, unlike the former rules, the new legislation regarding short-term work allowance does not provide for any prohibition against group contributions in the form of the allocation of a company’s profit.

The restricted period

Under the former rules as well as the new legislation, the above-mentioned prohibition against dividends, transfers of value and group contributions (as applicable) applies during the calendar month(s) in which a company receives short-term work allowance as well as two calendar months immediately preceding such period and six calendar months immediately following such period.

If you have any questions regarding the new rules or other questions on employment law, please do not hesitate to contact our employment law experts.