Temporary Work in Turbulent Times: The Swedish Experience

2.3 Changes in Regulations During the 1990s

During the 1990s there have been no significant reforms of the Employment Protection Act
concerning the termination of open-ended contracts. There have, however, been several changes
to the statutory regulation of fixed-term contracts. In January 1994 the maximum permitted
duration for probationary contracts and those motivated by a temporary increase in labour
demand were prolonged from six to twelve months. However, this was immediately repealed in
January 1995 when a Social Democratic government returned to power. Moreover, the impact of
this law was minimal on actual regulation even during its brief validity as it had next to no
impact on the content of collective agreements, and thus on the actual regulation at the work
place (Storrie, 1995).

The law of 1997 was of considerably more potential importance. It introduced the
opportunity for the employer to hire for a fixed duration without having to specify a particular
reason. However, an employer could only use a maximum of five such contracts and a particular
individual could not be employed under such a contract for more than twelve months during a
three-year period. If the firm is newly established, the period may be extended to 18 months. The
Bill stated that it was not the purpose of the Act to promote very short-term jobs and so the
minimum permissible duration was set at one month.

The new law also addressed the difficult legal issue of repeated contracts of fixed duration.
While this applied only to leave replacements, these are by far the most common form of fixed-
term contract in Sweden and thus the revision of the law may have had considerable potential
impact. The new law stated that if a leave replacement was employed for a total duration of three
years during a five-year period then the contract becomes open-ended. This paragraph,
announced in 1997, became law on 1st January 2000, presumably to enable employers to adjust
and so it probably had an effect on hiring policy before 2000.

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