RB Jurist

Termination of employee

Terminating an employee requires both valid reasons and adherence to the correct procedure. The Employment Protection Act (LAS) sets high demands on employers, and mistakes can lead to costly disputes. As legal experts in employment law, we help you navigate the process correctly and ensure that all decisions are legally sound.

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Termination according to the Employment Protection Act – what applies?

Termination of an employee is primarily regulated by the Employment Protection Act (1982:80) (LAS). For a termination to be valid, it must always be based on objective grounds. The process also requires the employer to follow a correct formal procedure.

Valid reasons are divided into two main categories:

  • Labor shortage When the need for labor decreases for organizational or economic reasons.
  • Personal reasons: When the employee cannot or will not fulfill their work duties.

Correct documentation and a well-executed negotiation process are crucial for the termination to be legally sustainable.

Valid reasons for dismissal

Labor shortage arises, for example, during reduced operations, reorganization, rationalization, or restructuring. It can also occur in connection with changes in business operations or when services are no longer needed.

Personal reasons may be repeated misconduct, inappropriate behavior, lack of competence, or other circumstances that prevent the employee from performing their duties satisfactorily.

Relocation and Employer's Responsibility

Before a termination can be carried out, the employer has an obligation to investigate whether there are redeployments within the organization. This means that the employer must look at vacant positions that are reasonable for the employee, both in terms of content and in practice.

If reassignment opportunities exist but are not offered, the termination may therefore be considered invalid. It is therefore important that the employee receives a written offer of reassignment if one exists and that the employer documents both what has been investigated and what decisions have been made.

Personal reasons – requirements for action before termination

Upon termination due to personal reasons, the employer is required to take less intrusive measures first. The employer should often start with a warning or reprimand and development talks where the employee is given the chance to improve. 

The conversation shall be documented, along with a description of the misconduct, proposed actions, and what has failed regarding improvement.

Two-month rule regarding termination

In case of termination for personal reasons, the two-month rule is often central. This means that the employer cannot base a termination on events that are known more than two months prior, if no action has been taken within that timeframe.

Formal procedure for termination for personal reasons

When terminating an employee for personal reasons, the employer must follow a formal procedure. This means that:

  • The employer terminates the employee in writing and the reason for the termination is clearly stated.
  • The employee is given the opportunity to explain themselves and present their views.

 

If the employee is a member of a union, the employer must also notify the union and consult with the union according to section 30 of the Employment Protection Act (LAS). This means the employer must explain the reasons, answer questions, and consider the union's views before making the decision to terminate employment.

Termination due to operational requirements - order of priority and exceptions

In the event of termination due to lack of work, the order of priority rules apply according to the Employment Protection Act (LAS), often referred to as the “last in, first out” principle. This means that the employee with the shortest length of service shall be terminated first, all else being equal.

However, there are exceptions in both law and collective agreements. For example, an employer may exempt a limited number of individuals who are particularly important for the continued operations. Additionally, many rules regarding order of seniority are dispositive, which means that agreed-upon deviations from the order of seniority in collective agreements may occur.

Duty to negotiate with the union

When terminating employment due to lack of work or significant organizational changes, the employer has an obligation to negotiate with the union. This means the employer must negotiate significant changes, explain the reasons for the termination, and consider the union's views before making a decision.

What we can help with

RB Jurist helps employers understand and apply termination rules, including objective grounds, the two-month rule, relocation, order of priority, and collective agreement deviations. Our starting point is to provide clear, legally correct, and practical advice that reduces the risk of disputes and damages.

We can provide assistance with, among other things:

  • Determine if you can implement the reorganization you desire.
  • Review the existing documentation and provide support for continued management.
  • Determine if it is possible to terminate due to personal reasons.
  • Advise on how to carry out a reassignment or follow the order of priority rules according to law or collective agreement.
  • Give support in Negotiations with the union or consultation before termination for personal reasons.

Do you need legal help with a termination?

Contact us at RB Jurist for an initial assessment. We help you as an employer make the right decisions from the start – and avoid unnecessary risks when terminating an employee.

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Frequently Asked Questions about Termination

When does the employer have the right to terminate an employee from a permanent employment contract?

An employer has the right to terminate an employee when there are valid grounds according to the Employment Protection Act (LAS), meaning redundancies or personal reasons, and the employer has followed the correct procedure.

Termination must be in writing and include information about the reasons and the employee's rights, such as the right to declare the termination void.

The LAS regulates when and how dismissals can occur. It sets requirements for objective grounds, order of seniority in cases of redundancy, the obligation to reassign, and correct handling of the process.

Yes, if the termination lacks valid grounds or if the employer has not followed the rules in the Employment Protection Act (LAS), it can be declared invalid and lead to damages.

Exceptions to the two-month rule for termination apply if there are special reasons, for example, if the employer needs to await an investigation or a government decision before action can be taken.

The two-month period begins to count from the day the employer gained sufficient knowledge of the relevant event or behavior. Therefore, it is not when the event occurred, but when the employer actually realized or should have realized what happened.

A reasonable reassignment offer is an offer of other employment for which the employee has sufficient qualifications and which appears reasonable based on the employer's operations. What is considered reasonable is to be interpreted based on the Labor Court's case law, where circumstances such as work duties, salary, and workplace are taken into account.

Termination for personal reasons is due to the employee's behavior or performance, such as misconduct or collaboration difficulties. Termination due to redundancy, on the other hand, concerns the needs of the business, such as financial problems or reorganization, and not the individual.

Yes, but not because of the illness itself. Termination requires objective reasons, such as a shortage of work or a permanent reduction in work capacity despite rehabilitation efforts.

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