Short-Time Work Allowance
Short-Time Work Allowance was one of the largest crisis supports during the corona-pandemic. The support meant that employers could reduce the working hours of the employees and receive support from the state to cover a large portion of the costs.
It is no longer possible to apply for the short-term work allowance
The last day for application for the short-time work allowance for July-September 2021 was November 30.
Support for Short-time work allowance is now available at the Swedish Tax Agency
From 1st of April 2022, it is The Swedish Tax Agency that handles ordinary support for Short-time work allowance. All applications received by The Swedish Agency for Economic and Regional Growth up to and including 31 March 2022 are handled by The Swedish Agency for Economic and Regional Growth until they are closed. Read more and apply for support from the Swedish Tax Agency.
Basic preconditions for being entitled to the financial support
- The employer must be registered with the Swedish Tax Agency as an employer during the comparison month and when the application for preliminary financial support is being reviewed.
- The financial support is available to both employers who are legal entities and natural persons who conduct a business enterprise or similar activity. Owners/employers are encompassed within the programme, and this includes limited liability companies, charitable/non-profit associations and foundations. A sole trader in a sole proprietorship, and certain governmental authorities, are not eligible to receive the financial support.
- Eligibility further requires that the company has suffered temporary, serious financial difficulties caused by circumstances beyond its control.
- It is only possible to obtain financial support for employees who were employed by the employer during all or part of the comparison month with the same or higher level of employment as during the month financial support is received for and for whom the employer was obligated to pay employer’s social insurance contributions pursuant to the Swedish Social Services Act (SoL) for the month financial support is received for.
- The company must have made efforts to reduce its labour costs
- The company may not be insolvent, under reorganisation nor subject to an obligation to prepare a Balance Sheet for liquidation purposes.
- The company may not have outstanding tax and/or employer contribution liabilities that have been submitted to the Swedish Enforcement Authority for collection. Preliminary financial support may not be granted to an employer who has debts relating to recovery of support provided as a short-time work allowance that has been submitted to the Swedish Enforcement Authority for collection.
- The company must have entered into an agreement for short-time work with its employees.
- The working hours and pay from employment must be reduced in accordance with the agreement on short-time working.
- The employer, or anyone with significant influence in the business operations, may not be subject to an injunction on engaging in business activities.
- During the months of financial support, the two calendar months immediately preceding the first month financial support is based on or the six calendar months immediately following the last month financial support is based on, the company may not decide to pay dividends or distribute dividends, or other extraordinary compensation, decide or engage in the acquisition of its own shares or decide to or effectuates a reduction of the share capital or reserve fund for repayment to the shareholders or members.
Important things to know before applying for a short-time work allowance in 2021
How much can I receive in financial support?
The levels of reduced working hours remain at 20, 40 or 60 percent. During January-June you can also apply for financial support for short-time work arrangements for up to 80% of the working hours.
The central government pays for 75% of the cost of reducing working hours throughout the period.
How much can I recieve in financial support?
Reduced working hours
Reduced pay from employment
Reduced costs for the employer
*Level 4 with 80 percent short-time of reduced hours can be applied for the period 1 January - 30 June 2021.
The comparison month is the reference month used for the application and to know which persons are eligible for financial support.
The comparison month for short-time work allowance until 30 June:
- If you have not applied for financial support in 2020, your comparison month for a short-time work allowance in 2021 will be September 2020.
- For those who have applied for financial support in 2020, the comparison month will be the month that has been the basis for calculating support for short-time work submitted in 2020.
The comparison month for all applicants during July–September 2021 will be April 2021.
Auditor’s Statement - for companies with salary costs of more than SEK 400,000
If your company applies for a short-time work allowance and has total salary costs of at least SEK 400,000 during the comparison month, you must attach an opinion from an auditor to in the application. The opinion must be signed in writing by an authorised or approved public accountant or a registered auditing firm. The total salary costs is the total of the remuneration reported by the company in the employer’s tax return for all employees, including those who are not working short-time.
At the Revisorsinspektionen, Swedish Inspectorate of Auditors you will find more information about authorised and approved auditors, as well as about registered auditing firms.
What needs to be included in an auditor’s opinion
The auditor must give an opinion on the following information in the company’s application:
- if the company has experienced financial difficulties
- how the financial difficulties have been experienced, the impacts
- when the financial difficulties commenced
- if there is a clear negative trend break in the company’s finances
- the cause of the financial difficulties
- whether the cause of the financial difficulties is beyond the control of the company, or if they are due to a circumstance which the company has been able to control
- whether the financial difficulties of the company can be considered temporary
- whether the company’s costs for personnel have increased, decreased or remained unchanged in the context of the financial difficulties (in addition to increases of pay from employment at the collective bargaining agreement level)
- whether the company’s costs for consultants, leased or other temporary staff have increased, decreased or remained unchanged in the context of the financial difficulties
- whether the company or one of the company’s parent companies that is part of the same Group has implemented or had decided on the implementation of any transfer of value.
Financial support for the costs of the auditor’s opinion
If you need to submit an auditor’s opinion in the application for short-time support, you will also receive support for the administrative costs incurred in connection with the application. The maximum amount of support you can obtain in this regard is SEK 10,000.
Skills enhancement initiatives under the short-time work programme
As a business enterprise, you can receive compensation for skills enhancement initiatives conducted by the employees during the time not working due to a short-time work agreement. Skills enhancement initiatives can be an opportunity for companies not only to survive the serious financial difficulties they are now facing, but also a means to invest in skills that can strengthen the company in the short term and long term. For the individual, it can also be an opportunity to strengthen their position, both in the workplace and in the labour market as a whole.
Agreements and agreement templates - short-time work and skills enhancement efforts
Before it is possible to apply for short-time work financial support, there must to be an agreement with the employees in place. There must also be an agreement for skills enhancement initiatives if you want to introduce such measures.
The financial support applies to employers that are legal entities or who are natural persons engaged in a business enterprise or similar activity and are registered as an employer with the Swedish Tax Agency during the comparison month and who are also registered as such when the application for preliminary financial support is being reviewed.
This financial support is not available to:
- The central government entities, Regions, municipalities or local municipal federations.
- Limited liability companies, partnerships, associations or foundations over which the central government, a Region, municipality or local municipal federation has controlling influence (ownership), unless the activities do not relate to commercial business activities.
Temporary and serious financial difficulties
In order to receive financial support, the company needs to show evidence of that they are experiencing temporary and serious financial difficulties caused by circumstances beyond the employer’s control. One such example is challenges in business operations linked to COVID-19.
May not be insolvent
A fundamental precondition for being eligible to apply for financial support under the short-time work allowance is that at the time of filing the application the employer is not in bankruptcy/insolvent, nor subject to an obligation to prepare a Balance Sheet for liquidation purposes, nor undergoing restructuring. What is meant by being in bankruptcy/insolvent, is that the company is unable to pay its debts and that this inability is not merely temporary. A Balance Sheet for liquidation purposes must be prepared when there is reason to assume that the company’s equity is less than half of its registered share capital.
Measures to reduce labour costs
The employer must have made use of other available measures with the goal of reducing its labour costs.
Such measures may involve making changes to the scheduling of work shifts plus the use of other measures to reduce labour costs, such as the dismissal of staff who are not employed as permanent employees and who are not regarded as being critical to the business operations, for instance consultants, leased personnel, or temp staff. Thus in the assessment, the employer must take the role and position of the employee in the company into consideration.
Even consultants and leased personnel may be critical to the operations of the business activities and there is no general requirement to lay off consultants or leased personnel.
Dividends and other transfers of value
The rules regarding transfer of value apply retroactively to months the financial support is received for, from 1 December 2020. During the period from two months before the first month of financial support, during the months of financial support or to six months after the last month of financial support, the company may not decide on:
- the distribution of or distribute dividends
- or provide other extraordinary compensation
- the acquisition or purchase its own shares
- a reduction or effectuates a reduction of the share capital or reserve fund for repayment to the shareholders or members. This also applies if such a decision is made by the annual general meeting (or other meeting of shareholders), or the Board of Directors or the corresponding body during the same period.
The same rules regarding transfers of value apply to all parent companies if the company is part of a Group. The parent company’s parent company is also subject to restrictions, where applicable. However, sister companies are not subject to these restrictions.
Groups based outside of Sweden may be included if the companies maintain relations with each other corresponding to what is stated in the Annual Report.
Group contributions are not regarded as a transfer of value and are not an obstacle to being entitled to support under the Short-Time Work Allowance programme.
The financial support covers only those who were employed at the time of the comparison month.
The support applies to employees for whom the employer has been obligated to pay employer’s social insurance contributions during the month financial support is received for.
The financial support also applies to part-time staff. In such cases the reduction in working hours and pay from employment is to be calculated on the basis of the extent of the part-time work (percentage of full-time) and the regular salary they would be paid for the part-time work. What this means is that if an employee works part-time at 50 percent of full-time and receives a reduction in working hours of 60 percent, they will then be working 20 percent of a full-time job.
Example: part-time employee with working hours according to the agreement 50 percent (20 hours) per month, short-time work of 60 percent.
The employment agreement states that Kalle must work 50 percent, 20 hours per month and that the pay from employment is SEK 200 per hour. 20 hours corresponds to a regular salary of SEK 4,000 (SEK 200/hour x 20 hours = SEK 4,000).
When Kalle goes to short-time working with 60 percent of the 20 hours he is expected to work, then his working hours under the short-time work arrangement will be 8 hours per month. Kalle’s salary decreases by 7.5 percent of SEK 4,000, in other words, by SEK 300. The pay from employment under the short-time work arrangement will be SEK 3,700.
The support paid for Kalle is SEK 4,000 x 0.6 x 1 x 0.986 = SEK 2,366.
Hourly employees may be encompassed within the short-time work allowance if the employment agreement provides for an expected number of working hours. The hours can be specified either in the number of hours per period of time (for instance a month or a week), or as a percentage of a month’s total working hours.
Example: hourly employee with working hours according to agreement 40 hours per month, short-time work of 60 percent.
The employment agreement states that Stina is to work 40 hours per month and that her pay from employment will be SEK 200 per hour. 40 hours corresponds to a regular salary of SEK 8,000 (SEK 200/hour x 40 hours = SEK 8,000).
When Stina goes to short-time working with 60 percent of the 40 hours she is expected to work, then her working hours under the short-time work arrangement will be 16 hours per month. Stina’s salary decreases by 7.5 percent of SEK 8,000, in other words, by SEK 600. The pay from employment under the short-time work arrangement will be SEK 7,400.
The support paid for Stina is 8.000 x 0.6 x 1 x 0.986 = SEK 4,733.
The employer can also receive financial support for probationary employees, as long as the employer otherwise fulfils the requirements for receiving the support. One of the basic requirements is that employers must have made efforts to the extent possible to reduce their cost of labour.
Yes, the financial support may apply to fixed-term employees/temporary employees if they have been employed during the comparative month and if the employer is assessed have fulfilled the basic requirements that exist for the support in general, for instance having taken measures to reduce personnel costs.
Employees belonging to the employer’s immediate family
Previously, employees belonging to the employer’s immediate family were excluded from eligibility for the allowance. The family member exclusion removed in 2020. Employees belonging to the employer’s immediate family will continue to be encompassed within the financial support in 2021 under the same preconditions as during the support in 2020. In this context, the period 1 December 2020 - 30 June 2021 is also a period where an exception applies.
Personnel who have been given notice of termination or permanently laid off
According to the ordinary legislation, financial support can only be provided for personnel who have been permanently laid off. Personnel who have been permanently laid off will continue to benefit from the financial support in 2021 under the same conditions as under the 2020 financial support. In this context, the period 1 December 2020 - 30 June 2021 is also a period where an exception applies.
Employees who are owners of their own company
The legislation for the short-time work allowance allows for financial support to be provided to companies with employees for whom they pay social insurance contributions. Due to that a sole trader in an individual company/sole proprietorship is not “employed” in their business activities, as there is no legal distinction between the owner and the business entity we cannot provide financial support to these.
If all other preconditions are fulfilled, your company can receive financial support for you as an owner, if you are an employee of the company. The financial support therefore requires a company as a legal form where you as an owner can be an employee of the company.
Regular and ordinary salary for calculating the financial support
Salary increases received by the employee after the comparison month are not to be included in the regular salary. What this means is that pay increases effective after the comparison month, and employees employed after the comparison month, are not encompassed within the financial support.
You may however make trade union agreed salary increases, or salary increases on the same level with a collective bargaining agreement within the industry your company is active in.
Time not working
The employer manages and distributes the work during the working hours.
During the time the short-time work allowance for reduced working hours is being received, the employees are obligated to be present at the workplace when the employer requests this. Otherwise, the employees can use their time not working as they choose, unless provided otherwise for in local agreements, for example as it concerns skills enhancement initiatives or outside activities/side gigs.
Working for more hours than the agreed hours
Except for special circumstances, the employer may not require an employee to work more than the agreed number of hours per week. The financial support provided with the short-time work allowance is intended to support the costs the employer incurs for reduced working hours.
If the employer makes chooses to receive benefits from the short-time work allowance system and allows employees to work more hours than agreed, this may constitute a breach of the rules and the employer will then become liable for repayment. However, if an unforeseen incident or circumstance has arisen that requires additional hours of work, the reduced working hours may be temporarily suspended for the particular individual(s), which can be reported with the reconciliation.
Change of scope or return to normal working hours
The scope of short-time work can be changed, which is to be governed in an agreement with the employees. If the level of working hours changes, you can adjust the existing agreement with the new agreed level or develop a new agreement. If there is no longer a need for short-time work, you can terminate your agreement and return to regular working hours and salary.