Employment Law News – What’s new in Swedish Employment Law (Third Quarter 2018)

New ruling re a job seeker who refused to shake hands during interview

On 15 August 2018, the Labor Court ruled in a case regarding discrimination during a recruitment process. During a job interview, a job seeker refused to greet the company’s representative by handshake because her interpretation of Islam does not allow such greeting with a person of the opposite sex. The company cancelled the interview and the recruitment process and the job seeker then sued the company for discrimination. In the Labor Court, the company referred to its policy, which aims to prevent, among other things, discrimination based on sex and requires all employees to be able to greet persons of the opposite sex by handshake. The Labor Court came to the conclusion that the policy discriminated women who, because of their religious belief, do not shake hands with men and that the policy is not appropriate, necessary and proportionate in order to achieve the legitimate objectives. The cancellation of the recruitment process thus constituted unlawful discrimination under the Discrimination Act and the company was liable to pay damages. [AD 2018 nr 51]

New ruling re non-competition clauses in employment contracts

In a new ruling, the Labor Court has considered, inter alia, the reasonableness of non-competition clauses in employment contracts and the limits of employees’ duty of loyalty. The case concerned four employees who resigned to engage in a competing business. Question arose whether the four employees had breached their duty of loyalty during their employment and if two of them had breached a non-competition clause in their employment contract. As regard the two-year long non-competition clause, the court found that it was reasonable in relation to one of the employees. The employee had breached the clause and was therefore liable to pay liquidated damages in accordance with the contract. The court considered, among other things, that the employee had agreed to the non-competition clause in connection to an asset transfer where she had received consideration also for goodwill and that she personally had many of the licenses required to conduct the business. In relation to the other employee, however, the court found that the non-competition clause was unreasonable and therefore not enforceable since the employee, among other things, had not received any compensation or had a significant role in the company. The ruling confirms previous case law that non-competition clauses are generally unreasonable if the employee does not receive any financial compensation for the undertaking. Further, the Labor Court found that one of the employees, and probably another as well, had breached their duty of loyalty during the employment but no damages were imposed as the company had not proved the financial damages it had suffered due to the breach. [Arbetsdomstolen 2018 nr 49]

New rulings re non-solicitation clauses in employment contracts

The Labor court recently gave its ruling in two cases regarding non-solicitation clauses in employment contracts. The cases concerned three employees working with game development who resigned to engage in competing businesses and question arose whether the non-solicitation clause in their employment contracts prevented them from hiring employees of the former employer.

In its ruling, the court held that when assessing the reasonableness of a non-solicitation clause, consideration shall be given to whether the employer has a legitimate purpose with the clause. If the sole purpose with such clause is to prevent that a former employee encourage other employees to leave their employments, for instance to start working for a competitor, the limitation can only be justified for a short period of time. The court held that at the time of the trial, 6, 15 and 18 months had passed since the termination of employment and the employer’s legitimate interest of maintaining the clause should have subsided.

The court noted that the restriction was not limited to any category of employees, such as employees who the former employees had worked with, had certain knowledge about or employees of the company or group company with specific skills or knowledge. Further, the clause was not limited to active recruitment by the former employees, they were not allowed to employ employees of the company or group company that turned to them for new employment without their encouragement.

The court came to the conclusion that the non-solicitation clause in the employment contracts was unreasonable and therefore not enforceable. [AD 2018 nr 61 and AD 2018 nr 62]

In the light of these rulings, employers should review their use of non-solicitation clauses and consider the following; (i) can the restrictive period be shortened? (ii) could the category of employees be limited? (iii) can the type of forbidden actions be limited, for instance only cover active recruitment by the former employee?

Cecilia Bergman, Associate

If you would like more information, or specific advice, please contact our L&E team.

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