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On May 14, 2020, the Government presented a new proposal on further measures in response to the negative effects of the COVID-19 crisis on society. The proposal contains several suggestions for measures and, among other things, updated rules on short-time work.

As mentioned in our previous TaxNews, an opportunity is proposed for employers to reduce their employees' working hours by 80% and that the Swedish Agency for Economic and Regional Growth (sw. Tillväxtverket) and the Swedish Tax Agency can make site inspections to assess the right to receive support for short-time work. In addition, some clarifications are provided on previously unclear issues.

Support for short-time work in combination with share dividends

The Government has considered the Law Council's opinions (see previous TaxNews) and has chosen not to introduce any explicit wording in the law on whether it should be specifically partically considered in the assessment of right to the support if the employer carries out dividends and other payments while receiving support. The reason for this is that the possibility of denying support for short-time work as well as demanding repayment of the support due to paid dividends is already possible under existing rules, since the employer must be subject to serious financial difficulties. What has been added in relation to the previous bill and report from the Finance Committee is the use of the concept of value transfers and that this also can be used as a basis for when assessing serious financial difficulties.

Annual leave should be counted as absence when calculating the support

To this day, the Swedish Agency for Economic and Regional Growth has stated on its website that paid and earned annual leave does not affect the calculation of support for short-time work as this is to be seen as a presence. However, it is clear from the new bill that annual leave should be considered as absence, which means that a holiday day, in the same way as sickness, leave for union representatives or parental leave, must be taken into account in the employer's reconciliation and thus be deducted in the calculation of the final support. Since the publication of the bill, the Swedish Agency for Economic and Regional Growth has updated its website in this section and now writes that "annual leave is regarded as absence and thus will be included in the provisional calculation of the financial support ".

KPMG Comment

It is particularly noted that the Government has chosen not to clarify the circumstances linked to " dividends and other similar payments" which may lead to refusal of the support, despite the fact that the Law Council clearly questioned this part in its referral response. What should be included, on the other hand, are different types of value transfers, but the question remains whether other types of payments can limit employers' ability to receive support.

Furthermore, the situation regarding how employees' annual leave should affect the assessment of the final support for short-time work is relatively complicated due to the Swedish Agency for Economic and Regional Growth's management. From the Agency's previous letter, it was clear that employees' annual leave should not affect the calculation of employer support. This has now completely changed. In some cases, annual leave has already been taken by laid-off employees, and their employers have then based their budget and their basis for already submitted applications on conditions that now prove not to be correct. This in turn can lead to financial consequences for such employers and the question is how this should be handled at the time of reconciliation. 

KPMG continuously monitors the ongoing legislative work.

Please feel free to contact us if you have any questions about the regulations for short-time work.

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The article in Swedish

Mattias Bergman
+46 70 939 66 64
mattias.bergman@kpmg.se

Joanna Droh
+46 76 640 27 69
joanna.droh@kpmg.se