AD 2025 No. 23 – Legal grounds for dismissal of an insurance administrator who failed to report changed circumstances affecting her eligibility for personal housing allowance

In this case, the Labour Court examined whether the Swedish Social Insurance Agency had legal grounds to dismiss an insurance administrator. The administrator, in her own application for housing allowance, failed during the benefit period to report changes in circumstances relevant to the assessment of her right to the allowance. The Labour Court found that there were legal grounds for dismissal without notice.

Background

The case concerned an insurance administrator at the Swedish Social Insurance Agency. During her employment, she applied for a housing allowance from the agency but failed to report three significant changes: she started a sole proprietorship, the father of her child registered his formal residence to be at the same address as her, and she purchased and moved into a new residence. The failure to report these changes resulted in incorrect payments of housing allowance totalling SEK 14,000. When the Swedish Social Insurance Agency became aware of the changed circumstances, the agency stopped the allowance. The Agency also demanded repayment of the incorrectly paid amounts, filed a police report for suspected benefit fraud, and dismissed the employee.

The employee sued the Swedish Social Insurance Agency, claiming that the agency had not observed the so-called two-month rule in Section 18, second paragraph of the Employment Protection Act (1982:80), and that there were no legal grounds for dismissal. The Swedish Social Insurance Agency contested the claim.

The Labour Courts assessment

The Labour Court began by examining whether the Swedish Social Insurance Agency had observed the two-month rule. Referring to previous case law, the Court stated that the decisive factor is when the employer becomes aware of the circumstances forming the basis for the dismissal, and that if the employer cannot immediately assess the situation, the time limit begins only when the circumstances are clarified. In this case, the Swedish Social Insurance Agency became aware of all relevant circumstances (including the purchase of a new residence and registration of business activity) only in May 2022. It was undisputed that the employee was notified within two months thereafter. The Labour Court therefore found that the two-month rule had been observed.

The Court then examined whether there were legal grounds for dismissal. The Court emphasized that the Swedish Social Insurance Agency’s operations require a high level of trust, both from the public and among the agency’s employees, who are expected to act correctly and with good judgment both at and outside of work. The Court further noted that an administrator who acts in a way that leads to repayment claims and a police report for benefit fraud not only affects the employer’s trust in the employee, but also the public’s trust in the Swedish Social Insurance Agency’s operations. The administrator’s conduct – repeatedly failing to report changes relevant to the housing allowance – was therefore deemed to have caused such a serious breach of trust that she had grossly neglected her obligations to the employer. The Swedish Social Insurance Agency thus had legal grounds to dismiss the administrator.

Read the full judgement here.

Setterwalls’ comments

The Labour Court once again confirms that offenses directed against the employer or committed in the workplace generally constitute grounds for dismissal without notice. The judgment further clarifies that particularly high standards are imposed on public sector employees, both at and outside of work, to ensure that public confidence in government operations is maintained. The decision follows previous case law, for example regarding police officers, where the Court has clarified that even actions in an employee’s private life may justify dismissal if they are deemed to constitute a serious breach of trust. It is noteworthy that the Labour Court refers to the fact that the conduct “resulted in a police report for suspected benefit fraud” and that this “affects not only the Swedish Social Insurance Agency’s trust in the employee, but also the public’s trust in the Swedish Social Insurance Agency’s operations.” A police report does not mean that the employee has actually committed a crime, only that the employer suspects it. At the same time, it must be acknowledged that the fact that an employer files a police report against an employee naturally affects trust in the manner described by the Court. In the present case, the employer is also a government agency, which means that special rules apply regarding police and prosecution reports.