AD 2025 No. 85 – Termination did not constitute a violation of the prohibition against reprisals under the Discrimination Act

An employee was terminated on the grounds of redundancy. The employee claimed that the redundancy was fictitious and that the termination was in fact a reprisal. The Swedish Labour Court found that there was no evidence supporting that assertion.

In this case, an employee was terminated due to redundancy. The employee argued that no redundancy existed and that the employer had violated the rules on order of selection and the right of priority to re-employment. She maintained that the termination was a reprisal because she had reported sexual harassment in the workplace five months prior to the termination. The District Court sided with the employee and concluded that the termination was an unlawful reprisal, but the judgment was appealed to the Labour Court.

The Labour Court began by examining whether there had been redundancy within the company at the time of the termination. The company had asserted that there was a significant need to reduce costs since the company was expected to post an annual loss of more than SEK four million and because a twelve-percent decline in sales was expected to persist for at least one to two years. It was established that the company incurred a substantial loss and that several other individuals in the company had also been terminated. Overall, the Labour Court therefore found that it had been proven that redundancy did in fact exist within the company.

The Labour Court explained that, in the ordinary case, where there is a genuine redundancy situation, it is legally irrelevant that the employer also considered that the employment should be terminated for personal reasons. The Labour Court therefore normally confines its examination to whether redundancy existed and does not address the question of personal reasons. This does not apply, however, if the alleged personal reasons mean that the termination is also connected to one of the discrimination grounds. Even in a situation of actual redundancy, such a termination may be discriminatory and therefore not objectively justified. Under the Discrimination Act, it is sufficient that a discrimination ground is one of several reasons for the employer’s action or decision. The Labour Court therefore had to assess whether, despite the redundancy, the termination constituted an unlawful reprisal under the Discrimination Act in response to the employee’s report of sexual harassment.

Chapter 6, section 3 of the Discrimination Act contains a special rule on the burden of proof. The provision states that if the person who considers themselves to have been discriminated against or subjected to reprisals demonstrates circumstances giving reason to believe that they have been discriminated against or subjected to reprisals, it is the respondent who must show that discrimination or reprisals did not occur. The provision is intended to ease the evidentiary burden for those who consider themselves to have been discriminated against. In this case, the evidentiary relief under the Discrimination Act focused on the causal link between the report of sexual harassment and the termination. This meant that the employee had to prove the circumstances giving reason to believe that she had been subjected to an unlawful reprisal.

Since the Labour Court concluded that there was, in fact, redundancy in the company at the time of the termination, that circumstance did not support the claim that the termination was a reprisal. Nor did the investigation reveal anything to suggest that company management was dissatisfied with the employee for having reported sexual harassment, and the District Court had found that the company fulfilled its investigative duty and took the measures reasonably required in response to the report. The company’s handling of the report therefore did not support the conclusion that the termination was a reprisal either. Moreover, the report of sexual harassment had been made five months before the termination, which, according to the Labour Court, was not such a close temporal connection as to in itself give reason to believe that the termination was due to the employee’s report.

In summary, the Labour Court did not consider that there was reason to believe that the employee had been subjected to an unlawful reprisal under the Discrimination Act. The Labour Court also found that the employer had not violated the rules on order of selection or the right of priority to re-employment.

Read the full case here.

Setterwalls’ comments: In situations where an employee is terminated and there is a history of earlier disagreements, complaints, or similar issues, employers often worry that the employee will object on the basis of fictitious redundancy. This case confirms that such a history does not prevent termination when the actual reason is redundancy and the redundancy can be substantiated. In this case, the employer was able, in a transparent manner, to show deteriorating results and that several positions were eliminated at the same time. The case also shows that it is of great importance to handle complaints of sexual harassment correctly and to fulfill the investigatory and remedial obligations that apply. This is not only to meet the employer’s immediate responsibilities, but also because it provides evidentiary protection against allegations of retaliation at a later stage, for example if a need later arises to terminate the employee.