In successorship cases (sale of a business and so forth) the law regarding employment contracts basically mirrors the Swedish law of contracts. In legal terms, the sale will imply the discontinuance of one contract, and, usually, the entry into another employment contract. However, some acquired rights are protected by labor law statutes, for example, earned vacation rights, and, in some instances, former time of employment with the predecessor-employer will be credited to the employee. The predecessor-employees are granted re-employment, if the successor engages new personnel for the acquired business. The recall right is a legal device to allow the employees to follow the work, even though the right may, in some cases, be more cosmetic than real.

By necessity the contractual setting in successorship cases is manifold and complex. The two employers — being also a seller and a purchaser of assets — may enter into undertakings that are, arguably, to the benefit of the employees. It is an open question whether such undertakings will be deemed promises to the benefit of a third party, and be enforceable in court by that party. Furthermore, the seniority issue may be touchy, if two or more seniority lists are merged. The competitive aspect of seniority is highlighted in such cases. If no collective agreement is entered into as to the merging of seniority lists — discriminatory seniority rosters will be struck down as being illegal — the seniority rules of the Swedish Employment Protection Act of 1974 (as amended 1982) will apply (a modified “last in-first out” principle).

Since the present legal setting in successorship cases is less than satisfactory in Sweden, it is suggested, finally, that the successor ought to be made a new employer by statute, and be entitled, in most cases, to apply other terms and conditions of employment than previously applied.