How will the outcome of Brexit affect Swedish employers?

The outcome of the United Kingdom’s decision to leave the EU is uncertain. As of right now the UK is heading towards a “no deal” Brexit without a withdrawal agreement with the EU on October 31st. However, nothing has been settled yet and the UK and the EU are currently in negotiations to reach a withdrawal agreement. This means that the more precise consequences for Swedish companies with British employees working and residing in Sweden are still uncertain, but we have listed a few things to keep in mind depending on the outcome of the ongoing negotiations.

Implications of a Brexit without a withdrawal agreement

• British citizens who are working in Sweden currently reside here with the right of free movement following the EU citizenship. This right will expire on the day that the UK leaves the EU.
• Without an EU citizenship, the British employees will need work permits and residency on the same basis as any other person from a non-EU country living in Sweden.
• Swedish authorities have prepared for a temporary legislation in the case of a no deal Brexit. This legislation will allow for British employees to live and work in Sweden without the regular work and residency permits for a year from the date of the Brexit. This will give those employees time to apply for the necessary permissions.

Implications of a Brexit with a withdrawal agreement

• The rights for British citizens to live and work in the EU will be regulated in the withdrawal agreement. The agreement sets forth a transitional period that will last until the end of year 2020.
• The chapter concerning citizens’ rights implies that their situation will be affected only to a smaller extent. The arrangement will cover all issues concerning the citizens’ day to day life, e.g. rights of residency, social safety benefits such as social insurance, health care, pensions, unemployment insurance and different types of family benefits.

Other regulations to keep in mind

• According to Swedish legislation at least half of the board members and deputy board members of a limited company or economic association must be residents within the EEA. Furthermore, the managing director, deputy managing directors and at least one of the signatories must also be residents within the EEA.
• If a company has company officials who are UK residents, the company might not be compliant with this legislation after Brexit. This can be solved by a shareholders’ meeting where new officials are appointed or through an application to the Swedish Companies Registration Office (Sw. Bolagsverket) for exemption from the residency requirements.
• Authorised and approved auditors must be residents within the EEA. A company may contact the Swedish Inspectorate of Auditors (Sw. Revisorsinspektionen) and apply for exemption from this requirement.
• A company with a branch in Sweden will have to have a managing director of the branch who resides within the EEA. If the company has a manager director who is resident in the UK and no longer meets the requirement after Brexit, the Swedish Companies Registration Office may in special circumstances grant exemptions from this.

How can Swedish employers prepare for Brexit?

Any employer with employees from the UK should ensure that employees that may be affected by Brexit are aware of the consequences of a deal or no deal withdrawal. Their rights to live and work in the EU will be affected. Depending on their rights after the Brexit, the situation for these employers may change when the transitional periods end and some of their staff no longer may be EU citizens or residents. Companies with board members or a managing director who resides in the UK should also evaluate the situation and secure that they will stay compliant with Swedish legislation after Brexit.