Companies fire people to avoid payoffs

It is all the more popular now for companies to fire employees instead of choosing to lay them off, according to a study done by newspaper Lag & Avtal.

When a company in Sweden fires an employee, which is only supposed to be done in cases of serious misconduct, firms do not have the same obligations compared to those who are given notice.

Courts can impose heavy penalties on companies that fire somebody without good reason. However, the study found that many employees don’t take their bosses to court, settling out of court instead.

Those who are given notice are given pay after being asked to leave their jobs, while those fired to not receive anything unless a court finds in their favour. With disputes occasionally lasting more than a year, firing somebody is a cheaper alternative.

“Companies do a risk calculation and come to realize that they would probably make more by firing people”, said John Karlman, a labour rights attorney, told Svenska Dagbladet.

While it prove be expensive for employers to fire people without good grounds if a court later finds against them, it is rare for a fired employee to pursue the case.

Nine out of ten suits for unfair dismissal are settled before they come to court, often because ex-employees are afraid of getting a reputation with potential new employers as litigious. This means that in most cases, firing staff is the cheaper option for companies.

The study focused on cases in the labor court between 1990 and 2005.