If this actually was a functioning way of handling the situation, every single company would be structured this way. Worker protection laws are a huge pain for employers in Sweden, so they wouldn't hesitate a second if they could work around them through such a loophole.

Calling for us to point to a certain paragraph of a certain law is not really fair, because we're generally not lawyers here. Can you instead explain why all companies are not structured the way you suggest. Because all managers are idiots, or because they've realized that it's not legally sound?