Hire in Sweden

The types of employment options are defined in the Employment Protection Act (‘Lagen om Anställningsskydd’ or LAS):

• Probationary employment
• Permanent employment (‘tillsvidareanställning’) is the most common type of employment (e.g. an employment contract without a defined end)
• General fixed-term (temporary) employment

Generally, an employee cannot be employed on a temporary basis for more than 12 months, after which the temporary employment automatically converts to continuous employment according to LAS.

Employees whose duties and conditions of employment are such that they may be deemed to hold a position equivalent to CEO (‘Verkställande Direktör’) are excluded from any Collective Bargaining Agreements but not LAS.

It is not possible for an employer to unilaterally change the essential terms and conditions of employment. Both parties must agree to such changes. The employer can unilaterally change non-essential terms of employment based on the employer’s right to direct work.

The employer can terminate employment and then re-employ the employee on new terms and conditions. However, this termination of employment requires objective grounds.

It is common in Sweden to start with a probationary employment (‘provanställning’), which will transform into a permanent employment (indefinite term) if neither party terminates the probationary employment. LAS permits probationary employment for a period of no more than six months but it can be shorter if agreed upon. Either party may terminate the probationary employment without stating the grounds, unless agreed otherwise by the parties. The employer may not, by terminating the probationary employment, discriminate against the employee or otherwise act in contradiction with good practices within the labor market.

In case the employer wishes to terminate the probationary employment prior to the last date of the probationary period, the employer must observe a 14 days expiry notice (Section 31 of LAS). If the employee is a member of a trade union, the employer should simultaneously notify the trade union. The employee and the trade union have a right to ask for consultations regarding the termination of the probationary employment. The employee is further entitled to a formal notice on the last date of the probationary period. An employer can serve a notice of termination on the last date of the probationary employment (e.g. without giving 14 days prior notice). According to practice, the employer will then pay severance to the employee corresponding to 14 days salary.

The Working Hours Act generally regulates working hours, including regular working hours, overtime and rest periods. It stipulates a regular working week should not exceed 40 hours. An employee’s total working hours (regular hours plus any overtime) should not exceed an average of 48 hours a week during a period of four months. There is no limit for managers who occasionally have to work remotely.

According to the Working Hours Act, employees have a right to receive their working schedule from the employer two weeks in advance and the employer must keep a record of any on-call time, overtime or additional hours the employee performs. Deviations from certain regulations in the Working Hours Act can be enacted through a collective bargaining agreement but not through an individual employment agreement. Workdays are usually from 8:30 or 9:00 a.m. to 5:00 p.m. Monday through Friday.

An employee should have a nightly rest period of minimum 11 hours per day (uninterrupted rest) and a weekly rest period of no less than 36 consecutive hours. This does include time on standby. The Working Hours Act also states an employee should not work for more than five consecutive hours without a break.

The Working Hours Act defines the rules on working overtime. If there is a collective agreement in place, other rules will apply, too. The Working Hours Act does not regulate employees’ right to extra pay. Rules on extra pay for overtime, call-on or standby time are usually part of collective agreements. If a workplace does not have a collective agreement, the employee must agree with their employer about payment for any work that is carried out outside of the employee’s regular working hours.

Employees should either request overtime work in advance or have it approved by the employer. Generally, in Sweden, employees working overtime at their request is neither valued nor seen as necessary. It can be viewed as a result of poor planning and time management. It is common for most Swedish employees to go home to take care of their families after 5:00 p.m.

Overtime work must not be scheduled and there must be a special reason for employees to be asked to work overtime, such as unexpected events requiring extra staff or work efforts. The employer can request overtime work with only one hour’s notice. If urgent work is required on evenings and weekends, the employer can ask the employee to work overtime on the very same day it is needed.

Rules on overtime when there is no collective agreement: If the workplace does not have a collective agreement, the rules and regulations of the Working Hours Act apply, stipulating a maximum of 200 hours of overtime in one year and a maximum 50 hours of overtime in one month.

Rules on overtime when there is a collective agreement: Under most collective agreements, employers cannot ask employees to work more than 150 hours of overtime in one calendar year. However, employees may, in special circumstances, work an additional 150 hours of overtime in one calendar year. These overtime hours must be approved by the relevant trade union. Of the total overtime hours permitted, the employer may not request more than 48 hours of overtime during a period of four weeks or 50 hours of overtime in one calendar month.

Sweden has robust legislation regulating health and safety in the work environment. The Work Environment Authority’s task is to supervise employers’ compliance with the Work Environment Act and its regulations. The Work Environment Act contains regulations concerning the obligations of employers and others responsible for safety. This is intended to prevent ill health and accidents at work. There are also regulations regarding the cooperation between employer and employee. For example, it outlines rules about the activities of safety representatives in the workplace.

It is common to reward key employees or management employees with bonus payments. These can either be contractual or discretionary.

There are no generally applicable restrictions on the payment of bonuses. The Swedish Financial Supervisory Authority has issued regulations concerning banks and other credit institutions that require these companies to have a remuneration policy (among other policies) that does not encourage short-term profits and excessive risk-taking.

In the case of wrongful termination of employment, the termination can be challenged by the employee and declared invalid by the court.

If an employment termination is disputed, it will still be terminated at the end of the notice period. The employer does not have to pay salary costs or employment benefits while there is an ongoing dispute on the termination. However, if it is deemed that the termination was indeed invalid, the employee will be entitled to compensation for his or her salary and other employment benefits for the duration of the dispute.

Individual Dismissals

Objective grounds for termination due to personal reasons can include:

• negligent performance
• serious misconduct
• theft
• disloyalty
• other aggravating circumstances relating to the employee and his or her individual performance

The employer has the burden of proof in these cases and it is often very difficult to present sufficient evidence to support the grounds for terminating an employee based on personal reasons. Further, the employer has an obligation to provide support to the employee to improve (e.g. education or performance improvement plans).

Prior to terminating an employment agreement for subjective personal reasons, the employer must notify the concerned employee in writing. If the employee is a union member, the employer must notify the trade union two weeks in advance.

Dismissal without notice is lawful only if the employee has committed a fundamental breach of the employment agreement, such as gross misconduct. This should only be implemented in exceptional cases. If an employer wants to summarily dismiss an employee who is a union member without notice (in a situation where the employee grossly neglects obligations towards the employer), the information must be given to the trade union one week before the dismissal.

The employee or the trade union may, within one week from receiving the information, request consultations with the employer concerning the dismissal. As per Swedish law, no prior approval from a government agency is necessary for dismissing employees.

Restricted or prohibited terminations

• If employment is terminated due to redundancy, the notice period for an employee on full parental leave does not start until the employee returns to work or the date the employee would have returned to work.
• If an employee is given notice of termination during the employee’s annual leave, the notice of termination will be deemed effective no earlier than the day after the annual leave ends.
• Termination of employment must not be in violation of applicable anti-discrimination laws (such as the Discrimination Act and the Parental Leave Act). For instance, pregnant employees and new mothers are protected from dismissal.
• Employees who also are trade union representatives may be protected under the Trade Union Representative in the Workplace Act.

If an employer wishes to terminate a permanent employment relationship:

• the affected employee must be notified in writing.
• the letter of notice must contain information about how the employee can contest the termination of the contract.
• the letter of notice must either be handed to the employee in person or sent by registered mail.

Grounds for Termination

LAS requires that a permanent employment relationship may only be terminated if the employer has a “just cause” in order to terminate employment. The EPA distinguishes between termination due to personal reasons (such as poor performance, misconduct or disloyalty) or economic reasons (such as restructuring or reorganization, closing down of business, etc.).

An employer will not be considered to have grounds for dismissal if the employee can reasonably be transferred to another job. Thus, before notice of termination is given, the employer must investigate whether there are any vacant positions within the employer’s business that the employee can be offered.

Collective Dismissals

• In Sweden, the obligation to consult collectively is applicable even if the redundancy concerns only one employee. The Co-Determination Act (‘medbestammandelagen’) does not recognize the term “collective redundancies”.
• A notification to the Swedish Public Employment Service must be issued if at least five employees are affected by a decision on terminations due to a redundancy situation.
• This provision also applies if the total number of termination notices is anticipated to be 20 or more during a 90-day period.
• When the workforce has to be made redundant owing to objective reasons, the basic principle to be applied is that the employee with the longest aggregate period of employment with the company should be entitled to remain the longest. Therefore, the employer must select those to be dismissed on a “last in, first out” basis.
• A condition for continued employment is that the employee has sufficient credentials for one of the positions that may be offered.
• Even when employers have not signed a collective agreement, they must request a negotiation with a labor union before they terminate a member-employee. Failure to request a negotiation can result in punitive damages for the employer.

Employees – An employee who wishes to resign must give one month’s notice. The notice period may be longer.

Employers – An employer must provide a prior notice of termination before dismissing an employee and certain formal rules set out in LAS must be observed by the employer when serving a notice of termination to an employee. Notices must always be made in writing and state the procedure to be followed by the employee if the employee wishes to claim that the notice of termination is invalid or to claim damages as a result of the termination. The notice must also state whether or not the employee enjoys rights of priority for re-employment. The letter of notice must either be handed to the employee in person or sent by registered mail.

Statutory notice periods vary between one and six months, depending on the length of the employment term:

The length of the notice period can be extended by virtue of collective bargaining agreements or individual contracts.

Employees are both entitled to and have a duty to work during the notice period and are entitled to salary and all other employment benefits. Agreements on garden leave and payment in lieu of notice are subject to the employee’s consent.

The provisions in LAS regarding termination of employment are mandatory. However, the employer and the employee can agree to terminate the employment. Accordingly, it is possible to reach a separation agreement stipulating payment in lieu of notice and other terms and conditions connected to the separation.

Any notice period is not deemed to begin until negotiations have been settled. The notice period begins on the day an agreement is signed.

• There are no statutory provisions in Sweden regarding severance pay. However, an employee may be entitled to severance pay in accordance with an employment agreement, a collective bargaining agreement or a separation agreement.
• At least in midsize to large companies, it is standard practice to include a severance payment on top of the notice period for a managing director (who would typically not be covered by employment protection) in the employment agreement. This normally corresponds to six to 12 months’ fixed salary.
• In a specific termination situation, it is common that the employer pays a severance payment in addition to notice in a settlement agreement. This applies especially if it is unclear whether “just cause” for termination exists or if there are other issues (e.g. failure to comply with the “last in, first out” rule.

There are no specific statutory rules in Swedish law that prohibit post-contractual restraints altogether. Instead, the rules are normally contained in collective bargaining agreements, which may allow post-contractual restraints under certain circumstances. However, these restraints may be deemed unreasonable and be void or adjusted by a Swedish court. If the employee is provided with compensation (at least 60% of the employee’s monthly salary) during the restricted period, the chances of the restrictions being enforceable are typically better.

Non-competes

Non-competes are normally set for nine months, but at most for 18 months. The latter typically only applies in exceptional situations. For a non-competition clause to be valid, the employee must be entitled to receive compensation during the restricted period. The compensation does not need to exceed 60% of the employee’s previous salary with the employer.

Customer non-solicits

Customer non-solicits are permissible but can be adjusted by a court ruling. There is no defined time limitation for clauses regarding non-solicitation of customers, such as for non-compete clauses. However, in practice, they adhere to the time limitations and conditions set forth in non-compete covenants.

Employee non-solicits

Employee non-solicits are permissible, as a non-solicitation of employees clause is considered a less restrictive post-termination covenant. Non-solicitation clauses should not, however, extend beyond the legitimate interest to equalize the competitive advantage gained by the employee through the knowledge of the former employer’s employees. The period for a non-solicitation of employees clause is often the same as for clauses regarding non-compete and non-solicitation of customers.

Enforcement of Restrictive Covenants

Covenants are normally combined with a contractual penalty. The penalty must be reasonable in relation to the affected employee’s salary. Typically, such a penalty for each breach of the clause is set at an amount equivalent to between three and six months’ salary. Moreover, a restrictive covenant can also be combined with a continuing penalty.

In 2019, the European Court of Justice stated companies must establish a system to record the working time of their employees. Thus, employers are required to implement an objective, reliable and accessible system that allows recording of the daily workday performed by each employee.

Among Swedish employees, the rate of labor union membership is high with just over 70% of the Swedish working force. Membership is fairly evenly distributed among private, local government and state sectors. The Co-Determination Act (‘medbestammandelagen’) consists of rules regulating collective agreements, rules of procedure regarding negotiations, consultations and employee representation. Collective agreements are common across all industries in Sweden.

Employers are also highly organized and the vast majority of Swedish workplaces are bound by collective agreements. These take precedence over certain articles of Swedish legislation.

Sweden’s three central organizations are LO, TCO and SACO:

• ‘Landsorganisationen i Sverige’ – LO (Swedish Trade Union Confederation) is a confederation of 14 national trade unions for blue-collar workers.
• ‘Tjänstemännens Centralorganisation’ – TCO (Swedish Confederation for Professional Employees) is a confederation of 13 trade unions of white-collar workers.
• ‘Sveriges Akademikers Centralorganisation’ – SACO (Swedish Confederation of Professional Associations) is a confederation of 21 trade unions of graduate professionals.

The concept of works councils is not recognized in Sweden, apart from European Works Councils. Instead, employees’ influence is ensured by the trade unions.

LAS and collective agreements regulate the forms of fixed-term employment allowed in Sweden. When there is a collective agreement in place, all fixed-term employments apply in accordance with this. Employers must treat fixed-term employees in the same manner as comparable employees on open-ended contracts in relation to pay and other conditions of employment (unless the less favorable treatment is justified or unrelated to the fixed-term status).

Under LAS, an employer can offer fixed-term employment contracts in the following four situations:

• Seasonal employment
• General fixed-term employment (e.g. project-driven employment for a fixed period)
• Temporary substitute employment (e.g. replacement for when another employee is on leave)
• When the employee has reached 67 years of age

When an employee has been employed for a total period of five years and at least 12 months of those five years have been a fixed-term or temporary employment, the employment contract will become permanent (indefinite term of employment).

Salaries are usually paid into a bank account at the end of the month. Employers have an obligation to deduct tax at source. This tax includes all social insurance contributions except unemployment insurance contributions.

Employees are entitled to receive a written salary specification showing their salary and the deductions made. Employers must also provide an annual income statement (‘kontrolluppgift’) to the employee and to the Swedish Tax Agency.

The Annual Leave Act regulates minimum holiday entitlement and holiday pay and applies to all employees. Under the Act, employees are entitled to 30 days of paid holiday per year if an employee does not earn overtime, running from 1 April to 31 March. Regarding employment lasting up to three months, it is possible to agree that the employee will not be entitled to any holiday. The employee will still, however, be entitled to holiday pay.

Annual leave days accumulate at a rate of 2.5 days per month; employees wishing to take holidays can only normally do so in the year following the one in which the time has been earned – unless they make special arrangements with their employer. The minimum Annual Leave is 25 days either by individual contract or by a collective bargaining agreement, but it is common to provide 30 days for white collar employees and professionals.

Employees are entitled to the following types of holiday pay:

• Semestertillägg (Holiday supplement)– After an employee has earned vacation, they will be entitled to normal monthly pay plus an addition for each day of leave taken. This is calculated at 0.43% of the monthly salary per day.
• Rörligt Semestertillägg (Variable holiday supplement) – This is a bonus paid annually in May for the vacation period and is based on an employee’s variable salary components from the previous calendar year.
• Semesterersättning (Holiday compensation payment when employment ends) – By law, employees in Sweden bank untaken vacation each year. If they have 30 days of vacation per year, they can save 10 days each year up to 30 days over a 5-year rolling period. If in the 6th year, they have 60 days of vacation saved, the employer will pay out 10 days in April each subsequent year. Additionally, when an employee leaves, their saved days and vacation days earned for the following vacation year must be paid out. These are paid at 12% of the monthly salary.

Carry Over Rules

Employees can carry over up to 10 days per year, up to 30, over a rolling 5-year period.

Employees who take sick leave must notify the employer immediately of their condition in order to receive sick pay. An employee unable to perform work for a period longer than seven days must present a doctor’s certificate. Otherwise, the employer is not required to disburse sick pay. The employer can, under certain circumstances, request a doctor’s certificate during the first seven days of absence. For example, this can happen if an employee has repeated short-term absence without any apparent medical cause.

Generally, no wages or sick pay are paid for the first day of absence due to illness (qualification period). The employee is entitled to sick pay from the employer from day two to day 14 of each period of absence. The sick pay amounts to 80% of the employee’s salary.

After 14 days, sickness benefit is paid by the Swedish Social Insurance Administration (‘Försäkringskassan’) to the employee, amounting to approximately 80% of the salary. However, this is capped at SEK 804 per day. Collective agreements usually have other and more beneficial terms for compensation during sick leave and individual employment agreements can also include more beneficial terms.

The employer may receive compensation from the state for annual sick pay costs that exceed a certain level as an additional safety net against high sick pay costs for employers.

An employee is also entitled to (unpaid) time off for rehabilitation and dental appointments.

The laws on compensation and leave for the “Care of Close Relatives” or “Pressing Family Reasons” (‘Lag om ledighet för närståendevård, lag om rätt till ledighet av trängande familjeskäl’) stipulate that employees shall have the right to leave:

• when a person close to them is seriously ill
• when a person close to them has a serious accident or death

This right cannot be contracted away and takes precedence even over any collective wage agreements. However, in some instances, it may be limited to just a few full days a year.

A leave of absence (‘tjänstledighet’) is a period of time during which one does not work (and generally does not get paid) but retains employee status and job security. After the leave, an employee is guaranteed the same position or at least a very similar one.

There are provisions governing leave of absence in some 20 different statutes within Swedish law. There is no general right to a leave of absence, but the right exists in certain circumstances in which employees have a legal right to extended time off from work. These include:

Education – According to the Employee’s Right to Educational Leave Act (‘Studieledighetslagen’) of 1974, any person who has been employed at a company for at least six months (or a total of at least twelve months during the past two years) retains a legal right to take a leave of absence for studies for an unpaid period of up to six months.

Starting a company – The Right to Leave to Conduct a Business Operation Act of 1998 gives employees who have been working for at least six months for an employer the right to take a leave of absence of up to six months to start their own company. Certain stipulations have to be complied with, including that the startup company cannot be a competitor of the current employer.

Political and union activities – Union work is one of the most important types of leave. The Trade Union Representatives Act specifies that an employer must not hinder a union trustee from completing his or her assignments.

The Parental Leave Act stipulates parents’ right to leave. Both parents have an equal right to leave and the parental leave is gender-neutral in its construction. These rights include:

• It is compulsory for women to take two weeks’ maternity leave before or after delivery. The Parental leave law §4 states the right for female employees to breastfeed the child but there are no further details about how this impacts work.
• Flexible working: Until a child reaches the age of eight, parents have the right to reduce their normal working time by up to 25%;  there is no payment for the reduced hours.
• The employee may be on parental leave until the child is 18 months. Thereafter, the employee is entitled to leave for as long as they receive full parental benefits (‘föräldrapenning’) from the state.
• In addition to parental leave, pregnant employees can take up to 60 days of government-funded leave before childbirth (or longer if there are medical grounds to do so).
• Under the Social Insurance Code, the second parent has a right to leave for 10 working days in connection with childbirth. These days can be taken in segments and must be taken before 60 days have passed since the child has come home after the birth.
• Compensation is paid by the state for a total of 480 days per child. Parents can take out parental benefits up to and including the day the child turns 12 years old or when the child finishes form/grade five in compulsory school. But, from the child’s 4th birthday, only 96 days in total can be saved. For twins, 132 days can be saved in total.
• The entitlement of parental days is divided equally between the parents but they have the right to transfer their entitlements to each other (with the exception of 90 days). Hence, one parent may use a maximum of 390 days. Single parents are entitled to the full 480 days.
• For 390 days the allowance is capped at nearly 80 % of the employee’s salary (limited to SEK 1,006 per day).
• For the remaining 90 days, the compensation is SEK 180 per day.
• If a collective bargaining agreement applies, the employee may be entitled to certain compensation from the employer in addition to the compensation from the state.
• Parents can take leave in one continuous period or in several blocks of time to a maximum of three periods each year. Many employers allow for more periods.
• Both parents can take up to 30 days of paid leave at the same time until the child reaches one year of age (‘double days’).
• If birth is given to multiple children (twins or triplets), the parents receive the following number of parental benefit days:

• The parental benefit that is based on income is called ‘parental benefit at sickness benefit level.’ To receive parental benefit at sickness benefit level, the employee must have had an annual income of at least SEK 82,100 for at least 240 consecutive days before the estimated delivery date. Workplaces or income levels can vary during the qualifying period. All parental benefits are taxable.
• If an employee has worked for less than 240 consecutive days before the child is born, has been without an income or earned less than SEK 117,590 in a year, they receive SEK 250 per day at sickness benefit level for the first 180 days that are taken out for the child. After the parents have taken out 180 parental benefit days, they receive parental benefits based on their income (a minimum of SEK 250 per day is offered at sickness benefit level).

Adoption leave

• The terms of parental benefit are generally the same for adopting parents. Employees can receive the parental benefit from the date they receive the child into their care but may not go beyond when the child turns 12. If parents adopt two or more children at the same time, they get an additional 180 days per child.

Care of a sick child (‘tillfällig föräldrapenning’ – VAB)

• Temporary parental leave – Parents can stay home from work in order to care for a sick child (or accompany the child to a medical appointment) and receive ‘temporary parental benefit’ for a maximum of 120 days per child per year. The child must be between 8 months and 12 years old. Under certain circumstances, the employee is entitled to compensation even if the child is older or younger. If the child is seriously ill, receipt of the benefit can be extended for an unlimited number of days.

There are 14 public holidays in Sweden during which employees are generally entitled to have paid time off. In addition, although not official, Midsummer Eve and New Year’s Eve are considered and generally treated as public holidays. However, these days are not included in the minimum holiday entitlement. Many employees are also entitled to half-days the day prior to a public holiday. However, employers commonly have a public holiday policy that regulates this or it is defined in a collective agreement.