Hire in Sweden

In Sweden, it is common to initiate employment with a probationary period (‘provanställning’), which automatically converts into permanent employment (indefinite term) if neither party terminates it. The Employment Protection Act (LAS) allows for a probationary period of up to six months, which can be shorter if agreed upon. Either party can terminate the probationary employment without specifying grounds, unless otherwise agreed. Termination of probationary employment by the employer should not involve discrimination or contradict good labor market practices.

If the employer wishes to terminate probationary employment before the scheduled end, a 14-day notice period (Section 31 of LAS) must be observed. If the employee is a trade union member, simultaneous notification to the union is required. The employee and the union have the right to request consultations on the termination. Additionally, the employee is entitled to formal notice on the last day of the probationary period. An employer can provide notice on the last day without a 14-day prior notice, but it is customary to pay severance equivalent to 14 days’ salary in such cases.

The Working Hours Act governs various aspects of working hours in Sweden, encompassing regular working hours, overtime, and rest periods. It mandates that a standard workweek should not exceed 40 hours, and the total working hours, including overtime, should average 48 hours per week over a four-month period. However, there is no specific limit for managers who may occasionally work remotely.

Under the Working Hours Act, employees are entitled to receive their work schedules two weeks in advance, and employers must maintain records of on-call time, overtime, or additional hours worked by employees. While certain provisions of the Working Hours Act can be modified through collective bargaining agreements, individual employment agreements cannot override them. Typically, workdays span from 8:30 or 9:00 a.m. to 5:00 p.m., Monday through Friday.

The legislation ensures employees have a nightly rest period of at least 11 uninterrupted hours per day, as well as a weekly rest period of no less than 36 consecutive hours, which includes standby time. Additionally, the Working Hours Act stipulates that employees should not work for more than five consecutive hours without a break.

The Working Hours Act in Sweden outlines regulations for working overtime, with additional considerations if a collective agreement is in place. While the Act doesn’t specify extra pay for overtime, collective agreements often address compensation for overtime, call-on, or standby time. In the absence of a collective agreement, employees need to mutually agree with their employer on compensation for work conducted beyond regular hours.

Employees are encouraged to request or obtain approval for overtime work in advance. In Sweden, working overtime at the employee’s initiative is generally not favored, as it may be perceived as a consequence of poor planning. Many Swedish employees prioritize family responsibilities and tend to conclude work by 5:00 p.m.

Overtime should not be routinely scheduled, and there should be a valid reason, such as unexpected events, for requesting employees to work beyond regular hours. Employers can request overtime with just one hour’s notice, and urgent work on evenings or weekends may prompt same-day overtime requests.

In the absence of a collective agreement, the Working Hours Act limits overtime to a maximum of 200 hours annually and 50 hours monthly. Under collective agreements, employers usually cannot request more than 150 hours of overtime in a calendar year, with additional hours requiring approval from the relevant trade union. Of the total permitted overtime, employers are typically restricted to 48 hours within a four-week period or 50 hours in a calendar month.

Sweden boasts comprehensive legislation governing health and safety in the workplace. The Work Environment Authority is entrusted with overseeing employers’ adherence to the Work Environment Act and its corresponding regulations. The Act encompasses guidelines addressing the responsibilities of employers and other entities accountable for safety, aiming to proactively mitigate health issues and workplace accidents. Additionally, there are stipulations outlining collaborative efforts between employers and employees, including rules governing the role and activities of safety representatives within the workplace.

It is a prevalent practice to recognize the contributions of key or managerial staff through bonus payments, which may be stipulated in contracts or granted at the employer’s discretion.

There are typically no universal constraints governing bonus payouts. However, the Swedish Financial Supervisory Authority has introduced regulations, particularly for banks and other credit institutions. These regulations mandate these entities to establish a remuneration policy, among other policies, that discourages the pursuit of short-term profits and excessive risk-taking.

In cases of wrongful termination, employees have the right to challenge the termination, seeking a declaration of invalidity from the court. If a dispute arises over the termination, it proceeds through the notice period, during which the employer is not obligated to cover salary costs or employment benefits. However, if the termination is later deemed invalid, the employee is entitled to compensation for salary and benefits during the dispute period.

**Individual Dismissals:**
Objective grounds for termination based on personal reasons may include negligent performance, serious misconduct, theft, disloyalty, or other aggravating circumstances related to the employee’s performance. The burden of proof lies with the employer, and termination for subjective reasons requires prior written notification to the employee, with a two-week advance notice to the trade union if applicable. Dismissal without notice is lawful only in cases of gross misconduct, and a summary dismissal should be reserved for exceptional circumstances.

The termination must not violate anti-discrimination laws, such as the Discrimination Act and the Parental Leave Act, protecting pregnant employees and new mothers. Trade union representatives may also be protected under the Trade Union Representative in the Workplace Act.

**Grounds for Termination:**
Permanent employment can only be terminated with “just cause” under the Employment Protection Act (EPA). This can be due to personal reasons (poor performance, misconduct) or economic reasons (restructuring, business closure). If the employee can reasonably be transferred to another position within the company, termination is not justified, and vacant positions must be considered before giving notice.

**Collective Dismissals:**
Even if only one employee is affected, collective consultation obligations apply in Sweden. A notification to the Swedish Public Employment Service is required if at least five employees are affected by terminations due to redundancy. The principle of “last in, first out” is applied in workforce reduction situations, and employers must negotiate with a labor union before terminating a member-employee, even without a collective agreement, or face potential punitive damages.

**Employees:**
Employees planning to resign are required to provide one month’s notice, with the possibility of a longer notice period.

**Employers:**
Prior to dismissing an employee, employers must issue a notice of termination, adhering to formal rules outlined in the Labor Employment Act (LAS). The notice must be in writing and detail the process for the employee to dispute the termination’s validity or claim damages. It should also specify whether the employee has re-employment priority rights. The letter of notice must be delivered in person or sent via registered mail.

Statutory notice periods range from one to six months, contingent on the duration of the employment term.

The duration of the notice period may be extended through collective bargaining agreements or individual contracts.

During the notice period, employees are both obligated to work and entitled to receive their salary and all associated employment benefits. Agreements involving garden leave or payment in lieu of notice require the employee’s consent.

LAS provisions related to employment termination are obligatory, but employers and employees can mutually agree to terminate employment. This allows for the creation of a separation agreement outlining terms such as payment in lieu of notice and other conditions tied to the separation.

The commencement of any notice period is contingent on the resolution of negotiations, with the notice period officially starting on the day an agreement is signed.

• Sweden lacks statutory regulations regarding severance pay. However, eligibility for severance pay may arise from an employment contract, a collective bargaining agreement, or a separation agreement.
• In medium to large companies, it is customary to include a severance payment, often equivalent to six to 12 months of fixed salary, for managing directors in their employment agreements. This practice extends to individuals typically not covered by employment protection.
• In specific termination scenarios, employers commonly provide a severance payment alongside the notice period through a settlement agreement. This becomes especially relevant when there is uncertainty about the presence of “just cause” for termination or other factors such as non-compliance with the “last in, first out” rule.

Swedish law lacks specific statutory regulations prohibiting post-contractual restraints. Instead, such rules are typically outlined in collective bargaining agreements, allowing for post-contractual restraints under specific conditions. However, Swedish courts may deem these restraints unreasonable and void or subject to adjustments. The enforceability of restrictions is often enhanced when employees receive compensation, at least 60% of their monthly salary, during the restricted period.

Non-competes

Non-compete clauses are usually limited to nine months, with a maximum of 18 months in exceptional cases. For validity, employees must be entitled to compensation during the restricted period, which need not exceed 60% of their previous salary with the employer.

Customer non-solicits

While permissible, customer non-solicitation clauses may be subject to court adjustments. There is no predefined time limit for these clauses, but they typically adhere to the temporal restrictions set for non-compete covenants.

Employee non-solicits

Employee non-solicitation clauses are allowed as they are considered less restrictive post-termination covenants. However, the period for these clauses should align with the legitimate interest of equalizing competitive advantages gained by employees through knowledge of former employer staff. The timeframe often mirrors that of non-compete and non-solicitation of customer clauses.

Enforcement of Restrictive Covenants

Restrictive covenants are commonly accompanied by a contractual penalty, which must be reasonable relative to the affected employee’s salary. Typically, this penalty for each breach ranges from three to six months’ salary. Additionally, a continuing penalty may be combined with a restrictive covenant.

In 2019, the European Court of Justice declared that companies must institute a mechanism to document the working hours of their employees. Consequently, employers must adopt an unbiased, dependable, and easily accessible system enabling the recording of the daily working hours completed by each employee.

Among Swedish workers, labor union membership is widespread, encompassing just over 70% of the country’s workforce. This membership is relatively evenly distributed across private, local government, and state sectors. The Co-Determination Act (‘medbestammandelagen’) establishes rules governing collective agreements, negotiation procedures, consultations, and employee representation. Collective agreements are prevalent across various industries in Sweden.

Employers are also well-organized, and the majority of workplaces in Sweden adhere to collective agreements, which hold precedence over specific articles of Swedish legislation.

The country’s three primary organizations are LO (Swedish Trade Union Confederation), TCO (Swedish Confederation for Professional Employees), and SACO (Swedish Confederation of Professional Associations):

• LO (Swedish Trade Union Confederation) is a coalition of 14 national trade unions representing blue-collar workers.
• TCO (Swedish Confederation for Professional Employees) comprises 13 trade unions representing white-collar workers.
• SACO (Swedish Confederation of Professional Associations) includes 21 trade unions representing graduate professionals.

Unlike some countries, Sweden does not officially recognize the concept of works councils, except for European Works Councils. Instead, employee influence is secured through trade unions.

Fixed-term employment in Sweden is regulated by both LAS and collective agreements. In the presence of a collective agreement, adherence to its provisions is mandatory for all fixed-term employments. Employers are obligated to treat employees on fixed-term contracts on par with those on open-ended contracts concerning pay and other employment conditions, unless any differential treatment is justified or unrelated to the fixed-term status.

LAS outlines four situations under which an employer can offer fixed-term employment contracts:

• Seasonal employment**
• General fixed-term employment:** This includes project-driven employment for a predetermined period.
• Temporary substitute employment:** This pertains to the replacement of an employee on leave.
• When the employee reaches 67 years of age**

If an employee accumulates a total of five years of employment, with at least 12 months being under a fixed-term or temporary contract, the employment contract automatically converts to permanent (indefinite term of employment).

Workers have the right to receive a written breakdown of their salary, indicating both their earnings and the deductions applied. Employers are also mandated to furnish employees with an annual income statement (‘kontrolluppgift’), which is submitted both to the employee and the Swedish Tax Agency.

Vacation days accumulate at a rate of 2.5 days per month, and typically, employees can only take holidays in the year following the one in which the time was earned, unless alternative arrangements are made with the employer. The minimum annual leave is set at 25 days, either through individual contracts or collective bargaining agreements, but it is customary to provide 30 days for white-collar employees and professionals.

Employees have the entitlement to various types of holiday pay:

• Holiday Allowance (Semestertillägg) – Upon accruing vacation days, employees are entitled to their regular monthly salary plus an additional amount for each day of leave taken. This additional payment is calculated at 0.43% of the monthly salary per day.
• Variable Holiday Allowance (Rörligt Semestertillägg) – This bonus is disbursed annually in May for the vacation period and is based on an employee’s variable salary components from the preceding calendar year.
• Holiday Compensation Payment upon Employment Termination (Semesterersättning) – According to Swedish law, employees accumulate untaken vacation days each year. For instance, if an employee has 30 days of vacation per year, they can save 10 days each year, up to a maximum of 30 days over a rolling 5-year period. In the 6th year, if they have accumulated 60 days of vacation, the employer will pay out 10 days in April each subsequent year. Moreover, when an employee departs, their accrued days and the vacation days earned for the following vacation year must be compensated. This compensation is calculated 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 on sick leave must promptly inform their employer about their condition to qualify for sick pay. If the incapacity to work extends beyond seven days, the employee is obligated to furnish a medical certificate. Without such documentation, the employer is not obligated to provide sick pay. In specific situations, the employer may request a doctor’s certificate within the initial seven days of absence, especially if there is a pattern of unexplained short-term absences.

Ordinarily, no remuneration or sick pay is disbursed for the initial day of illness (qualification period). Sick pay from the employer is applicable from the second to the fourteenth day of each absence period, amounting to 80% of the employee’s salary.

Subsequent to 14 days, the Swedish Social Insurance Administration (‘Försäkringskassan’) takes over sick leave compensation, covering around 80% of the salary but capped at SEK 804 per day. Collective agreements often stipulate more favorable compensation terms during sick leave, and individual employment agreements may also include enhanced terms.

Employers with annual sick pay costs exceeding a specified threshold may be eligible for state compensation, providing an additional safeguard against substantial sick pay expenses.

Employees are also entitled to (unpaid) leave for rehabilitation and dental appointments.

The regulations concerning “Care of Close Relatives” or “Pressing Family Reasons” (‘Lag om ledighet för närståendevård, lag om rätt till ledighet av trängande familjeskäl’) establish that employees are entitled to leave:

• When a person close to them is severely ill.
  When a person close to them experiences a severe accident or passes away.
• This entitlement cannot be waived through contracts and holds precedence even over collective wage agreements. However, in certain cases, it might be restricted to a limited number of full days annually.

A leave of absence (‘tjänstledighet’) is a period during which an individual refrains from work, typically without pay, while maintaining employee status and job security. Post-leave, the employee is assured of either the same position or a closely related one.

Provisions regarding leave of absence are outlined in around 20 different statutes within Swedish law. While there is no universal entitlement to a leave of absence, specific circumstances allow employees legal rights for extended time away from work. These include:

Education**: As per the Employee’s Right to Educational Leave Act (‘Studieledighetslagen’) of 1974, individuals employed for a minimum of six months (or a cumulative total of at least twelve months in the past two years) have the legal right to take an unpaid leave of absence for studies for up to six months.

Starting a Company**: The Right to Leave to Conduct a Business Operation Act of 1998 grants employees, with at least six months of service with an employer, the right to a leave of absence of up to six months to initiate their own company. Specific conditions must be met, such as ensuring the startup is not a competitor of the current employer.

Political and Union Activities**: Union work is a significant form of leave. The Trade Union Representatives Act specifies that employers must not impede a union trustee from fulfilling their assignments.

The Parental Leave Act outlines the entitlements for parental leave, ensuring that both parents possess an equal and gender-neutral right to take leave. These entitlements encompass:

• It is mandatory for women to take two weeks of maternity leave either before or after childbirth. According to Section 4 of the Parental Leave Law, female employees have the right to breastfeed the child, although specific details regarding its impact on work are not provided.
• Flexible Working: Parents have the right to reduce their normal working time by up to 25% until the child turns eight, with no payment for the reduced hours.
• Parental Leave Duration: An employee can be on parental leave until the child is 18 months old. Afterward, the employee is entitled to leave as long as they receive full parental benefits (‘föräldrapenning’) from the state.
• Government-Funded Leave: Pregnant employees can take up to 60 days of government-funded leave before childbirth, or longer if there are medical grounds.
• Second Parent’s Right: The second parent has the right to 10 working days of leave in connection with childbirth under the Social Insurance Code. These days must be taken before 60 days have passed since the child has come home after birth.
• Compensation: The state provides compensation for a total of 480 days per child. Parents can take parental benefits until the child turns 12 or finishes grade five in compulsory school. However, from the child’s 4th birthday, only 96 days in total can be saved (132 days for twins). The entitlement is equally divided between parents, with the possibility of transferring entitlements, except for 90 days. Single parents are entitled to the full 480 days.
• Allowance Cap: For 390 days, the allowance is capped at nearly 80% of the employee’s salary (up to SEK 1,006 per day). The remaining 90 days receive compensation of SEK 180 per day. If covered by a collective bargaining agreement, the employee may be entitled to additional compensation from the employer.
• Leave Periods: Parents can take leave in one continuous period or in several blocks, up to a maximum of three periods each year, although many employers allow for more periods.
• Double Days: 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’).
• Multiple Births: In the case of multiple children (twins or triplets), the parents receive a specific number of parental benefit days.

• The parental benefit linked to income is referred to as ‘parental benefit at sickness benefit level.’ To qualify for this benefit, the employee must have earned an annual income of at least SEK 82,100 for a continuous period of 240 days leading up to the estimated delivery date. During the qualifying period, variations in workplaces or income levels are allowed. All parental benefits are subject to taxation.
• If an employee has worked for less than 240 consecutive days before the child is born, experienced a period without income, or earned less than SEK 117,590 in a year, they are entitled to SEK 250 per day at the sickness benefit level for the initial 180 days taken for the child. Subsequently, after exhausting the initial 180 parental benefit days, the parents receive benefits based on their income, with a minimum of SEK 250 per day offered at the sickness benefit level.

Adoption leave

• The conditions for parental benefits are typically consistent for adoptive parents. Adopting employees can avail parental benefits from the day they assume care of the child, with the entitlement extending until the child reaches the age of 12. In cases where parents adopt two or more children simultaneously, they receive an extra 180 days per child.

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

Intermittent parental leave – Individuals have the option to take time off from work to attend to a sick child (or accompany the child to a medical appointment) and receive ‘intermittent parental benefit’ for up to 120 days per child per year. This provision applies to children aged between 8 months and 12 years. In specific situations, employees may be eligible for compensation even if the child falls outside this age range. In cases of a child’s serious illness, the benefit period can be extended without a set limit.

Sweden observes 14 official public holidays, during which employees typically enjoy paid time off. Additionally, Midsummer Eve and New Year’s Eve, while not officially designated, are widely regarded and treated as public holidays. It’s important to note that these days are not included in the standard minimum holiday entitlement. Furthermore, many employees may be eligible for half-days on the eve of a public holiday. Employers often have specific policies or guidelines in place to regulate this, and such arrangements may also be outlined in collective agreements.