Labor laws in Sweden

Sweden’s labor law model is governed by a complex legal framework, necessitating a thorough understanding to steer effectively. Employers must adhere to contract terms, work environment standards, social security provisions, and anti-discrimination regulations while prioritizing employee welfare or in a nutshell comply with Swede’s employment law.

Labor laws in Sweden directs that fixed-term contracts are restricted, with an emphasis on full-time positions. Workplace regulations are significantly guided by union agreements, impacting various aspects of employment conditions including labor disputes etc.

Hiring processes for EU/Nordic employees are simplified, with minimal bureaucratic requirements, while work permits are normally needed for those outside these regions. Employers must also stay informed about regulations affecting remote workers to ensure compliance.

Contractual Agreements

Contractual agreements in Sweden’s labor laws mandate that employers provide written employment contracts within one month, detailing essential terms such as:

•       Names and addresses of both employer and employee
•       Commencement date of employment
•       Work location of the employee
•       Job title and primary responsibilities
•       Clarification if it’s a special fixed term contract
•       Typical working hours and days per week
•       Compensation rate and additional benefits
•       Confirmation of social security contributions
•       Existence of any probationary period
•       Procedures and notice period for termination
•       Applicable collective bargaining agreements

Categories of employment contracts in Sweden

Labor laws in Sweden primarily support Non-fixed-term contracts for most positions, unless specified otherwise in the contract. Employers can also opt for special fixed-term contracts, continuing up to 12 months, as per Swedish labor law. Notably, Swedish employment laws promote transitioning employees on special fixed-term positions to full-time contracts after a nine-month period.

Responsibilities and rights for both parties

Employers in Sweden must ensure that work contracts accurately sketch terms and conditions, including working hours, pay, and termination clauses. Additionally, they must adhere to regulations such as paying 80% of the usual salary for the first 14 days of employee illness and providing a conducive circumstance for unionization.

Regarding taxation, while subcontracted employees may not be subject to Swedish taxes, resident remote temporary workers and business travelers are now taxed under the revised 183-day rule. Furthermore, employers are accountable for employee data handling and privacy issues. Consideration of Data Processing Contracts alongside employment agreements can help alleviate associated risks.

Minimum wage and compensation

Sweden’s labor laws do not mandate a minimum wage.

Factors affecting wage determination

Wage determination in Sweden hinges on collective bargaining between trade unions and employers. Absent unions, minimum salaries may associate with work permit application criteria. In 2024, the minimum monthly salary for work permit applications in Sweden is SEK 26,560. Discover efficient payroll methods.

Social Security and employee benefits

The employment laws in Sweden mandate the condition of the following benefits.

Statutory benefits

•       The Annual Leave Act guarantees paid vacation time for employees.
•       The Sick Pay Act mandates employee pay during illness.
•       The Employment Protection Act ensures salary and benefits during termination notice periods.
•       Employees are entitled to maternity pay benefits for up to 480 days, funded by the Swedish government.

Added perks and benefits

Employers must offer old-age pension, health insurance fees, survivor’s pension, and work injury insurance for employees.

Collective agreements may alter working hours, overtime pay, leave entitlements, notice periods, severance pay, or supplementary pension.

Social Security requirement and contributions

The labor laws in Sweden require that employers contribute an additional 31.42% of the total taxable remuneration for employee social security, with no cap.

Working Hours and Overtime

The Working Hours Act applies collectively, covering both domestic and foreign companies, provided that all operations are conducted within Sweden. Let’s examine its provisions:

Regular working hours

Employers can demand employees to work an average of 40 hours weekly, averaged over four weeks. Sweden’s labor law also regulates on-call time for remote workers, allowing up to 48 hours per employee over four weeks or 50 hours monthly. However, these guidelines may not extend to domestic work or managerial roles.

Overtime regulations and compensation

•       The law separates between general overtime and extra overtime:
•       General overtime is limited at 200 hours per employee annually.
•       In specific cases, additional hours outside general overtime can reach up to 150 hours annually.
•       Similar provisions apply for part-time employees.

However, employees cannot work more than 48 hours over four weeks or 50 hours monthly.

Sweden’s employment laws do not specify overtime pay, but understanding international compensation regulations is advisable.

Holidays and Paid Time Off

Here’s a summary of the main elements outlined in the Annual Leave Act, highlighting the differences between paid and unpaid leave:

Annual leave entitlement

Employers are required to provide up to 25 days of paid vacation per annual leave year. However, employees joining after August 31st are entitled to five days’ paid vacation in the subsequent annual leave year. Swedish labor law commands a distinction between the ”annual leave year” (April 1st to March 31st) and the ”qualifying year” (the preceding 12 months) for pay calculation during annual leave. Moreover, Saturdays and Sundays cannot be counted as annual leave under the law.

Communal or Public holidays and special leaves

The employment laws in Sweden differentiate between public holidays, non-working days, ’bridge days,’ and ’red days. Red days involve Sundays and specified public holidays. Non-working days include public holidays and bridge days, which are workdays between a public holiday and a weekend. While red days are contractually protected, employers can settle with employees to work on other days. Moreover, Swedish labor law requires paid time off for special occasions: Maternity leave can extend up to 14 weeks, including seven weeks post-birth. Employers may grant ten working days of paternity leave for new childbirth. Terms of leave for education, bereavement, entrepreneurship, etc., can be negotiated between employers and employees.

Termination and Severance: Knowing Your Rights and Obligations

The reformed employment laws in Sweden provide clearer guidelines for employee termination. However, they do not explicitly mandate severance pay. Let’s delve deeper into this topic.

Causes for termination

Swedish labor law makes a merit between dismissals with notice and those without. Dismissals with notice are typically based on intent such as company restructuring, economic issues, or lack of work. In cases of poor performance or misconduct, employers are required to carefully investigate the breach of contract rather than solely aiming on the employee’s circumstances or future risk. The decision is based on a complete assessment of all relevant factors. Before termination, employers must explore substitutes, such as offering alternative positions within the company. In exceptional circumstances, such as serious misconduct posing immediate risk, employees may be dismissed without notice.

Notice period

Employers are needed to provide a notice period based on the length of the employee’s service:

•       Less than two years: one month
•       Two to four years: two months
•       More than four years: An extra month is added for every two years of service, up to a maximum of six months.

Probation period

Employers have the choice to subject new employees to a probationary period of up to six months. This period assists easier hiring and termination processes.

Advantage Advokatbyrå are equipped with the right set of skills and they can help you in all aspects of labor laws in Sweden. You are welcome to contact us, you can reach us either on  08 20 21 40  or at  info@advantage.se