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Country snapshot

Key considerations

Which issues would you most highlight to someone new to your country?

Among the key features of Swedish employment law are the far-reaching protection of employees’ rights, the importance of both local and national collective bargaining agreements and the relationship between employer and trade unions in the workplace.

What do you consider unique to those doing business in your country?

The Swedish government plays a less dominant role than governments in other jurisdictions, and leaves many of the decisions to the parties in the labour market. As a result, employers’ associations and trade unions strongly influence the formation of the standard terms and conditions for employment at both collective and individual levels in many sectors.

As mentioned above, the Swedish labour market is also characterised by the extensive protection afforded to employees’ rights – employers cannot terminate employment without objective grounds for doing so. In return for such protection – and without the need to be explicitly stated in the employment contract – employers can expect their employees to act in the interest of the company, such as by observing a far-reaching loyalty duty in the course of their work.

Is there any general advice you would give in the employment area?

Any change in the employment relationship will trigger several obligations under either the law or collective bargaining agreements. The process can be both time consuming and costly.

Emerging issues/hot topics/proposals for reform

Are there any noteworthy proposals for reform in your jurisdiction?

A new law on trade secrets is being enacted to replace the current Act on the Protection of Trade Secrets (1990/409). The proposal, which will implement an EU directive on the protection of trade secrets, addresses a key matter: the criminal liability of employees who breach trade secrets to which they have had lawful access in the course of their employment.

What are the emerging trends in employment law in your jurisdiction?

Employers are paying more attention to the work environment as a result of the Swedish Work Environment Authority’s increased activity in fields such as the physical, psychological and social work relationships in the workplace.  

Another emerging trend is the increased use of summary dismissal when terminating an employment rather than giving notice, even though the employer may then have to pay damages if it is unsuccessful in proving that the employee had grossly neglected his or her obligations to the employer.

The employment relationship

Country-specific laws

What laws and regulations govern the employment relationship?

The main laws governing the employment relationship in Sweden are:

  • the Employment Protection Act (1982/80);
  • the Employment (Co-determination in the Workplace) Act (1976/580);
  • the Work Environment Act (1977/1160);
  • the Discrimination Act (2008/567);
  • the Annual Leave Act (1977/480);
  • the Working Hours Act (1982/673);
  • the Parental Leave Act (1995/584); and     
  • the Trade Union Representatives (Status at the Workplace) Act (1974/358).

In addition to the laws listed above, employers must also be aware of the derogations included in collective bargaining agreements, if any, since such provisions may take precedence over those set forth in statutory law.

Who do these cover, including categories of worker?

The Swedish employment legislation is applicable in its entirety to those employees who work permanently in Sweden and in general to all categories of workers. That said, employees whose duties and conditions of employment are such that they may be deemed to occupy a managerial or comparable position may be excluded in some cases, in particular with regard to employment protection.

Misclassification

Are there specific rules regarding employee/contractor classification?

While Swedish employment legislation applies broadly to employees only and not contractors, pursuant to the Swedish tax regulations, certain contractors may be considered as employees. Consequently, such individuals may be treated as ordinary employees with regard to, for instance, employment protection.

Contracts

Must an employment contract be in writing?

There are no formal requirements for employment contracts: they can be entered into either orally or in writing. It is, however, customary to conclude them in writing.

By contrast, regardless of the form of the contract (whether written or oral), an employee has a right to written information in respect of all the terms and conditions relevant to the employment contract or employment relationship. The employer must provide the employee with such information within one month of the commencement of work.

Are any terms implied into employment contracts?

Yes, many of the principles that govern the employment relationship and that are based in case law are implied in employment contracts – for instance, the employer’s right to lead the work at the workplace and the employee’s duty to be loyal to the employer.

In contrast to many other countries, employment contracts in Sweden are fairly brief, especially if the employer is bound by a collective bargaining agreement. These collectively agreed terms and conditions, however, effectively add to the employment contract together with the implied terms.

Are mandatory arbitration/dispute resolution agreements enforceable?

Arbitration/dispute resolution agreements are enforceable in Sweden. However, an individual agreement is invalid where it excludes or limits the employees' rights to bring any complaints to a court or tribunal.

How can employers make changes to existing employment agreements?

The employment relationship in Sweden is based on the freedom of contract, and the parties are fairly free to agree upon the terms and conditions of the employment. However, the employer has only limited ability to unilaterally change employment contracts that are already agreed. As a result, an employer can make changes to existing employment contracts only if the employee agrees to the changes. However, some changes – such as changing the employee’s activity level – may be done unilaterally without having to obtain the employee’s consent before any change.

Foreign workers

Is a distinction drawn between local and foreign workers?

A ‘posted worker’ is defined as an employee who has been sent by the employer to another country to work for a limited period of time. In comparison to local workers to whom all Swedish employment legislation is applicable, the employee that has been sent to Sweden is covered by only certain provisions of the Swedish employment legislations and, if any, the applicable collective bargaining agreement during the period of employment in Sweden. The general framework applicable to employees posted in Sweden is set forth in the Swedish Posting of Workers Act (1999/678).

Recruitment

Advertising

What are the requirements relating to advertising positions?

Only public sector employers are required to advertise available positions.

Background checks

What can employers do with regard to background checks and inquiries in relation to the following:

(a) Criminal records?

The use of different background checks as a part of the recruiting process has become more common in recent years in Sweden, both for public and private sector employers. In general, employers are not prohibited from carrying out background checks on applicants if there is a legitimate reason to do so or from requesting that the applicant present a copy of his or her criminal record. In some sectors (eg, financial sector or working with children), providing a copy of a criminal record may also be a pre-condition of the commencement of employment. However, applicants are not obliged to provide a copy of their criminal record if they know that doing so will definitely result in their application being dismissed.

The Swedish Personal Data Act (1998/204) limits employers’ rights to process data collected in the course of any recruitment procedure. Essentially, employers are prohibited from keeping records of applicants’ and employees’ criminal activities and records.

 (b) Medical history?

The Personal Data Act also limits employers’ rights to carry out background checks in respect of an applicant’s or employee’s medical history and to process data collected in the course of any recruitment procedure.

However, an employer may process sensitive personal data (eg, medical history) if such data is required to fulfil the employer’s obligations in relation to the employee – for instance, to calculate sick pay, examine the employee’s right to sick leave or as part of a rehabilitation investigation.

(c) Drug screening?

Employers are allowed to screen employees for drugs if there is a legitimate reason to do so – for instance, if the employee’s work involves major risk of serious accidents.

(d) Credit checks?

Employers have a right to carry out credit checks on applicants if there is a legitimate reason to do so – for instance, if the applicant is seeking a chief financial officer position or equivalent.

(e) Immigration status?

The general rule is that a foreign applicant must have a work permit before entering Sweden. In certain circumstances, applicants may apply for and obtain a permit after entering Sweden. Employers have a duty to check that applicants hold work permits or equivalent documentation entitling them to work in Sweden.

(f) Social media?

Employers are not prohibited from carrying out background checks based on information that applicants post on social media and that is therefore part of the public domain. However, the use and processing of data collected in this way must be done in accordance with the Swedish Personal Data Act.

(g) Other?

N/A.

Wages and working time

Pay

Is there a national minimum wage and, if so, what is it?

Sweden, unlike many other countries, does not have a national minimum wage that employers must observe when negotiating wages with employees. Wage levels are either set in individual negotiations between the employer and the employee or collectively agreed between employers’ associations and trade unions at sector level for those employers that are bound by collective bargaining agreements. Annual pay rises are still common practice in most sectors.

It is increasingly common for the pay package of white collar employees to be based partly on performance.

Are there restrictions on working hours?

The Working Hours Act (1982/673) governs restrictions on working hours. Most of the provisions of the act are mandatory in that respect, but derogations may be made through collective bargaining agreements concluded by either central or local employee organisations.

As a general rule, regular working time may not exceed 40 hours a week. When it is required and the work is of such nature that the general rule may not be applicable, instead of the fixed 40 hours a week, working time may amount to an average of 40 hours a week over a period of four weeks at most.

In terms of on-call time and overtime, an employee may claim on-call time up to a maximum of 48 hours over a period of four weeks or 50 hours per calendar month. If there is a special need, overtime may be worked up to a maximum of 48 hours per employee over a four-week period, or 50 hours over a calendar month with a maximum of 200 hours over a calendar year.

The employer also has the possibility to add another 150 hours per employee over a calendar year if there are special grounds for doing so and no other reasonable solution has been found.

Hours and overtime

What are the requirements for meal and rest breaks?

Employees are entitled to:

  • a rest after five hours of work;
  • a break of at least 11 hours every 24 hours; and
  • a rest of 36 consecutive hours each week of work.

How should overtime be calculated?

Due to the differences between the working conditions in the labour market, the calculation of overtime is often regulated at sector level in collective bargaining agreements.

Overtime is generally compensated through either overtime pay compensation or compensatory leave. The overtime compensation is usually depending on the time or day when the employee worked overtime. For instance, compensation is often higher if the employee works after 8pm or at weekends.

What exemptions are there from overtime?

The Working Hours Act applies generally, but certain categories of employees are excluded. These include employees who hold managerial or comparable positions, employees who are entrusted with organising their own working time, work performed in the employer´s household, work on board a ship or work on certain road transport.

Is there a minimum paid holiday entitlement?

Under the Swedish Annual Leave Act, employees are entitled to annual leave, holiday pay and compensation in lieu of annual leave. The regulations are mandatory and any individual agreements are invalid where they restrict an employee’s rights. However, similarly to many other aspects of the Swedish labour market, derogations may be made by collective bargaining agreements that have been concluded or approved by a central employee organisation.

Employees have a right to a minimum of 25 days of annual leave each year, except where employment commenced after August 31, in which case the employee is entitled to five days of annual leave that year. Although the Annual Leave Act provides for a minimum of 25 days of annual leave, in many sectors employees are entitled to 30 days of annual leave.

What are the rules applicable to final pay and deductions from wages?

Under the Annual Leave Act, employees are entitled to a final pay no later than one month after the last day of employment.

An employer’s rights to set off any claims from wages are very limited in Sweden. An employer may set off claims towards an employee from wages only:

  • if the employee has agreed to it;
  • if the employer has a claim to compensation for damages that the employee intentionally caused during the employment; or
  • if an applicable collective bargaining agreement stipulates a right for the employer to set off.

Record keeping

What payroll and payment records must be maintained?

According to the Swedish Accounting Act (1999/1078), all documents that fall within the definition of ‘accounting information’ must be maintained or stored for at least seven years.

Discrimination, harassment & family leave

What is the position in relation to:

Protected categories

(a) Age?

The Discrimination Act (2008/567) prohibits employers from discriminating, directly or indirectly, on the basis of age, any employee, trainee, job or trainee applicant or any person who carries out work as hired or borrowed manpower.

(b) Race

The Discrimination Act prohibits employers from discriminating, directly or indirectly, on the basis of race, any employee, trainee, job or trainee applicant or any person who carries out work as hired or borrowed manpower.

(c) Disability?

The Discrimination Act prohibits employers from discriminating, directly or indirectly, on the basis of disability, any employee, trainee, job or trainee applicant or any person who carries out work as hired or borrowed manpower.

Inadequate accessibility is also considered a form of discrimination. This means that an employer has to take reasonable accessibility measures to put an employee or applicant with a disability in a position comparable to employees or applicants without such disability.

(d) Gender?

The Discrimination Act prohibits employers from discriminating, directly or indirectly, on the basis of gender, any employee, trainee, job or trainee applicant or any person who carries out work as hired or borrowed manpower.

(e) Sexual orientation?

The Discrimination Act prohibits employers from discriminating, directly or indirectly, on the basis of sexual orientation, any employee, trainee, job or trainee applicant or any person who carries out work as hired or borrowed manpower.

(f) Religion?

The Discrimination Act prohibits employers from discriminating, directly or indirectly, on the basis of religion, any employee, trainee, job or trainee applicant or any person who carries out work as hired or borrowed manpower.

(g) Medical?

‘Disability’ is defined in the Discrimination Act as a permanent physical, mental or intellectual limitation of a person´s functional capacity that, as a consequence of injury or illness:

  • existed at birth;
  • has arisen since then; or
  • can be expected to arise.

Further, the Discrimination Act prohibits employers from discriminating, directly or indirectly, on the basis of disability as defined above, any employee, trainee, job or trainee applicant or any person who carries out work as hired or borrowed manpower.

(h) Other?

N/A.

Family and medical leave

What is the position in relation to family and medical leave?

Under the Parental Leave Act (1995/584), both parents have an equal right to leave. The provisions are mandatory and any individual agreement is invalid if it restricts an employee’s rights under the act. However, as with other areas of Swedish labour law, derogations may be made by a collective bargaining agreement that has been concluded or approved by a central employees’ organisation.

There are several types of parental leave:

  • full-time leave for both parents;
  • leave for one parent in the form of a reduction of normal working hours; and
  • leave for an employee’s temporary care of a child.

In addition to parental leave, in certain circumstances relatives may also be entitled to leave to assist ill relatives pursuant to the Care for Related Persons Act (1988/1465).

Harassment

What is the position in relation to harassment?

According to the Discrimination Act, the definition of ‘discrimination’ includes harassment and sexual harassment. ‘Harassment’ is a conduct that violates a person’s dignity and that is associated with:

  • sex;
  • transgender identity or expression;
  • ethnicity;
  • religion or other belief;
  • disability;
  • sexual orientation; or
  • age.

Whistleblowing

What is the position in relation to whistleblowing?

In 2016 a new law entered into force that improves the protection of whistleblowers in the workplace. The Whistleblowing Act (2016/749) states that employees must not be subject to retaliation for reporting serious misdeeds. Employees must first sound the alarm internally before doing so externally. However, in some situations employees may report the misdeeds externally immediately if they have a justified reason for not observing the normal procedure.

Privacy in the workplace

Privacy and monitoring

What are employees’ rights with regard to privacy and monitoring?

Employees’ rights with regards to privacy and monitoring in the employment relationship is governed by the Swedish Personal Data Act and supervised by the Swedish Data Protection Authority. This framework will change in May 2018 when the EU General Data Protection Regulation (2016/679) enters into force. The key changes that the regulation will introduce are that employers will be entitled to process employees’ personal data only in the following circumstances:

  • if it is necessary for the employees’ performance of the employment contracts;
  • if it is required by law; or
  • if the employers’ legitimate interests outweigh the general privacy rights of employees.

There are also limitations to the employers’ legitimate interests: the processing must be strictly necessary for a legitimate purpose and it must be proportionate and implemented in the least intrusive manner possible.

There are also restrictions on how long employers may store any personal data concerning employees collected in the course of monitoring employees.

To what extent can employers regulate off-duty conduct?

An employer’s right to regulate the behaviour of its employees outside work is limited in Sweden, unless the behaviour has an impact on the employee’s performance of their work or if it involves any form of competition with the employer’s business.

Are there rules protecting social media passwords in the employment context and/or on employer monitoring of employee social media accounts?

Employers may be entitled to monitor their employees’ social media accounts, if the accounts belong to the employers and are used in the course of the employees’ performance of work for the employers. Monitoring employees’ social media accounts is considered processing of personal data and is regulated by the Data Protection Act.

Employers are not entitled to monitor their employees’ private social media accounts; doing so may be deemed to be a criminal offense under the Swedish Penal Code (1962/700).

Trade secrets and restrictive covenants

Intellectual Property

Who owns IP rights created by employees during the course of their employment?

In the absence of a general legal framework for the transfer of IP rights in the employment relationship from employees to employers, the matter is addressed in:

  • individual employment agreements;
  • company policies; and
  • collective bargaining agreements.

However, exceptions exist for IP rights connected to computer programs and patentable inventions created by employees during the course of their work. According to the Act on Copyright in Literary and Artistic Works (1960/729), the copyright to a computer program created by an employee as part of his or her tasks is transferred to the employer, unless the parties have agreed otherwise. The employer’s rights to patentable invention created by an employee as part of his or her tasks in the performance of the work for the employer are regulated in the Right to the Inventions of Employees Act (1949/345).

Restrictive covenants

What types of restrictive covenants are recognised and enforceable?

The use of restrictive covenants is common practice, but is primarily a matter to be addressed post-employment. During the term of employment, employees have a far-reaching implicit duty to be loyal to the employer – for instance, by not engaging in a competing business.

In terms of restrictive covenants after termination of the employment, the established practice, which balances the rights of employers and employees, is summarised below:

  • non-competition clauses prohibiting employees from engaging, directly or indirectly, in a competing business: the restrictive period may not exceed 18 months and the employee must be compensated for the inconvenience caused by the restrictions; and
  • non-solicitation clauses prohibiting employees from soliciting, directly or indirectly, customers or any other parties with whom the employer has a business relation: if the employee has a non-competition clause included in the employment contract, the length of the restrictive period is often mirrored in the non-solicitation clause. However, the employee has no right to compensation for any inconvenience caused by the solicitation restrictions.

Other restrictive covenants, such as secrecy clauses, are often tied to the employer’s trade secrets and the employee’s obligations under the Swedish Act on the Protection of Trade Secrets.

Non-compete

Are there any special rules on non-competes for particular classes of employee?

The use of non-competition clauses has been subject to negotiations between the employers’ association and the trade unions resulting in a collective bargaining agreement that solely addresses the matter. The collective agreed terms and conditions have been recognised as a guidance for the use of non-competition clauses in all employment relationships, including employees whose duties and conditions of employment are such that they may be deemed to occupy a managerial or comparable position.

Non-competition clauses may in general be included in employment contracts only for employees who hold positions where they typically gain knowledge about the employer’s business with a high level of competitive value. The purpose of the clause must be to protect the employer’s business rather than to restrict the employee from seeking new employment.

In order for non-competition clauses to be enforceable, they must be reasonable and the employee must be compensated for the inconvenience caused by the competition restriction.

Discipline and grievance procedures

Procedures

Are there specific laws on the procedures employers must follow with regard to discipline and grievance procedures?

Discipline and grievance procedures are regulated by laws or collective bargaining agreements.

Discipline procedures According to the Employment (Co-determination in the Workplace) Act, disciplinary actions may not be taken unless permitted by law or a collective bargaining agreement.

Swedish law provides for two main types of disciplinary action:

  • disciplinary penalties; and
  • formal caution.

Disciplinary penalties such as salary deductions, suspensions and warnings are in most cases subject to negotiations between the employer and the trade union before any final decision to proceed and deliver the penalty to the employee.

Formal caution, by contrast, is a notification from the employer to the employee that the employer intends to take action against the employee if the employee does not improve or change his or her behaviour. Such an action can ultimately lead to terminating the employment.

Grievance procedures Grievance procedures can be handled either internally pursuant to an employer’s applicable grievance policy or as a part of a formal complaint or claims process filed with a supervising authority such as the Parliamentary Ombudsmen.

Industrial relations

Unions and layoffs

Is your country (or a particular area) known to be heavily unionised?

Yes, in Sweden employees are heavily unionised. Approximately 70% of the workforce are members of a trade union.

What are the rules on trade union recognition?

The rules on trade union recognition and the employees’ rights thereof are governed by the Employment (Co-determination in the Workplace) Act. Employees have a general right of association – that is, a right to:

  • belong to a trade union of their choice;
  • participate in the establishment of such an organisation in the workplace; and
  • exercise the rights of their membership.

What are the rules on collective bargaining?

Collective bargain agreements play an important role in the Swedish labour market. The collectively agreed terms and conditions may take precedent over statute law and in many cases, form the standard framework for individual employment terms for employers not bound by the collective bargaining agreement.

The main rules on collective bargaining agreements are set forth in the Employment (Co-determination in the Workplace) Act.

Termination

Notice

Are employers required to give notice of termination?

Yes, if an employer wishes to terminate an employment, certain formalities must be observed. A notice of termination by the employer must be in writing and should include information about the procedure that the employee must follow if he or she wishes to dispute the termination or claim damages from the employer. Further, the employer must inform the employee about any rights of priority concerning re-employment.

The notice of termination should be delivered to the employee personally and if this is not possible, sent by recorded post to the employee’s last known address.

Redundancies

What are the rules that govern redundancy procedures?

The rules that govern redundancy procedures are set forth in the Employment Protection Act.

Redundancy as a ground for termination of employment applies to all situations other than where notice of termination is based on circumstances relating to the employee personally. However, the employer does not have objective grounds for notice of termination if it is reasonable to require that the employer provide other work within the business to the affected employees.

Further, the employer must observe certain rules on priority when establishing the order of termination among the affected employees. Special orders of termination may be established for each agreement sector if the employer is bound by a collective bargaining agreement.

The order of termination for the affected employees is based on each employee's total length of service. Employees with longer lengths of service (senior employees) have priority over employees with shorter lengths of services (junior employees). However, in order for a more senior employee to claim the position of a less senior employee successfully, the more senior employee must possess the satisfactory qualifications for the continued work. If not, the more senior employee may be given notice of termination despite the length of service.

Employers of 10 employees or fewer may give priority for continued employment to at most two employees who are of particular importance for the future activities of the employer’s business, despite their having a shorter length of service.

Are there particular rules for collective redundancies/mass layoffs?

No particular rules exist for collective redundancies. However, the employer must provide a written notice to the Public Employment Agency before the procedure starts if the redundancy affects more than four employees.

Protections

What protections do employees have on dismissal?

Swedish law does not provide for ‘at-will employment’. The termination of employment must be based on objective grounds, either redundancy or personal reasons. Dismissal for personal reasons is often connected to misconduct. The obligation to terminate the employment based on objective grounds includes, for example, a far-reaching duty for the employer to correct any wrongdoings by informing the employee in advance, so that the employee can adjust and remedy the situation.

If the employee suffers from a physical or mental illness in a way that affects his or her working ability, the employer must provide for rehabilitation.

There is a distinction between dismissal with notice and summary dismissal. Summary dismissal may take place only where the employee has grossly disregarded his or her obligation towards the employer.

Courts/tribunals

Jurisdiction and procedure

Which tribunals or courts have jurisdiction to hear complaints?

The Swedish Labour Court is a specialised court that hears complaints in labour-related disputes. The Swedish Labour Court is also the court of appeal for labour-related disputes heard by the district courts at first instance.

Labour-related disputes can also be subject to arbitration proceedings and it is customary to include arbitration clauses in employment contracts for directors and top management employees.

What is the procedure and typical timescale?

If conditions for bringing the dispute directly before the Swedish Labour Court are not met, the complaint should instead be heard before a district court and appealed to the Swedish Labour Court.

The timescale is highly dependent on the urgency of the matter and varies from a few days to several months (from when the application is filed) until a final judgment is notified.

Appeals

What is the route for appeals?

Judgments of the Swedish Labour Court are final and cannot be appealed, regardless of whether the court heard the case as a first instance court or as an appellate court.