Employment laws in Sweden

Over the last few years, several global tech, SaaS, and fintech companies have been scaling their operations in Sweden. If you plan to do the same, you must understand the employment laws in Sweden before initiating hiring operations.

Sweden’s employment framework provides robust protections for employees while maintaining transparency for employers. It defines the regulations surrounding all aspects, from the contract framework to working hours. 

Knowing these labor laws in Sweden helps you mitigate risks.

Nonetheless, we’ll help you understand Sweden’s employment legislation so you can make informed hiring decisions.

Key employment laws in Sweden

Sweden employment laws may have standardized the following practices. 

Labor law	Description
Employment Protection Act (LAS)	Regulates employment contracts, working hours, leave policies, and termination grounds.
Working Hours Act	Standardizes working time, overtime rules, breaks, and time-offs to maintain a healthy work-life balance.
Annual Leave Act	Grants employees the mandatory right to at least 25 days of paid vacation each year.
Social Insurance Code	Covers long-term benefits such as health insurance, pension, parental leave benefits, and sick leave.

Contract employment laws

Labor laws in Sweden outline multiple types of written contracts. The contract must be submitted in writing and signed by both parties before an employee can legally commence work for a Swedish organization. Before we get into the core aspects of the contract, let’s understand the types of contracts. 

Types of contract

Labor laws in Sweden typically define the following types of contracts.

• Permanent employment: This type of contract has a fixed start date and no predefined end date, unless either party chooses to terminate it with prior notice. 
• Part-time employment: In this type of employment, staffing needs are limited to a few hours a week, allowing you to offer part-time roles. It allows an employee to work on a part-time basis.
• Temporary employment: This type of contract has a fixed duration, but the employee works as per the temporary arrangements. The policies need to be stated beforehand.

Essential contract terms

Employment laws in Sweden require employers to outline the essential contract policies. All contracts must include the following information:

• Employer and employee details, such as names and addresses
• Start date of employment
• Work location 
• Details of the job, like roles and responsibilities
• Type of contract (permanent, temporary, or seasonal)
• Notice period 
• Duration of probation (if applicable)
• Remuneration and other benefits
• Salary cycle
• Standard working hours (daily or weekly)
• How working hours and on-call shifts are communicated
• Annual leave and other leave policies
• Training modules offered by the employer
• Terms of contact termination by either party
• Employer’s social security contributions
• Details about social protection, such as sick pay, pension, insurance, etc.

Minimum wage in Sweden

Sweden’s employment laws don’t specify a government-set minimum wage. Wages are decided by unions and employer groups across various industries. 

Collective agreements or contracts between trade unions and employers often include minimum wages for various jobs, such as cleaners, retail workers, and others. 

Working hours in Sweden

Employment laws in Sweden permit employees to work up to 40 hours a week. However, in certain exceptional cases, the time may exceed an average of 40 hours per week, but such an arrangement can continue only for up to four weeks.

Overtime

As per Sweden’s Working Hours Act, here’s what overtime work policies look like:

• Employees can work up to 48 hours of overtime in four weeks, or 50 hours in a month. The duration cannot exceed 200 hours in a year. 

Mandatory Benefits

Under Swedish labor law, all employers must guarantee the following mandatory benefits. 

• Insurance: Employers are required to provide social insurance, which usually includes health insurance, parental insurance, unemployment protection, and work injury insurance. Most employers may also offer collective agreement-based insurance for additional protection.

• Annual leave: Employees are entitled to 25 days of paid annual leave each year. Collective agreements may grant them additional vacation leave. 
• Parental leave: Parents can share up to 480 days of paid parental leave. The Swedish Social Insurance Agency funds this. 
• Sick leave: Employers must grant at least 14 days of sick leave. If the duration exceeds, the benefits are managed by Försäkringskassan.

Termination

In Sweden, employers must have valid grounds for terminating an employee. Terminating employment without such grounds may constitute unfair dismissal, which can result in legal repercussions for the employer. Therefore, the termination process must be managed with extreme care and sensitivity due to its complexity.

An employment contract can be ended through a Mutual Termination Agreement (MTA).

The notice period during probation is generally 2 weeks. After the probation period, the notice periods are as follows, depending on the period of employment:

Notice period	Period of employment
2 months	Minimum 2 years but less than 4 years
3 months	Minimum 4 years but less than 6 years
4 months	Minimum 6 years but less than 8 years
5 months	Minimum 8 years but less than 10 years
6 months	Minimum 10 years

However, the employment contract terms may apply.

Navigate employment laws in Sweden with trusted support

Employment laws in Sweden involve strong worker protections, union involvement, and evolving labor standards. This can be challenging to handle, especially when it comes to employment contracts, benefits, and termination procedures.

Payoneer Workforce Management offers assistance in drafting employment contracts, managing local payroll, and handling benefits and more, without setting up a local entity.

Book a demo today!

FAQs

1) What is the Employment Protection Act in Sweden?

The Employment Protection Act (LAS) typically regulates job security in Sweden. It outlines rules for hiring, probation, termination, redundancy, and priority rights. Employers may have to justify dismissals and follow specific notice procedures. Recent updates may have modernized rules on probation periods and layoffs.

2) What is the termination period in Sweden?

Termination notice periods vary by length of service. Employees typically have between 1 and 6 months’ notice, as defined by the Employment Protection Act. During probation (up to 6 months), either party may terminate with 2 weeks’ notice unless a different agreement applies.

3) What are the employee benefits in Sweden?

Mandatory employee benefits in Sweden include paid vacation (minimum 25 days), parental leave, sick leave compensation, and access to public healthcare. Many employers also offer additional benefits such as wellness stipends, private insurance, or training allowances.