Labour and Employment Comparative Guide

1 Legal framework

1.1 Are there statutory sources of labour and employment law?

Several Swedish statues are fundamental. The primary source is the Employment Protection Act (1976:580). In addition, there are several specific statues that are important to recognise from a Swedish employment law perspective – mainly:

• the Employment (Co-determination in the Workplace) Act (1976:580);
• the Working Hours Act (1982:673);
• the Annual Leave Act (1977:480);
• the Discrimination Act (2008:567);
• the Work Environment Act (1977:1160);
• the Trade Secrets Act (2018:558); and
• the Parental Leave Act (1995:584).

However, this list is not exhaustive and other statutes are also essential parts of the Swedish employment law landscape. Further, EU law and case law from the Labour Court have a material impact on Swedish employment law. Provisions in collective bargaining agreements (CBAs) are also of part of the so called 'Swedish Model' and supplement and replace mandatory law.

1.2 Is there a contractual system that operates in parallel, or in addition to, the statutory sources?

The 'Swedish Model' is based on a rather high degree of unionisation and the principles that mandatory law (Swedish statues and EU law), together with the existence of CBAs, provides a comprehensive legal framework. In practice, this means that CBAs often include more specific provisions and rules in mandatory law. Consequently, mandatory law may be supplemented and replaced by provisions in an applicable CBA.

A CBA is negotiated and entered into between the parties on the labour market – that is, trade unions and employers' organisations. The idea is that Swedish Model is based on self-regulation by the parties on the labour market and CBAs are typically adapted to a specific industry. To become bound by a CBA the employer must become a member of an employers' organisation or enter into the CBA directly with the relevant trade union. If an employer is bound by a CBA, the employer must apply the provisions of the CBA to all of its employees covered by such CBA (ie, also in relation to employees who are not members of a trade union).

It is not mandatory to be bound by a CBA. However, a trade union may, depending on the circumstances, have a right to take industrial actions in order to conclude a CBA. Further, the majority of Swedish employees are members of a trade union and many employers are bound by a CBA.

In addition to mandatory law and CBAs, individual employment agreements are essential to determine the terms and conditions of employment.

1.3 Are employment contracts commonly used at all levels? If so, what types of contracts are used and how are they created? Must they be in writing must they include specific information? Are implied clauses allowed?

Yes, employment contracts are commonly used for all levels. The general rule that the employment is for an indefinite term but may be entered into for a fixed period. An employment relationship does not necessitate a written employment agreement. However, according to the Employment Protection Act, an employer must provide written information regarding the most important terms of employment. Such information includes the following:

• the name and address of the employer and employee;
• the commencement date;
• the location of the workplace or information regarding different work locations;
• a description of the work (including work tasks);
• the position/title;
• the form of employment (fixed or indefinite and any probationary period);
• the length of the probationary period;
• the salary and other employment benefits;
• working hours and the right to compensation for overtime and additional time;
• the right to training or education;
• annual leave;
• The provisions that the employer and employee must adhere to if the employer or the employee wishes to terminate the employment relationship;
• confirmation that social security contributions are paid by the employer and information about the social security protection provided by the employer; and
• the applicable collective agreement (if relevant).

There are certain unwritten principles that apply to an employment relationship. Two of the most important are the managerial prerogative and the duty of loyalty. In short:

• the managerial prerogative pertains to the employer's right to lead and distribute the work tasks; and
• the duty of loyalty obliges the employee to:
• • act in the best interests of the employer;
  • perform the intended work to the best of their ability; and
  • avoid situations where a conflict of interest may arise.

2 Employment rights and representations

2.1 What, if any, are the rights to parental leave, at either a national or local level?

Sweden has generous statutory parental leave rules, stipulated in the Parental Leave Act (1995:584). A parental benefit is paid by the Social Insurance Agency. The parental benefit is paid out for 480 days per child.

The right to parental leave starts from the employee's first day at work and the right to parental leave and to receive parental benefit is dependent on the he child's age and whether the parental benefit is taken out from the Social Insurance Agency.

In short, an employee who is pregnant has the right to be on full leave in connection with the birth of their child. The employee has the right to be on leave for a consecutive period of:

• seven weeks before the estimated due date (with a right to receive parental benefit 60 days prior to the birth); and
• seven weeks after the birth.

The non-pregnant parent is also entitled to 10 days off with temporary parental benefit when a child is born.

2.2 How long does it last and what benefits are given during this time?

Parental leave benefit: A parental benefit is paid by the Social Insurance Agency. The parental benefit is paid out for 480 days per child. For 390 days, the compensation is based on the employee's income. For the remaining 90 days, the compensation is set at SEK 180 per day. The parental benefit is divided equally between the parents, but there is a right to transfer parental benefit days to each other, except for 90 days. Many collective bargaining agreements (CBAs) also stipulate that the employer must pay an additional top-up to the parental benefit provided by the Social Insurance Agency.

When the child is under the age of 18 months: The employee has the right to full leave from work, without the requirement to take out parental benefit from the Social Insurance Agency up until the age of 18 months (ie, a right to unpaid leave during these 18 months).

When the child is over the age of 18 months: An employee has the right to take time off to the extent that they take out parental benefit from the Social Insurance Agency. Parental benefit can be paid out as:

• full compensation;
• three-quarters compensation;
• one-half compensation;
• one-quarter compensation; or
• one-eighth compensation.

The employee must notify the employer no later than two months before the leave that they intend to be on leave and for how long. When returning to work, the employee has the right to return to their position.

2.3 Are trade unions recognised and what rights do they have?

Yes, the freedom of association is guaranteed. The Employment (Co-determination in the Workplace) Act contains rules and provisions governing the relationship between the employer and the relevant trade unions pertaining to, among other things, information and negotiations.

An employer bound by a CBA must apply the provisions of such CBA to all its employees and consult with the relevant trade unions prior to deciding on a significant change to the employer's business or a significant change pertaining to the working conditions of an employee. This is a rather extensive obligation that typically covers matters such as:

• the appointment of a new manager;
• the implementation of policies;
• engagement of staffing companies;
• divestments;
• outsourcings;
• material investments, and
• reorganisations.

Consultations are initially conducted on a local level but can be escalated to central trade union consultations.

Even if the employer is not bound by any CBA, the employer must consult in certain situations such as in case of a redundancy termination or the transfer of a business. Such trade union consultations are held with the relevant trade unions of which the affected employees are members.

A failure to call for and conclude trade union consultation may lead to liability to pay damages.

Moreover, local trade unions representatives elected to represent the unionised employees at the workplace enjoy certain protection. The Board Representation Act (1987:1245) also stipulates that if the employer is bound by a CBA, there is a right to appoint ordinary and deputy employee representatives to the board of directors depending on the number of employees in the company.

2.4 How are data protection rules applied in the workforce and how does this affect employees' privacy rights?

The General Data Protection Regulation (GDPR) and the Swedish act containing supplementary provisions to the GDPR set out strict rules regarding an employer's processing of employee personal data. Accordingly, the following general principles regarding data processing apply:

• A lawful basis is required to process personal data;
• Personal data should be collected for a specific and explicitly stated purpose;
• An employer should not process more personal data than is necessary for the relevant purpose;
• Personal data that is processed should be accurate;
• Personal data should be deleted when it is no longer needed; and
• Personal data should be sufficiently protected to prevent access to unauthorised persons and prevent the loss or destruction of personal data.

In the employment context, the following legal grounds are the most common:

• the performance of a contract (ie, fulfilment of the employment agreement);
• a legal obligation (ie, mandatory law and regulations may require the employer to process and disclose certain information); and
• legitimate interest (ie, certain processing may be allowed if the legitimate interest of the employer outweighs by the employee's interest of personal integrity).

An employer cannot as a rule rely on consent as a legal basis for processing because employees are usually deemed unable to provide voluntary consent.

Sensitive data may only be processed in special circumstances and relates to information about employees' or applicants':

• race or ethnic origin;
• political opinions;
• religious or philosophical beliefs;
• trade union membership;
• health or sexual preference; and
• genetic or biometric data.

2.5 Are contingent worker arrangements specifically regulated?

An employee employed for a fixed term is covered by the Employment Protection Act and other employment legislation.

Consultants or independent contractors providing specific services without being directly supervised by the company/employer using the services are not deemed employees and general contract law applies to such relationship.

In relation to staffing/agency workers, the Agency Work Act applies and stipulates, among other things, that staffing/agency workers must be treated equally to the employees employed by the company engaging staffing/agency workers. Moreover, a company engaging staffing workers must offer an employment for an indefinite term or financial compensation equivalent to two months' salary to a staffing worker who has performed work for such company in the same operational unit for a total of more than 24 months during a period of 36 months.

3 Employment benefits

3.1 Is there a national minimum wage that must be adhered to?

There is no statutory minimum wage. However, many collective bargaining agreements (CBAs) include wage levels, wage criteria and sometimes minimum wages; and an employer bound by such CBA is required to act in accordance with the CBA.

3.2 Is there an entitlement to payment for overtime?

There is no statutory compensation for overtime. However, many CBAs stipulate mandatory compensation for overtime work or additional vacation days as compensation for overtime work. An employer bound by CBA is required to act in accordance with the provisions regarding overtime pay in the CBA.

3.3 Is there an entitlement to annual leave? If so, what is the minimum that employees are entitled to receive?

Yes, the minimum is 25 days per year. However, many employees are provided with 30 days of annual leave.

3.4 Is there a requirement to provide sick leave? If so, what is the minimum that employees are entitled to receive?

Sick pay is paid by the employer during days 1 to 14 at 80% of the salary. A sick leave deduction is also made by the employer (20% of the sick pay for an average week). From day 15, the employee receives sickness benefit from the Social Insurance Agency. There is no obligation for the employer to pay any supplementary sick pay, unless this has been agreed or an applicable CBA stipulates otherwise.

3.5 Is there a statutory retirement age? If so, what is it?

There is no fixed retirement age in Sweden. An employee has the right to remain employed until the month they turn 69 and an employee may apply for state public pension from the age of 63.

4 Discrimination and harassment

4.1 What actions are classified as unlawfully discriminatory?

According to the Discrimination Act, there are six types of discrimination:

• direct discrimination;
• indirect discrimination;
• inadequate accessibility;
• harassment;
• sexual harassment; and
• instructions to discriminate.

Direct discrimination occurs when someone is disadvantaged by being treated less favourably than someone else in a comparable situation, provided that the disadvantage pertains to a discrimination ground.

Indirect discrimination occurs when someone is disadvantaged by the application of a provision, a criterion or a rule that appears neutral but in fact disadvantages a person and pertains to a discrimination ground.

Inadequate accessibility occurs when a person with disability is disadvantaged through a failure to take reasonable measures for accessibility.

Harassment occurs when a behaviour violates a person's dignity and the behaviour pertains to a discrimination ground.

Sexual harassment occurs when the harassment or behaviour is of a sexual nature and violates another person's dignity.

Instructions to discriminate occur when someone orders or instructions to discriminate against another person in a manner that constitutes:

• direct or indirect discrimination;
• a lack of accessibility;
• harassment; or
• sexual harassment.

4.2 Are there specified groups or classifications entitled to protection?

There are seven grounds of discrimination covered by the Discrimination Act, which prohibits discrimination in relation to:

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

Further, part-time and fixed-term employees are also protected against discrimination. Moreover, job applicants and employees are protected against unfavourable treatment related to parental leave under Swedish law. Trade union representatives also enjoy protection against discrimination based on their union activities.

4.3 What protections are employed against discrimination in the workforce?

A Swedish employer must work with active measures, meaning that the employer must identify and implement measures to prevent discrimination, including sexual harassment and the promotion of equal rights and opportunities in the workplace. If an employer employs more than 25 employees, the active measures must be documented in writing.

If an employer suspects or has been notified of alleged harassment or sexual harassment, it must:

• investigate such allegations; and
• if necessary, take measures to end and prevent such continued harassment.

The Discrimination Act also prohibits an employer from retaliating against an employee or a job applicant for:

• reporting breaches of the Discrimination Act;
• participating in an investigation; or
• rejecting harassment/sexual harassment.

4.4 How is a discrimination claim processed?

Trade union members are often represented by their trade union, which may raise claims against the employer on behalf of the employee and ultimately bring the claim to court. If an employee is not a trade union member or if the trade union does not to represent the employee, the employee may report the alleged discrimination to the Equality Ombudsman. The Equality Ombudsman is entitled to initiate an investigation and raise a claim against the employer on behalf of the employee. An employee is also entitled to raise a claim in court by themselves.

4.5 What remedies are available?

Depending on the circumstances a person who has been discriminated against may be entitled to discrimination compensation or economic damages. Further, if a person is discriminated against by a provision in an individual agreement or in a collective bargaining agreement or by a legal act such a termination of contract, such provision or legal act may be modified or declared invalid upon the discriminated person's request.

The Equality Ombudsman is the supervisory authority and ensures compliance with the Discrimination Act. An employer may be obliged by the Equality Ombudsman to investigate and take measures; and the Equality Ombudsman also has the authority to issue an order to fulfil the obligation subject to a financial penalty.

4.6 What protections and remedies are available against harassment, bullying and retaliation/victimisation?

As explained, harassment may constitute discrimination under the Discrimination Act.

Further, all employers with more than 10 employees must:

• have a written work environment policy;
• work systematically to prevent and rectify any deficiencies in the workplace environment; and
• take measures to prevent conditions that may give rise to victimisation or bullying.

The Work Environment Authority has also issued an ordinance aimed at preventing victimisation and bullying. Accordingly, an employer must:

• plan and organise its business to prevent victimisation;
• clarify to all employees that victimisation is not acceptable;
• establish routines to detect victimisation;
• undertake investigatory measures and actions to prevent victimisation and ensure a sufficient work environment; and
• provide support to affected employees.

5 Dismissals and terminations

5.1 Must a valid reason be given to lawfully terminate an employment contract?

Yes, an employment relationship may be terminated only if there are objective reasons, such as redundancy or personal reasons. A gross breach of contract may entitle the employer to summarily dismiss the employee without notice.

5.2 Is a minimum notice period required?

Yes. The notice for the employee is one month, unless a longer notice period has been mutually agreed.

If the employer terminates the employment relationship, the employee is entitled to a notice period of:

• one month if the total period of employment is less than two years;
• two months if the total period of employment is at least two years but less than four years;
• three months if the total period of employment is at least four years but less than six years;
• four months if the total period of employment is at least six years but less than eight years;
• five months if the total period of employment is at least eight years but less than 10 years; and
• six months, if the total period of employment is at least ten years.

5.3 What rights do employees have when arguing unfair dismissal?

An employee is entitled to bring a claim of unfair dismissal and the termination may be declared invalid. The employer may also be liable to pay:

• punitive damages;
• economic damages; and
• the costs associated with the litigation.

The statute of limitations for claims for unfair dismissal is rather short:

If an employee wishes to claim that a termination shall be declared invalid:

• The employer must benotified of such claim no later than two weeks after the date of the notice of termination or summarily dismissal; and
• The action should, as a general rule, be initiated in court within four weeks of the date of the notice of termination or summarily dismissal.

If an employee wishes to claim damages as a consequence of a termination:

• the employer must be notified of such claim within four months of the date of the notice of termination or summarily dismissal; and
• an action should be initiated in a court within eight months of the date of the notice of termination or summarily dismissal.

The limitation period is also dependent on whether there is a collective bargaining agreement in place and consultations have been held.

5.4 What rights, if any, are there to statutory severance pay?

There is no right to statutory severance pay under Swedish mandatory law.

6 Employment tribunals

6.1 How are employment-related complaints dealt with?

If the employee is a member of a trade union or if the employer is bound by a collective bargaining agreement, a trade union will often represent the employee and initiate negotiations with the employer and may claim damages. Ultimately, in order to solve a complaint or employment matter, the employee or trade union may be forced to raise a claim in court.

6.2 What are the procedures and timeframes for employment-related tribunals actions?

Employment-related tribunals as such are not a concept that is acknowledged under Swedish law.

7 Trends and predictions

7.1 How would you describe the current employment landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The Employment Protection Act was recently revised and new case law is thus of interest to understand the exact implications of the legislative changes. Moreover, in the past year, changes to the Agency Act have garnered significant interest: a company engaging agency/staffing workers must now offer indefinite employment or compensation to agency/staffing workers who have been engaged for a certain period of time. The exact scope of this legislation and the implications for the consultancy sector have been widely discussed.

Looking forward, the implementation of the EU Pay Transparency Directive (which must be implemented in 2026) is a hot topic. Sweden's initial investigation, publication and legislative proposal appear to be some of the first in Europe and may set an interesting precedent for other EU member states.

8 Tips and traps

8.1 What are your top tips for navigating the employment regime and what potential sticking points would you highlight?

The position that trade unions enjoy in the Swedish labour market and the extensive information and consultation requirements that apply may appear excessively burdensome for foreign employers. However, these are often to some extent exaggerated and can usually be navigated efficiently if the employer:

• makes efforts to understand the implications of the applicable collective bargaining agreement; and
• takes a strategic approach to building good trade union relations.

Sweden has a reputation for being very employee friendly and there is an erroneous perception that it is almost impossible to terminate an employment relationship. In fact, the lack of mandatory severance payments implies that a termination may be cost efficient if there are objective reasons therefor. However, it is imperative to understand Swedish mandatory law, so it is generally advisable for an employer to seek legal guidance in a termination situation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.