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The relation between employers and their employees is highly regulated in Sweden. In addition to a number of laws affecting employment, many aspects of labour relations, such as salaries and terms of employment, are regulated by collective bargaining agreements (CBA) that are negotiated by and between trade unions and the Confederation of Swedish Enterprise. Therefore, an investigation into the employment law applicable to any particular area of industry and commerce would not be complete without a study of the relevant collective bargaining agreements.

Swedish law does not require a written contract of employment. However, the employee has a right to receive written information about the conditions of the employment within a month from the start of the employment term. Moreover, the Employment Protection Act (1982:80) provides certain minimum requirements for the terms of employment. The act applies to all categories of employees, except for top-level management, household staff and members of the employer’s family.

Generally, employment is entered into for an indefinite term. However, employees may be employed for a probationary period of up to six months. Moreover, an employer is, to some extent, entitled to enter into employment agreements concerning fixed-term employments. There are four different kind of fixed-term employments, namely: (i) the so called general fixed-term employment (Sw: allmän visstidsanställning); (ii) fixed-term employment for a position as a substitute; (iii) fixed-term employment for seasonal work; and (iv) fixed-term employment until the employee reached the age of 67. A general fixed term employment is automatically transformed into an employment valid for an indefinite time if the aggregate term of employment exceeds two years within a five-year period.

A substitute agreement is also transformed into an employment valid for an indefinite time if the aggregate term of employment exceeds two years within a five-year period. The act further restricts employers’ right to terminate employment contracts and states that terminations must be based on just cause. Just cause may be attributable either to the employee, such as severe absenteeism and gross misbehaviour, or to the employer such as redundancy.

In cases of termination attributable to employees, the employer must act within two months from the date the employee committed the offense. If there are special reasons for the delay or the employer has delayed termination in accordance with the employee’s wishes or with the employee’s consent, occurrences older than two months may be invoked together with more recent occurrences. Moreover, the employer normally has the obligation to attempt to relocate the employee within the company.

Except when an employee has committed a gross breach of contract, employees are guaranteed a period of notice which may range from one month to six months depending on the term of employment. The corresponding period for notices of resignation is one month. Specific employment agreements may include longer notice periods or periods when an employee resigns.

In principle, the priority order for lay-offs is based on the employee’s seniority of employment with the company. Temporary lay-offs are permitted in cases of work shortage, but the employees are entitled to unchanged employment benefits, unless otherwise stipulated in an applicable collective bargaining agreement. The act also regulates rehiring under generally the same priority rules once the work shortage ceases. The employees’ right to reemployment applies during their notice periods and for nine months thereafter.

As indicated above, the act may be supplemented by collective bargaining agreements or individual employment contracts.

In a redundancy situation, a list of priority based on seniority of employment should be drafted. However, an employer with a maximum of ten employees may exclude from the list of priority two employees whom, according to the employer’s opinion, have a particular importance for the continuation of the employer’s business.

In Sweden, there is no statutory minimum salary that must be paid to an employee. However, minimum salaries are often included in collective bargaining agreements, which the employer may have to consider.

Under Swedish law, all compensation given to an employee is normally taxed as income, with a maximum marginal tax rate of approximately 60 per cent (income year 2015). The employer does not deduct national insurance contributions from the gross salary, but pays the employer’s contributions of 31.42 per cent (income year 2015) of the whole salary and on all other employment benefits except for pension premium contributions. For employees born before 1950, lower rates apply (income year 2015). For foreign employers without a permanent establishment in Sweden, contributions are reduced. The employer’s contributions are tax-deductible in the business of the employer for Swedish tax purposes.

Salary is normally paid on the 25th of each month and vacation pay (please see below under Vacation) normally has to be paid on salary and on any bonus/ commissions awarded.

The standard for stating the amount of the employee’s salary is in Swedish crowns (SEK) per month.

If not bound by a collective bargaining agreement, there is no obligation for the employer to provide insurance to the employee. However, it is common that the employer provides group accidental and invalidity insurances.

If not bound by a collective bargaining agreement, there is no obligation for the employer to pay pension contributions exceeding the mandatory pension obligations stipulated in the Social Insurance Code (2010:110) (which is included in the employer’s contributions). However, it is common and required in collective bargaining agreements that the employer pays an extra pension premium, at least for white-collar staff. It is possible to agree that the pension contribution shall correspond to a set percentage of the employee’s salary.
Payroll tax on pension costs is payable at a rate of 24.26 per cent (income year 2014).
The right to paid vacation days is regulated by the Annual Leave Act (1977:480), which provides for a minimum of 25 paid vacation days annually or a maximum of five paid vacation days if the employment commenced only after 31 August in the year for which the vacation days are accrued. The number of vacation days may, however, be increased by collective bargaining agreements or individual employment agreements. Personnel who do not receive overtime pay frequently receive an extra three to five days of vacation days as compensation. Calculation of vacation pay is complicated but generally equals to approximately twelve to fourteen per cent of the employee’s total earnings during the year.
Under the Parental Leave Act (1995:584), parents are entitled to full parental leave for the care of their child until the child reaches one and a half years of age, regardless of whether they receive parental leave benefits or not. Parental leave benefits in connection with childbirth are provided for a total of 480 days per child. Sixty days are reserved for the father and another 60 days for the mother. The rest can be shared freely between the parents. No employer may terminate an employee due to the exercise of this right. The act also entitles parents to reduced working hours to up to 25 per cent until the child has reached eight years of age or, if later, until the child has finished its first year of school.
Hours worked are regulated by the Working Hours Act (1982:673). This act provides for a work week of no more than 40 hours, applicable to all employees except for employees who work out of their homes, those who are on managerial level, household workers, certain road transportation workers and ships crews. Moreover, the act also states the maximum hours for overtime, 48 hours during a period of four weeks or 50 hours during a calendar month and normally with a maximum of 200 hours of overtime per year. Some collective bargaining agreements further limit regular work time and overtime.
As in most other European countries, Swedish legislation prohibits direct and indirect discrimination, harassment, sexual harassment and instructions to discriminate. The Discrimination Act prohibits discrimination on the grounds of an employee’s gender, ethnicity, religion or other belief, disability, sexual orientation or age. In addition, the Swedish legislation also prohibits discrimination on the grounds of an employee’s transgender identity or expression.

Sexual harassment at work is unlawful and both the employer and the harasser may be held liable and be required to pay damages. It is prohibited by law to discriminate against part-time and fixed-term employees. Furthermore, an employee may not be dismissed or otherwise treated less favourably because they exercise their right to maternity leave, parental leave or other statutory leaves.

Companies with 25 or more employees are obligated to conduct reviews every third year in order to discover, remedy and prevent unfair gender differences in pay and other terms of employment. The company shall also liaise with any union with which it has a CBA in order to implement a gender equality plan (including an action plan) every three years in order to handle any issues identified in the review.

The Act (1976:580) on Co-Determination at Work (the “Co-Determination Act”) affords the labour unions a certain measure of influence over decisions affecting their members. However, since the employer normally has a final say in all matters, the Co-Determination Act cannot generally be said to unduly restrict the operation of the business.

The first part of the Co-Determination Act affirms the right of employers and employees to belong to employers’ associations and trade unions and prohibits any direct or indirect restriction of this right.

The main part of the act focuses on the right of the trade union with which the employer has signed a collective bargaining agreement to be informed of and be allowed to consult about important changes in the business. The employer is prohibited from deciding on any significant changes in the business, such The Global Employer: Focus on Sweden | 7 as the appointment of a general manager, new investments, or changes in the workplace or personnel, before consultations have been conducted and concluded. However, the right of consultations merely gives the trade union an opportunity to influence the way decisions are made, but this does not give trade unions a veto right or the power to decide the future course of the business. The employer is not required to reach any agreement with the union and has the exclusive competence to determine its own actions. However, the act may delay a decision by the employer up to a couple of months.

Moreover, the employer shall keep the trade union with which it has a collective bargaining agreement continually informed about developments in the economy of the business, matters of production and staff policy. Before any reductions in the workforce are made based on redundancy or work shortage, the employer is required to consult the union. If the employer is not party to any collective bargaining agreement, a similar obligation to consult and inform exists with every union that has a member employed with the employer.

The Co-Determination Act gives trade unions the ability to veto the hiring of independent contractors under certain conditions.

As stated above, under the Act (1987:1245) on Board Representation for Privately Employed, the employees of a business employing at least 25 persons may appoint two members and two deputy members to the board of directors. For employers with 1,000 employees, three ordinary and three deputy directors can be appointed. However, as prerequisite for board representation, there must a collective bargaining agreement in force between the employer and a trade union.
Regulations concerning immigration and foreign nationals in Sweden are principally found in the Aliens Act (2005:716) and the Aliens Ordinance (2006:97). Entry into Sweden requires a valid passport and nationals of most African and Asian nations must have visas. However, as of 25 March 2001, Sweden has been an operative member of the Schengen cooperation. In order to deepen their cooperation, many of the European Union (EU) member states have entered into a convention with the purpose of achieving free movement of persons, regardless of their citizenship, within the exterior borders of the EU. The member states have thereby harmonized their visa rules and the rules regarding the customs of the exterior borders.

As of 5 April 2010, the EU’s Visa Code applies in Sweden. A visa granted by one of the Schengen countries is also valid for visits to the other Schengen countries. However, in exceptional cases, such as if the holder’s passport is not approved by all Schengen countries, the visa may only be valid for entry into the issuing country or only for certain countries.

Citizens of the Nordic countries are exempted from the requirements of passport, residence permit and work permit.
A residence permit, which is mandatory if the alien stays in Sweden for more than three months, must in principle be applied for and granted before the alien enters Sweden.

However, EU and European Economic Area (EEA) citizens and their family members no longer need residence permits for staying in Sweden for more than three months. As of 1 May 2014, EEA citizens do not need to register their right of residence with the Migration Board. However, family members who are not EEA citizens must apply for residence cards.
An alien who does not have a permanent residence permit or who is not an EEA citizen must have a work permit to be able to work in Sweden, regardless of whether the work is carried out for an employer in Sweden or abroad.

Close relatives or next of kin of an EEA citizen working in Sweden are also entitled to take up residence in Sweden. Close relatives or next of kin are in this context defined as follows:

• Husband/wife or common-law spouse
• A child or children (of either or both spouses) under 21 years of age or dependent on the parent(s)
• Parents (of either or both spouses) dependent on the spouse(s)

In addition to a passport or identification document, relatives or next of kin will be required with some form of document issued by the appropriate authorities in their country of domicile certifying that they are closely related to, or dependent upon, the employee. An EEA citizen’s husband/wife/ common-law spouse or children, who are themselves entitled to take up residence in Sweden, may work in Sweden without having to apply for a work permit. However, common-law spouses or next of kin from a country outside the EEA must apply for a residence card (Sw. uppehållskort) at the latest after three months from arrival to Sweden. If the employee has a work permit that is valid for more than six months, the relative or next of kin is allowed to work in Sweden as well.

Non-Nordic and non-EEA citizens need a work permit to be able to work in Sweden. As of 15 December 2008, new rules for labour immigration to Sweden entered into force. This has resulted in a more effective and flexible system that has made it easier for people to come to Sweden to work and for companies to recruit labour from outside of Europe. An employer who is not able to meet its labour needs through recruitment in Sweden or in other EU/ EEA countries may recruit labour from a third country if certain fundamental conditions, such as terms of employment, are met.
As the case is with EU/EEA citizens and their family members (regardless of citizenship), the following persons are also exempted from the requirement of a work permit:

• Specialists who work in Sweden for an international group (for up to one year from entry)
• Persons employed in professional transportation and tourist bus drivers (for up to three months from entry)
• Carers of persons visiting Sweden for medical or recreational reasons (for up to three months from entry)
• Researchers with higher education called here to conduct research, teach or give lectures (for up to three months during a 12 month period)
• Persons who are residents and employed in, but not citizens of, an EEA Member State, who are temporarily working in Sweden for the original employer in connection with the performance of a tender agreement or similar contract
• Aliens holding a permanent residence permit
• Fitters or technical instructors who will carry out work of an emergency nature relating to the assembly or repair of a machinery, for example (for up to two months from entry)
• Persons occasionally engaged by certain Swedish radio or television outfits (for up to two months from entry)
• Musicians including their staff (for a maximum of 14 working days during a 12 month period)
• Professional athletes and officials in connection with international sports events (for up to three months during a 12 month period)
• Railway personnel and lorry drivers in international traffic
• Aid personnel, in the event of a catastrophe or accident in Sweden

Furthermore, there is an exemption from the requirement of a work permit for employees employed by an international group that will undergo practical training, on-the-job training or other in-service training at a company in Sweden that is a part of the group (totalling a maximum of three months covering a twelve-month period). The same applies to employees who will undergo training, conduct tests, prepare or finish deliveries, or participate in similar activities in Sweden as part of a business deal (totaling a maximum of three months covering a twelve-month period).
Work permits are issued by the Swedish Migration Board. To obtain a work permit, an alien must have been offered employment and the employment must enable the alien to provide for himself in Sweden. Moreover, the salary, level of insurance and other terms and conditions of the employment must be equal or more favourable than corresponding terms and conditions in relevant Swedish collective bargaining agreements or such terms and conditions that are customary within the relevant profession.

During the first two years, a work permit is limited to a specific employer and to a specific employment. After the first two years, the alien, who has been granted an extension of his work permit, is permitted to change employer without applying for a new work permit, provided that he continues to have the same occupation. If the occupation is changed, the alien will need to apply for a new work permit.

A granted work permit will cover the relevant period. However, the maximum validity period for the permit is two years at a time. The alien will receive a shorter permit if the period of the employment is difficult to decide, for instance if his assignment is to set up a new branch of the company. After four years, the alien may apply for a permanent residence permit.

A residence and work permit in Sweden is always temporary. If a person loses his job and does not receive a new one within three months, the Swedish Migration Board may cancel his residence permit. If the person receives a new job, he must submit a new application for a work permit unless the permit also covers the new job.

Applications for work permits can be made online through the Migration Board’s website. If the application is made online and the application is accurate and complete upon submission, the processing time may be short (approximately 15 working days at present). If the application is not made online, the application must be filed with a Swedish diplomatic mission in the applicant’s country of domicile or another foreign country before entering and commencing employment in Sweden. However, if the applicant already resides in Sweden, the application may, in certain cases, be filed with the Migration Board. The processing time for applications filed with a Swedish diplomatic mission at present may take up to ten months but may be shorter or longer depending on the Migration Board’s work load.

The work permit must be obtained at the diplomatic mission where the application was filed unless the applicant has requested that it be sent to another diplomatic mission. Employment may not commence before the work permit is obtained. Once granted, a work permit may be renewed through the Migration Board.