Sweden Employment Contracts

Swedish Contracts

Foreign companies hiring employees in Sweden must operate within a framework of legislation that relies on both collective agreements as well as case law and European Union (EU) directives to provide safeguards and entitlements for the workforce.

However, unlike many European nations Sweden’s employment market does not have a comprehensive labour code. Individual legislation includes the Employment Protection Act, Working Hours Act and Sick Pay Act, for example, alongside statutes prohibiting discrimination and promoting equal pay for men and women. Additionally, the Swedish Work Environment Authority oversees employees’ welfare in the workplace.

These considerations come into play during the first stages of hiring and onboarding – drawing up a contract with your new employee. Once Bradford Jacobs’ Professional Employer Organization (PEO) recruitment networks have located the best talent for your company, we step in to steer you through this crucial element of recruitment.

General requirements apply to all contracts. These include:

• Employers provide employees with a written contract or agreement within 30 days of starting work. The contract covers specific conditions of the employment. Oral contracts are considered equally binding legally but more difficult to enforce in the case of dispute
• There is no legal requirement to provide the contract in a particular language. Foreign employees are entitled to fully understand the terms of the contract and should ask for a translation if they have insufficient Swedish to understand the terms
• Contracts should include full details of employer and employee, job type and location, paid vacation arrangements and other benefits, type of contract (permanent or fixed term), notice and termination details, any relevant trade union or collective agreements, and fringe benefits

Other issues must be dealt with before companies move into the ‘contract phrase’. These include:

• Registering employees with the Swedish Tax Agency (Skatteverket) to receive a personnel identity number (personnummer) and for assessing entitlements such as maternity, pension, sickness and unemployment benefits
• Registering employees with the Tax Agency for withholding and remitting income tax and social insurance payments
• Registering with the Swedish Social Insurance Agency (Fӧrsäkringskassan)
• Note: Companies posting employees in Sweden must register with the Swedish Work Environment Authority (Arbetsmiljöverket) if the assignment lasts more than five days. Failure to register risks a fine of SEK 20,000 (€1,952, US$2,209)

Employment Contracts in Sweden

Apart from the specific terms of contracts, employees must be given a written agreement or formal contract within days of starting work detailing basic information such as full names and addresses of the parties, location of work, description of role, salary and payment schedule and all statutory benefits and entitlements.

The Swedish Employment Protection Act formally recognizes only two types of contracts: permanent open-ended and fixed term.

Permanent, Open-ended Employment Contracts (tillsvidareanställning): The preferred contract type in Sweden, with an indefinite timescale until the contract is ended by mutual agreement or by following termination regulations. Under the Act, all employment contracts are deemed permanent unless contractually agreed otherwise.

Fixed-term Employment Contracts (tidsbegränsad anställning): The Act recognizes four types of fixed-term contracts: general, as applying to a particular project or specific timescale; temporarily substituting another member of staff; seasonal employment; hiring a person over 67 years of age. However, general or temporary fixed-term contracts which exceed two years over five years automatically become indefinite. Similarly, repeated fixed term contracts that have no more than six months between them are considered continuous and become open-ended.

Probationary Periods (provanställning): Permanent contracts typically start with a trial period of up to six months for employer and potential employee to assess suitability.

Collective Bargaining Agreements (CBAs): 

Collaboration is a key mover in the employment market and collective agreements play a significant role in improving employees’ benefits and entitlements above statutory minimums. In general, collective agreements are voluntary written arrangements between an employer or employer organization and a trade union organization covering the rights of employees. The main employers’ association in Sweden is the Confederation of Swedish Enterprise.

The National Mediation Office, answerable to the Ministry of Employment, promotes long-term agreements on wages and salaries to encourage stability in the market.