Companies are regularly in contact with people. It can be suppliers, business partners, consultants or employees – all of whom contribute to the business in their own way. It is important when running a business to understand a company's rights and obligations in that relationship. This is especially important for the employees who both contribute to a company at the same time also have obligations towards the employer.

Labour law regulates the relationship between employees and employers. Labour law gives employers and employees both rights and obligations and is governed by both mandatory law and to a large extent by collective agreements. Anyone who participates in the labour market, whether they are an employer or an employee, regardless of industry, position or whether they work in the public or private sector, will encounter and be affected by the right of work. That said, not everyone a company works with is employed. In this text, we will not focus on collective agreements. However, we can support on issues of collective agreements if you have any.

Types of employment contract

There are 2 common forms of employment in Sweden.

• permanent employment, i.e. for an indefinite period of time and sometimes referred to as permanent employment,
• fixed-term employment, i.e. employment for a certain period of time

Permanent employment

Permanent employment means that the employee is employed until the employee or employer terminates the employment or the employee retires. An employment relationship is considered to be indefinite unless an agreement has been concluded to the contrary.

Fixed-term employment

In the case of temporary employment, the employment is limited in time. Common forms of fixed-term employment

• substitute, where someone is employed to replace someone who is, for example, ill or on parental leave, and
• seasonal work, such as summer jobs or holiday jobs, for example during the Christmas period.

Please note that fixed-term employment may be transferred to a permanent position if the employee has had fixed-term employment for longer than 2 years over a 5-year period.

Probationary period

In addition to the two forms of employment mentioned above, employment may start with a probationary period that may not be longer than 6 months. This can usually be used when an employee starts a new job to let the employer and employee decide whether the role and candidate fit.  Om the employer and the employee are satisfied with the arrangement, the probationary period will be transferred to a permanent position when the probation period is over.

Note, in order for owners of companies (limited liability companies) to receive a salary, the company must be registered as an employer and the owners as employees of the company.

Formal requirements –  do  employment contracts have to be in writing?

In Sweden, there are no formal requirements for employment contracts, they can be concluded orally and in writing. As mentioned, employers are required to provide written information about important terms of employment - this is something that can be easily done through a written employment contract.  However, this does not apply when the period of employment is less than 3 weeks.

As with other types of contracts, we recommend that employment contracts be concluded in writing to ensure transparency between the parties,  clarity about the terms of employment and to ensure that the employer fulfils its obligations in writing informs about important terms of employment.

Salary – how much should an employee be paid?

One of the rights of employees is the right to be paid for work done. While many countries provide for a minimum wage (which is generally calculated on an hourly basis), the Swedish state does not provide any national minimum wage legislation. Instead, the Swedish government expects collective agreements to ensure a reasonable minimum wage. An employer is also obliged to pay social security contributions as well as holiday compensation. However, it is also common for employers to provide insurance and pension schemes to workers.

Working hours, holidays and leave

What are regular working hours in Sweden?

Working hours in Sweden are usually determined in collective agreements within the framework specified in the Working Time Act. Working hours in Sweden may not exceed 40 hours per week, but overtime is allowed to a limited extent.

Leave

Some types of leave are guaranteed by law. Three main forms are (i) vacation, (ii) sick leave and (iii) parental leave. Annual leave with salary is protected by the rules of the Annual Leave Act and entitles an employee to at least 5 weeks of leave per year. This is one week more than is required by the EU. The law provides a system for annual leave payment but collective bargaining agreements can provide employees with better benefits than those set out in the law.

Leave may also be granted for health reasons and, even if not guaranteed by law, sickness compensation. The right to parental leave for the care of children is set out in the Parental Leave Act. This right to leave applies in connection with the birth and care of sick children.

Discrimination

All employees in Sweden have the same rights and opportunities.  Employers in Sweden must ensure that employees, job seekers and trainees are not discriminated against. This applies not only in the workplace, but everywhere in connection with work, for example on business trips. The Discrimination Act prohibits unlawful direct or indirect discrimination on the basis of seven grounds which, if breached, can lead to liability. The seven basics are;

• age,
• gender,
• transgender identity or expression,
• ethnicity,
• religion or other beliefs,
• sexual orientation,
• disability.

In addition, employers must actively work against discrimination and ensure equal rights and opportunities. Employers must not discriminate against part-time or fixed-term employees on the basis of the nature of the employment or discriminate against employees in order to take parental leave or leave for the care of sick children - the rules around these two examples are set out in separate parts of legislation and not the Swedish Discrimination Act.