The labour market in Sweden is to a great extent self-regulated by employers’ organisations and trade unions. The Swedish labour law model is based on civil rules that govern most aspects of the employer-employee relationship. Mandatory laws and regulations in collective bargaining agreements provide a comprehensive framework for the terms and conditions of employment. Disputes are finally settled by the Swedish Labour Court, which is the final instance in employment related disputes. However, the majority of disputes are solved by the parties on the labour market through consultations and negotiations.
- An employment agreement does not have to take any specific form to be valid.
- An employment may only be terminated on objective grounds, such as redundancy or personal reasons.
- An employer has certain consultation and information obligations towards trade unions even if the employer is not bound by any collective bargaining agreement.
- Generally, citizens of countries outside the EU must have a work permit to work in Sweden.
Swedish employment law is regulated by statutes and case law, as well as by collective bargaining agreements concluded with trade unions. Collective bargaining agreements are of great importance and they often contain regulations deviating from statutory provisions to better suit the type of business where they apply. Regulations regarding employment protection are found in the Employment Protection Act. Employees whose duties and conditions of employment are such that they may be deemed to occupy a managerial or comparable position are excluded from the Employment Protection Act.
The Co-Determination Act contains the general provisions governing the relationship between employers and trade unions in such areas as right to association, information, negotiations, industrial actions and labour market stability obligations. Other essential statutes are, for example, the Discrimination Act, the Annual Leave Act, the Personal Data Act, the Parental Leave Act, the Working Hours Act, the Work Environment Act and the Sick Pay Act.
On 7 April 2020, legislative changes as regards the Act on Short-time Work Allowance entered into force with retroactive effect as of 16 March 2020. Following the legislative changes, employers may apply for and receive, state funded financial support when employing short time working arrangements, as alternatives to dismissals during temporary and unexpected financial hardship. A short time working arrangement needs to be agreed between employer and employee, or employee organisation, and may entail a temporary reduction in working hours by 20, 40 or 60 percent and a temporary reduction in salary by 12, 16 or 20 percent, respectively.
When applying such arrangements, the employer may qualify for financial support amounting to 43 percent of the part of the employees’ salaries that correspond to the reduced working hours, i.e. the basis when calculating the financial support is 60 percent of the employees’ salaries if working hours are reduced by 60 percent. Due to the Covid-19 pandemic, specific regulations were enacted, temporarily, during 2020 to allow employees to retain more than 90 percent of their salary even though working hours were reduced by 20, 40 or 60 percent, and to allow employers to receive financial support amounting to 98.6 percent of the salary that corresponded to the reduced hours of work.