international employment law firm alliance L&E Global

Starting a business in Sweden

1. Introduction

Sweden has historically been a jurisdiction where labour law is intricate and the relationships between employers and trade unions are strong. The share of Swedish workers who are members of a trade union is approx. 70 per cent and Swedish labour law gives trade unions right to consultations and information with the employer – a right that is reinforced if the employer is bound by a collective bargaining agreement. Despite the trade unions’ strong position in Sweden, employers have a fundamental right to organise the work and, as long as the statutory requirements are followed, doing business in Sweden is rather straightforward. The following checklist will allow your organisation to understand some of the most important legal requirements for opening up shop in Sweden.

Drawing on Cederquist’s broad experience and in-depth knowledge of Swedish labour law, we are able to manage risks in all of our clients’ labour law-related situations. Our labour practice handles all matters relating to the legal areas of labour, pension, and benefits. We would be delighted to have the opportunity to assist with your organisation’s establishment in Sweden.

We know that relentless commitment, experience and expertise at the highest level are required in order to meet our clients’ high expectations in relation to sustainable advice at all stages. Swedish and international companies, labour organisations and authorities are among our diverse client base. Our labour team distinguishes itself from the competition by combining our unrivalled expertise with detailed, practical knowledge of various industries, such as banking and finance, media and telecommunications, private equity and financial services. Whenever necessary or deemed appropriate, our experienced, efficient and committed team also draws on the expertise of other practice groups in relevant legal areas (e.g. Private M&A, Public M&A and Stock Market, Commercial Agreements and Dispute Resolution).

2. Labour and Employment Law Requirements

a) Employer Policy Requirements

In order to be legally compliant, employers are required by legislation to create and implement a number of employment policies:

  • a written occupational health and safety policy;
  • a policy containing guidelines and routines to prevent harassment, sexual harassment and retaliatory measures in your organisation;
  • a policy containing routines for first aid and crisis support;
  • a policy with routines concerning rehabilitation and work adjustments for when the employees turn ill, or suffer from injury or other conditions, including the abuse of alcohol and drugs;
  • a policy with routines concerning chemical work hazards;
  • a policy with routines concerning the introduction and guidance for the minor employees in your organisation;
  • a policy with security routines within your organisation; and
  • a whistleblowing policy, including the establishment of internal reporting channels for employers with over 50 employees.

There are a number of policies that employers should create. These policies will help an organisation manage employee relations and mitigate the risk of legal liability in the future:

  • a general discrimination policy concerning the prevention of discrimination in your organisation;
  • a general policy concerning misconduct with routines on how your organisation handles employee misconduct;
  • a policy governing the accessibility for employees or other persons with disabilities;
  • policies governing attendance, work hours and leave of absence such as annual leave, parental leave and sick leave to manage the expectations of attendance and leave of absence in your organisation;
  • a policy concerning the processing of employees’ and customers’ personal data; and
  • a policy concerning the usage of employer property (computers, phones, internet and social media etc.) to assure employee awareness of your organisation’s expectations surrounding the usage of such property.

Having an employee manual is not a statutory requirement in Sweden, but we do recommend employers to collect all applicable policies in one employee manual. This is a practical way for employers to make the policies visible and easily accessible for the employees. Preferably, the employee manual can be kept digitally on your organisation’s intranet.

We would be pleased to assist your organisation with drafting and adopting the abovementioned policies.

b) Employee Training Requirements

Employers are required to complete certain training activities. The following is statutorily mandated training that employers must provide:

  • training to ensure knowledge concerning occupational health and safety for managers, supervisors, safety representatives and other employees;
  • training to ensure knowledge for the managers and supervisors relating to unhealthy workloads and victimisation within your organisation;
  • training and human resources development to prevent discrimination and promote an even gender breakdown at the workplace;
  • training to ensure knowledge concerning rehabilitation and work adjustments for the people responsible for tasks related to this;
  • training for employees concerning violence and threats to ensure that your employees can perform their work safely;
  • training to ensure that employees have sufficient knowledge concerning ergonomics related to the work;
  • training concerning management of work that may imply exposure to hazardous chemical products; and
  • training to ensure that some of your employees can perform first aid and have adequate knowledge in crisis support.

c) Employment Agreements

An employment agreement does not have to be in writing to be valid in Sweden. In fact, an employment agreement does not have to take any specific form. However, we always recommend that written employment agreements are entered into with all employees. Also, Sweden has implemented the EU directive on transparent and predictable working conditions. As a result of this, the employer must provide certain information in writing concerning the principal terms of the employment, such as duties and title, commencement date, place of work, form of employment, period of notice, etc. This information must be provided to the employee within one month of the commencement of the employment.

Our firm has vast experience with drafting and negotiating employment agreements, including executive agreements, incentive agreements and collective agreements.

3. Corporate Law Requirements

If you are planning to open up shop in Sweden, you can do so by either registering a Swedish branch or by establishing a Swedish subsidiary. A branch is not its own legal entity, but an extension of the parent company. As such, the branch’s assets and liabilities are a part of the parent company’s total assets and liabilities. Both branches and subsidiaries are registered with the Swedish Companies Registration Office. If you want to establish a limited liability company in Sweden, two alternatives are available: (i) buying an existing, empty, company off the shelf from a supplier or (ii) registering a new company.

A new company is registered by following the following basic steps. If the company is bought off the shelf instead, the required amount of time and administration in each step is reduced. Steps 4-6 are also relevant when establishing a Swedish branch.

1. Memorandum of association

The founders draw up and issue a memorandum of association, which must include information on the share price, information on the company’s future directors and auditor as well as draft articles of association. The articles of association must include information on inter alia company name and business operations.

2. Subscription and payment

The shareholders-to-be subscribe and pay for the shares in the company. The share capital invested in the company must be at least SEK 25,000 (approximately EUR 2,500).

3. Registration of the memorandum of association

The founders complete, date and sign the memorandum of association and the company’s board of directors submit the memorandum of association and a bank certificate evidencing the payment of the shares to the Swedish Companies Registration Office.

4. Registration of beneficial ownership information

The company must register information concerning beneficial ownership with the Swedish Companies Registration Office. The beneficial owner is the person who ultimately owns or controls the company.

5. Registration with the Swedish Tax Authority

Most companies are required to apply for F-tax and VAT registrations with the Swedish Tax Agency. Further, if the company is to have employees, the company must also register as an employer.

6. Business specific permits and registrations

Depending on the conducted business operations, the company may be required to apply for additional permits or registrations. Example of business operations that often require additional permits or registrations are inter alia financial services, healthcare and environmentally hazardous operations.

Our firm has a team specialised in both registering a new company or branch in Sweden and buying an off the shelf company. Please contact us for assistance with setting up your corporate entity in Sweden.

4. Payroll and Benefits Providers

In Sweden, the vast majority of employers outsource payroll and benefit responsibilities to third party companies. This reduces the administrative burden faced by the company by outsourcing payroll deductions and benefit administration to qualified companies that specialise in these areas. We have close contacts with the leading payroll providers in Sweden and we would be happy to recommend payroll providers to fit your business’s requirements.

Any questions

Ask our member firm Cederquist in Sweden