Global growth is an integral part of many companies plans for success and Europe is a common area to target. Sweden is a great option for businesses seeking motivated employees and high innovation, which is why we’ve pulled together basics about Swedish employment law. This region offers great benefits for employees and their families and has a relaxed culture that US-based businesses can integrate into quickly. Take these best practices with you as a guide to get started, but always consult with your team’s attorney before making any final decisions about international expansion.
1. Worker Categorization
Swedish employment law does not categorize workers into different sectors such as full-time, part-time, and self-employed. It does, however, classify work based on the type of agreement formed between employee and employer.
There are two categories, which include:
- Employment Work Agreements
- Contract Work Agreements
The first, employment work agreements, is the only type of employment that is covered by Swedish employment law. The later, contract work agreements, represents an independent contractor relationship, which is autonomous and not covered by required entitlements. Be careful when working with this type of agreement because if the work represents a dependent employment in any way, you as the employer could be subject to heavy fines and withholdings for that worker. Learn more about the risks of working with independent contractors in our previous post.
2. Statutory Rights in Swedish Employment Law
The rights for employees, including social security and taxation, are subject to the type of agreement and work of an employee. Since there are no specific categorizations for employees in Sweden, workers rights are based on autonomy. If you’re working with a dependent employee that has a schedule and works for your team in office through an employment contract, they are subject to entitlements. If you’re using contractors, they do not receive entitlements.
3. Employment Contracts
Since worker categorization in Swedish employment law is solely based on employment agreements, these are raised to a higher importance than in other countries. By law, you will need to establish a written agreement if the employment is slated to last more than three weeks. This agreement will establish terms of employment for both you as the employer and your employee. If you’re working with contractors, the agreement must establish autonomy.
While there are no formal requirements for contracts in Sweden, you should include the following information:
- Start date, along with employer and employee’s names and addresses.
- Job description.
- Employment term.
- Salary and benefits information.
- Paid holiday length and working hours per week.
- Collective bargaining agreements, if applicable.
It’s important to understand that even if you have a solid contract with your employees or contractors, Swedish employment law always takes precedence. Basically, your contracts could be disregarded if any issues go to labor courts.
Before signing off on any contracts, you should consult an attorney or international consultant that has experience with labor laws in Sweden. You can also use a service such as International PEO (Professional Employer Organization) or Foreign Subsidiary as a Service (FSaaS) to hire employees overseas, establish compliant contracts, and manage all employment law regulations.
4. Minimum Wage
There is no statutory minimum wage in Sweden. Wages are often established by collective agreements so it varies by position. Again, we suggest working with an in-country partner to determine fair wages and attract the best talent for your global operations. Often, your salary and benefit packages determine the level of talent you can attract. When starting up international operations, you want to be competitive and attract the best people. Working with an expert in Sweden can really help.
In Sweden, the Annual Leave Act (1977:480) regulates that the minimum holiday entitlement and pay for employees is 25 days each year. There are also 12 additional public holidays in which employees generally receive paid time off. These holidays include Christmas, Midsummer Eve and New Year’s Eve.
6. Intellectual Property in Swedish Employment Law
Intellectual Property (IP) is not automatically covered by Swedish employment law. In order to protect IP, you will need to establish patents and trademarks in local courts. Also, when establishing agreements with contractors and employees, include clauses that protect your company’s intangible assets.
7. Termination of Employment in Sweden
Since “at-will” employment doesn’t exist in most overseas markets, including Sweden, employers need to provide written notice of termination prior to dismissal. Terminating an employee also includes reasonable notice requirements, which varies between one and six months.
International PEO and FSaaS can also help employers navigate the complexities surrounding termination and the overall employment process in Sweden and more than 185 other countries. To learn about these services, contact the Velocity Global team today!