Terminating employment in Sweden requires strict adherence to the provisions of the Employment Protection Act (Lag om anställningsskydd, LAS) and potentially applicable collective agreements. Swedish law is generally considered employee-friendly, placing a significant burden on employers to demonstrate just cause for dismissal and follow specific procedural steps. Understanding these requirements is crucial for employers operating in Sweden to ensure compliance and avoid costly legal challenges.
This guide outlines the key aspects of employment termination and severance in Sweden as they apply in 2025, covering notice periods, grounds for termination, procedural requirements, and employee protections. Navigating these regulations correctly is essential for a lawful and smooth termination process.
Notice Period Requirements
The minimum statutory notice period for termination by the employer in Sweden is regulated by LAS and depends on the employee's total length of service with the company. These minimum periods apply unless a collective agreement or individual employment contract specifies a longer notice period. Collective agreements often provide more favorable terms for employees, including longer notice periods.
The statutory minimum notice periods are as follows:
| Length of Service with Employer | Minimum Notice Period (Employer to Employee) |
|---|---|
| Less than 2 years | 1 month |
| 2 years but less than 4 years | 2 months |
| 4 years but less than 6 years | 3 months |
| 6 years but less than 8 years | 4 months |
| 8 years but less than 10 years | 5 months |
| 10 years or more | 6 months |
For employees giving notice to the employer, the statutory minimum notice period is typically one month, regardless of the length of service, unless otherwise agreed upon or stipulated in a collective agreement.
Severance Pay Calculations and Entitlements
Unlike some other countries, there is no general statutory right to severance pay upon termination in Sweden based solely on length of service. Severance pay is not mandated by LAS for standard terminations due to redundancy or personal conduct.
However, severance pay entitlements can arise in several ways:
- Collective Agreements: Many collective agreements include provisions for severance pay, often referred to as "omställningsavtal" (readjustment agreements) or similar schemes. These are common in cases of redundancy and aim to support employees transitioning to new employment. The calculation and entitlement vary significantly depending on the specific collective agreement, often considering age, length of service, and other factors.
- Settlement Agreements: In cases of disputed termination, employers and employees may negotiate a settlement agreement to avoid litigation. Such agreements often include a financial compensation package, which effectively functions as severance pay, in exchange for the employee agreeing not to challenge the termination legally.
- Company Policy: Some employers may have internal policies or individual employment contracts that provide for severance pay, although this is less common than provisions found in collective agreements.
When severance is provided, either through collective agreement or settlement, the calculation methods are not standardized by law but depend on the specific agreement. Common factors influencing the amount include the employee's salary, length of service, and age.
Grounds for Termination
Swedish law distinguishes between two main grounds for terminating an employment contract:
- Termination for Personal Conduct (Uppsägning på grund av personliga skäl): This ground relates to the employee's behavior or performance. For a termination based on personal conduct to be legally valid, the employer must demonstrate 'just cause' (saklig grund). This requires serious misconduct or persistent poor performance that the employee has failed to rectify despite warnings and opportunities for improvement. Examples include serious breaches of company rules, insubordination, dishonesty, or repeated unexcused absences. The employer must have exhausted all reasonable alternatives, such as warnings or relocation to another position, before resorting to termination.
- Termination due to Redundancy (Uppsägning på grund av arbetsbrist): This ground relates to the employer's operational needs, such as downsizing, restructuring, or closure of a business unit. It is not related to the individual employee's performance or conduct. When terminating due to redundancy, the employer must demonstrate that there is a genuine lack of work. If multiple employees perform similar tasks, the employer must apply 'last-in, first-out' principles (turordningsregler) based on length of service, with exceptions potentially applicable under collective agreements or for small companies under specific conditions.
Termination of employment must always be based on 'just cause', regardless of whether it's due to personal conduct or redundancy.
Procedural Requirements for Lawful Termination
Swedish law imposes strict procedural requirements that employers must follow to ensure a termination is lawful. Failure to adhere to these steps can render a termination invalid, even if grounds for dismissal exist. Key procedural steps include:
- Investigation (for personal conduct): Before terminating for personal conduct, the employer must conduct a thorough investigation into the alleged misconduct or performance issues. The employee must be given an opportunity to present their side of the story.
- Notice of Termination (Varsel): If the termination is based on personal conduct, the employer must notify the employee and their relevant trade union (if the employee is a member) in advance, typically two weeks before the formal notice of termination is issued. This allows for potential consultation.
- Consultation (MBL-förhandling): The employer has a primary duty to negotiate with any trade union with which they have a collective agreement regarding the impending termination, regardless of whether it's due to redundancy or personal conduct. If the employee is a union member but the employer has no collective agreement with that union, the employer must still notify the union and, upon request, enter into negotiations. This consultation process must occur before the final decision to terminate is made.
- Written Notice of Termination (Uppsägning): The formal notice of termination must be in writing and delivered to the employee personally or sent by registered mail. The notice must state the grounds for termination (though not necessarily in full detail in the notice itself) and inform the employee of their rights, including the right to challenge the termination and the deadline for doing so, as well as information about their priority right to re-employment in case of redundancy.
- Documentation: Proper documentation is essential throughout the process, including records of warnings (for personal conduct), investigation findings, consultation minutes with unions, and the formal written notice of termination.
Common pitfalls include insufficient grounds, failure to follow the correct consultation process with unions, inadequate investigation of personal conduct issues, and errors in the written notice.
Employee Protections Against Wrongful Dismissal
Employees in Sweden are strongly protected against wrongful dismissal. If an employee believes their termination was not based on 'just cause' or that the correct procedure was not followed, they have the right to challenge the termination.
- Challenging the Termination: An employee can challenge a termination by notifying the employer in writing within two weeks of receiving the notice of termination. They can also seek assistance from their trade union.
- Legal Proceedings: If the matter is not resolved through discussion or negotiation, the employee or their union can file a lawsuit against the employer, typically with the Labour Court (Arbetsdomstolen) or a district court.
- Consequences of Wrongful Dismissal: If a court finds that a termination was unlawful (either lacking just cause or failing to follow procedure), the employer may face significant consequences:
- Invalidation of Termination: The court can declare the termination invalid, meaning the employment relationship continues. The employer may be ordered to reinstate the employee and pay back wages for the period since the termination.
- Damages: If the court does not order reinstatement (e.g., if the employee does not request it or if there are strong reasons against it), the employer may be ordered to pay damages to the employee. The amount of damages varies depending on factors such as the length of service, the circumstances of the termination, and the employee's age, but can be substantial.
- Procedural Errors: Even if just cause exists, significant procedural errors can lead to the employer being ordered to pay damages for violating procedural rules.
Trade unions play a significant role in protecting employee rights during termination processes, often representing their members in negotiations and legal disputes.
