What Severance Pay Rules Must Employers Follow in Sweden?

Which Employees Qualify for Severance Pay?

• Employees covered by a collective bargaining agreement that includes severance or redundancy pay terms.
• Employees whose individual employment contracts expressly grant severance or enhanced termination benefits.
• Employees with indefinite (permanent) contracts who are dismissed for redundancy or business-related reasons, where a CBA or policy provides severance.
• Long-serving employees in sectors where standard industry CBAs commonly provide extra redundancy compensation.
• Employees who are not dismissed for gross misconduct and who meet any qualifying service thresholds in the relevant CBA or policy.
• Employees whose roles are transferred or restructured, where an agreed social plan or redundancy program includes severance payments.

What Are the Legal Timelines for Paying Severance?

In Sweden, statutory notice pay must continue throughout the notice period, with salary and benefits paid on the normal payroll cycle. If you agree a lump-sum severance under a collective agreement, social plan, or individual contract, it is usually paid when employment ends or on the next regular pay date. Many CBAs and union-negotiated redundancy programs specify exact payment dates, so you should check those terms carefully. To stay low risk, your company should document the payment schedule in the termination agreement and ensure all amounts are paid no later than the final settlement date. Always provide a clear payslip or settlement statement showing how notice pay, vacation pay, and any severance were calculated.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company mishandles severance-related obligations in Sweden, the main risks are wrongful-termination claims, damages, and disputes with unions. Courts and the Swedish Labour Court focus heavily on whether you followed the Employment Protection Act (LAS), any applicable collective bargaining agreement, and proper consultation procedures.

• Employees can claim damages for unlawful dismissal or breach of contract.
• Unions may bring actions and seek damages for violations of collective bargaining agreements.
• You may be ordered to pay general and economic damages, plus any unpaid amounts with interest.
• Reputational harm and strained union relations can make future restructurings more difficult.
• Legal and advisory costs can increase significantly if disputes escalate to the Labour Court.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (EOR) such as https://www.playroll.com/employer-of-record does not remove the need to follow Swedish termination and severance rules. In a compliant EOR setup, the EOR is the legal employer and is responsible for notice pay, accrued vacation pay, and any agreed severance at termination. However, your company usually directs the business reasons for dismissal and can be contractually responsible for funding all termination costs. If the EOR mishandles a termination, both the EOR and your company can face reputational and commercial consequences, and you may be asked to indemnify the EOR for legal claims. Clear service agreements, pre-termination planning, and documented approval workflows are essential to keep liability controlled.

Be 100 Percent Compliant in Offering Severance with Playroll

Playroll helps your company navigate Sweden’s complex mix of statutory rules, collective bargaining agreements, and market practice so you do not miss hidden severance or notice obligations. Our team tracks which CBAs apply, how LAS rules interact with local agreements, and what is customary in your industry when restructuring or closing roles. You get practical guidance on notice periods, redundancy selection, union consultations, and how to structure any voluntary severance offers.

With Playroll as your global employment partner, you can model termination scenarios in advance and understand the full cost, including notice pay, unused vacation, and any agreed severance. We coordinate with local experts and, where relevant, unions to ensure documentation, timelines, and payments are correct from day one. That way, your team can make confident workforce decisions in Sweden while staying fully aligned with local law and employee expectations.