How struggling companies can lay off staff
Bankruptcy is a last resort. Companies usually start by reducing staff and closing down poorly performing units or business lines.
Under Swedish employment law, companies cannot make people redundant without so-called sakliga skäl, or "objective reasons". Assuming the layoff has nothing to do with a worker's personal conduct, these reasons are classed as arbetsbrist.
While this literally translates as "shortage of work", it is a legal concept that covers everything from financial problems, through a decision to move a unit overseas, to the sort of crisis faced by the battery company Northvolt, which laid off more than a thousand workers in 2024 (before filing for bankruptcy on March 12th, 2025).
It is up to the company to decide how it organises its operations, so there's no need for it to be facing an actual crisis. If a company decides to close its offices in Sweden and move the jobs there to New York, it could cite arbetsbrist, even if it was posting record profits.
Varsel
When the company has decided to make layoffs, it issues a varsel, or "notice" to the Swedish Public Employment Service.
This notice must contain information about the reasons for the planned redundancies, the number of employees intended to be made redundant and the period over which the redundancies are planned to take place.
Union talks
The union representatives at the workplace have a right to receive a copy of the notice, and the employer is then required to negotiate the redundancies with the unions under the so-called co-determination law or medbestämmandelagen.
No redundancies can be finalised until the company has reached agreement with the union, and the union will make contact with any members whose jobs are threatened.
As a general rule, a company cannot make an employee redundant if it has open positions which the person is qualified to do. This rule, called omplaceringsskyldighet (literally, "the duty to find new positions").
The union will also negotiate with the company over turordningsregler, Sweden's "last-in, first-out" rules under which workers have more protection the longer they have worked for the company.
The company has the right to exempt three employees it believes are of particular importance for its continued operation.
Redundancies agreed and notice given
Once the company has agreed a list of employees to be made redundant, it then contacts those affected to give them their notice, or to negotiate waiving their notice.
Both the company and the employees are bound by the notice period agreed in employment contracts.
Companies will sometimes strike an agreement allowing employees to stop working with immediate effect. Employees might then be paid what they would have received during the notice period, or else agree to a reduction in exchange for not having to work.
A buy-out agreement, or voluntary redundancy
If a company wants to avoid turordningsregler, cannot legally cite arbetsbrist, or wants to make an employee redundant even if there are no problems with performance or conduct, it might instead offer a buyout agreement, or utköpsavtal.
This is typically structured in such a way that the worker is offered the chance to receive their full salary and other benefits for an extended period while not having to work and being free to take another job.
These deals are voluntary and employees are under no obligation to accept them, so if you are offered such an agreement, you should discuss it with your union before signing anything.
The right to reemployment
Anyone made redundant has a preferential right to new employment at the company for nine months from their last day of work. This is to prevent companies making staff redundant then rehiring replacements on lower wages and with lower benefits.
The three-month rule
Non-EU citizens whose right to live and work in Sweden depends on a work permit have three months to find a new job before they lose this right and have to leave the country.
There are ways around this however, such as applying for a residency permit to live with a partner (a so-called sambo permit), or applying for a permit to study.
READ ALSO: How can I stay in Sweden if I lose my job?
Apply for benefits and income insurance
Once an employee has been made redundant, an employer issues them with an arbetsgivarintyg, which you can then use to apply for payouts from your A-kassa, the company which pays out unemployment benefits.
If you have salary insurance, or inkomstförsäkring, either privately or through your union, you can also apply for this, which will take your payments to the same level as your monthly pay when you were employed.
Retraining
Once you are unemployed, there is a lot of help available for getting a new job. The Swedish Labour Market Authority will help you, but there are also organisations which offer retraining and career advice.
Trygghetsrådet (TRR) and Trygghetsstiftelsen (TSN) give career advice, advice on retraining or starting a business to white-collar and blue-collar workers respectively.
They also offer financial support called omställningstöd, or "transition support", of up to 80 percent of your former salary, with a maximum level of 362,700 kronor a year in 2025.
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