Hamilton Perspectives

Swedish contractual employment law – The obligation for employees to repay expenses for education paid by the employer

Contract law and em­ploy­ment law are two le­gal ju­ris­dic­tions with a close con­nec­tion. A wide range of con­tracts are fre­quent­ly uti­lized with­in em­ploy­ment law; e.g., em­ploy­ment agree­ments, ex­it agree­ments and agree­ments re­lat­ing to non-com­pete claus­es and oth­er re­stric­tive covenants.  General prin­ci­ples of con­tract law are com­mon­ly em­ployed to in­ter­pret these agree­ments. However, there are sev­er­al ar­eas where the Swedish con­trac­tu­al em­ploy­ment law de­vi­ates from the “or­di­nary” con­tract law.

A com­mon oc­cur­rence in Sweden is that an em­ploy­ee, dur­ing the em­ploy­ment, un­der­goes an ed­u­ca­tion paid for by the em­ploy­er. In re­turn, it is usu­al­ly agreed be­tween the par­ties that the em­ploy­ee shall re­pay the em­ploy­er for the costs, if the em­ploy­ee ter­mi­nates the em­ploy­ment be­fore cer­tain time has lapsed from the com­ple­tion of the ed­u­ca­tion.

In a re­cent case, AD 2018 no. 77, the Swedish Labour Court (Sw. Arbetsdomstolen) has elab­o­rat­ed its view on such agree­ments. In its judge­ment, the Swedish Labour Court al­so con­firms its pre­vi­ous state­ments re­gard­ing how and when an agree­ment shall be deemed to have been con­clud­ed with­in the field of em­ploy­ment law.

AD 2018 no. 77

In the present case, a he­li­copter tech­ni­cian had un­der­gone an ed­u­ca­tion paid by the em­ploy­er. A few months lat­er the tech­ni­cian ter­mi­nat­ed his em­ploy­ment. The ques­tion in the case was whether the par­ties had oral­ly agreed that the tech­ni­cian here­by should re­pay parts of the costs for the ed­u­ca­tion.

According to the Swedish Labour Court, such agree­ments are al­lowed un­der cer­tain con­di­tions and can be com­bined with cer­tain oblig­a­tions for the em­ploy­ee to re­pay the costs.

Such an oblig­a­tion con­sti­tutes a con­di­tion of es­sen­tial im­por­tance for the terms of em­ploy­ment in ac­cor­dance with Article 6 c of the Swedish Employment Protection Act. Such agree­ments should there­fore, as a gen­er­al rule, be con­clud­ed in writ­ing.

The Court fur­ther stat­ed that an agree­ment has been con­clud­ed on­ly when the par­ties have agreed up­on all con­di­tions that ei­ther of the par­ties wished to reg­u­late by the agree­ment.

The Court found that the par­ties had not agreed up­on how the re­pay­ment would be made or which spe­cif­ic costs the em­ploy­ee would be ob­lig­at­ed to re­pay. Therefore, an agree­ment re­gard­ing an oblig­a­tion of re­pay­ment had not been con­clud­ed.

In con­clu­sion

It is im­por­tant for em­ploy­ers to reg­u­late the em­ploy­ee’s oblig­a­tion to re­pay ed­u­ca­tion­al ex­pens­es by a writ­ten agree­ment. The agree­ment should be con­clud­ed be­fore the em­ploy­ee un­der­goes the ed­u­ca­tion and the terms and con­di­tions for the re­pay­ment oblig­a­tion should be clear­ly and pre­cise­ly reg­u­lat­ed. The key is­sues to be reg­u­lat­ed are e.g. how long the em­ploy­ee shall re­main in the em­ploy­ment, which costs that shall be cov­ered by the re­pay­ment oblig­a­tion and how much of the costs that shall be re­paid if the em­ploy­ee leaves the em­ploy­ment ear­li­er than agreed.