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.
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.