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What should be in an employment contract? A guide for EU and Nordic startups
What should be in an employment contract? EU Directive 2019/1152 requirements plus Finland, Sweden, Germany specifics for startups.
An employment contract is often drafted once, filed somewhere, and forgotten, until it matters. That moment usually arrives when a dispute surfaces, a role changes significantly, or an auditor asks to see documentation of employment terms.
EU Directive 2019/1152 on Transparent and Predictable Working Conditions, which all EU member states were required to implement by August 2022, requires employers to provide a written statement of essential working conditions from the first day of employment. This is not an optional best practice. It is a legal minimum across all EU jurisdictions. Non-compliance can result in fines and means the employer has no documentary evidence if employment terms are disputed.
For founders and People leads at growing startups, the most common problem is not malicious non-compliance. It is a contract drafted quickly at a high-growth moment that omits required clauses, references outdated terms, or was never updated when conditions changed. This guide covers what a legally sound employment contract needs to include, with notes on country-specific requirements in Finland, Sweden, and Germany.
TL;DR
- EU Directive 2019/1152 requires a written statement of employment terms from day one, mandatory in all EU member states
- A contract must cover: parties, start date, role, location, working hours, remuneration, leave entitlement, probation, notice period, and governing law at minimum
- Nordic contracts typically include additional clauses: applicable collective agreement, Saturday rule applicability (Finland), holiday salary accrual method (Sweden)
- Contracts should be reviewed when: a role changes significantly, an employee relocates, law changes in the relevant jurisdiction, or the company entity structure changes
- Templates tied to the employee record, rather than saved in document folders, ensure the right version is used every time
What are the minimum required clauses under EU law?
EU Directive 2019/1152 sets the floor. Every employment contract in an EU member state must document:
Identity of the parties. Full legal name of the employer entity (not just the company brand name) and the employee. The employer must be identified by its registered legal name.
Place of work. Physical address or, for remote and flexible roles, a statement that the employee has no fixed place and may work from multiple locations.
Title, grade, or description of the work. The job title and a brief description of the role’s scope.
Start date. The date the employment relationship begins.
Duration. Whether the contract is permanent or fixed-term. If fixed-term, the end date and the grounds for the fixed term.
Remuneration. Base salary, payment frequency, payment method, and any additional components (bonus structure, equity, benefits). Salary amount must be stated explicitly.
Working hours. Normal daily and weekly working hours. For flexible or variable-hours roles, the reference hours and how variations are determined.
Leave entitlement. Minimum annual leave and, where applicable, paid public holidays.
Notice period. The minimum notice period the employee is entitled to and the notice period required from the employee.
Applicable collective agreement (where relevant). If the employee’s terms are governed by a collective agreement, the agreement must be identified in the contract.
This is the minimum. Most well-drafted contracts go beyond this floor, and for Nordic companies, the country-specific requirements add additional mandatory content.
What should a startup add beyond the legal minimum?
A contract that only contains the legal minimum is technically compliant but practically thin. These clauses are not legally required everywhere but are standard practice and protect both parties:
Probation period terms. Duration, reduced notice during probation, and evaluation criteria. In Finland, the statutory maximum is 6 months (or half the contract duration for fixed-term). In Sweden, prövotid (trial period) is up to 6 months. In Germany, the Probezeit is typically up to 6 months. State it explicitly. Do not assume the statutory default applies without documentation.
Confidentiality. Scope of confidential information, duration after employment ends, and permitted disclosures. For roles with access to salary data, product roadmap, or customer information, this clause matters.
IP assignment. Confirmation that work product created during employment is owned by the employer. This is particularly important for engineering and product roles. Some jurisdictions have default rules, but explicit clauses remove ambiguity.
Non-compete (if applicable). Enforceability varies significantly by jurisdiction. German courts enforce reasonable non-competes with compensation. Finnish law requires compensation for non-competes exceeding one month. UK post-employment restrictions are enforceable only if they protect a legitimate business interest. If you include a non-compete, it needs to be jurisdiction-appropriate.
Expense reimbursement. Which expenses are covered, what the approval process is, and reimbursement timelines.
Remote work terms. If the role is partly or fully remote: expectations for availability, equipment responsibility, home office allowance, and which jurisdiction’s labor law applies.
Country requirements at a glance
| Requirement | EU minimum | Finland | Sweden | Germany |
|---|---|---|---|---|
| Written statement required by | Day 1 | Day 1 | Day 1 | Day 1 |
| Acceptable eSign type | SES / AES | SES / AES | SES / AES | QES required |
| Max probation period | Not set | 6 months | 6 months | 6 months |
| Collective agreement reference | If applicable | TES (if applicable) | If applicable | Tarifvertrag (if applicable) |
| Non-compete compensation | No EU rule | Required for >1 month | Required for any duration | ≥50% of last salary/month |
| Leave framework | Annual leave stated | Vuosilomalaki | Semesterlagen | Bundesurlaubsgesetz (20 days min) |
| Key jurisdiction-specific clause | Saturday rule (lauantaisääntö) | Holiday pay calculation method | Notice of Nachweisgesetz compliance |
What are the country-specific requirements for Finland, Sweden, and Germany?
Finland
Finnish employment contracts must comply with the Employment Contracts Act (Työsopimuslaki). Key requirements and common clauses beyond the EU minimum:
Lauantaisääntö (Saturday rule). Finland’s working time law includes specific rules for how Saturday hours are compensated and how the working week is counted. If the employee works Monday to Friday, this is largely standard, but for roles with variable hours or on-call requirements, the contract should reference the applicable working time arrangement explicitly.
Applicable collective agreement (TES). Many Finnish roles are governed by a sectoral collective agreement. The contract must state which TES applies (if any), or confirm that none applies to the role.
Payroll cycle. Finland typically uses semi-monthly (twice a month) or monthly payroll. State which applies.
Leave accrual. Annual leave is governed by Vuosilomalaki (Annual Holidays Act). Accrual rate depends on employment duration (2 or 2.5 days per month). The contract should state the applicable rate.
Sick pay. Finnish law provides sick pay from the first day of illness for up to 9 days, then Kela takes over. State the employer’s sick pay policy clearly.
Sweden
Swedish employment law is governed by the Employment Protection Act (LAS). Notable requirements:
Semester (holiday) accrual. Swedish law uses a Semesterlagen framework where holiday pay is calculated as a percentage of salary earned during the holiday year. The contract should state the method: sammalöneregeln (same salary rule) or procentregeln (percentage rule).
Notice period under LAS. Notice periods scale with length of employment under LAS. The contract can offer better terms but not worse. State the contractual notice period explicitly.
Overtime. Swedish law limits overtime. If the role has variable hours, the contract should state how overtime is handled and compensated.
Non-compete enforceability. In Sweden, non-competes are only enforceable if the employer compensates the employee for the restricted period. State the compensation clearly if a non-compete is included.
Germany
German employment contracts are governed by Bürgerliches Gesetzbuch (BGB), Nachweisgesetz (documentation requirements), and various sectoral laws.
Nachweisgesetz requirement. Germany requires a written statement of employment terms on day one (implementing EU Directive 2019/1152 strictly). Digital signatures are not accepted for the initial written statement in Germany: a wet signature or qualified electronic signature (QES) is required.
Probezeit. State the probation period duration explicitly (maximum 6 months). During probation, both parties can terminate with two weeks’ notice.
Applicable tariff agreement (Tarifvertrag). If the role falls under a collective agreement, it must be referenced in the contract.
Overtime rules. German law places strict limits on working hours (maximum 48 hours per week averaged over 6 months). State expected hours and how overtime is handled.
Non-compete compensation. German courts require that a non-compete includes compensation of at least 50% of the employee’s last salary for each month of the restricted period. Without this, the clause is void.
How should employment contracts be managed as the company scales?
The most common documentation failure at startups is not the first hire’s contract, it is contracts 15 through 35, drafted during a high-growth period, using a template that was “good enough” at the time and never reviewed.
Three practices that prevent documentation gaps from accumulating:
Use templates tied to the employee record. When a contract generates from the employee record rather than a saved Word document, it inherits the correct entity, jurisdiction, and salary data. Manual copy-paste errors are the primary source of incorrect employment terms.
Review templates annually. Employment law changes. Minimum wages adjust. Collective agreements are renegotiated. A contract template that was correct in 2023 may be non-compliant in 2025. Assign a review date.
File signed contracts against the employee record. When contracts live in the HRIS rather than a Drive folder, they are accessible when needed, during audits, role changes, payroll queries, and terminations.
If you’re using document templates that aren’t connected to your employee records, Taito.ai’s Docs & eSign handles this end-to-end: templates pull from the employee record, route for eSignature, and file automatically when signed with jurisdiction-aware retention. Learn more at taito.ai.
