An employment contract does not automatically terminate because the employer is declared bankrupt. The receiver has to decide whether or not to give notice of termination.
An employee’s salary claim is considered as a general preferential status. Unpaid salaries due within three months before and within one month after the bankruptcy decision have such preferential status. Claims in respect of salary or other remuneration, which have preferential status, are also at least partly covered by a ‘salary guarantee’ according to the Swedish Wage Guarantee Act of 1992. To the extent the assets of the bankrupt estate are not enough to cover these employee claims, the employees will be able to obtain a limited compensation from the Swedish Government.