"It is based on a lack of confidence for Josefsson," Seko chairperson Janne Rudén explained the decision to the TT news agency.
According to Rudén the decision to leave the board has developed over a period of time, which has included highly controversial discussions over the sale of the firm's electricity grid.
Following the recent revelations that Vattenfall has in effect leveraged the entire concern in Germany and left the firm exposed to massive damages in the event of a nuclear accident, the union decided to call time on its involvement on the board.
"The news brought everything to a head," he said.
"If you have as little respect for owner directives and for the owners that he displays, then I don't consider it suitable for him continue as CEO," Rudén said.
The union's decision comes at a time when speculation is mounting over the future of Josefsson at the helm of the firm.
According to media speculation on Friday Josefsson is set to be forced to resign on Friday and will then leave his post next autumn when he draws his pension, reported to total 57 million kronor ($8.27 million).
"It is the board which appoints the CEO, and as long as I have their confidence and retain the motivation then I will naturally remain in my post," Josefsson told a TV4 news programme on Thursday in response to the speculation over his future.
The enterprise minister, Maud Olofsson, confirmed on Thursday that the government did not receive information regarding contracts signed between Vattenfall and the German state in June 2008 which regulate liability in the event of an accident at one of Vattenfall's nuclear power stations in Germany.
"We do not want to risk our assets in Sweden in the event of an accident in Germany," Olofsson said in response to revelations that Vattenfall has an unlimited liability according to the contracts.
Josefsson has defended the agreement by stating that it is common practice under German law to sign such an agreement and he underlined that the risks of Vattenfall being held liable were in practice minimal.
He explained that it is only if the sums involved would exceed "thousands of billions" then the Swedish firm could be impacted.