Definitive Guide to Hiring in Sweden

Hiring in Sweden

Hiring employees compliantly in Sweden means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Sweden so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Sweden; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Sweden

Employee Probation Period

• The probationary period can last a maximum of six months making it possible for the employer to see if the employee fits into the company, or to see if they can perform the duties of the job

Annual Leave in Sweden

• According to the Annual Leave Act, employees are entitled to 25 full days of vacation every year regardless of their age or type of employment

Holidays in Sweden

Maternity Leave Sweden

• The Swedish government says that parents of both sexes are entitled to 480 days (16 months) of paid parental leave at about 80% of their salary (with a cap), plus bonus days for twins
• The days don't expire until the child is 8 years old.
• Parental leave must be shared between mothers and fathers

Paternity Leave Sweden

• The Swedish government says that parents of both sexes are entitled to 480 days (16 months) of paid parental leave at about 80% of their salary (with a cap), plus bonus days for twins — Swedish dads must take at least some of those 16 months.
• The days don't expire until the child is 8 years old.
• Parental leave must be shared between mothers and fathers

Sick Leave in Sweden

• Employees who are absent from work due to sickness are entitled to sick pay for the first 14 days of sickness except the first day, known as the "waiting day".
• The employer is required by law to pay sick pay to the employees during day 2 - 14 of illness.
• The benefit payable is 80% of the income.

Working Hours in Sweden

• The ordinary weekly working hours in Sweden are stated to equal 40 hours.
• However, the actual average reported weekly working hours in Sweden fluctuated between 30 and 30.9 hours per week during the period from 2009 to 2019.
• In 2019, an actual working week amounted to 30.2 hours on average.

Overtime in Sweden

• No more 50 hours' overtime over a calendar month is permissible and the absolute maximum overtime is 200 hours per calendar year.
• Overtime is usually paid at a rate of 50-100% more than the normal wage.

Termination of Employment in Sweden

• In Sweden, there are rules on the rights of an employer in relation to terminating an employee. The rules for termination are determined by the law in the “Employment Protection Act” (Lagen om anställningsskydd - LAS).
• Termination must always be in writing and it must be objectively justified. The employer must state the reason for termination upon request of the employee.
• Contracts of employment can be terminated in the following ways: -
  • Notice of termination of employment from the employer or the employee
  • The fixed term runs out
  • Summary dismissal
  • An employee’s immediate resignation where the employer in a fundamental respect has failed to fulfil his obligations to the employee
  • An agreement to the effect that the employment ceases to exist
• The length of the notice period depends on how long you have been employed. If you have been employed less than two years, the notice period is one month. If you have been employed for two to four years, you have a notice period of two months. Then one additional month is added for each two-year period up to six months.
• Companies have no obligation to pay any severance pay but it may be included in an employment agreement.

Notice Period in Sweden

• Notice periods in Sweden are determined by employment contracts, collective agreements, or by the Employment Protection Act.
• With a collective agreement - Notice periods should be agreed upon between employer and employee and stated in the employment contract. The most common notice period is one month.
• Without a collective agreement -
  • Less than 2 years - 1 month
  • 2 years but less than 4 years -2 months
  • 4 years but less than 6 years - 3 months
  • 6 years but less than 8 years - 4 months
  • 8 years but less than 10 years - 5 months
  • 10 years or more - 6 months
• Employers may dismiss employees without notice if they have grossly misbehaved

Severance in Sweden

• Companies have no obligation to pay any severance pay but it may be included in an employment agreement.

Sweden Salary and Wages

13th / 14th Month Salary in Sweden

• No
• There is no statutory requirement to pay the 13th or the 14th month salary.
• Employees are entitled to 25 days annual leave.
• The annual leave payment accumulates at 12% of their gross salary.
• In some instances, depending on the collective agreement, the employee may receive some holiday pay increments.

Employers

• Social security taxes are levied on salaries, wages and the assessed value of benefits in kind and are paid primarily by the employer (however, see Employees).
• Payments are made to several programs, including general sickness insurance, basic old-age pension insurance and supplementary pension insurance.
• Contributions to these various programs are assessed and administered by a single authority.
• The total average rate for most employers is 31.42%.
• In addition, the rate is 10.21% for individuals born between 1938 and 1953 (both years inclusive).
• The rate is 0% for individuals born in 1937 or earlier.

Immigration Sweden

• Citizens of EU/EEA member countries and Switzerland are treated in accordance with EU rules and do not need work permits to work in Sweden.
• Sweden also has an agreement with the other Nordic countries (Denmark, Finland, Iceland and Norway) that allows citizens of these countries to live and work in Sweden without residence or work permits.
• Foreign nationals from other countries who wish to work in Sweden must obtain work permits before entering Sweden.
• An application for a work permit must be accompanied by an offer of employment form issued by the Swedish employer or “end user” (the company for which the individual performs work in Sweden if not the legal employer) in Sweden.
• In situations in which the foreign (non-EU/EEA or Swiss) national is a new local hire (by the formal employer), the position must be posted on the EU job exchange (EURES) network before a job offer is issued to the foreign national.
• The terms of the offer of employment must comply with current collective bargaining agreements concerning wages, mandatory insurance and other benefits or, if no collective agreements exist, with market practice for the specific industry.
• An opinion must be obtained from the relevant union body as part of the application process.
• Certain exemptions exist with respect to the requirement to apply for a work permit, such as for employees who enter Sweden for the purpose of undertaking internal training for up to three months with the Swedish entity of an international group of companies.
• Work permits are granted for a maximum period of two years and can be extended for another two years. After 48 months’ work in Sweden, a permanent residence permit can be applied for.
• High skilled foreign nationals can apply for the EU Blue Card to reside and work in Sweden
• When applying for an EU Blue Card, it must be proven that: the salary, working conditions and other terms of employment are at least equal to persons already residing in Sweden.
• For 2019, the salary threshold is SEK 50,550 per month.

Value Added Tax (VAT) in Sweden

• The Swedish VAT system is harmonized with the European Union (EU) rules.
• The general VAT rate of 25% is chargeable on most goods and services.
• Reduced rates apply to a few goods and services, such as foodstuffs, restaurant meals, and non or low alcoholic drinks (12%), as well as to transport of passengers (6%).
• Certain financial and insurance services are exempt from VAT.

Mandatory Benefits in Sweden

• These are mandatory benefits as postulated by law
• These include probationary period, public holidays, annual leave, sick leave, maternity leave, paternity leave, notice period, and severance pay
• Statutory benefits also include social security benefits

Payments And Invoicing

• Tax is assessed on taxable income for each fiscal year, which is generally the calendar year.
• Married persons are taxed separately, not jointly, on all types of income.
• Annual tax returns must generally be filed by 2 May of the year following the year in which the income is earned.
• Extensions to file returns may be obtained.
• Tax on salaries, wages and other remuneration, including benefits in kind, is withheld by employers. Individuals who are self-employed or who have business income as well as other non-employment income may register as self-employed taxpayers.
• Preliminary tax is then computed according to a preliminary tax return.
• The preliminary tax is payable monthly, beginning in February of the fiscal year and ending in January of the following year

Payroll Accrual in Sweden

Country Accruals Additional Information

Description

Swedish social security contributions for employed personnel are payable by the employer at a rate of 31.42 percent of the gross salary. There are no upper limits in respect of employer contributions.

Swedish social security contributions are payable by the employee at the rate of 7 percent of the net earned income with a cap at an annual income of SEK538,700 (maximum contribution SEK37,700). One hundred percent is allowed as a credit against income taxes.

Sweden has concluded a number of conventions on social security with different countries, mostly within Europe but also including non-European countries such as Morocco, Canada, Quebec, Turkey, Israel, and the United States. Since Sweden is a member of the EU, the provisions in Council Regulations 1408/71 and 883/2004 will apply for intra-community transfers. Where an employee is assigned from a non-treaty country/jurisdiction to perform work in Sweden, different rules apply depending on the length of stay. If the intended length of the stay does not exceed 12 months, no social security levies are payable. If the length of the stay exceeds 12 months, levies are payable in full from the first day. If the employer has a permanent establishment in Sweden full charges are payable from the first day.

As a main rule, Swedish social security contributions are always payable by a Swedish employer or a foreign employer if the work is performed in Sweden. This applies irrespective of the nationality of the employee. For foreign employers with no permanent establishment, the liability to pay social security contributions could be transferred to the employee by an agreement between the employer and the employee.

Payroll Accruals Additional Information

Accrued Benefits in Sweden

Why use Global Expansion to hire in Sweden

Establishing a branch office or subsidiary in Sweden can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Sweden labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Sweden law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Sweden. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Sweden Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.