Sweden Employer of Record

Sweden employer of record

If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in Sweden, an employer of record may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in Sweden―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.

Learn about the hiring, employment, payroll and benefits requirements for workers in Sweden and how our employer of record service, Global Employment Outsourcing (GEO), and local HR experts can help you manage your international employment needs.

Hiring in Sweden

Sweden is known for having fairly liberal working regulations. There is no single labor code, and most employment relations are determined by collective bargaining agreements. Sweden has a long history of trade unions and has been a member of the International Labor Organization since 1919. 

Even though employment in Sweden is less regulated than in other countries, it is essential that all employment practices and contracts are compliant with the law and applicable collective agreements. As your employer of record and PEO in Sweden, we can ensure that every contract, for every worker, meets all requirements. We can also provide you with guidance about cultural norms and hiring best practices and keep you up-to-date with employment regulations as they change.

Employment contracts in Sweden

As you look to hire employees in Sweden, here are some common regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.

Working hours
Although working hours are often determined by collective agreements, the typical day lasts eight hours with a maximum of 40 hours per week. Employees are entitled to at least 11 hours of rest between workdays and at least 36 hours of rest each week. Employees are entitled to a break after five hours.

Compensation
As you consider the appropriate salary to offer new employees, keep in mind:

  • There is no minimum wage in Sweden.
  • Work done outside normally worked days or hours is considered overtime and is limited to 48 hours over four weeks or 50 hours per calendar month with a maximum of 200 hours per year. Overtime pay is determined by collective agreements at either 150% or 200% of regular wages.
  • Wages are usually paid monthly but are determined by collective agreements.
  • Collective agreements may regulate the legal salary and overtime range.

As your employer of record in Sweden, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.

Bonuses
Bonuses are not required by law but awarding them is common in Sweden.

Probationary period
Probationary periods are allowed as long as they do not last more than six months. Unless otherwise stipulated, probationary employment can be terminated at any time.

Termination and severance
Swedish law considers termination a last resort and requires employers to help employees correct unsatisfactory performance and/or improve the working relationship first. 

The only legal reason for termination is just cause, which includes the following:

  • Redundancy
  • Business necessity 
  • Reasons related to the employee

Additionally, employers can require that an employee retire at age 67 or if they become eligible for a full indefinite disability pension.

The Employment Protection Act mandates that employers determine who will be laid off based on their length of employment, although collective bargaining agreements can establish different criteria. Laid-off employees are entitled to being recalled to their previous positions, also based on seniority, within nine months if the employer’s circumstances change. 

How much notice an employer must give before termination varies according to the employee’s continuous length of employment, ranging from one month for less than two years of employment to six months for 10 years or more.

Before giving notice, an employer is required to notify both the employee and the local trade union of which the employee is a member. 

When an employee is terminated for personal reasons, a court assesses if the termination is fair. Whether the employee has a position of trust and whether the misconduct is intentional or unintentional, particularly in cases of theft, embezzlement or violence, is of particular importance in this determination. 

Employees must give one month’s notice in order to terminate their employment.

As your employer of record in Sweden, we can work with you to quickly handle the unforeseen event of an employee termination, providing legal guidance and a personalized process that ensures you stay out of labor court.

Employee benefits and paid leave in Sweden

When negotiating terms of an employment contract with a candidate in Sweden, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

Maternity leave
Parents are jointly entitled to 480 days of parental leave when a child is born or adopted, and they may take it until their child is 18 months old. Multiple births mean additional days of leave. 

Each parent must take at least 90 days off, but otherwise they can share the leave between them, with one parent taking as many as 390 days. The mother can receive paid leave from 60 days before the due date until the child turns 12 years old, but only 96 days can be used after the child turns four. Parental leave pay is generally 80% of regular wages for the first 420 days as long as the employee has worked at least 240 days in Sweden. 

Parents are also entitled to reduce their working hours by up to 25% until the child turns eight.

Vacation
Employees are entitled to 25 days of annual vacation. While on vacation, an employee is entitled to holiday pay as long as it has been accrued during the qualifying year, which runs from April 1 through March 31. The right to receive holiday pay must be earned during a qualifying year before being paid out the following year. 

If the first year of employment begins after August 31, the employee is entitled to five days of vacation during the first holiday year. 

Employees can waive any annual leave that is not combined with holiday pay. 

Collective agreements often stipulate that the holiday year and qualifying year must coincide, so vacation is earned the same year it is taken. 

Employers can decide when employees take vacation as long as at least four continuous weeks are provided during June, July or August unless otherwise accounted for in a collective agreement.

Vacation pay equals 12% of all wages earned during the qualifying year. 

Employees accrue vacation pay during the following periods of absence during the qualifying year:

  • Illness not exceeding 180 days 
  • Parental leave not exceeding 120 days
  • Education leave not exceeding 180 days 
  • Military training not exceeding 60 days

An employee with more than 20 days of accrued leave may carry forward one or more days for up to five years after the qualifying year. When employment ends, employees are entitled to payment in lieu of vacation days not taken. Unless the employee agrees, an employer may not schedule vacation leave during a notice period of termination.

Holidays
Employees are entitled to 13 paid public holidays:

  • New Year’s Day
  • Epiphany
  • Good Friday
  • Easter and Easter Monday
  • Labor Day
  • Ascension 
  • National Day
  • Whit Sunday 
  • Midsummer Day 
  • All Saints’ Day  
  • Christmas 
  • Boxing Day

Public holidays that occur on a weekend are not moved. Overtime pay is not required for working on a public holiday

Sick leave
Employers must pay sickness benefits equal to 80% of an employee’s salary for the first two weeks of an employee’s absence. If the absence continues beyond two weeks, sickness benefits are paid by the Social Insurance Agency. Employees cannot be dismissed on the grounds of illness.

Health coverage
Sweden offers universal healthcare to all residents, and enrollment is automatic. Emergency coverage is extended to residents of the EU, European Economic Area countries and countries with whom Sweden has a bilateral agreement. Healthcare is largely funded via income taxes and other taxes.

Private health insurance is used as supplementary coverage and is purchased mainly by employers to guarantee quick access to an ambulatory care specialist or to shorten wait times for elective procedures. In 2017, only 13% of employed people between 16 and 64 had private insurance. 

As your employer of record in Sweden, we may be able to provide optional supplementary medical insurance coverage for professionals and their dependents at a more cost-effective rate.

Pension
The legal retirement age is 65.

Employers must contribute 31.42% of their gross payroll toward employee pensions and health insurance for any employee or contractor who earns 1,000 krona or more per year. 

Employers pay a reduced rate for employees under the age of 26. 

Employee contributions equal 7% of wages and are capped at an amount that is adjusted annually. 

Collective agreements generally require employers to take out additional insurance for their employees for supplementary pensions and group insurance.

Workers’ compensation
Employees injured at work are compensated through their workers’ compensation insurance fund. When death or severe injury results, the employer must notify the Swedish Work Environment Authority. Employers’ contribution equal to 31.42% of payroll and includes a workers’ compensation fee of 0.3%.

Employer social costs will cover a large portion of employee benefits in Sweden, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance, if needed.

Employee onboarding with an employer of record in Sweden

We write and validate all local employment contracts, streamlining the onboarding process for you and your Sweden employees—all you have to do is provide relevant information and review and approve the employment agreement. 

As your employer of record in Sweden, we will:

  • Schedule a welcome call to discuss HR and employment information for Sweden, as well as answer any questions 
  • Prepare a customized employment contract in English and in Swedish (or other local language)
  • Share the employment contract and benefits information with the new employee for signature and review
  • Gather tax and banking information from the employee to set up payroll 
  • Provide a local point of contact to the employee to answer any questions regarding their employment, local HR or payroll

The entire onboarding process for the employee is often completed in as little as two weeks.

Partner with Safeguard Global as your Sweden employer of record and PEO

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on Global Employment Outsourcing (GEO) to expand and hire in over 179 countries around the world, quickly and compliantly. 

We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in Sweden. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.

Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations—in more than 150 countries and can accommodate the payroll outsourcing needs of any size organization. 

Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.

The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.

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