Employer of Record Services for Sweden

Employing in Sweden

Sweden is best known for pop music, Volvo motor cars and IKEA — the home furnishings company so closely linked with the country that its logo shares its colours with the Swedish flag. In many ways, the giant of the Nordics, Sweden has the biggest population, largest total GDP and a greater land mass than any of Denmark, Norway, Finland or Iceland. The fact that it is two-thirds forest, however, means a concentration of people in the main cities of Stockholm, Gothenburg, Malmö and Uppsala.

The Swedes enjoy a high standard of living with clean streets, friendly people and a leading welfare system. Sweden also has low levels of bureaucracy, so it’s no surprise to see it sitting high on the index of ease for doing business. Particularly suited to R&D, innovation and digital technologies, there’s a highly skilled workforce here for your business to tap into. So, if you’re looking to expand into the EU and are considering a Scandinavian country, Sweden is worth considering.

Our Expertise

Managing a global workforce in Sweden

Sweden's employment landscape is governed by the Employment Protection Act, which mandates fair labour practices and emphasises employee well-being. TopSource Worldwide assists companies in navigating these complexities, ensuring adherence to local laws and cultural expectations. With TopSource's EOR expertise, businesses can focus on growth and innovation, secure in the knowledge that their Swedish workforce management aligns with local standards.

Extensive expertise

Our team of experienced, knowledgeable staff collectively provide up-to-date employment information across 180 countries, so you can always get accurate advice.

Entity-free employment

Feel free to hire employees from all over the world without being weighed down by setting up entities, running complex payroll or recruiting a hiring team.

Payroll without hassle

Have the confidence that your staff will always be paid accurately and on time, so that you can focus on your core business activities and work towards your success.

Always-on support

Access helpful, relevant, personalised advice whenever you need it, along with expert-led recruitment policies and tried-and-tested HR best practices.

"With TopSource we were able to have employees hired or maintained in Nutreco without having to establish an entity in these countries for only 1-2 employees. I think most countries are covered by TopSource, so they can help us with almost all cases. Good advice on conditions and direct contact with employees. Invoicing done directly to the company. An easy process compared to hiring employees by ourselves."

Annette van Duijnhoven

Nutreco

See our customer stories

”We searched the market for a local payroll vendor in 2014 and we chose TopSource as our partner. We were looking for error-free and timely payroll processing and TopSource Worldwide delivers this, saving us time and money. We have worked together for 8 years now and would recommend them to anyone."

Praveen Lihinar

Sungard

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”TopSource Worldwide has a detailed and methodical onboarding process that made it easy for us to get set up and running with our UK employees. They were able to take the worry out of trying to comply with all local laws and regulations. Because they have this knowledge we do not have to research on our own and hope we are in compliance. This has saved us hours of time and gives both the company and employees a sense of security."

Supervisor

Client based in Ft Worth, Texas, USA

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GLOBAL EXPANSION STRATEGY

Personalised Employer of Record services in Sweden

TopSource Worldwide offers personalised Employer of Record (EOR) services tailored to meet the specific needs of your business in Sweden. This includes handling employee onboarding, payroll processing, tax compliance, employee benefits management, and HR support. Our EOR services ensure that your business meets all legal and regulatory requirements, providing a hassle-free solution to manage your Sweden-based employees.

End-to-end Sweden payroll services

Looking to expand into Sweden? Our unparalleled expertise in global payroll services ensures that your business can seamlessly navigate the complexities of payroll on a global scale, supporting your Sweden expansion initiatives.

Global entity management

Venturing into the Swedish market can be both exciting and challenging. With distinct business regulations, cultural nuances, and economic landscapes, it's essential to have a clear roadmap for your business establishment journey.

Accounting

Whether your goal is to process your purchase-to-pay transactions with minimum errors or manage your expense claim procedure, our team of experts can handle your accounting responsibilities, allowing you to focus on your core business and save time and money.

Global EOR services

Managing a diverse global workforce can be complex. This is where TopSource steps in as an invaluable employer of record services partner for companies seeking to expand their global reach while ensuring compliance with local employment laws and regulations.

Global Expansion Simplified

How to do business in Sweden

Entering the Swedish market presents a mix of excitement and challenges. Given unique business regulations, cultural intricacies, and economic dynamics, a well-defined roadmap is crucial for a successful business establishment.

TopSource Worldwide is with you at every stage. Whether it's navigating local regulations or facilitating seamless operational transitions, our expertise ensures a swift and efficient process for establishing your business in Sweden.

Start your Sweden expansion

Sweden Insights

Key insights into Sweden's landscape

VAT rates: Sweden has a standard VAT rate of 25%, with reduced rates of 12% and 6% for specific goods and services.

Ease of Doing Business rank: Sweden ranks 10th in the World Bank's Ease of Doing Business Index, showcasing a highly favourable business environment.

Consumer Confidence Index: As of 2022, Sweden's Consumer Confidence Index was 96.5, reflecting stable economic sentiment.

Employee maternity/paternity leave: Maternity leave is up to 480 days, and paternity leave is up to 90 days, emphasising work-life balance and parental support.

Employee termination period: Standard notice for termination is typically 1 to 6 months, depending on employment contract terms and length.

Employee salary pay date: Wages are generally paid monthly, with specific pay dates outlined in employment contracts and subject to labour laws.

Bank holidays: Sweden observes national holidays, including New Year's Day, Midsummer Day, and Christmas, with a total of 11 public holidays in a year.

Statutory benefits

Vacation allowance

Employees are entitled to vacation pay in accordance with the Same Pay Method as defined by section 16a of The Vacation Act (Semesterlag, SFS 1977:480). Vacation pay for each earned vacation day will be their current daily salary plus a vacation premium corresponding to 0.43% of their monthly salary.

Pension

The state pension scheme is part of the social security system in Sweden. The public pension component of the social costs equates to 10.21% of the gross salary, and only the pension component on salaries up to around SEK 43,000 per month goes into the individual’s personal public pension account.

When discussing pensions in Sweden, most Swedes tend to disregard the public pension and when they speak of pension contributions to their employers, they often mean additional occupational pension. TopSource Worldwide does not currently offer an occupational pension in Sweden.

Employers costs

Social security costs equate to around 31.42% of an employee’s salary and these are paid directly to the Swedish tax authority which then distributes funds to other authorities.

Social security system

Social security in Sweden is administered by the Swedish Social Insurance Agency and the Swedish Pensions Agency. The Swedish Social Insurance Agency is responsible for benefits and benefits for families with children, the sick and people with disabilities. The Pensions Agency is responsible for pensions and other support for the elderly and survivors.

The majority of health and medical care in Sweden is publicly financed. There are 21 county councils which have primary responsibility for health and medical care. The majority of health care institutions are under public management, but there is also publicly financed healthcare run under private management. In this case, the private healthcare providers have agreements with the relevant county council. Healthcare is primarily financed via taxes. Healthcare treatment is free under the public social security system but as a patient, one also has to pay a fee. These fees vary between county councils, but there is a national ‘high-cost protection’ for outpatient treatment as well as for medicines.

Employees in Sweden enjoy the following statutory benefits:

Family allowances/care of Relatives
Healthcare
Incapacity benefits
Pension — old-age and survivor’s pension
Social assistance
Unemployment benefits

Other provisions

Working time

Weekly working hours and their allocation are subject to the Working Hours Act (Arbetstidslag, SFS 1982:673). The regular weekly working schedule with TopSource Worldwide is 40 hours per week, Monday to Friday.

Non-compete

It is possible to include non-compete clauses covering sometime after the employment, but under Swedish law, such a clause would only be valid if the employee (one way or another) has been compensated for the limitation this imposes on their freedom of choice. Our standard agreements do include provisions without compensation which are intended to serve as a deterrent effect. If this clause needs to be enforceable, then clients should discuss this with their account manager.

Sickness

In accordance with the Sick Pay Act (Lag om sjuklön, SFS 1991:1047), sick pay in an amount of 80% of an employee’s gross salary will be paid by the employer during the first 14 days of illness, minus a deduction (Swe. “Karensavdrag”), corresponding with 20% of the employees weekly base salary rate.

Employers need not pay out sick pay for longer than seven days unless the employee provides a statement from a qualified doctor to support their claim. The employer reserves the right to request a statement from a qualified doctor for any days of claimed sickness if there is sufficient cause.

Sickness benefits after fourteen days are dependent upon the employer registering the employee’s sickness with Försäkringskassan within seven days from the end of the employer sick pay benefit period. The employee is required to provide a doctor’s statement that supports their claim for sick pay and sickness benefits.

Termination

Termination for cause is highly regulated by Swedish case-law, and legal expertise should always be consulted before considering it as an option.

The actual notice period is effective from the date the individual receives official notification in writing. It’s prudent, therefore, to get the recipient to confirm in writing on which day they received the notice. This is especially important when handling a termination other than person to person which is the default way of terminating an employment under Swedish law. If a termination notification is sent by post (recorded letter only) to the last known address of the employee, it’s regarded as received 10 calendar days after it was sent unless the employee recognises that they have received it before then.

Important note: as the Employer of Record, the responsibility for assessing the legal basis and issuing appropriate legal documentation for a potential termination is owned by TopSource Worldwide. It’s imperative that the workside employer (client) consults TopSource Worldwide prior to any individual discussions taking place around possible termination of contracts.

Other paid time off

Special occasion leave

Number of days

Childbirth of adoption leave

An employee who has become a parent but has not been pregnant has the right to take time off when children are born or adopted. It’s the Swedish Social Insurance Agency that pays compensation for 10 days to the employee. The employer pays nothing.

Maternity leave

Employees have the right to take leave for a continuous period of at least seven weeks before the estimated time of delivery and seven weeks after delivery.

Parental leave

An employee who is pregnant has the right to take parental leave when there are 60 days left until the scheduled birth.

Expectant parents also have the right to take parental leave to visit maternity care when there are 60 days left until the estimated birth date. They may also take parental leave to participate in parental training.

Employees who have children under eight years of age have the right to take time off work, with or without parental allowance from the Swedish Social Insurance Agency. The employee has the right to:

Take a continuous leave of absence.
Reduce their working hours by up to a quarter of normal working hours.
Divide the leave into a maximum of three periods each calendar year.
Split the leave over more periods (if agreed with the employer).

Co-workers with sick child (Vab):

Vab is when a co-worker stays home from work to take care of a sick child. The Swedish Social Insurance Agency pays the allowance called temporary parental allowance

An employee may be free from work to care for their child under the age of 12. This applies in the following cases:

The child is sick or infected.
Regular carer is sick or infected. The regular carer is the person who usually takes care of the child when the employee is working — for example another parent, childminder or relative.
The other parent must accompany another of the family’s children to a doctor.
The employee should visit the child welfare centre or another child health clinic, such as dentists or child and adolescent psychiatry (BUP).

Mileage allowance

Employees can claim SEK 18.50 for every 10 kilometres for use of their own vehicle for business mileage.

Holiday entitlement

Annual entitlement

Employees are entitled to 25 days (or, if part-time, an equivalent percentage time period based on a working week) of vacation a year in accordance with the Vacation Act (Semesterlag, SFS 1977:480). Employees are also entitled to holiday pay for those vacation days taken during the vacation year as defined by the Act.

Vacation is earned during the earning year (Swe. “intjänandeår”). The earning year is the period running from the 1^st of April to the 31^st of March of any year during which the employee “earns” the right to holiday pay. The vacation year (Swe. “semesterår”) is then the period running from the 1^st of April to the 31^st of March the year following the earning year, during which the earned days are used.

It’s possible to allow the employee the option of using vacation as soon as it has been earned (without waiting for next year). If this principle is to be applied, then this would be covered through the employment agreement to state that the employee can (with the employer’s approval) draw upon earned vacation during the same earning year in which it was earned.

Vacation benefits are earned at the normal rate for days worked, qualified sick days claimed and qualified vacation days taken in accordance with the Swedish Vacation Act (SFS 1977:480). Vacation benefits are earned during the first 120 days of parental leave if the employee is in a relationship or 180 days if they are not, for 180 days a year if the employee is on sick leave or indefinitely if the employee is on sick leave because of a work-related incident. No vacation benefits are earned in excess of the abovementioned days if employees are on parental leave or sick leave.

Requests for vacation and leave must be made at least 60 days in advance and approved by the employer if the vacation is scheduled against the employee’s wishes. However, generally, vacation requests can be given and approved with as short notice as the parties agree.

The employer reserves the right to deny vacation and leave requests that would be overly disruptive to its business. For example, the parties can agree that the optional right to four weeks of continuous summer vacation, stipulated by section 12 of the Swedish Vacation Act, will not be applicable on the employment.

De facto holidays

In Swedish tradition, many holidays have their main celebrations not on the day but on the eve of the holiday, meaning one day earlier. This is especially significant on Christmas Eve and Midsummer Eve, but also on New Year’s Eve (which to some individuals is even more important than the main holiday). These days are “de facto” holidays.

The day before an official holiday is, in most cases, treated as a de facto holiday in two variants: full day and half day. The de facto holidays are almost always treated as official holidays by employers in Sweden, so most employees working regular office hours expect not to work on these days. These days are, therefore, also included as standard public holidays in our employment agreement.

The de facto half holidays are often treated with employees taking the afternoon off, but this varies depending on the employer in Sweden. It’s now more common to work a full workday on these days, so TopSource Worldwide does not include them as forming part of the public holiday observance. These can be added to the employment contract if required.

5 January (Twelfth Night / Trettondagsafton)
30 April (Walpurgis Night / Valborgsmässoafton)
19 June (Midsummer Eve / Midsommarafton) — the Friday during 19–25 June
30 October (All Saints’ Eve / Alla helgons afton) De facto
24 December (Christmas Eve / Julafton)
31 December (New Year’s Eve / Nyårsafton)

Employ and pay anywhere

Specialising in multi-country payroll solutions

TopSource Worldwide offers comprehensive payroll outsourcing services, ensuring seamless and accurate management of your organisation's payroll functions. With cutting-edge technology and a team of experienced professionals, we handle payroll processing, tax compliance, and regulatory requirements with precision.

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Calculate Your Employer of Record Taxes in Seconds

Employment Cost Calculator in Sweden

Our Employment Cost Calculator simplifies complex tax calculations for global businesses. Accurately assess tax obligations, ensuring compliance with local regulations. Streamline payroll management effortlessly with our user-friendly tool, providing transparency and efficiency in international workforce taxation.

In addition to calculating your EOR taxes, our calculator can also help you:

Understand the different types of EOR taxes
Stay up-to-date on the latest changes to EOR tax regulations
Avoid penalties for non-compliance

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Our author

Mark Robbins

Global Sales Director

Mark is the Sales Director at Topsource Worldwide. He has been a pioneering figure in the global expansion space since 2013. He is the first salesperson to sell EOR services in Europe, a feat he accomplished in 2013.

Published 2023-11-14 00:00:00

Updated 2023-11-15 00:00:00

Reviewed by:

Adrian Cooney

Fact checked by:

Adrian Cooney

Employer of Record FAQ

Frequently Asked Questions about Swedish employment solutions

What is an Employer of Record in Sweden?

An Employer of Record (EOR) is a professional services provider that assumes the responsibility of being the legal employer for a company's workforce in Sweden. This entails managing tasks such as payroll processing, tax withholding, benefits administration, and ensuring compliance with local labour laws and regulations.

How do global employment services work?

Global employment services operate as a comprehensive solution for businesses seeking to expand their workforce across borders. These services, often provided by Employer of Record (EOR) companies like TopSource Worldwide, streamline the complexities of international employment.

What are the benefits of working with an Employer of Record in Sweden?

Employer of Record companies assume the legal responsibilities associated with employment, alleviating the burden of compliance, payroll, and HR management in Sweden. This allows companies to expand globally without the complexities of establishing legal entities in each location.

What is the difference between EOR & PEO?

An EOR acts as the legal employer, handling tasks like payroll, tax compliance, and benefits administration. This allows companies to expand internationally without establishing legal entities. On the other hand, a PEO shares employer responsibilities with the client company, often co-employing workers.

How are employer payroll taxes calculated in Sweden?

Calculating employer payroll taxes involves understanding the various taxes associated with employing workers and complying with tax regulations in Sweden. Key components include federal and state income taxes, Social Security, Medicare, and unemployment taxes.

What global employment solutions does TopSource offer?

TopSource Worldwide facilitates hassle-free global expansion by acting as the legal employer, handling payroll, tax obligations, and HR responsibilities. With expertise in global entity management, TopSource assists businesses in navigating the intricacies of legal structures across borders.