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.
But could Sweden also be the place for your expanding company to make money, money, money!?
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. If you’ve identified talent living in Sweden, you may struggle to persuade them to relocate!
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, this guide will give you some starting points.
The salary should be defined in Swedish Krona (SEK) and it’s not uncommon for the payment date to be around the 25th of the month in Sweden. It should be noted that TopSource Worldwide pays all salaries on or by the last day of the working month. Annual salaries are paid out in 12 monthly equal instalments.
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.
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.
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 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
- Incapacity benefits
- Pension — old-age and survivor’s pension
- Social assistance
- Unemployment benefits
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.
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.
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 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
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).
Employees can claim SEK 18.50 for every 10 kilometres for use of their own vehicle for business mileage.
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 1st of April to the 31st 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 1st of April to the 31st 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)
Keen to engage an EOR in Sweden?
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