Sweden, a Scandinavian nation in Northern Europe, is the third-largest country in the European Union. The Swedish economy is export-oriented and driven by hydropower, timber, and iron ore. Predominant industries are telecommunications, industrial machines, chemical goods, pharmaceuticals, motor vehicles, precision equipment, iron and steel, and home goods and appliances. Swedish economy’s regulatory efficiency combined with open-market policies help sustain competitiveness, flexibility, and large inflows of trade and investment. A conducive industrial environment in Sweden helps setting up businesses in a hassle-free way.
Currency: Swedish Krona
Principal Language: Swedish
Government: Parliamentary Representative Democratic Constitutional Monarchy
Capital City: Stockholm
Major Cities: Gothenburg, Malmo, Uppsala, Helsingborg
An employment contract is considered as established when the party performing the work:
- becomes a part of the organization established by the other party
- provides services to another for monetary reward
- is subject to the control/direction concerning the way in which work is to be performed
A clear distinction between a contract for services and contract of employment is crucial in deciding on applicable legislation related to labor, social security, and taxation. Employment contracts, under the Employment Protection Act, are of indefinite term. Fixed-term employment contracts are permitted under special circumstances such as temporary substitute employment, seasonal employment, under a general fixed-term employment contract, and when employees turn 67. Fixed-term employment contracts are converted into indefinite employment contracts after an employee has worked for 5 years under a fixed-term contract or for more than 2 years as a substitute employee.
The 1982 Working Hours Act sets regulations governing work schedules for employees’ protection. Normal work schedule includes an 8-hour workday and 40 hours work week. Overtime is limited to 48 hours in a week but should not exceed 200 hours in a year. Collective bargaining agreements (CBAs) generally set the overtime premium at 50% or 100% of the ordinary hourly wage.
Employees are entitled to the following paid public holidays:
- Jan. 1: New Year's Day
- Good Friday
- Easter Monday
- May 1: Labor Day
- June 6: National Day
- Whit Sunday
- June 21: Midsummer Day
- Nov. 1: All Saints' Day
- Dec. 25: Christmas
- Dec. 26: Boxing Day
Public holidays that fall on a weekend are not carried over. There are no provisions on overtime pay for working on a public holiday.
Under the Vacation Act, employees are entitled to 25 days of annual vacation and are given holiday pay accrued during the qualifying year. The qualifying year starts on 1st April and ends on 31st March. Employees can take the vacation even during their first year of employment, but if employment begins after 31st August, they are entitled to 5 days of vacation during the first year. Employers can decide when employees can take annual leave, but they must provide a minimum of continuous 4 weeks during June, July, or August.
Pregnant employees are entitled, under the Parental Leave Act, to 7 weeks of leave before childbirth and 7 weeks after childbirth.
Fathers can take 10 days of paternal leave for childbirth.
Employees are entitled, under the 1991 Sick Pay Act, to sick pay due to an injury/illness/rehabilitation and are protected from dismissal on the grounds of illness. Employees get additional benefits under the National Insurance Act if an illness extends beyond the general sick pay entitlement. Employers are required to notify the Social Insurance Agency in such situations. Employees can receive sickness benefits for a maximum of 364 days in a 15-month period. This period is extended only under special conditions. The extended sickness pay is 75% of the employees’ annual salary up to 550 days.
The legal retirement age is 65 for employees with 40 years of Swedish residency. Employers must contribute to fund pension and health insurance at a rate of 31.42% for all employees/contractors who earn more than 1,000 krona in a year. Employers make reduced social security contributions for employees aged less than 26. There is no upper limit to employer contributions to the social security system, but employee contributions of 7% of their salaries are capped at an annually adjusted amount. Collective agreements generally have provisions that require employers to provide additional insurance for benefits such as group insurance and supplementary pensions.
Employees who suffer an injury in the workplace receive compensation through their workers’ compensation insurance fund. Employers are required to notify the Work Environment Authority in case of an accident or any situation that results in severe injury or death of an employee (s). Failure to respond to deficiencies or violations of the safety and health-related laws can result in penalties and imprisonment in serious cases.
How GPS can Help
With our Global PEO/Employer of Record services, companies can expand into Sweden and hire their employees without having to establish a branch office or subsidiary in Sweden.
- Your candidate is hired via our Sweden PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
- Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Sweden laws.
- Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
- With no contractor risks, pass on the compliance burden to Global PEO Services.
Spin Off/M&A Support
- Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.
24/7 Support in 100+ Countries
- Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
- We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.
Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcount.
Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.