Sweden PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Sweden to companies willing to enter the Swedish market or hire local/expat employees in this country.

Traditional procedure requires establishing a subsidiary in Sweden.  Nevertheless our solution allows you to start the operations in Sweden within days hence save time and money.  WeHG would employ candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf. 

Sweden fast facts

Population, million: 10.3
Land area: 450,295 km²
Capital:Stockholm
Local currency:Swedish krona (SEK)

Hiring, Negotiating and Doing Business in Sweden

Necessity of written employment contract

There are no formal requirements for employment contracts. An employment contract can be entered into both orally and in writing. However, oral employment contracts are very rare and a written contract is usual. If the employment lasts for more than three weeks, the employer must provide the employee with written information on the essential terms of employment at the latest one month after the starting date of the employment. Such information must as a minimum contain the following:

• The employer’s and the employee’s name and address, commencement date and workplace.
• A short description of the duties and the employee’s occupational title.
• Information relating to whether the employment is for an indefinite term, fixed term or is a probationary form of employment. If the employment is:
  • for an indefinite term, the applicable notice periods must be provided;
  • for a fixed term, the termination date and the form of fixed term employment must be provided;
  • probationary, the length of the probationary period must be provided.
• Starting salary, other salary benefits and how often the salary is paid.
• The length of the employee’s paid holiday and the normal working hours per day or per week.
• Applicable collective bargaining agreement, if any.

An exception to this rule applies for employments that are shorter than three weeks.

Sweden Employment Contract

Types of employment agreements

Temporary workers

The Act against Discrimination of Part-time Employees and Employees on Fixed-term Employment (2002:293) prevents employers from disfavouring part-time employees or employees on fixed term employment contracts. The employment cannot provide for less favourable employment conditions than the employer gives or would have given employees that work full-time or have an employment for an indefinite period. The Act covers both direct and indirect discrimination. However, the Act does not prohibit less favourable terms and conditions when these are justified on reasonable grounds.

Agency workers

Agency workers have their employment contract with their agency and are paid by their agency. Agency workers are not considered as employees with the company for which they are providing services. However, the courts may find an agency worker to be a de facto employee of the company in certain circumstances.

Part-time workers

The Act against Discrimination of Part-time Employees and Employees on Fixed-term Employment (2002:293) also applies to part-time workers.

Sweden working hours

The Working Hours Act (1982:673) regulates working hours. Normal working hours cannot exceed 40 hours per week. For a period of four weeks, the maximum overtime is 48 hours, or for a calendar month, a maximum of 50 hours overtime. The maximum amount of overtime work in one year is 200 hours. However, extra overtime of 150 hours per year is permitted if there are special reasons for it and the situation cannot be solved in any other reasonable manner.

The Working Hours Act can be modified or set aside in its entirety through collective agreements. Special rules apply for employees under the age of 18.

Vacation leave in Sweden

The Annual Leave Act (1977:480) regulates minimum holiday entitlement and holiday pay, and applies to all employees. Under the Act, employees are entitled to 25 days of paid holiday per year. Regarding employments lasting up to three months, it is possible to agree that the employee will not be entitled to any holiday. The employee will still, however, be entitled to holiday pay.

The Act can be replaced by rules in collective agreements. In some categories of employment, it is common to negotiate additional paid holiday or be compensated for overtime by additional paid holiday.

Sick leave: 

Entitlement to paid time off

Generally, no wages or sick pay are paid for the first day of absence due to illness (qualification period). The employee is entitled to sick pay from the employer from day two to day 14 of each period of absence. The sick pay amounts to 80% of the employee’s salary. Employees must notify the employer immediately of their condition in order to receive sick pay.

Entitlement to unpaid time off

Employees who are prevented from performing their work due to illness or injuries are entitled to time off.

An employee who is unable to perform work for a period longer than seven days must present a doctor’s certificate. Otherwise, the employer is not obliged to pay sick pay. The employer can under certain circumstances request a doctor’s certificate during the first seven days of absence, for example, if an employee has repeated short-term absence without any apparent medical cause.

An employee is also entitled to time off for rehabilitation and dental appointments.

Sweden Maternity Leave

The Parental Leave Act (1995:584) stipulates parents’ right to leave. Both parents have an equal right to leave. The right to leave includes:

• The right to full leave in connection with childbirth for female employees. This includes at least seven weeks before the calculated date of delivery and seven weeks after the delivery. A female employee is also entitled to leave for breast-feeding.
• Full time off for a parent until the child is 18 months or, provided that the parent then has full parental benefits, for the time thereafter. It is possible to take out parental benefit up to and including the day the child turns 12 years old or when the child finishes form/grade 5 in compulsory school. However, after the child has turned four years old, it is only possible to save 96 days (parental benefit is paid out for 480 days in total).
• Parents also have the right to shorten their working hours by up to a quarter of the normal hours until the child reaches the age of eight.
• Leave for temporary care of children.

Sweden Severance Laws

Notice periods

The statutory notice periods to be observed by the employer vary in accordance with the employee’s length of service and range from one to six months as follows:

• Employed for less than two years: one month’s notice period.
• Employed for at least two years but less than four years: two months’ notice period.
• Employed for at least four years but less than six years: three months’ notice period.
• Employed for at least six years but less than eight years: four months’ notice period.
• Employed for at least eight years but less than ten years: five months’ notice period.
• Employed for at least ten years: six months’ notice period.

However, individual employment agreement or collective agreements may provide for longer notice periods. In general, employees adhere to notice periods of one to three months.

Severance payments

There are no statutory rights to severance payments. The employee is entitled to normal wages during the notice period.

However, individual agreements can stipulate a right to a severance payment. Collective agreements can also provide for supplementary unemployment benefit (AGE) to employees dismissed due to redundancy. This compensation (referred to as severance compensation) is provided by an insurance system which is collectively financed by the employer community and, therefore, not paid directly by the employer.

Sweden Tax

Employment income is taxed at the following rounded taxable income amounts (2020):

* Swedish kronor

** This rate equals the average municipal tax rate.

Employment income tax for non-residents

Non-residents working in Sweden for a Swedish employer or a foreign employer with a permanent establishment (PE) in Sweden are taxed a flat rate of 25% at source. The same rate applies when a pension is paid by a Swedish source to a person not tax-resident in Sweden.

Non-residents working in Sweden for a non-Swedish employer without a PE in Sweden are tax liable in Sweden if the beneficiary of the employee’s work is an entity in Sweden and the work is performed under the management and control of the Swedish entity. The tax rate is 25%. An exception applies if the employees is working in Sweden for less than 15 days in a row and less than 45 days in total during a calendar year. 

Social security contributions

Employers pay Swedish employer social security contributions on compensation paid to employees who are covered by the Swedish social security system.

Social security contributions are levied at 31.42% of the total taxable remuneration (no cap) in cash and in kind paid by a Swedish employer or a foreign employer with a PE in Sweden. Foreign employers who do not have a PE in Sweden must register for the payment of social security contributions or may enter into an agreement with the employee that the employee pays and reports the contributions on a monthly basis. Different rates apply depending on which solution is used.

A pension fee of 7% of gross earned income, up to SEK 550,400 (i.e. a maximum fee of SEK 38,500), is payable by the employee, but the fee is normally fully tax creditable on the employee’s tax return.

Additional Benefits in Sweden

Some companies provide meal vouchers, company cars, stock incentive plans, and/or extra vacation.

Sweden Holidays

Sweden celebrates 13 public holidays for which employees are given the day off, including:

• New Year’s Day
• Epiphany Day
• Good Friday
• Easter Monday
• Labour Day/May Day
• Ascension Day
• Sweden’s National Day
• Midsummer’s Eve
• November All Saints Day
• Christmas Eve
• Christmas Day
• Boxing Day (Second Day of Christmas)
• New Year’s Eve

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.