An Employer of Record (EOR) in Sweden is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.
Discover the key considerations and essential details you should be aware of before opting for an Employer of Record (EOR) in Sweden.
Employment Contracts in Sweden
As per Swedish employment laws, employers are required to provide the terms and conditions of the employment in writing within one month of the first working day.
The Swedish word for permanent employment is tillsvidareanställning and the Swedish word for fixed-term employment is tidsbegränsad anställning.
Like any standard employment contract, it is important to include the job title, employee and employer names, probation period, scope of work, compensation, working hours, contract type, and more. One unique aspect about the employment contracts in Sweden is the inclusion of fringe benefits. The Swedish word for fringe benefits is förmåner.
The probation period in Sweden can be up to six months. Employment agreement will become permanent after this period automatically.
Unreasonable terms in the employment contract will be revised or nullified as per the Swedish contracts act.
Minimum Wages
There is no legally mandated minimum wage in Sweden.
Payroll in Sweden
In Sweden, payroll is typically processed monthly and salary is paid on the 25th of the month. Salaries are paid in Swedish local currency, Swedish Krona (SEK).
Probation and Notice Period
The probation period in Sweden can be up to six months. The notice period in Sweden increases with relevance to the length of employment.
| Length of Employment in Months | Notice Period in Months |
|---|---|
| Less than 2 years | 1 |
| 2 to 4 years | 2 |
| 4 to 6 years | 3 |
| 6 to 8 years | 4 |
| 8 to 10 years | 5 |
| More than 10 years | 6 |
Working Hours
The standard working hours in Sweden is 40 per week and 8 hours per day. The maximum overtime working hours per month cannot exceed 48 hours. This is exclusive of the standard working hours.
Overtime Pay
The maximum allowed overtime working hours is 200 per year. Overtime pay in Sweden is not regulated by the Swedish government. Overtime pay is decided based on the terms in the employment agreement.
13th Month Salary
It is not legally mandated to pay 13th month salary in Sweden.
Social Security in Sweden
Sweden Social Security Contributions
As per Swedish tax agency, Skatteverket, here are important insights about social security contributions in Sweden:
Separate guidelines apply to established and non established businesses in Sweden regarding social security contributions. These laws apply to local and foreign companies that employ staff living in Sweden.
Additionally, there are specific guidelines for Swedish companies hiring foreign workers outside of Sweden.
The Swedish government provides social security coverage to non-Swedish nationals who are temporarily posted in Sweden. To qualify for these benefits, individuals must be from countries with which Sweden has social security conventions.
Employer social security contributions in Sweden are 31.42% of the gross salary. These contributions go towards several social security programs as outlined below
Employer Payroll Contributions in Sweden
| Employers | % of Gross Salary |
| Health Insurance | 3.5% |
| Parental Insurance | 2.6% |
| Retirement Pension | 10.21% |
| Survivors Pension | 0.6% |
| Labor Market Fee | 2.6% |
| Occupational Injury | 0.2% |
| General Payroll Tax | 11.6% |
| Total Employment Cost | 31.42% |
Employee Payroll Contributions in Sweden
| Employees | % of Gross Salary |
| Pension Insurance | 7% |
| Total Employee Cost | 7% |
Employer contribution for the employees who are 66 years old at the beginning of 2023 is 10.21%. Employers need to contribute only for retirement pension and it is calculated on taxable income rather than the gross salary.
Employer contribution for the employees who are over 15 and under 18 at the beginning of 2023 2023 is 10.21% if the gross salary is less than 25,000 SEK. The contributions are calculated at a rate of 31.42% for the amount exceeding 25,000 SEK.
Employers don’t have to contribute if the employees are born on or before 1937.
Employees vs Independent Contractors
In Sweden, workers are classified as employees or independent contractors based on their nature of work and employment arrangement, rather than their classification in the contract. Independent contractor classification is only applicable when the worker is allowed to work independently, without direct supervision from the employer.
As per the Swedish Employment Protection Act, 'lagen om anställningsskydd,' employees should not be incorrectly classified as independent contractors. In Sweden, the process of converting a contractor to an employee is referred to as 'Re-characterization.' Legal consequences may arise when converting contractors to employees if employment laws are not followed correctly. Employees are entitled to receive retroactive benefits in case of misclassification. These benefits include vacation pay, overtime compensation, and more.
Self-employed people in Sweden must have F-tax (tax certificate) in order to deduct income tax and social security contributions from the payments they receive for their work.
Personal Income Tax in Sweden
There are two types of taxes in Sweden, national income tax (A-tax) and municipal income tax (SINK tax). Municipal tax varies according to the municipality anywhere between 25 and 32%.
| Income Tax | National Income Tax | Municipal Income Tax |
| Under 519400 SEK | 0% | 32% |
| Over 519400 SEK | 20% | 32% |
- Residents (Preliminary A-Tax): To calculate personal income tax deductions, employees are required to provide an A-tax certificate to their employer. The A-tax certificate is a document issued by the Swedish Tax Agency to Swedish employees. It contains employee details, tax brackets, tax history, and other relevant information. In some cases, employees may need to request confirmation of their tax bracket from the Swedish Tax Agency. Employers are obligated to deduct an additional 10% income tax when an employee is awaiting their A-tax certificate.
- SINK (Special Income Tax for Non-residents): The tax rate for non-residents is at a flat rate of 25% of an employee's gross salary.
Personal income tax in Sweden is decided based on 3 conditions
- Deduct as per the tax table in case of primary income
- Deduct 30% in case of secondary income
- Special decision by Swedish Tax agency, Skatteverket
Employee Benefits in Sweden
| Leave Type | Details |
|---|---|
| Holidays |
|
| Paid Time Off |
Vacation/Annual Paid Leave: Employees are entitled to up to 25 days of paid annual leave after 12 months of work.
Rollovers and payout of unused hours: Unused days can be carried over for up to 5 years. |
| Maternity, Paternity, and Adoption Leave |
Parental Leave: Employees can take up to 480 days' parental allowance per child.
Maternity Leave: Mothers get 240 days of paid parental leave. Paternity Leave: Fathers have 10 days upon a child's birth and 240 days of paid parental leave. |
| Sick Leave |
Sick Leave: Employers pay 80% of regular wages for the first 14 days, followed by state compensation.
Disability Leave: Full or partial disability may lead to state compensation. |
| Jury Duty and Voting Leave | Not specified by law. |
| Bereavement Leave | Employees can have up to 10 days of paid leave due to the death of a family member. |
| Military Leave | Not specified by law. |
Sweden Overview
| Overview | |
| Continent | Europe |
| Country | Sweden |
| Capital | Stockholm |
| Time zone | UTC+01:00 (CET) |
| Total Time zones | 1 |
| Working hours per week | 40 |
| Working week | Monday–Friday |
| Typical hours worked | 8 |
| Personal Tax filing deadline | 2nd May |
| Financial Year | 1st January to 31st December |
| Date format | yyyy/mm/dd |
| Currency | Swedish Krona (SEK) |
| VAT | the standard rate is 25% |
Conclusion
In conclusion, Sweden's employer of record services play a vital role in navigating the intricacies of the country's labor and employment regulations. By serving as a trusted intermediary between international businesses and local labor laws, EOR services facilitate smooth market entry and employee management. Sweden's progressive labor laws, extensive social benefits, and inclusive work environment make it an attractive destination for global enterprises. With the support of an Employer of Record, companies can ensure compliance, simplify HR operations, and focus on their core business objectives while offering employees a secure and favorable working environment in the heart of Scandinavia.
Northern Europe: EOR Denmark | EOR Finland | EOR Iceland | EOR Norway | EOR Sweden