SEK
10.25 million
627.43 billion
10th Ranked
Swedish
Monthly
Grow your team in Sweden
Benefits of hiring in Sweden
Sweden has an exceedingly competitive economy. The International Institute for Management Development ranked 63 economies and placed Sweden fourth in their world competitiveness yearbook, a comprehensive annual report and worldwide reference for a country’s economic competitiveness.
The World Economic Forum reports that Sweden is not only among the world’s most technologically advanced, innovative, and dynamic economies in the world, but it also provides better living conditions and social protection than its peers.
According to the World Bank, the Swedish economy’s key features are its openness and liberal perspective to trade and business. The World Bank ranks Sweden in the top 10 countries in the world for ease of doing business.
Sweden’s economy has traditionally been export-oriented while maintaining a trade surplus. The prosperous economy features a modern distribution system and a skilled workforce.
The World Bank ranks Sweden in the top 10 countries in the world for ease of doing business.
Challenges of hiring in Sweden
Sweden’s cost of living, expensive labor, and tax rates are among the highest in the world.
A valued-added tax (VAT) rate of 25% applies to the import of most products, whereas most VATs are set at around 15%.
Introducing innovative products and services into the public tender process continues to remain a burdensome, systemic obstacle.
Sweden’s cost of living, expensive labor, and tax rates are among the highest in the world.
Cultural nuances of doing business in Sweden
Swedish business culture is punctual and organized. Colleagues are perceived as discourteous if tardy. Additionally, there is an expectation to give at least two weeks’ notice to arrange a business meeting.
Swedish colleagues usually don’t partake in small talk at the beginning of a business meeting. Most likely, they will dive right into the meeting’s agenda.
Meetings are typically structured with an agenda that is shared before the meeting.
Decisions are mostly made through consensus across teams.
Swedish business culture promotes egalitarianism. Subordinates are often responsible for managing negotiations, while supervisors are not always required in the process.
Swedish egalitarianism translates to a high emphasis on gender equality. Treating a woman differently than a man counterpart is considered disrespectful.
Most Swedish colleagues take vacation during the summer months of June, July, and August, as well as in late February to early March. Try to keep away from these times for important business.
Boasting about your company and its accomplishments can be perceived as impolite.
Fika is Swedish for light refreshments and conversation. It’s a Swedish business custom akin to a coffee break and informal water cooler talk for colleagues. Choosing not to attend frequently may cause your Swedish colleagues to grow suspicious of you.
Most Swedish colleagues take vacation during the summer months of June, July, and August, as well as in late February to early March. Try to keep away from these times for important business.
Hiring in Sweden
-
Employment agreements in Sweden
In Sweden, employers must notify employees, in writing, of the employment relationship’s essential particulars. The following terms must be provided to employees within a week of their starting date:
- Names and addresses of the employer and employee
- Employment start date
- Place of work
- Employment contract’s duration
- Job title and description of work
- Payment information
- Ordinary working hours and days
- Overtime hours and pay
- Notice period for termination and notice period for changes to ordinary working hours
The following terms must be provided to employees within a month of their starting date:
- If applicable, a collective agreement
- If applicable, training provided by the employer
- Paid annual leave information
- Rules for when the employer or employee wants to terminate the employment relationship
- Employer’s social security contribution information
Easily navigate payroll laws, contributions, and requirements in Sweden
July 1
In Sweden, the tax year is the calendar year. Tax returns need to be filed by July 1.
Monthly
The payroll cycle in Sweden is generally monthly, as employers must pay their employees at least once a month.
40 hrs/wk
Sweden’s labor code designates maximum working hours at 40 hours weekly
-
Minimum wages and salaries in Sweden
In Sweden, there is no official minimum wage. Sweden uses collective agreements as their mechanism for setting minimum wages. The minimum wage agreements are differentiated by age, skill, and seniority.
-
Bonus payments in Sweden
There is no legal mandate which requires bonuses in Sweden. However, it is a common practice for employers to reward employees with a contractual or discretionary bonus.
The Swedish Corporate Governance Code, which applies to companies whose shares are listed on a regulated market, puts forward guidelines on payment to the board of directors and executive management. Companies need to disclose the process for calculating their bonuses, which needs to be connected to predetermined performance criteria.
-
Overtime in Sweden
Swedish labor law describes any hours worked more than the designated maximum of 40 hours per week as overtime hours. Overtime cannot exceed 50 hours per month.
There is no statutory obligation to receive overtime pay, but it can be agreed upon in individual employment agreements and by any applicable collective agreements.
Taxes and social security in Sweden
In Sweden, individuals are considered residents for tax purposes if they either:
- Continually remain in the country for at least six months
- Are former residents with a significant connection to the country
Swedish residents are taxed on their worldwide income, while non-residents are taxed solely on their Sweden-sourced income.
Tax thresholds in Sweden
As of 2022, the Swedish personal income tax brackets are:
- Up to SEK 540,700: 0% National Income Tax and 32% Municipal Income Tax
- Above SEK 540,700: 20% National Income Tax and 32% Municipal Income Tax
Non-residents working in Sweden for an employer with a permanent establishment in the country are taxed a flat rate of 25%.
Health insurance in Sweden
Sweden’s healthcare system is predominantly tax-funded, overall high quality, and internationally recognized. The World Health Organization (WHO) and Organization for Economic Co-Operation and Development (OECD) report that Sweden provides top-quality healthcare for its residents. The country is often ranked as possessing the best hospitals in the world.
The Swedish healthcare system is decentralized, where responsibility is held by regional councils and municipal governments. The country’s healthcare system is universal and covers all forms of care, including dental.
Pension in Sweden
There is no fixed retirement age in Sweden. Employees decide when to begin receiving their national public pension. However, they cannot do so earlier than age 63. Employees in Sweden have the right to work until the age of 69.
The Swedish Pensions Agency manages the country’s government pension based on an employee’s pensionable income. The majority of Swedish employees also receive an occupational pension from their employer, in addition to an optional private pension.
The higher an employee’s salary and the later they choose to retire, the higher their public pension. There is a limit to the pensionable income used for the calculation of the public pension. The limit is 7.5 times the income base amount, which is determined every year.
Leave entitlements in Sweden
-
Annual leave in Sweden
Swedish labor law guarantees employees annual paid leave of 25 days after completing 12 months of service. Employees receive vacation pay of 12 percent of their annual salary.
-
Parental and maternity leave in Sweden
In Sweden, parental leave encompasses maternity, paternity, adoption, and carer’s leave. Parental leave for one child is 480 days for both parents or 240 days for a single parent.
The parental benefit payment is based on an employee’s income for the first 390 days. For the remaining 90 days, the parental benefit pay is set at SEK 180 daily.
-
Sick leave in Sweden
The Swedish labor code provides that every employee is entitled to 14 days of sick leave with 80 percent pay from the employer. If an employee’s illness goes beyond 14 days, they can apply for a sickness benefit from the social insurance system, Försäkringskassan.
If an employee is ill for more than seven days, they must provide a medical certificate for verification of the illness by a doctor.
-
National and regional holidays in Sweden
Sweden has 13 public holidays in a calendar year, which are not included in the minimum paid leave entitlement. Employees take public holidays in addition to annual leave. The following are national holidays recognized by all of Sweden:
- New Year’s Day (January 1)
- Epiphany (January 6)
- Good Friday (March or April, the specific day fluctuates each year)
- Easter Sunday (March or April, the specific day fluctuates each year)
- Easter Monday (March or April, the specific day fluctuates each year)
- May Day (May 1)
- Ascension Day (May, the specific day fluctuates each year)
- Whit Sunday (May or June, the specific day fluctuates each year)
- National Day (June 6)
- Midsummer Day (June, the specific day fluctuates each year)
- All Saints’ Day (October or November, the specific day fluctuates each year)
- Christmas Day (December 25)
- Second Day of Christmas (December 26)
Employment benefits in Sweden
The Ministry of Employment is responsible for matters involving the labor market, labor law, and work environment. The Swedish Public Employment Service (Arbetsförmedlingen) is a government agency managed by the Ministry of Employment, which provides the overall administration of unemployment insurance and benefits in Sweden.
The Public Health Agency (Folkhälsomyndigheten) regulates the country’s mainly government-funded, universal healthcare system.
The Social Insurance System (Försäkringskassan) collects taxes from employers and employees to maintain the Swede Social Security regime, which administers the country’s benefits for those with disabilities, families with children, and illness. The Swedish Pensions Agency (Pensionsmyndigheten) manages the country’s old-age retirement pensions.
Termination and notice period in Sweden
For employers in Sweden, the notice period for termination of the employment relationship is a minimum of at least one month. The notice period gradually increases to six months, depending on the employee’s length of service.
Notice periods have the ability to be waived in collective agreements but not in individual employment agreements. Notice periods from employers can legally be longer than six months in individual employment agreements.
For employees in Sweden, the notice period for termination of the employment relationship is one month. However, it can be changed in an individual employment agreement or collective agreement.
In Sweden, there are no statutory severance payment regulations. Employees can be entitled to severance from an employment agreement, a collective agreement, or a separation agreement.
FAQ
-
What is an employer of record in Sweden?
An employer of record (EOR) in Sweden is a third-party organization that becomes the full legal employer of your in-country workforce. The EOR compliantly handles employer-related responsibilities like onboarding, pay, and benefits while enabling you to continue managing the day-to-day operations of your team.
-
How does an employer of record in Sweden help hire talent?
An EOR enables you to hire in Sweden without going through the complexities and restrictions of setting up a legal entity. As an EOR, Velocity Global acts as the legal employer, hiring your new team members through local, compliant employment contracts—you get back the time and flexibility to focus on your growing business.
-
Can an employer of record run payroll in Sweden?
When you work with Velocity Global’s EOR solution in Sweden, our experts compliantly handle all payroll and benefits for your team members in the country.
Get a global perspective with our resources
The Complete Guide to Employee Cost: How to Calculate the Cost of an Employee
Global Employee Benefits: How to Attract and Retain Top Talent With the Right Benefits Packages
What Is an Employer of Record? A Complete Guide for Global Employers
Help your team reach its fullest potential
