Hiring In Sweden: Key Facts to Know

Hiring In Sweden: Key Facts to Know

Every country has its own rules and regulations to consider for business leaders looking to hire new talent. Part of making sure your company stays successful, no matter how much it expands, is making sure you understand the hiring and recruitment rules of each location.

When you’re expanding into a location like Sweden, you need to learn everything there is to know about contract law, annual leave, taxes, and more, to avoid getting into serious legal trouble. Learn more about hiring in Sweden: Key facts to know.

Failing to adhere to the guidelines set by the Swedish authorities while dealing with payroll for example, could lead to your entire business being shut down.

In this article we’ll explain some of the key facts you need to know before you hire in Sweden; for a deeper dive see this Swedish payroll resource.

Related: 4 Things To Consider When Hiring A Marketing Agency In Sweden

Hiring In Sweden: Key Facts to Know
Sweden’s labor laws and policies also make it an appealing place for employees and employers alike. Photo: Arlington Research/Unsplash

There are 3 Types of Contracts for Hiring in Sweden
Sweden is the home of countless companies known for changing the world, from Ericsson with its innovative mobile technology, to IKEA with its affordable furniture. The country’s labor laws and policies also make it an appealing place for employees and employers alike.

In fact, Sweden is ranked among the best countries in the world for job security and work-life balance.

Of course, there are some differences between hiring in Sweden, and hiring elsewhere in the world. For instance, there are 3 types of employment contract in Sweden:

  • Probationary employment (provanställning)
  • Fixed-term employment (tidsbegränsad anställning)
  • Permanent employment (tillsvidareanställning)

Permanent employment is the most common kind, defining a type of employment where the contract could last indefinitely. An employment contract for a permanent employee will usually include:

  • Starting date for the employee
  • Personal details of the employee and details of the workplace
  • Any probation periods (up to 6 months)
  • Pay or salary agreements
  • Firing benefits
  • Job title and duties
  • Annual leave

Sweden Offers a Range of Annual Leave Options
Employees in Sweden have the right to a certain number of paid days off a year, whether they’re full-time or part-time. All staff are entitled to at least 25 vacation days annually, and some employers also offer more than this. The Swedish Vacation Act also allows employees to take up to 4 weeks of consecutive vacation during the summer.

Related: Growing Jon Fields in Sweden

When employees receive paid vacation, they get 0.43% of the monthly base salary for each day taken which is paid in the month following the time off. Bonuses are usually paid in May, accounting to 12% of commission sales or bonus payments for the last year.

Sick leave and parental policies are very generous. Sick employees receive up to 14 days of paid leave at 80% of their salary. Pregnant employees receive 7 weeks of vacation before and after their child’s birth, and partners can take 10 days. New parents can even take paid parental leave for up to 480 days after giving birth or adopting a child at any time until the child turns 8.

Related: 6-Hour Workdays in Sweden Boost Productivity, Energy, and Happiness

Hiring In Sweden: Key Facts to Know
In Sweden, the right to paid vacation is earned in one year and given the next. Photo: Jason Goodman/Unsplash

Termination Notices in Sweden
Termination notices in Sweden are interesting too. The amount of notice you need to give depends on how long you’re employed. It’s one month if you’ve been employed less than 2 years, and up to 2 months if you’ve been employed for 2-4 years. One additional month is added for every two years, up to a cap of 6 months. Employees work as normal during the notice period and have their normal salary paid as standard.

Resigning requires a one month notice period, and employees don’t have to provide a reason.

In Sweden, the right to paid vacation is earned in one year and given the next. This means some employees take “unpaid leave” during their first employment year.

However, most companies offer förskottsemester, which allows employees to take paid leave before earning it, and they record this as a debt to the company. If an employee resigns before completing five years of service, they need to repay the debt in a deduction from their final salary.

Hiring In Sweden: Key Facts to Know
Swedish Social Insurance Agency. Photo: Funka

Social Security, Pension Contributions, and Employee Contributions
All Swedish employers must pay social security contributions which consistent of pension charges, health insurance, and other social benefits. These contributions make up around 31.42% of gross salary, with 10.21% set aside for pension contributions.

All Swedish residents are entitled to a state-financed minimum pension of SEK7,500 per month. Employees pay around 7% of their income to pension contributions, and this contribution is balanced by an equal tax reduction for the employee.

Notably, pension contributions for an employee in Sweden are also tax deductible for the employee, and a tax of 24.26% is levied for the contribution amount.

Payroll and Wages in Sweden
The payroll process involves various contributions on the part of employees, and business payroll processes need to consider individual income tax, payroll and sales taxes, social security contributions and withholding taxes. Setting up payroll also requires a Swedish TIN from employees.

Employees need to be issued with a pay slip on every pay date, and payroll records need to be maintained for at least 10 years. Sweden also doesn’t have a “minimum wage”. Instead, wages are set based on Collective Bargaining Agreements with a trade union. This means average salaries can vary drastically by occupation. The average salary in 2022 was around 45.100 Swedish krona (SEK) per month.

Usually, payroll is paid as a monthly salary or hourly wage, and some employers pay wages a month in arrears, while others pay at the end of each month.

Scandinavian Neighbours
Being part of the same Scandinavian bloc as Denmark and Norway, Sweden does share similarities in its payroll and employment laws as them although there are differences.

You can learn more about each country here:

Hiring In Sweden: Key Facts to Know, a promotional article from Papaya Global.

Feature image (on top): © Depositphotos