Sweden is a Nordic country located in Northern Europe. It has a population of approximately 10 million people, with the majority residing in urban areas. Sweden is known for its high quality of life, social welfare system, and progressive attitudes.
The country has a highly educated talent pool, with a literacy rate of 100% and a high percentage of the population holding advanced degrees. Employment laws in Sweden prioritise workers' rights, with strong protections for job security, parental leave, and workplace safety. The business climate is generally favorable, with a focus on innovation, sustainability, and equal opportunities
Sweden is an excellent country to expand your business into, owing to its political stability, strong public finances, well-performing economy and sound banking system. It offers a number of efficient processes to make business operations easier, including online filing platforms for taxes, property transfer, incorporation and more. Sweden also provides some of the EU’s lowest corporate tax rates.
Sweden’s main industries are as follows:
Manufacturing: Steel, Iron, Motor vehicles, Home goods and appliances, Precision equipment, and Industrial machines.
Forestry: Sweden is one of the world's largest producers and exporters of wood products.
Technology: Telecommunications, Chemical goods, and Pharmaceuticals.
Swedish krona (SEK)
Payroll and taxes in Sweden
Residents in Sweden can deduct a basic allowance of between SEK 14,200 and SEK 37,200 (as of the taxation year of 2022) on taxable earned annual salary, as long as they have had an unlimited tax liability for the full year.
After the basic deduction, the following taxes are paid on taxable income: Municipal tax - approximately 29-34% Church tax and burial charges - approximately 1-2% State progressive income tax - 20% of the part of the taxable income that exceeds SEK 598,500
Income from capital
Swedish residents pay a tax of 30% on income from capital. If they have a deficit from capital due to deductions being larger than their income, tax is reduced automatically during the final tax calculation. This reduction is 30% of the deficit up to SEK 100,000. If the deficit is greater, the tax reduction will be 21% on the part that exceeds SEK 100,000.
Social security is part of the Swedish welfare system. It includes various social insurances handled by the National Agency for Social Insurance, as well as welfare provided by local municipalities on a need basis. While the Swedish tax system is among the highest in the world, their social security benefits greatly offset the amount of taxes paid.
Employers are required to pay Swedish employment social security contributions on compensation for employees covered by the system. These consist of the following:
Employer contributions in Sweden
Provides retirement benefits to employees
Provides survivor's pension and dependant's pension to surviving spouses and children
Provides health insurance coverage to employees
Provides benefits to employees taking parental leave
Work injury compensation
Provides compensation to employees who suffer injuries or illnesses due to their work
0.4% - 7%
Used to finance the Swedish Public Employment Service
Used to finance the Swedish Work Environment Authority
These contributions are levied at 31.42% of the total taxable remuneration. Foreign employers who don’t have a PE in Sweden should register to pay social security contributions. Alternatively, they can enter into an agreement with the employee that the employee pays and reports the contributions monthly. Depending on the solution, different rates will apply.
Social security contributions for Swedish employees are age-dependent.
However, there are some further considerations for employee contributions depending on their year of birth:
Social Security Contribution Rate
1937 or earlier
Not subject to contributions
1938 - 1956
1957 - 1998
1999 - 2003 (up to SEK 25,000/month)
1999 - 2003 (exceeding SEK 25,000/month)
2004 or later (up to SEK 25,000/month)
2004 or later (exceeding SEK 25,000/month)
Swedish employees are required to pay a pension contribution of 7% of their gross salary up to a maximum of SEK 572,970. However, this fee is usually fully tax creditable on the employee’s tax return.
Minimum wage in Sweden
In Sweden, there is no statutory minimum wage. Instead, most employees are covered by collective bargaining agreements negotiated between labour unions and employer organizations. These employment agreements set minimum wages for different industries and occupations.
The minimum wages in collective bargaining agreements vary depending on the industry and job, but they are generally considered to be quite high compared to other countries. As of 2023, salaries in Sweden range from 11,400 SEK per month to 201,000 SEK per month. The average salary earned monthly is 42,400 SEK.
It's worth noting that even without a statutory minimum wage, Sweden has some of the most generous labour protections and social welfare programs in the world, including strong regulations on working hours, parental leave policies, and unemployment benefits.
Source: Pexels/Alena Shekhovtcova
Employee benefits in Sweden
Some statutory requirements that employers provide are as follows:
Childcare allowance and parental benefits Parents of children up to the age of 16 are eligible for a child allowance of SEK 1,250 per child, with an additional supplement for multiple children. This ranges from SEK 150 for two children to SEK 4,240 for six children.
Parents also receive parental leave to allow them to care for their children for up to 480 days, as well as a temporary benefit allowing them to stay at home to care for a child who is sick. The benefits can be split between both parents as they see fit, and can be taken as full-time, part-time, or intermittent leave. The amount of parental benefits paid is based on the parent's income, with a maximum benefit of 80% of their salary up to a certain cap.
Employees in Sweden are also entitled to a childcare allowance, enabling them to stay at home to care for children with long-term illnesses. The allowance is paid until the child reaches the age of 12 and is means-tested, meaning that it is based on the parents' income and can vary depending on the number of children in the family.
Housing allowance In Sweden, there is a housing allowance program called "Bostadsbidrag" which provides financial support to low-income households to help them pay for their housing costs. The program is administered by the Swedish Social Insurance Agency (Försäkringskassan) and is available to both renters and homeowners.
To be eligible for Bostadsbidrag, the applicant must meet certain criteria, including having a low income, being a Swedish citizen or permanent resident, and having a lease or ownership agreement for their home. The amount of the housing allowance provided is based on the applicant's income, family size, and housing costs.
The maximum amount of Bostadsbidrag that can be received is SEK 5,843 per month (as of 2021) for a family with three or more children living in a large apartment. The actual amount received may be lower depending on the individual's circumstances. The allowance is paid out monthly and can be used to cover the cost of rent, mortgage payments, and other housing-related expenses.
It's worth noting that Bostadsbidrag is a means-tested program, meaning that the amount of support provided is based on the applicant's income and assets. Therefore, those with higher incomes or more substantial assets may not be eligible for the full amount of the housing allowance.
Illness and disability benefits In Sweden, employees who are unable to work due to illness or disability are eligible for various benefits. Here are some of the most common:
Sick pay (Sjuklön): Employers in Sweden are required by law to provide their employees with sick pay for the first 14 days of an illness. The amount of sick pay is usually 80% of the employee's regular salary.
Sickness Benefit (Sjukpenning): If the employee's illness lasts for more than 14 days, they may be eligible for sickness benefit from the Swedish Social Insurance Agency (Försäkringskassan). The sickness benefit is usually paid for up to 364 days and is based on the employee's income before they became ill.
Rehabilitation Benefit (Rehabiliteringspenning): If an employee is participating in a rehabilitation program or training to improve their ability to work, they may be eligible for rehabilitation benefit from the Swedish Social Insurance Agency. The benefit is usually paid for up to 550 days and is based on the employee's income before they began the rehabilitation program.
Disability Pension (Invaliditetspension): If an employee's disability is permanent and they are unable to work in any capacity, they may be eligible for disability pension from the Swedish Social Insurance Agency.
Employees can also obtain an allowance to purchase a car, make alterations to a vehicle or take a driving licence if they have difficulties with mobility and public transport due to their disability.
Support for the elderly Employees are entitled to old age pensions, the levels of which depend on their income and length of employment. There is also a guaranteed pension, which employees are entitled to if they have lived in Sweden for at least three years and have had no or low income.
Elderly employees can also receive housing supplements or maintenance support from their employer. The levels of these benefits depend on the employee’s individual needs.
The following benefits are becoming more popular and commonplace in Sweden:
Flexible working hours
Extra annual leave
Unlimited annual leave
Taxable supplementary benefits in Sweden include:
Optical, dental and life insurance
Company mobile phones
Payment of hotel and flight expenses for business travel
Working hours in Sweden
In Sweden, the approach to working hours is aimed at promoting work-life balance and employee well-being while still ensuring that businesses are able to operate effectively and meet their goals.
Regular working hours should not exceed 40 hours per week for full-time employees. In total, maximum working hours must not be more than 48 hours per week, including overtime, additional time and on-call time.
Swedish labour laws also provide for a minimum of 11 hours of rest between work shifts and a minimum of 36 hours of rest in any 7-day period. This means that employees must have at least 11 hours of uninterrupted rest between shifts, and cannot work more than 6 consecutive days without a day off.
Source: Pexels/Alena Darmel
Types of leave available in Sweden
Annual leave in Sweden entitles employees to 25 paid vacation days per year, running from April 1st to March 31st the following year. If the employment begins after August 31st in any given year, the employee is only entitled to five paid vacation days in that year.
Sweden has a strict policy of promoting equality between men and women. Hence, it is anticipated that both mothers and fathers will equitably distribute the responsibility of taking 480 days of parental leave.This is in addition to the maternity leave period, which is 90 days and is usually taken by the mother before the child is born.
The parental leave can be taken in several different ways. Parents can take the leave together or separately, and they can take it all at once or spread it out over time. In addition, parents can take a "flexible" form of leave, where they work reduced hours or days while receiving partial parental leave pay.
The Social Insurance System states that fathers have as much right to their 240 days of paternity leave as mothers do to their 240 days of maternity leave. However, if desired, one parent may take up to 420 days of the total leave. The remaining 60 days must then be used by the other parent.
The state social insurance system pays 80% of the normal wage for the first 390 days, with 90 days at a flat rate.
Employers pay 80% of the total loss of income for up to 14 days, with the expectation of Karensavdrag (a deduction from the sick pay based on 20% of the employee’s weekly sick pay). On the 7th day of being unwell, the employee needs to get a doctor’s certificate to confirm their illness to the employer.
From the 15th day of sickness onwards, the social insurance system will pay employees a 77.6% sickness benefit.
Public holidays in Sweden
Sweden observes the following public holidays:*
New Year's Day
All Saints' Day
New Year's Eve
*All dates are correct for 2023
Note: If a public holiday falls on a weekend day, the holiday is usually observed on the following workday.
Are background checks mandatory in Sweden?
Background checks are not mandatory in Sweden for all types of employment. However, in some industries, such as finance and banking, background checks may be required as a part of the employer's due diligence process. Additionally, some positions that involve working with vulnerable populations, such as children or the elderly, may require a criminal background check.
Employers can request that prospective employees disclose their criminal records, but they must be provided by the prospective client themselves, and the information obtained must be directly relevant to the position being applied for. There is no law stating that a candidate should disclose this information, but an employer can choose not to hire an applicant for not complying with the request.
Attracting talent in Sweden
Sweden’s workforce has a 75% full employment rate, giving it the seventh-highest global employment rate. In a highly competitive job market like this, companies must offer a comprehensive benefits package in order to attract and retain top-tier talent.
Private health insurance
National health insurance in Sweden provides coverage for all employees. Private healthcare services, on the other hand, are often utilized as a means of obtaining more expeditious access to medical care.
Providing additional health insurance could help you to stand out from competitors and attract talent in Sweden.
Across the world, employee expectations around remote and flexible working have evolved over the last few years. This, coupled with Sweden’s positive approach to family life and work-life balance, means it is essential for hiring managers to offer a working structure that suits their prospective employees’ lifestyles.
Source: Pexels/LinkedIn Sales Navigator
90% of employees decide whether or not to continue working with an organisation during their first six months of starting a new job. First impressions count, and getting new employees settled in and comfortable with what they need to thrive in their role is a vital part of onboarding.
A well-implemented onboarding process will not only make it easier for businesses to integrate their new staff, but it also makes sure that their new workers have a positive experience during the start of their career with that company.
Some of the best practices employers should follow during the onboarding process are:
Covering all essential information in the employment contract to help employees clearly understand their roles and responsibilities
Familiarising new employees with the rules and policies of the organisation as well as completing all necessary paperwork
Explaining the company culture to the new employee so that they can understand how things work, and how they can contribute to the goals of the business
Providing them with opportunities to connect with their co-workers by scheduling introductory meetings, assigning a new employee a work buddy, or hosting an informal team meeting or event
Ensuring they are aware of all the resources and work tools they have and know how to access them
Termination of employment in Sweden
The length of an employee’s notice period in Sweden depends on how long they have worked at the company:
Length of Employment
Up to 6 months
6 months or more
5 years or more
Up to 6 months, depending on the collective bargaining agreement or employment contract
Employees are required to work as usual during the notice period and they should be paid their normal salary in full.
If an employee resigns from their role, the Employment Protection Act states that they provide at least one month’s notice, depending on their contract. They are not required to provide a reason for their resignation.
The Employment Protection Act states that probationary periods should not exceed six months. If the probationary period is longer than one month, it must be stated in writing and agreed upon by both the employer and the employee. During the probationary period, the employee is entitled to the same wages and benefits as other employees in a similar position.
There are no mandatory provisions in regards to severance pay. That said, any employee may be eligible for severance pay in accordance with the employment contract, collective agreement or exit agreement.
If the employer and employee have agreed on a severance payment in the employment contract or collective bargaining agreement, the amount of the payment is typically based on the employee's length of service, salary, and reason for termination. Severance pay can be paid as a lump sum or in installments.
In some cases, such as a termination due to redundancy or restructuring, employers in Sweden may be required to offer employees financial compensation or assistance with finding a new job. This is known as "redundancy pay" and is regulated by the Swedish Employment Protection Act. The amount of redundancy pay is based on the employee's length of service and salary.
Minimum retirement age in Sweden
The minimum retirement age in Sweden is 61 years old. However, it's important to note that the retirement age is gradually increasing, and starting in 2023, the minimum retirement age will be raised to 62 years old. By 2026, the minimum retirement age will be 64 years old.
It's also worth mentioning that while the minimum retirement age is 61 (or 62 starting in 2023), individuals in Sweden can choose to continue working and delay their retirement beyond the minimum retirement age. There is no maximum age for working in Sweden, and employers are not allowed to discriminate on the basis of age.
Employees can withdraw their national public pension from the month they turn 62. This will increase to the age of 63 from 2023. From 2026, this limit will gradually increase in line with national life expectancy. Employees can still work whilst withdrawing their national public pension.
What are my options for hiring in Sweden?
Airswift provides a variety of employment solutions and professional advice for international companies looking to hire employees in Sweden. Our services make the hiring process simple, efficient and fully compliant with Swedish laws.
Our extensive knowledge and expertise enable us to reduce risk when shouldering the administrative responsibilities of onboarding new employees, giving you more time to focus on business growth.
Our contract hire services can help you fill temporary roles and provide your business with the agility to respond to shifts in needs and market demand.
For long-term hiring needs, Airswift’s professional search service can help you discover talented candidates for permanent employment within your business.
Employer of record
If your business needs to hire remote staff without setting up an entity, working with an Employer of Record in Sweden makes this process simple, with minimal compromise on expenses and time.
Working with an experienced Employer of Record allows you to bypass the complications of setting up a legal entity in-country by appointing a partner to oversee locally compliant payroll and manage mandatory benefits.
*Although the information provided has been produced from sources believed to be reliable, no warranty, express or implied, is made regarding the accuracy, adequacy, completeness, legality or reliability of any information. For the latest information and specific queries regarding particular cases, please contact our team.
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