Employment Law

Swedish Employment Contract

Employment laws in Sweden can be complex, so it's crucial to always understand the regulations when you're trying to expand and hire employees in the country.

In Sweden, employers must provide all employees with a written employment contract. These contracts need to clearly include all relevant information such as wages/salary, vacation and other benefits, working hours, etc.

Additionally, all contracts issued in the country should be in Swedish and use the local Swedish kronor currency.

Fixed Term

Indefinite

Swedish Working Hours

The normal working week in Sweden is 40 hours. In addition, employees must have 11 hours of rest between shifts and at least 36 hours of rest every seven days.

48 hours is the legal limit for working per week, after which overtime pay must be paid. Overtime hours must not exceed 200 hours per year and are generally paid at 1.5 to 2 times the normal wage. Alternatively, it can accrue toward future leave.

Holiday Policy

Sweden Vacation

Employees in Sweden are entitled to at least 25 days of paid vacation per year. Many employers offer larger perks, and employees may demand higher perks. Typically, vacation is "earned" a year in advance, so there is no legal requirement for an employer to provide vacation during the first year of employment. However, many people still do it. If unused for a year, it can be carried forward for up to five days and up to five years into the future.

Swedish Sick Leave

In Sweden, employees receive no pay on the first day of sick leave but will receive 80% of their normal pay/salary for the following two weeks of absence. In addition to this, the employer needs to submit the case to the Försäkringkassan (Government Office) for liability for sick pay. Sick pay support is also available to parents who need time off to care for their children (under 12 years old).

Employees who are absent from work for more than 7 days will need to provide a medical certificate as proof of illness.

Maternity and Paternity Leave in Sweden

Employees in Sweden can take up to 16 months (480 days) of parental leave, and mothers are entitled to at least 7 weeks of parental leave before and after childbirth. The mother's partner can take ten days' maternity leave. The 480-day allowance can be shared by either parent, but 60 days are reserved exclusively for each parent.

In terms of pay, employers are not required to pay for parental leave (but many do), and parents often receive government-funded support at 80% of normal wages. This amount is limited depending on the type of leave taken and decreases significantly after 390 days of leave.

Another form of parental support allows parents with children under eight to work part-time for 3/4 hours (or more).

Termination and Severance Pay in Sweden

In Sweden, employers must give employees two weeks' notice of dismissal. The employee can then negotiate and provide reasons and possibly make a written request.

The notice period depends on the length of employment, with one month's notice required for employees less than two years old. One month is added for every two years of employment, up to a maximum of six months after ten years. In most cases, employees are entitled to regular payments and full benefits throughout the notice period.

An employee who believes he or she was wrongfully fired may sue and may be entitled to damages ranging from 1.5 to 2.5 years' wages. In many cases, employers will also need to speak to employee unions.

Severance pay is not required in Sweden, but many employment contracts will contain an agreement to pay severance pay.

For companies expanding overseas for the first time, dealing with employee layoffs and dealing with severance packages can be complicated. Remoly's Swedish PEOs can reduce risk for foreign companies and provide guidance during the process.  

Swedish Taxes

In Sweden's progressive tax system, employers deduct taxes before paying wages. Municipal income tax of 32% (the average rate across cities) applies to all employees regardless of income; national income tax is 0% or 20%, depending on income level.

As of 2020, Sweden's corporate tax rate is 21.4%, but it will decrease slightly in 2021.

Social benefits are partly funded by the employer. Employers are required to contribute approximately 30% of wages to the social insurance fund, which covers various social benefits such as pension funds and sick leave payments.

Swedish Health Insurance

Sweden's healthcare system is universally available and government-funded, so employers are not required to provide private health insurance. However, some employers may choose to offer it as part of a benefits package to attract employees.

Salary and Benefits

Swedish Compensation Law

Sweden's minimum wage system differs from most countries in that there is no universal minimum wage. Instead, unions work to set minimum standards based on industry or type of job. For jobs not covered by a union in this way, an agreed wage should be set and written into the employment contract.

Welfare Administration in Sweden

Setting up a Swedish benefits system for employees can be difficult. Establishing a comprehensive and compliant benefits system can take a long time and be costly due to different languages ​​and a unique set of employment laws.

At Remoly, we specialize in building and operating Swedish employee benefits systems. We'll use our experience to handle everything to ensure you're ready to start your Swedish business as quickly as possible.