As your company grows, specialized projects may become a common occurrence. Independent contractors can offer the skills and expertise you require to complete them without scaling your team beyond capacity.
Hiring independent contractors in Sweden
Before hiring an independent contractor, you’ll need to understand this worker type and the important legal obligations.
Independent contractors vs. employees
Rather than working as an integral member of your team, a contractor relationship is similar to a business transaction. Independent contractors provide services to companies and are responsible for making their own social security contributions. While there is not a specific definition of what constitutes as an employee, courts examine many factors, including whether the person is subject to the supervision and direction of the company.
Penalties for misclassification
The Swedish Tax Agency, or Skatteverket, may impose liability on companies for misclassifying an employee as a contractor. The agency can require employers to retroactively pay for social security taxes and any additional employment remuneration owed to the worker. Companies could also face multiple fines for failing to meet requirements.
How to hire independent contractors in Sweden
The process of hiring an independent contractor differs from that of hiring an employee. You can follow these 3 key steps as you begin.
1. Carefully conduct interviews.
When interviewing contractors, keep in mind that you’re establishing a business-to-business relationship. Personality traits aren’t a main focus as they would be in an employee interview because contractors are separate from your company culture. Instead, discuss the contractor’s certifications, industry experience, specialized skills, and past projects.
2. Create a service agreement.
Service agreements are not required when hiring contractors in Sweden; however, the best practice is to create one so both parties have a framework to reference as needed. Include these details in the service agreement:
- Pay rates and arrangements
- Services the contractor will provide
- Length of the contract
- Termination conditions
3. Introduce necessities.
While in-depth training may come across as overly supervisory, you may need to introduce new contractors to any tools and workflows that are necessary for project completion. Ensure they have access to key resources and connect them with a point of contact for questions or project management needs.
How to pay independent contractors in Sweden
Since contractors aren’t part of employee payroll, companies usually pay a lump sum upon project completion or upon certain project milestones.
While companies do not typically need to pay for contactors’ benefits or tax contributions, employers are responsible for providing the payment rates and meeting the schedules specified in the service agreement.
Terminating independent contractors
Generally, contractors provide services until the end of a project or a set date. Both parties have the legal freedom to set termination and extension conditions.
To avoid legal issues, companies should establish clear guidelines for termination in the service agreement. That way, if you need to end a service contract unexpectedly, you’ll have the framework in place to do so.
Turn to G-P when hiring independent contractors in Sweden.
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Contact us to learn more.