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Hiring in Sweden
When negotiating the terms of an employment contract and offer letter with employees in Sweden, it may be useful to keep the following standards in mind.
Employment contracts in Sweden
In Sweden, employers should put a strong, written employment contract in place that spells out the terms of the employee’s compensation, benefits, place of work, job title and duties, termination requirements, among other aspects. An employment contract in Sweden should always state the salary and any compensation amounts in Swedish krona (SEK) rather than another currency.
Working hours in Sweden
The workweek in Sweden may not exceed 40 hours. Employees are entitled to 11 hours between workdays and 36 hours of consecutive rest every 7 days.
Work hours should not exceed 48 hours per week averaged over 4 weeks or 50 hours per week averaged over a calendar month. A maximum overtime of 200 hours is allowed per calendar year. In Sweden, there are no strict legal requirements for how overtime should be paid. Instead, the specific terms of compensation for overtime are typically agreed upon through negotiations between the employer and the employee. Overtime is usually paid at a rate of 50% to 100% more than the employee’s normal wage but can also be exchanged for time off.
Holidays in Sweden
Sweden celebrates 13 public holidays for which employees are given the day off, including:
- New Year’s Day
- Epiphany Day
- Good Friday
- Easter Monday
- Labour Day/May Day
- Ascension Day
- Sweden’s National Day
- Midsummer Eve
- November All Saints Day
- Christmas Eve
- Christmas Day
- Boxing Day (Second Day of Christmas)
- New Year’s Eve
There can be additional holidays depending on the applicable Collective Bargaining Agreement (CBA) or company policy. For example, many employees work half days on the day before a public holiday. Also, if a public holiday falls on the weekend, most employers provide either the previous Friday or the following Monday off, but this is not required by law.
Vacation days in Sweden
Sweden’s law guarantees 25 days of paid annual leave per year. The vacation year is from April 1 through March 31, and the leave days are typically accrued in the previous year. For example, in the first year of employment, employees earn the vacation days for the second year of employment. There is no statutory requirement to provide paid vacation in the first year, so it’s up to the employer’s discretion. In addition to regular wages, employees are entitled to a daily vacation premium of 0.43% of the monthly salary, unless an applicable CBA provides for a different calculation method.
Sweden sick leave
Employees receive zero pay for the first day of sickness. If the employee is out for longer than 7 days, they must present a doctor’s certificate. For the following 2 weeks, sick pay is paid by the employer at a rate of 80% of the employee’s salary. On the 15th day, the illness needs to be reported to Försäkringkassan (the Swedish Social Insurance Agency), which then takes over the responsibility of providing sick pay. Only individuals with a personal identity number in Sweden have a right to governmental sick pay.
Parents who miss work to take care of a sick child 12 years or younger can also receive compensation for lost income.
Parental leave in Sweden
A pregnant employee has a right to a minimum of 7 weeks of leave before birth and 7 weeks after. Non-birthing parents have a right to 10 days of paternity leave that must be taken within the first 60 days after the birth. When the child is born, parents share a total of 480 days of parental leave, which they can take until the child’s 8th birthday or 2nd school year. Of these days, 90 are tied to each of the parents, and must be taken individually.
Parents can take advantage of the paid parental leave benefit provided by the government as part of Sweden’s social insurance system. Parents on leave are generally eligible to receive 80% of their salary for the first 390 days, although remuneration is subject to a cap of SEK 1,027 per workday, depending on which type of parental leave is taken. The remaining 90 days are capped at SEK 180 per day. Employers do not need to pay salary to employees when they are on parental leave, though some agree to do so.
Parents of children ages 8 and under have the right to work part-time, which many people take advantage of.
Health insurance in Sweden
Sweden has universal healthcare, which is largely funded through local and regional taxes. Everyone in the EU is eligible for Sweden’s public health insurance, not just citizens of Sweden.
CBAs may require employers to provide private health insurance. Private health insurance is used to skip the line of public health insurance and provide cash upfront instead of having to pay out of pocket and wait for reimbursement. In Sweden, this benefit is wrapped up into a bundled plan that includes a pension and a few other protection benefits.
Sweden supplementary benefits
Some companies provide meal vouchers, stock incentive plans, or extra vacation time.
Employer and employee private pension schemes are also very popular in Sweden. For non-EU citizens working in Sweden, private pension insurance is generally a mandatory prerequisite for their work permit. It is not mandatory that an employer pay an extra pension in Sweden, but it is becoming an extremely common and preferred additional benefit. It is common to offer a private pension to employees after they have culminated their probation period. Approximately 5% to 10% of their gross salary per month is standard.
Termination and severance in Sweden
In Sweden, employers can enforce probationary periods of up to 6 months. However, certain CBAs may regulate the permitted length of probationary periods. Generally, employment may be terminated prior to the end of the probationary period by providing 2 weeks’ notice.
After that, employers can terminate an employment contract with notice only for objective reasons, such as redundancy. Termination based on individual circumstances requires informing the employee at least 2 weeks in advance before giving a notice of termination. Additionally, if the employee is a member of a trade union, the relevant union must be notified simultaneously. Upon request from the trade union or the employee, the employer must engage in consultation. In situations involving redundancy, the employer might also be required to conduct consultations. Notice of dismissal must be made in writing.
The length of notice varies based on tenure. The minimum notice period for both the employer and employee is 1 month for tenure that is less than 2 years. After 2 years, it increases by a month every 2 years to a maximum of 6 months’ notice reaching a tenure of 10 years or more. Employees are entitled to payment and other employment benefits during the notice period.
In cases of wrongful dismissal, employees can sue for reinstatement. If the employer refuses reinstatement, this can lead to damages ranging from 16 to 32 months of salary.
A dismissal is never dependent on approval by the union, but employers must consult with the union in many situations, including redundancy situations. If the employer does not consult with the relevant trade unions when required, they may be liable to pay damages to the trade unions.
There are no mandatory severance payments under Sweden’s law. However, individual employment agreements may specify otherwise.
Employees may also give notice to terminate employment but do not have to give a reason for doing so. Such termination is also followed by a notice period in which the employee is obliged to stay with the employer during this time unless otherwise agreed.
Paying taxes in Sweden
Social insurance in Sweden is financed mainly through employers’ contributions. All employers must pay social security contributions on behalf of their employees. These contributions typically amount to 31.42% of gross salary. For employees over the age of 65 or under the age of 18, a reduced tax rate is applicable. International employers are obliged to contribute a little over 21% of gross salary. Social insurance covers sickness, disability, retirement, and more.
Resident employees are obligated to pay a municipal tax of 32% and a national tax of up to 20%. The national tax is 20% on earned income over SEK 613,900. There is no national tax for income below this threshold. Non-residents working in Sweden must pay a flat tax rate of 25%. Employers deduct the income tax from wages, and employees are taxed at the same rate whether married or single, with or without children.
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