How to hire and pay employees in Sweden

In Sweden, employees accrue vacation pay daily and it equates to 12% on top of their gross salary. It’s paid out when they go on vacation. In Sweden, employees are entitled to 25 days of paid holiday each year.

We know keeping track of all this might sound overwhelming—but it doesn’t have to be. A solution like ours eliminates the barriers for you. With us, you can automate compliance, easily managing HR and payroll—all in one, easy-to-use platform.

Get an overview of what you need to know when hiring in Sweden below.

At a glance
EMPLOYER TAXES: 31.42% of gross salary

Good to know
Vacation pay in Sweden is accrued daily and equates to 12% on top of the employee’s gross salary. It is paid to employees when they go on vacation.
Sweden has very generous parental leave with both mothers and fathers eligible to take 240 days of paid leave.
Employment agreements are generally agreed beforehand with unions and so amendments are not necessarily trivial to make.

Labor laws in Sweden
Working hours and overtime
Employees are entitled to 25 days of paid holiday per year.

For a period of four weeks, the maximum overtime in Sweden is 48 hours, or for a calendar month, a maximum of 50 hours overtime.

Employment contracts
Employment agreements are generally agreed beforehand with unions, and so amendments to contracts are not necessarily trivial to make.

Sweden generally has some of the highest social security contributions, but also best social support in the world. Pensions are no exception. In Sweden, there are three types of pensions:

  • Public pension (allmän pension): This is provided by the state from contributions from social security taxes and is around 18% of an employee’s salary in total with 10.2% coming from employer taxes and 7% from employee taxes
  • Occupational pension (tjänstepension): This is an additional pension that can be provided by the employer to all their staff. It’s typically 4.5% of an employee’s gross salary. This applies to a cap of a monthly gross salary of SEK 44,375. Beyond the amount of this cap, the cost for occupational pension is 30% of the gross salary. An estimated 94% of Swedish employers over this benefit, and any company offering it to one or more employees is legally required to offer it to all, so the occupational pension is considered a mandatory benefit for companies hiring through us.
  • Private pension (privat pension): This is a voluntary additional private pension and contributions can be made by employer or employee.

In Sweden, non-compete agreements cannot exceed a maximum period of 18 months. Employers must also compensate the employee for the duration of the restriction at a rate of no more than 60% of the employee’s normal wages. The compensation is dependent on the loss of income caused by the non-compete restriction, and it can be reduced to reflect any wages earned in new employment during the period of the restriction.

Non-compete agreements

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Benefits and leave in Sweden
Vacation time
Employees are entitled to 25 days of paid holiday per year. Besides paid holidays, another six half-days of leave should be allowed for personal needs.

Vacation pay in Sweden is calculated as an additional supplement of 0.43% of an employee’s monthly pay per day when they take vacation. Swedish law also mandates that 12% vacation pay is added on any bonuses, commissions or variable pay.

During summer months (June, July and August), employers are obligated to provide each worker with four consecutive vacation weeks.

Sick leave
In Sweden, it’s up to the employer to decide whether or not to provide sick pay. If they do, for the first 14 days of sick leave, an employer pays sick pay instead of an employee’s regular salary. After that, employees can apply for sickness benefits from Försäkringskassan. If an employer does not pay sick pay, employees can apply for sickness benefits from Försäkringskassan for the full sick period.

Parental leave
Employees in Sweden may be eligible for maternity, paternity, adoption, or carer’s leave.

Mothers receive 240 days of paid leave with the right to start 60 days before the expected birth. Fathers are also entitled to 240 days of paid leave.

View a list of recognized public holidays in Sweden here.

Employer tax
Employers in Sweden are taxed 31.42% on top of each employee’s salary. On top of this, with occupational pension, there is an additional tax called SLP tax. This is 24.26% charged on the gross occupational pension amount paid.

Individual tax
Employees in Sweden who make a salary of less than 509,300 SEK do not have to pay income tax. Employees who earn over 509,300 SEK are taxed 20%. Employees also pay a municipal tax of 32%. Employees who earn an income of 538,700 SEK per year also pay for pension insurance of 7%, but this is normally offset against other taxes and so effectively zero for the employee.

Termination in Sweden
In Sweden, there are no statutory rights to severance payments. The employee is entitled to normal wages during the notice period.

Notice period
The statutory notice periods to be observed by the employer vary in accordance with the employee’s length of service and range from one to six months as follows:

  • Employed for less than two years: one month
  • Employed for at least two years but less than four years: two months
  • Employed for at least four years but less than six years: three months
  • Employed for at least six years but less than eight years: four months
  • Employed for at least eight years but less than ten years: five months
  • Employed for at least ten years: six months

Start hiring employees in Sweden
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.

We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.

With us, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.

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