Employer of Record in Sweden

What is an Employer of Record in Sweden?

An Employer of Record (EOR) in Sweden is a strategic partner that acts as the legal employer for your employees residing in Sweden. The EOR takes on all employment responsibilities and liabilities on your behalf, handling payroll, benefits, taxes, and regulatory compliance.

By partnering with an EOR, you can hire employees in Sweden without the need to establish a local entity or navigate complex labor laws.

General Information

• Currency: Swedish Krona (SEK)
• Employer Taxes: 31.42%
• Payroll Frequency: Monthly
• Employee Costs: 8.03%
• Capital: Stockholm
• Fiscal Year: 1 January – 31 December

Main Aspects of the Labour Code

Minimum Wage

General: In Sweden, there is no official national minimum wage. Instead, minimum wage levels are determined through collective bargaining agreements negotiated by trade unions representing the employees.

Payroll

Payroll Cycle: In Sweden, payroll is typically processed on a monthly basis, with employers generally issuing salary payments on the 25th of each month.

13th Salary

In Sweden, 13th-month payments are not required by law. Employers have the discretion to provide bonuses if they choose to do so.

Working Hours

General: The standard workweek in Sweden consists of 40 hours spread over five days. After five consecutive hours of work, employees must be given a break.

Overtime: All work beyond the standard weekly hours is considered overtime and is governed by the terms of the employment contract or collective agreements. When employees are required to work overtime or on holidays, there are limits on the number of overtime hours allowed, which are set at a maximum of 48 hours per week, an average of 50 hours per month, or 200 hours annually over four months.

Overtime hours exceeding the standard 40-hour workweek are compensated according to the rates specified in the employment contract or collective agreements. For overtime worked on weekdays before 8:00 pm, compensation is calculated by dividing the monthly salary by 94 for each additional hour worked. For overtime after 8:00 pm or on weekends, the compensation rate is calculated by dividing the monthly salary by 72 for each additional hour.

Employees in managerial or equivalent roles, or those who set their own work schedules, are generally not entitled to overtime compensation. In some cases, overtime pay may be included in the gross salary for non-managerial positions as well.

Leave

Annual Leave (Vacation):

The annual leave accrual period in Sweden runs from April 1st to March 31st of the following year. Employees are entitled to 25 days of paid vacation each year after completing one year of service, with leave accruing at a rate of 2.08 days per month. It’s common practice for some companies to offer 30 days of vacation annually. During the first year of employment, employees accumulate 25 vacation days to be used in the second year.

Unused vacation days beyond 20 can be carried over to the next year, with a maximum of 30 days being held for up to five years. Vacation pay is calculated at 12% of the employee’s gross annual salary. Any unused vacation days can only be cashed out upon termination of employment.

Public Holidays

Public holidays that fall on the weekend are usually lost.

Sick Days

In Sweden, paid sick leave is provided by the employer from the 2nd to the 14th day of illness, while social security covers benefits for sickness lasting longer than 14 days. The first day of sickness is unpaid. Sick leave compensation typically ranges from 75% to 80% of the employee’s regular pay, depending on the duration of the illness.

Maternity Leave

In Sweden, women are required to take a mandatory two-week maternity leave following childbirth, which is paid by the Swedish Social Insurance Agency at approximately 80% of the worker’s salary. If there are specific medical reasons, pregnant employees may be eligible for up to 60 days (or longer in certain cases) of government-funded leave before childbirth.

This leave is part of the 480 days of joint parental leave available to parents. Additional leave can be taken as part of the overall parental leave entitlement.

Paternity Leave

The non-pregnant partner is entitled to 10 days of leave, which must be taken within the first 60 days after the birth. This leave is paid by the Swedish Social Insurance Agency at approximately 80% of the partner’s salary.

Parental Leave

Both parents, regardless of gender, are eligible for shared Parental Leave, which provides a total of 480 days off. Each parent can use up to 390 days individually. Starting July 1, 2024, parents can take up to 60 days of this leave simultaneously (known as “double days”) until the child is one year old. Leave can be taken either in one continuous period or divided into up to three separate blocks each year, unless otherwise agreed upon with the employer.

From July 1, 2024, parents with joint custody can transfer up to 45 days of their parental benefits to another relative, while sole guardians can transfer up to 90 days.

Parental Leave benefits can be utilized until the child turns 12 years old or finishes year 5 of compulsory school. Additionally, employees have the option to reduce their working hours using their Parental Leave entitlement until the child is eight years old.

The leave is paid by the Swedish Social Insurance Agency, with a daily cap of 1,116 SEK for the first 390 days and 180 SEK for the remaining 90 days. Employees should provide their employers with at least two months’ advance notice of their intention to take Parental Leave.

Other Leave

In Sweden, additional types of leave entitlements may be available as specified in the relevant Collective Bargaining Agreement or Employment Contract. This leave requires employer approval and is applicable to family members and close relatives of the employee.

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