By Globalization Partners
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Sweden is the birthplace of companies that have changed the world, from IKEA and its affordable, flat-pack furniture to Ericsson, a mobile technology producer. Along with its track record of innovation, the country’s labor laws and policies make it an appealing place for employers. Sweden has been rated among the best in the world for job security and work-life balance. If you’re considering expanding into new countries and hiring people abroad, Sweden can be an excellent choice.
The steps to hiring in Sweden might share some similarities with your home country, particularly when it comes to finding qualified candidates and making the offer, but there are also likely to be notable differences. Our guide to hiring employees in Sweden can help you understand the country’s labor laws and how employment works there.
What to know before hiring in Sweden
The rules regarding wages, taxes, and working hours, in particular, are where you may find some differences compared to in your home country. Here’s what to know before hiring someone in Sweden.
1. Swedish population
At the end of 2020, more than 10.3 million people lived in Sweden. The majority of the country’s populace lives in the south. Areas with a denser population tend to have more resources to offer residents in the form of education and employment. Sparsely populated regions tend to have high rates of unemployment. Children who live in these areas often need to travel considerable distances to participate in compulsory education.
Most of the employed population in Sweden has completed either secondary or tertiary education. The country has a higher-than-average employment rate for individuals who have completed secondary education, so many people decide not to pursue post-secondary studies.
Swedish is the official language of the country and is the most spoken language across Sweden. Since the country has seen higher immigration rates in the decades after World War II, more people now speak languages other than Swedish. As of 2019, the second-most spoken native language in the country was Arabic, followed by Finnish.
Although it’s not the native language of many people who live in Sweden, English is used throughout the country, and Swedes have a reputation for being highly proficient in the language. The country is ranked number four globally for English language proficiency among countries where English isn’t the official language.
Sweden doesn’t have a minimum wage. Instead, employers typically set wages based on Collective Bargaining Agreements (CBAs) made with a trade union.
Average salaries across the country vary by occupation. For all occupations, the average monthly salary was 31,400 Swedish krona (SEK) or about 13,040 euros as of 2019.
Swedish income tax rates are based on the amount an employee earns, with higher-earning employees paying an income tax rate over 50 percent. There are two types of income tax in the country: a local tax and a national tax. Only individuals who have high incomes pay the national tax. Taxes follow a Pay As You Earn (PAYE) model, so every month, an employer needs to file a tax return for each employee that lists the salary paid, the tax deducted, employer contributions, and any benefits the employee received.
Employers are also responsible for paying social security taxes for their employees. The employer contribution is typically 31.42 percent of each employee’s earnings, but only 10.21 percent for employees born between 1938 and 1955, as well as employees younger than 18 who make less than 25,000 SEK per year. There is no employer contribution for employees born in 1937 or earlier. Social security contributions cover many services and payments, including those for sickness, disability and retirement.
4. Working hours
One thing Sweden is known for is work-life balance. The country’s working hours reflect that balance. On average, an employee in Sweden works 1,644 hours per year — about 100 hours fewer than the average among Organization for Economic Cooperation and Development (OECD) countries.
The Working Hours Act sets the regular workweek at no more than 40 hours. If employees do have to work overtime, they can’t work more than an average of 48 hours per week during a four-month period. The act also states that employees should get an 11-hour rest period each day and a 36-hour rest period at the end of the week. When on the job, employees shouldn’t work more than five hours without a break.
Although the act describes the length of the workweek, it’s worth noting that it doesn’t require overtime pay. Just as Sweden doesn’t have a minimum wage, it also doesn’t have overtime pay requirements. However, many CBAs dictate additional payments for overtime. Employees who aren’t covered by a CBA can negotiate wages and overtime pay with their employers individually.
5. Time off
Employees in Sweden have the right to a certain number of paid days off per year. Whether employees are full-time, part-time, or work unusual hours, they are entitled to a minimum of 25 paid vacation days annually for a full year of employment. Depending on the job, some employees have more than 25 paid days off annually. The work year in Sweden runs from April 1 to March 31. If someone begins a job after August 31, they are entitled to five vacation days from the start of their employment through March 31 of the next year.
The Swedish Vacation Act allows the legal right for employees to take four consecutive weeks of vacation during the summer.
The right to paid vacation is earned in one year and granted in the following vacation year. This means employees may find themselves taking unpaid leave during their first year of employment and even during their second year. To overcome this, many companies offer “förskottsemester,” which means they grant employees paid leave before employees have fully earned it, and record this paid leave as a debt to the company. If employees resign before completing five years of service, they will be required to repay this debt, normally as a deduction from their final salary. After five years of service, or if the company terminates the employment, the debt is cleared. Employees can choose to take unpaid leave, even if their company offers förskottsemester.
When employees are entitled to paid vacation, they receive a “semesterersättning” for each day taken. This is equivalent to 0.43 percent of the monthly base salary for each day taken and paid in the month following the vacation. Additionally, a vacation bonus is paid annually in May, and this is 12 percent of any sales commission or bonus payments received the preceding year.
Sick leave and parental leave policies in Sweden are very generous for employees. Employees who become ill can receive up to 14 days of leave, paid at 80 percent of their usual salary. If employees are sick and need to miss work for more than 14 days, they need to contact the Försäkringskassan, the country’s social insurance agency, to apply for sickness benefits.
Pregnant employees receive seven weeks before and seven weeks after their child’s birth, and their partners receive 10 days. New parents can take paid parental leave of up to 480 days after giving birth or adopting a child at any time until the child turns 8. The 480 days can be divided up between partners, but each person gets 60 days reserved exclusively for them and can’t be transferred to their partner. Parents of children under age 9 also have the right to work part-time.
In Sweden, employees can be absent from work under “Vård av Barn,” or VAB. This time off is for looking after a sick child who cannot attend nursery or school. The employer does not pay for this time off. Instead, an employee must report this and claim compensation from the Försäkringskassan.
6. Employment types and contracts
Unless otherwise agreed between the employee and employer, employment in Sweden is always permanent or indefinite. Employers can hire people temporarily, but they need to make the temporary nature of the employment clear from the beginning, usually by writing out the terms of the employment in a contract.
Employers may apply a probationary period called “provanställning,” which can be a maximum of six months. During this time, employers can terminate the employment without engaging in performance improvement plans or lengthy negotiations. Once the probationary period has passed, the employment is automatically deemed to be permanent and ongoing, or “tillsvidare.”
Technically speaking, contracts between employees and employers can be oral, but since the Swedish government requires certain factors be put into writing, such as the description of duties and salary, it makes sense for an employer to provide a new hire with a written contract. The Swedish Contracts Act limits what can be put into an employment contract, forbidding the inclusion of unreasonable terms.
7. Unions in Sweden
Trade unions are common in Sweden and play a significant role in the relationship between employers and employees. Seventy percent of workers in the country are part of a union. Along with setting the conditions of employment with employers, trade unions offer their members unemployment insurance and career advice.
Cost of hiring an employee in Sweden
How much it costs to hire employees in Sweden depends on the approach you take. For example, traveling to Sweden from your home country to recruit and interview candidates will make your hiring costs higher than if you recruit remotely.
Some costs to keep in mind as you enter the labor market in Sweden include:
- Recruiting costs: Whether you use a mix of free and paid job boards, an employment agency, or rely on word-of-mouth, it costs money to advertise available positions. There’s also the time cost of reading applications, contacting qualified applicants, and scheduling interviews.
- Training costs: New employees need to learn how to perform their job duties and mesh with your company’s culture. Managers usually need to direct their time and energy away from other projects to train new hires. If you are training people across continents or oceans, the cost can be even higher than if training were taking place in the same location. You might have some trial and error involved in terms of training and workplace fit. The initial group of employees you hire in Sweden might not get along or work well with the team in your home country.
- Compensation costs: The cost of compensation includes the salary you pay your Swedish employees, the cost of employer taxes, and other benefits, such as mandatory vacation days.
Hiring practices in Sweden
While hiring new employees in Sweden, it’s important to keep in mind certain rules that limit what you can ask candidates and what information you can collect about them.
- Application process: When applying for a job, candidates typically send in a curriculum vitae (CV) and a cover letter. The CV is usually no more than two pages long and lists an applicant’s education, experience, and achievements. The cover letter, or “personligt brev,” gives candidates a chance to illustrate to an employer why their experience and skill sets make them an ideal fit for the position.
- Interview questions: Interviews in Sweden might be more relaxed and informal than they are in your home country. Often, employers want to find out more about who candidates are rather than what their qualifications are. While you can ask personal questions, such as what a person’s hobbies are, the country’s labor laws prevent you from asking questions that could be discriminatory, such as asking about family plans or if they are part of a union.
- Assessments and tests: An employer can ask candidates to complete assessments that verify their skill level or allow them to demonstrate competency. As an employer, you also have the right to ask your potential employers to take a drug test, and you can deny employment to candidates who refuse the test.
- Background checks: The General Data Protection Regulation (GDPR) limits the types of background checks employers can perform on potential candidates. Notably, the checks you can perform need to be directly related to the job the person will perform. Someone who will work with children can reasonably be asked to undergo a criminal records check, for instance.
What does a company need to hire in Sweden?
The Swedish government expects companies that want to hire people in the country to register as employers with the Skatteverket, or Swedish Tax Agency. Non-Swedish companies that want to operate in the country often need to register with a local branch of the Swedish Companies Registration Office. After registering with the Swedish Companies Registration Office, a company receives an identity number.
One way to hire employees in Sweden without registering with the Swedish Tax Agency is to work with an Employer of Record (EOR). When you work with Globalization Partners as your company’s EOR, Swedish employees are on our payroll. We make sure they get paid as required and that the appropriate taxes are withheld from their paychecks. Working with an EOR streamlines the process of getting set up in a new country and allows you to onboard the best employees quickly.
Hiring remote employees in Sweden
Since the interview process in Sweden is relatively informal, it translates well to a remote format. Swedish companies often use video conferencing during the first round of interviews to help filter out candidates and decide who to invite to in-person meetings. If you are going to conduct remote interviews or hire people for positions that will be fully remote, here are some tips for hiring in Sweden using video conferencing software:
- Keep time differences in mind: Depending on where you’re based, there could be a considerable time difference between you and a candidate in Sweden. Sweden is in Central European time, so if, for example, you’re in California and you’re just starting your workday, it’s the end of the day for a candidate in Stockholm. When scheduling the interview, it can be helpful to send candidates a list of options that are in their time zone to avoid any confusion.
- Test your platforms: The last thing you want is to miss out on the chance to interview a qualified applicant because of technical difficulties. Choose a video conferencing platform you’re comfortable with and test it out before the interview to ensure there are no glitches. It can be a good idea to have a back-up plan in case unexpected technical difficulties come up.
- Choose the right space for the interview: You should clearly see and hear the candidate, and they should clearly see and hear you. Make sure you’re lit from the front and use a microphone that picks up your voice well. If several people will be on the call, ensure that they all have a quiet, well-lit place to interview.
Hire Swedish employees with Globalization Partners
If you are looking to expand into Sweden and want to start hiring Swedish residents to work for your company but don’t want to register as a business there or violate any labor rules, Globalization Partners can help. Our HR and legal experts are dedicated to helping companies remain compliant with global business laws. As your EOR, we take on all the responsibility for your team members in Sweden, including providing payroll, creating contracts for your employees, and supplying benefits packages that meet your team’s needs and in-country requirements. Request a proposal and get ready to start hiring in Sweden today.