General Overview
Sweden is a highly developed, export-driven economy in Northern Europe known for its innovation, high standard of living, and strong welfare state. Its labor market is governed by a mix of statutory regulations and collective bargaining agreements, ensuring robust employee protections and clear employer obligations.
Employment Contracts
- Written Requirement: All contracts must be in writing.
- Backdating: Contracts may be backdated within the same month without tax implications, though additional payroll costs may apply.
- Fixed-Term Contracts: Fixed-term contracts can be used for a cumulative period of up to 2 years, provided they are justified with objective criteria.
Probation Period
The maximum trial (probation) period permitted is 6 months.
Working Hours
Regular Hours: Generally 8 hours per day and 40 hours per week.
Overtime Limits:
- Maximum overtime in a 4-week period is 48 hours.
- Total overtime is capped at 150 hours per calendar year.
Vacation Days
Annual Holiday Entitlement: Employees earn 25 days of paid holiday for 12 months of work in the holiday year (April 1 to March 31).
Holiday Pay: Paid out in May, calculated as 0.43% of averaged wages plus 12% of qualified variable bonuses from the previous holiday year.
Sick Leave
Initial Sick Leave: Employers usually cover the first day of sick leave (though not legally required).
Subsequent Sick Leave:
- From the 2nd to the 14th day, employees receive their regular salary paid by the employer.
- After the 14th day, the employer is no longer required to pay; employees may claim sickness benefits from local social authorities.
Wages and Salary Payment
Salary Payment Date: Salaries are typically paid on the 25th of every month.
Minimum Wage: There is no legally set minimum wage in Sweden; wages are generally determined through collective agreements and individual negotiations.
Public Holidays
Sweden observes the following national public holidays (additional regional holidays may apply):
- January 1: New Year’s Day
- January 5: Twelfth Day
- January 6: Epiphany
- 15–18 April: Easter (movable dates)
- May 1: Labour Day
- May 26: Ascension Day
- June 4: Pentecost
- June 5: Whitsun
- June 6: National Day
- June 24: Midsummer Eve
- June 25: Midsummer Day
- November 5: All Saints’ Day
- December 24: Christmas Eve
- December 25: Christmas Day
- December 26: Boxing Day
- December 31: New Year’s Eve
If a public holiday falls on a Sunday, a substitute day off is generally provided within the following three months.
Employer Taxes
- Social Security: Employers are required to contribute 31.42% of the total taxable remuneration (with no cap).
- Pension-Related Wage Tax: Employers with a permanent establishment in Sweden also pay a specific wage tax of 24.26% on pension costs associated with tax-qualified company pension plans.
Employee Taxes
Income Tax:
- For taxable income from 0 to 540,700 SEK, the national income tax is 0%; for income above 540,700 SEK, the rate is 20%.
- In both ranges, the average municipal tax rate is approximately 32%.
Pension Fee: Employees pay a 7% pension fee on gross earnings, capped at SEK 38,500 for incomes up to SEK 550,400.
Notice Period
Employer's Notice:
- For employment under 2 years, notice starts at 1 month.
- Notice periods increase with longer tenure, reaching up to 6 months for relationships lasting 10 years or more.
Termination and Severance Pay
Termination Process: Terminations should consider accrued and untaken holidays, which are paid out upon termination.
Severance Pay:
- Severance is not legally mandatory; however, it is common to include provisions for severance in negotiated or mutually agreed terminations.
- Typically, severance pay corresponds to 6–12 months’ salary, depending on seniority and tenure.
Legal Recourse: Employees may appeal to a court if they believe their dismissal was unjustified, and additional compensation may be awarded if a court finds the termination unfair.