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Hire and manage employees in Sweden

As your Employer of Record (EOR) in Sweden, we’d help you expand by hiring employees and running their payroll without establishing a local branch office or subsidiary.
Last updated:
March 5, 2025
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Table of Contents

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.

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