What are Employee Benefits?
Employee benefits are the additional perks and benefits offered by the companies to their employees, along with their basic salary. These additional compensations can be monetary or non-monetary, depending on company policies.
Employee benefits help both employers and employees in the long run. Employers can create a gratified workforce by ensuring employees receive the relevant perks. It lets them attract and retain talent. Conversely, employees feel valued and satisfied when employers invest in their career growth. Hence, a good employee benefits package keeps employees happy and less likely to change jobs.
Some standard employee benefits and compensations are minimum wages, paid vacation, health insurance, maternity leaves, etc. Most of these benefits are usually guaranteed by the labor laws in almost all nations. Hence, corporations operating within the jurisdiction of such countries must adhere to these laws.
This article will highlight the necessary details regarding the compensation and benefits policy in Sweden.
Compensation Laws in Sweden
Sweden’s labor unions play a major role in determining the compensation and benefits policy in Sweden. The labor union culture is quite strong here, with a trade union membership rate of nearly 70%.
The country has a right to association, allowing all employees to join any trade union. A Swedish employer can neither prevent employees from joining a union of their choice nor ask which union they wish to join.
This lays down the base for the Swedish employee benefits resulting from the collective agreements bargained by the unions and organizations. The Swedish model provides security to employees and flexibility to employers.
The Swedish Constitution and the Employment (Co-Determination in the Workplace) Act of 1977 lays down the constitutional and legal grounds for collective agreements. It refers to the voluntary agreement made between the employer and the employee. Collective agreements regulate overtime pay and paychecks, the right to exert influence, supplementary insurance schemes and health benefits, working hours, and vacations.
While the Swedish government lays the boundaries of the labor laws determining the compensation package in Sweden, it does not interfere in the collective agreements negotiated by the trade unions.
Swedish labor laws specify the following guidelines that all employers doing business in Sweden must abide by while determining compensation structure in Sweden:
- There is no statutory minimum wage specified in the Swedish labor laws. Trade unions negotiate the minimum wage per the sectors where they operate.
- The Swedish Working Hours Act mandates that regular working weeks cannot exceed more than 40 hours a week. The upper limit is 48 hours a week, including overtime. It also stipulates that employees must not work for more than five hours without a break.
- The employee compensation policy in Sweden does not mandate any 13th-month bonus. Employers may or may not offer this bonus.
How to Design an Employee Benefits Program for Employees in Sweden?
Employee benefits in Sweden are a critical part of the total compensation costs of an employee.
To create an efficient and well-thought-out benefits program, employers must ensure it addresses the needs of all employees. An excellent benefits plan perfectly balances the needs of employees and the business organizations while adhering to the Swedish labor laws.
Corporations must heed the following steps to design the perfect compensation package in Sweden:
Step 1: Determine the budget & set clear goals
The basic foundation of designing any employee compensation policy in Sweden is to assess the business’s finances and determine how much to spend on the employee benefits package. It is crucial to set a realistic budget.
With a precise figure in mind, employers must chalk out the perks they want to offer to employees. While calculating the checklist of compensation and benefits in Sweden, an employer must remember these salient objectives:
- Complying with the local and federal labor laws
- Scouting for potential talents
- Functioning within the allocated budget
- Retaining present employees
Step 2: Research employee needs and industry standards
After deciding on the package budget, employers must focus on conducting assessments or surveys. They must conduct in-depth market research, tallying what their rival firms offer, and the usual industry standard of compensation structure in Sweden.
Employers can also perform internal assessments by taking feedback from their employees. They can conduct interviews and offer questionnaires to know the employees’ needs. By doing so, employers can boost employees’ motivation and create a package that caters to all employees.
This data will help businesses to get a clear picture of:
- What are some of the supplementary benefits employees must add to their employee compensation and benefits in Sweden to design a lucrative proposition that can outperform their competitors?
- What benefits do employees need apart from what they’re already getting?
These are the primary concerns employers must consider while designing an employee compensation policy in Sweden. By conducting market research and internal evaluation, employers can create the ideal benefits package that complies with local laws and industry standards.
Step 3: Design a flexible and customizable compensation package
By completing the above two steps, an employer can work out the main framework of the compensation package in Sweden.
The next step is to ensure the proposed benefits program is flexible enough to adapt to individual employee needs. For instance, the compensation package can allow employees to choose supplementary benefits according to their requirements. This particular compensation structure will be cost-effective by cutting down under-used benefits and ensuring that each worker receives their desired perks.
Step 4: Convey the benefits plan to the current and potential employees
Transparent communication is the key to a well-planned compensation package in Sweden.
Employers must consult senior management and employees while designing benefits packages. Feedback is crucial. Incorporating their proposed points and keeping communication channels open throughout the process will exhibit how much employers value others’ opinions. It will stimulate a sense of appreciation and security in the entire workforce, create a productive workplace, and help employers gain the employees’ trust.
Step 5: Evaluate the effectiveness of the benefits package
As the last step, employers must run performance checks to comprehend the benefits package’s efficiency. This will help them understand if the benefits package addresses the necessary concerns of employees and if any modifications are needed. Employers must regularly monitor the workforce, economy, demographics, and legislature to remain compliant and competitive.
Types of Guaranteed Benefits in Sweden
Along with the Swedish Labor Code, union-specific bargaining and cultural expectations determine the compensation and benefits policy in Sweden.
Swedish labor laws are employee-friendly with powerful trade unions, 40 hours work weeks, and mandatory breaks. The Swedish payroll contribution of employers amounts to 31.42% of the employees’ wages. It covers health insurance, pensions, parental benefits, and workplace injury insurance.
Some of the mandated entitlements in workers’ compensation in Sweden are:
The Swedish pension system comprises many components, with an occupational pension from the employer playing a major part.
Swedish employees receive occupational pensions from their employers after they reach 65 years of age. If an employee has different employers, they are entitled to receive the same from everyone. However, self-employed people, students, or unemployed people do not receive occupational pensions.
Sweden does not have any public insurance system. Medical benefits for employees in Sweden are funded primarily by the national government, the taxation system, and employer contributions.
All employees, including expats, are covered under the public healthcare system. The employer makes a monthly payment to the employee tax accounts by filing Pay As You Earn (PAYE) return. Plus, employers must bear the entire cost of the Swedish social security fee.
Leave benefits in Sweden mandate that all employees get compensated for the 2nd to 14th day of their sick leave. Employees are eligible for sick pay subject to a deduction of 20% of their regular compensation. If an employee is sick for more than two weeks, they must provide medical certificates.
All employees are entitled to a payment of SEK 1,006 (as of 2020) for 390 days of ‘sickness benefit days’. Employees are entitled to 180 SEK daily under the Swedish social security system for the remaining days.
Mothers can take 14 weeks of maternity leave with 7 weeks before and after delivery. Fathers get 10 days of paternity leave simultaneously as mothers.
Employees can extend the parental leave for 180 days for each child born in case of multiple births. The parental leaves in Sweden are equally divided among the parents, with 480 days of leave approved. However, a parent can take a maximum leave of 390 days if the other parent transfers their leave.
According to the compensation structure in Sweden, there is a cap on overtime work. An employee cannot work more than 48 hours a week, 50 hours per month, or 200 hours per year in overtime.
Employees working weekdays before 8 pm are compensated for their overtime hours, with their monthly compensation divided into 94 for each extra hour of overtime. The same gets divided into 72 for every additional overtime hour when employees work overtime on weekends or after 8 pm on weekdays.
Holidays and vacation
Swedish labor laws require employers to give all employees a paid annual vacation of at least 25 working days. Employees can also take a continuous four-week vacation between June and August. The holiday leave benefits in Sweden consist of the employee’s current salary, compensation, and a holiday bonus.
Employee Benefits for Expatriates
The Swedish taxation scheme and social security system guarantee that all employees working in Sweden, irrespective of their national identity, get a high standard of health coverage.
Other additional benefits offered to expats per the compensation package in Sweden are:
- Relocation benefits
- Retirement security
- Accommodation benefits
- Reputable school for children
How are Employee Benefits Taxed in Sweden?
All employers pay the social security contributions for their employees. The social security contributions are levied at 31.42% of the total taxable remuneration. It covers the mandatory benefits (pension, occupational injury insurance, health insurance, and parental benefits) in an employee compensation package in Sweden. Both Swedish and foreign employers must pay the contributions with private equity (PE) in Sweden.
Foreign employers with no private equities in Sweden must register for the payment of social security contributions. They can also bargain to an agreement with their employees where the latter pay and report the contributions monthly.
Restrictions for Benefits and Compensation in Sweden
Sweden’s laws make no provision for minimum wage. Hence, it is entirely the discretion of the employer to set the minimum wage for their employees.
Employers must abide by the working hours limit irrespective of the employee’s position. No employee can work more than 48 hours in overtime a week, or an average of 50 hours per month or 200 hours per year.
Employees working in managerial and executive positions are not covered under Working Hours Act (1982).
Supplemental Benefits for Employees in Sweden
In addition to the mandated employee benefits per the Sweden labor laws and compensation package in Sweden, business firms must also provide supplemental perks to employees.
A list of such supplementary employee benefits in Sweden:
- Short-term and long-term disability pay
- Childcare centers and subsidiaries
- Company cars
- Private health insurance
- Flu Shots and vaccinations
- Group benefit pools
How Multiplier Can Help with Benefits Management in Sweden
With a strong labor union culture, employers often face unique challenges while designing compensation and benefits policies in Sweden. This becomes even more challenging for foreign employers unaware of the country’s laws and business regulations.
A global EOR like Multiplier can help foreign employers to overcome all hassles related to hiring and employee management. Apart from payroll and international team management, our experts can help you design industry-standard compensation and benefits policies in Sweden. We can even help you hire employees in Sweden without establishing a subsidiary there. So, you can test new markets, set up teams in foreign nations, and attract talent at cheaper costs.