Why Businesses Need a PEO and Employer of Record in Sweden

Doing Business With a Sweden PEO/EOR 

Sweden is Europe’s fourth most competitive economy, with a population of 10 million and a GDP exceeding $560 billion (in 2020). The country is known for its solid business foundation, talented youth, and diverse language skills. 

Powering the Swedish economy are hydropower,  lumber, and iron ore exports. Leading industries are telecommunications, manufacturing equipment, chemical products, pharmaceuticals, automobiles, generation technology, steel and iron, home furnishings, and appliances. The Swedish economy’s efficient regulatory system and open-market principles support efficiency, flexibility, and substantial direct investment flows. Sweden has a favorable industrial environment that makes it easy to launch a firm.

Sweden has several advantages to making business more manageable, but it is not entirely straightforward. Starting or growing a business in Sweden becomes challenging with differences in local customs and language diversification. In addition, employers face challenges, including paying payroll, adhering to labor laws, hiring skillful employees, etc.

A Sweden EOR can assist in simplifying the process. You can accelerate the expansion of your business by working with a global PEO like Multiplier. Our professionals help with payroll management, new hire orientation, national laws, and regulations compliance.

Why Use a Sweden PEO? 

Establishing a division or subsidiary office is a meticulous process because it is frequently drawn out and expensive. In particular, when beginning a business in a foreign nation, using a Professional Employer Organization (PEO) or Employer of Record (EOR) is a quicker and more efficient choice. 

At Multiplier, the staff is hired on your behalf, which contracts them lawfully through a Swedish subsidiary. Therefore, it is our responsibility to ensure compliance, and the workers can start working for your business immediately. You have a more straightforward choice when using PEOs/EORs in Sweden for employing staff, market research, and meeting expanding business demands. Collaborating with global PEO services will relieve you from tedious HR responsibilities, and you can focus more on the company’s growth.  

Sweden PEO Costs 

The expense of a PEO in Sweden is determined by the services offered. On average, professional PEO services charge $500–$1,500 per employee annually. You can negotiate charges with your Sweden PEO partner during early talks. 

Multiplier offers a straightforward price structure with fixed rates for each contractual or hiring system it manages. Here, we provide PEO solutions for a reasonable price, starting at $300 per month. To manage freelancers, you can make use of Multiplier’s services. For $40 per month, companies can onboard and pay their freelancers internationally in a few minutes.

Additionally, the rate does not alter if the incentive or revenue for your employee increases. You can organize your funds as a consequence without being concerned about unforeseen PEO expenses.  When working with a Sweden EOR firm like Multiplier, there are no hidden charges.

How to Hire in Sweden? 

Sweden has highly educated youth to offer companies. There is a relatively flat hierarchy, and decisions are made after extensive discussions. Swedish people place a high value on professionalism and punctuality.  While hiring in Sweden, employers need to understand employment law. In this country, employers must issue written employment contracts to all employees. These contracts must enlist the salary, working hours, and additional benefits an employee will get once they join the company. 

Many Swedish businesses turn to recruitment agencies to fill open positions. If you intend to do the same, ensure the company you choose can produce the intended results. Some organizations charge astronomical fees for hiring. Partnering with a global PEO like Multiplier is one approach to overcome the restrictions of the hiring process.

Businesses must be aware of the following fundamental employment laws if they intend to hire someone on their own:

Types of employment agreements in Sweden:

If you are plan to establish your business in Sweden, here are the types of employment agreements you can refer:

Permanent employment (tillsvidareanställning)

This is the most common employment type offered in Sweden. According to the Employment Protection Act, all the employees hired with permanent employment contracts are assumed to be permanent (until further notice).

Fixed-term employment (tidsbegränsad anställning)

These are also known as temporary contracts wherein employees are hired for a specific duration. This includes general fixed-term contracts, temporary positions, and seasonal employment.

Probationary employment (provanställning)

Generally, in Sweden, permanent employment starts with a probationary period. It usually lasts for six months, wherein employers can assess employees’ abilities.

Hourly employment (timanställning)

Hourly employment is not valid as per the employment law. However, there is no limit on how short fixed-term employment can be. Some companies hire employees on fixed-term employment on a very short-term basis, which turns into hourly work.

Sweden employment contract 

When seeking to grow and hire in Sweden, you must always grasp the rules because the country’s labor laws might be complicated.

Employers must offer all individuals formal employment agreements in Sweden. All relevant information, like pay/salary, holidays and other perks, working hours, and more, must be included in these agreements clearly and understandably.

All contracts made in the nation must be written in Swedish and be paid for with the native Swedish Krona.

The team of local professionals at Multipliers can help design solid employment contracts that comply with regional laws by working together with our Sweden PEO.

Working hours

In Sweden, a typical workweek is 40 hours. Additionally, employees must enjoy a minimum of 36 hours off each week and 11 hours off in-between hours.

A working week can only last 48 hours legally before overtime is due. In general, overtime is compensated at 50–100% more than the regular pay rate and restricted to 200 hours per year. It can also be accumulated for future use as vacation time. 

Overtime

In Sweden, no employee may work more than 48 hours in 4 weeks, 50 hours per month, or 200 hours annually.

The CBA or employee contract outlines overtime policies and compensation, often in salary or leave. White-collar workers who meet the requirements, CEOs, and anyone who can plan their schedules are exempt from paying overtime.

There is no mandated overtime compensation. Standard overtime compensation (per hour) examples are:

• Monthly wage * 94 (before 8 p.m. on weekdays)
• Monthly wage * 72 (after 8 p.m. or on weekends)

Minimum pay

Sweden lacks a set minimum wage, like other highly industrialized European countries.Typically, worker unions negotiate minimum wages.

For comparison, the hourly wage for a McDonald’s cashier is generally around 137 Swedish Krona or about 14 USD. The minimum wage in Sweden for the hotel and hospitality sector is 23854 SEK, or 2500 USD, as of 2022.

Holidays 

There are several internationally and regionally recognized national holidays in Sweden. Sweden celebrates the below 13 major holidays: Weekend-based public holidays do not extend. There are no guidelines regarding overtime compensation for working on a public holiday. Following are some public holidays celebrated in Sweden:

Annual leave

Employees receive 25 days of vacation time and holiday pay accrued throughout the preceding year under the Vacation Act. The qualifying year is from April 1 to March 31. Vacation days are earned one year in advance. This means that employees can earn their vacation days in their first year of employment, which they can use in the second year. However, some employers offer vacation days in the first year as well. The timing of annual vacation is up to the employer, although it must last a minimum of four consecutive weeks between June and August.

Sick leave

• According to the 1991 Sick Pay Act, workers are eligible for sick pay for injuries, illnesses, and rehabilitation, and they are also protected against being fired for being unwell. They must provide a medical note for more than seven days as proof of sickness. 
• Under the National Insurance Act, employees are entitled to supplementary benefits if an illness lasts longer than the standard amount of sick leave. In certain circumstances, businesses are required to inform the Social Insurance Agency. 
• In 15 months, an employee is only eligible for 364 days of sick pay. Only in exceptional circumstances is this time frame prolonged. For up to 550 days, workers are eligible for prolonged sick leave at a rate of 75% of their yearly wage.
• Employees are not paid for the first day of sick leave. They get 80% of their usual pay for the next two weeks of absence. Beyond this, they can refer to the case of government office. 
• Parents who need sick leave for their child (under 12 years) can use ill pay support. 

Maternity leave 

• Mothers are guaranteed to receive seven weeks before and after delivery, and workers in Sweden have access to up to 16 months (480 days) of parental leave. 
• The mother’s partner is entitled to take ten days off for the delivery. 
• The 480-day allocation can be split between either parent, but 60 days are set aside, especially for each parent.

Paternity leave 

• From the time a child is 0 to 12 years old, parents can take 480 days of leave collectively. 
• Usually, the employee’s salary serves as the basis for parental leave pay. 
• Single parents are offered the whole 480 days. 
• Parents of kids under the age of eight have the right to reduce their working time by up to 25%. 
• Until the child is 12, the parent or primary caregiver who requires time to care for a sick child is also eligible for vacation and interim parental benefits. 
• Unless otherwise stipulated in the collective agreement, employers are not required to offer paid parental leave over the amount covered by the state.

Payroll 

There are certain obligations related to payroll in Sweden that employers need to take care of. They should prioritize adhering to applicable tax rules. Employers must take personal income tax, social security payments, payroll, excise taxes, and withholding taxes into account throughout a corporation’s payroll process. While setting up payroll in Sweden, employers must provide specific details, including the employees’ Swedish Tax Identification Number (TIN).

Moreover, the income tax rates in Sweden are different for “resident” and “non-resident” taxpayers. Employers must contribute 31.42% to social welfare, while employees are expected to pay 7% of the total. These payments go toward medical insurance, pensions, welfare payments, and unemployment benefits, among other things. Employers must send payslips to employees every pay period and preserve payroll documents for at least ten years.

Taxation in Sweden

Employers withhold taxes from employees’ paychecks as part of Sweden’s progressive taxation system. A national income tax of either 0%or 20 %, applies to all workers regardless of income, depending on income level, and a municipal income tax of 32% (the average throughout municipalities). Sweden’s corporate tax rate is currently 20.6% as of 2022. Employers contribute financially to social benefits. Employers must contribute about 31.42% of employee wages to a social insurance scheme that provides many social benefits, including pension funds and paid sick leave. Foreign employees are liable to contribute 21% of their gross salary. 

Termination/severance in Sweden

In Sweden, employers must give notice of dismissal two weeks in advance. Then, employees can enter conversations with their employers where the reason for termination is discussed. Employees can demand an explanation for release in writing. 

The notice period duration of an employee depends upon the course of employment. If an employee has worked for less than two years, they have to serve a minimum of one month as a notice period. For those who have done more than two years of employment, the notice period increases by two months. The maximum duration of a notice period is six months.   

In most circumstances, staff are eligible for regular salary and full benefits during the notice period. Employees who believe their termination was unfair may file a lawsuit and be entitled to compensation equal to 1.5 to 2.5 years of their lost wages. Employers frequently need to communicate with a worker’s union. Moreover, employees also have an option to end their employment, followed by a notice period.  

Although severance packages are frequently included in employment contracts in Sweden, they are not legally obligatory.

Managing worker terminations and compensation packages can be challenging for businesses making their first international expansion. Multiplier’s Sweden PEO can reduce the risk for foreign businesses and offer assistance during this procedure.

Why Multiplier? 

Expanding internationally entails several challenging processes, such as adhering to government-approved norms and regulations. Employers can consult global PEO services at this point to control business growth and bring on talented and qualified staff.

If you decide to expand your business into Sweden, Multiplier can assist you with most of your hiring and onboarding needs. Our Sweden PEO experts can help you expedite your hiring process by creating official, written employment agreements.

You may handle staff hiring, payroll, and global personnel management with Multiplier as your global employment collaborator. In compliance with Swedish employment legislation, our professionals will manage employment contracts, social security contributions, retirement, and other benefits.

Our Sweden PEO Simplifies Your Expansion 

• Overseeing and operating global payrolls
• Give workers benefits and insurance that are affordable in their region.
• Easily control spending and compensation claims
• 100% statutory compliance
• No requirement for a local entity
• Absolute accuracy and transparency
• There are no hidden fees or transaction expenses.

If you want to learn more about our solutions, speak with our PEO Sweden professionals immediately.