Employment Laws in Sweden

Contractual Agreements

The labor laws of Sweden require employers to provide a written employment agreement outlining the following key terms within one month:

• Employer and employees’ names and addresses
• Employee start date
• Employee work location
• Employee job title and primary duties
• Whether it's a special fixed-term contract
• Length of normal working day and week
• Pay rate and other employee benefits
• Confirmation of social security contributions
• Any probationary period
• The process and notice period for ending employment
• Any applicable collective bargaining agreements

Types of employment contracts in Sweden

• The employment laws in Sweden allow most jobs to be permanent (indefinite-term) unless explicitly stated otherwise in the employment agreement. 

• Employers may sign special fixed-term agreements under contract employment law in Sweden for not more than 12 months. 

• The Sweden labor law encourages prioritizing employees under special fixed-term for full-time positions after nine months. 

Obligations and rights for both parties

• Employers must outline terms and conditions accurately, detailing working hours, pay, and termination clauses.
• Employers must pay 80% of the usual salary for the first 14 days of employee illness.
• Employers must allow a conducive environment for unionization and negotiate in good faith.
• Employers need not subject outsourced employees to Swedish taxes. However, all resident foreign temporary workers and business travelers are now taxed under the revised 183-day rule. 
• Employers are liable for employee data handling and privacy issues arising from it. Thus, employers may consider signing Data Processing Agreements alongside employment contracts. 

Working Hours and Overtime

The Working Hours Act applies to both local and foreign companies as long as all work is carried out within the country. Let’s explore the provisions of the act: 

Regular working hours

• Employers may ask employees to work an average of 40 hours per week, calculated over four weeks. 
• Sweden labor law also regulates on-call time for remote employees. Employers may claim up to 48 hours per employee over four weeks or 50 hours per calendar month.  
• Working hour regulations may not apply to domestic work, managerial, or relevant positions.

Overtime regulations and compensation

Minimum wage and compensation

There is no minimum wage provision under the labor laws of Sweden.  

Factors affecting wage determination

• Wage determination in Sweden is primarily driven by collective bargaining between trade unions and employer organizations.
• In their absence, employers can base the minimum salary on the requirements of work permit applications. 
• Employers may consider various market force factors and other legal and government regulations to arrive at fair compensation. 

The minimum wage rate in 2024

• Currently, the minimum monthly salary for work permit applications is SEK 26,560. 

Explore some effective ways to pay your employees.

Employee Benefits and Social Security

The employment laws in Sweden require you to extend the following benefits: 

Statutory benefits

• The Annual Leave Act entitles employees to paid vacation time.
• The Sick Pay Act covers employee pay during illness. 
• The Employment Protection Act ensures salary and benefits during termination notice periods.
• Employees may receive maternity pay benefits for up to 480 days, funded by the Swedish government.

Additional perks and benefits

• Employers must also cover employees with an old-age pension, fees for health insurance, survivor’s pension, and work injury. 

• Moreover, collective agreements may call for deviations in working hours, overtime pay, leave entitlements, notice periods, severance pay, or provide for supplementary pension. 

Social Security contributions and requirements

The employment laws in Sweden require employers to contribute an additional 31.42% of the total taxable remuneration (no cap) for employee social security.

Vacations and Paid Time Off

Here's a breakdown of the key points in the Annual Leave Act, making it easier to understand the differences between paid and unpaid leave:

Annual leave entitlement

• Employers must extend up to 25 days for paid vacation in every annual leave year. However, they may offer five days of paid vacation to employees who joined after 31 August in the following annual leave year. 
• The labor law in Sweden requires employers to distinguish between an “annual leave year” (1 April to 31 March) and a “qualifying year” (the 12 months before the vacation year) for the calculation of pay during the annual leave.
• Further, the laws restrict employers from accounting for Saturdays and Sundays as annual leave.

Public holidays and special leaves

Termination and Severance

The reformed employment laws in Sweden add more clarity to employee termination. However, the laws do not include specific provisions for severance pay. Let’s discuss it further. 

Reasons for termination

Notice period

Probation period

• Employers can place new employees under probation for not more than six months. 
• The probationary period allows employers to hire and fire new employees easily. 

Discrimination and Equal Opportunity

The employment laws in Sweden require employers to actively prevent discrimination and provide equal opportunity. Let’s highlight specific provisions in the law.  

Prohibitions against workplace discrimination

• The labor law in Sweden protects employees from unfair treatment based on several protected characteristics, including gender identity, sexual orientation, disability, religion, ethnicity, age and parental leave, and union membership. 
• Further, the laws encourage employers to promote equal pay for equal work.
• Employers hiring over 10 employees must document employee pay review and analysis and outline measures to address non-objective pay differences. 

Further, the laws may levy punitive damages for workplace discrimination. Employers can avoid it by partnering with a reputed Employer-Of-Record solution. 

Health and Safety Regulations

Sweden's Work Environment Act prioritizes workplace safety and well-being. It puts employers in charge of ensuring a healthy and positive work environment for their employees. Employers may begin by: 

• Specifying general safety standards and ergonomic guidelines at the workplace.
• Implementing risk assessments and conducting regular safety training.

Stay Compliant with Skuad

Skuad empowers businesses to seamlessly build and manage distributed teams across over 160 countries, including Sweden, without establishing local entities. 

Skuad handles the legal and administrative complexities, like payroll processing, taxes, and benefits administration, ensuring compliance with the Sweden labor law. Thus, employers can focus on core business operations by delegating the administrative tasks of hiring and managing employees under the employment laws in Sweden to Skuad. 

Get onboard with Skuad to explore how we could help in global hiring and expansion. 

FAQs

Q1. What are the labor rules in Sweden?

A1. The Swedish labor rules emphasize written contracts, balanced 40-hour-per-week regulations, and contribute to social security at about 31.42% of the total taxable remuneration. The laws encourage anti-discrimination and equal opportunity measures alongside safe working conditions. Moreover, collective bargaining agreements may significantly impact work conditions. 

Q2. How does employment work in Sweden?

A2. In Sweden, employment offers fair wages, generous leave, and strong employee protections. Work permits are needed for foreign employees outside the EU/Nordic region. While remote employees are covered under the law, freelancers require clear contracts and manage their taxes and social security. 

Q3. What are the termination laws in Sweden?

A3. Sweden's newly reformed termination laws require employers to give objective reasons and written notice between one and six months. Further, the laws allow employees to challenge unfair dismissals and get fair compensation. 

Q4. What is the 183 rule in Sweden?

A4. The 183-day rule in Sweden is regarding income taxation for resident foreign temporary workers and business travelers. It replaces the 183-day rule before taxation with a new economic employer concept to achieve a more level playing field in the labor market.