Sweden has a strong and stable economy. In addition to being business-friendly, Sweden is an attractive destination for foreign investment. According to reports, Sweden’s economy is expected to grow in 2026.

Sweden has a decent overall employment rate of 68.7% and a labor force participation rate of 75.5%. While the unemployment rate in the 15-74 age group stands at 9%, the rate in the 15-24 age group stands at 25.1%. 

Typically, Sweden has a decent overall employment rate and labor force participation.

If you are looking for business expansion and hiring in Sweden, seeking support from a workforce management platform helps. With an appropriate solution, like Payoneer Workforce Management, you may leverage the benefits of a global workforce. 

A workforce management platform offers guidance and expertise to navigate local employment laws while assisting in mitigating compliance risks. 

Explore Payoneer Workforce Management’s service to understand how we can support with hiring, paying, and managing local talent in 160+ countries, without setting up a local entity. 

How to hire employees in Sweden

Here is an overview of the process for hiring employees in Sweden: 

1) Setting up a local entity

If there are no budget and resource constraints, you can plan to set up a local infrastructure in Sweden and hire employees. 

Setting up a local entity requires an in-depth understanding of local labor laws and business administration, involves a lot of paperwork, and takes a lot of time. It may take a few months or a year before you make your first local hire.

Although you will have control over your employees in Sweden, this process is both expensive and time-consuming. 

2) Hiring independent contractors

Employers can also hire independent contractors, as it offers them a flexible option.

Along with minimal administrative obligations, you will have no liability for providing employee benefits, such as pensions, healthcare insurance, social security, and many more.  Independent contractors complete the project or assignment within the deadline and receive remuneration for their work. However, you must ensure that you don’t misclassify employees, as this can result in hefty penalties. 

3) Partner with a workforce management platform

Typically, businesses may opt for an Employer of Record (EOR), as it legally hires and manages employees on behalf of a company/employer. However, this model may not be applicable in Sweden, so companies may use a workforce management platform.

For instance, Payoneer Workforce Management can help handle the legal paperwork and procedures for local talent on your behalf. This way, you can get support to navigate local employment laws compliantly without needing to establish a local entity.

Regardless of your preferred process, it is essential to be aware of Sweden’s tax laws, labor laws, labor regulations, and other key administrative requirements.

Payroll in Sweden

Here is a quick overview of the payroll practices in Sweden. 

• Fiscal year: The fiscal year for general individuals in Sweden is the calendar year, from January 1st to December 31st. 
• Payroll cycles: The payroll cycle in Sweden is monthly for the majority of employees. 
• Minimum wage/salary: Sweden does not have any statutory minimum wage. The wage levels can be negotiated in collective bargaining agreements. 
• Bonuses: Bonuses are not mandatory legally in Sweden. However, many employee compensation packages include bonuses, which are often contingent upon the company’s profits or the employee’s performance. 

As an employer in Sweden, you are required to pay employer contributions to fund the social security system. 

The employer contribution rate usually ranges from 29% to 36%.

Employment Laws in Sweden

The Government of Sweden and the Swedish Work Environment Authority ensure that companies and organisations comply with the laws regarding working hours and the work environment in the country. 

Mentioned below are some key legislation and employment laws in Sweden:

• The Employment Protection Act (LAS): This act applies to employees in the private and public sectors. The act regulates various employment terms, including dismissal, termination, employment contracts, and other related matters. 
• The Work Environment Act (1977:1160): The main purpose of this act is to ensure a healthy and good work environment to prevent accidents or occupational health hazards. 
• The Working Hours Act: This act governs the activities of employees when they are working for an employer. The act also covers regular working hours, overtime, breaks, rest periods, and other related matters. 
• The Swedish Sick Pay Act (1991:1047): The Swedish Sick Pay Act regulates the entitlement to sick pay. Sick employees are entitled to sick pay from their employers for a maximum of 14 days. 

Mentioned below are some important things that all employers in Sweden must follow:

• Working hours: Regular working hours for employees must not exceed 40 hours per week for at most four weeks. Monday is the first day of the week. 
• Overtime: The Working Hours Act (2011:740) governs the overtime laws in Sweden. According to this act, overtime can be worked to a maximum of 48 hours over four weeks or 50 hours over a calendar month, with a maximum of 200 hours over a calendar year.
• Probation period: The maximum probation period for employees in Sweden is 6 months. 

Minimum wage in Sweden

• As mentioned previously, there is no minimum wage standard in Sweden. 
• Collective agreements determine minimum wage rates in the country. 

• Wages are determined based on the difficulty level of the job and the candidate’s performance in it.
• Factors like skills, educational qualifications, competence, and responsibility may also determine the minimum wage of a worker in Sweden; however, it mostly depends on the collective agreements. 

Employment contracts in Sweden

It is not necessary that employment contracts in Sweden have to be in written format. An oral contract is also considered valid. However, certain clauses and conditions of employment must be provided in writing. 

Here are the details that an employment contract in Sweden must have:

• Name of the employer and the employee with complete details 
• Contract period
• Job description
• Working hours
• Organization of working hours
• Compensation, including salary, accommodation, food, and overtime
• Annual leave
• Insurance
• Notice of termination
• Summary dismissal
• Liability and damages
• Disputes 

With the help of a workforce management platform, you can get assistance to draft employment contracts in the country. 

Leave policy in Sweden

Employees in Sweden are entitled to the following leaves:

• Annual Leave: Employees in Sweden are entitled to 25 earned leaves annually.

• Sick Leave: As per the Swedish Sick Pay Act, employees are entitled to sick pay in Sweden. The employee must provide a medical certificate for any illness lasting more than 7 days. The employer pays sick pay to the employee for a maximum of 14 days. If the illness persists beyond 14 days, the employee may apply for sickness benefit from the Försäkringskassan. 

• Public Holidays: Here is a list of the public holidays in Sweden. 

Occasion	Date
New Year’s Day	1st January
Epiphany	6th January
Good Friday	Varies
Easter Monday	Varies
International Workers’ Day	1st May
Ascension Day	39 days after Easter Sunday
National Day of Sweden	6th June
Midsummer’s Day	Saturday, between 20th – 26th June
All Saints’ Day	Saturday, between 31st October – 6th November
Christmas Day	25th December
Boxing Day	26th December

• Parental Leave: In Sweden, employees are entitled to 480 days of parental leave for one child. For two parents, each is paid for 240 days. 

• For 390 days of the 480 days, parental benefit depends on the employee’s income. 
• For the other 90 days, the benefit offered is at the minimum level. 
• Maternity leave is a part of the 480-day entitlement of parental leave. 

Not adhering to the leave policy in Sweden might lead to employee dissatisfaction. A workforce management platform may be able to help you navigate leave policies in the country, as part of its services.

Background checks in Sweden

As Sweden is a member of the European Union (EU), it must comply with the General Data Protection Regulation (GDPR). Every employee background check in the country must comply with the GDPR. As per GDPR, the employer can request a check on data relevant to the job profile. 

• The Swedish Police helps to carry out criminal record checks in Sweden when an employer wants a background check for a prospective employee. 
• An employer can also conduct a check on a candidate’s employment history, ensuring that the candidate has provided accurate information about their employment records in the resume. 
• Education history checks are also legal in Sweden, where you can verify if the candidate has submitted accurate certifications for respective qualifications. 

Employment termination in Sweden

Employment termination in Sweden is covered under the Employment Protection Act (1982:80). 

• When an employer gives a notice of termination to the employee, it must be based on objective grounds. These grounds include a lack of work and circumstances directly related to the employee.
• The employer has to give the notice of termination to the employee in writing. Additionally, the notice must be delivered to the employee personally by post or registered letter. When the employee receives the notice of termination, it is deemed effective.  

• The notice period is 2 weeks during probation and 1–6 months after probation, based on tenure.

Company registration in Sweden

To register a company in Sweden, you must compare different types of companies and choose the most suitable one, as well as select a suitable company name. You must apply to the Swedish Company Registration Office (Bolagsverket) and register with the Swedish Tax Agency for the F-tax. 

For more details, you can visit the official website of the Swedish company registration office.

PEO in Sweden

A PEO in the country shares various employment responsibilities with your business organisation. Businesses can concentrate on the main business areas and core operations as the PEO takes care of the administrative work, HR functions, local law compliance, payroll management, and similar functions. 

However, for companies looking to move quickly and streamline the process, workforce management platforms provide a more effective way to manage local talent.

Explore Payoneer Workforce Management’s services in Sweden

Whether you are looking to hire employees in Sweden or targeting business expansion in the country, Payoneer Workforce Management can help streamline the process. 

Payoneer Workforce Management helps with onboarding talent in more than 160 countries and facilitates payroll in 70 currencies. Along with offering compliance support with local employment laws, our unified platform helps handle payroll processing, manage timesheets, tax filing, and other administrative services. 

Book a demo today.

FAQs

1) What is the approximate cost of hiring in Sweden?

Various factors determine the approximate cost of hiring in Sweden. These include social security contributions, gross salary, and various benefits. 

2) Are there risks of employee misclassification in Sweden?

Yes, Swedish labor laws have strict classifications between employees and independent contractors. It is important to classify the professionals correctly to avoid fines and penalties due to misclassification. 

3) What is the minimum notice period for terminating an employee in Sweden?

The minimum notice period in Sweden for both the employer and the employee is 2 weeks (during probation) to 6 months, based on tenure.