Sweden — 12 min

How to use an Employer of Record in Sweden

Written by Iarla O’Carroll

July 12, 2023

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Hiring a globally distributed team has significant benefits for businesses that are looking to expand beyond local borders. If your company is looking to grow operations in Europe, Sweden is an excellent choice. The country’s strong economy and high standard of living have contributed to the growth of a skilled and talented workforce, making it a sought-after destination to recruit highly skilled workers.

To hire employees in Sweden, you’ll have to open your own local entity in the country, understand the country’s employment and tax laws, and take on the HR and admin work of managing your employees. Hiring internationally can be an expensive and time-consuming process.

Jump straight to a key chapter

5 steps to hiring employees in Sweden using an employer of record:
What are the benefits of using an employer of record in Sweden?
How much does it cost to use an EOR in Sweden?
Hiring in Sweden
What are the risks of employee misclassification in Sweden?
Get started with an EOR in Sweden

An employer of record (EOR) service can make your life easier by allowing you to employ global workers at an affordable price quickly. An EOR has its own local entity in Sweden, so you can get the global workforce your business needs without worrying about setting up a new entity. An employer of record also manages the HR functions involved in hiring foreign employees, which means you get a team of legal experts who can help you to comply with labor laws and tax regulations.

If you're a non-Swedish employer looking to hire international employees in Sweden, keep reading to learn more about how to use an employer of record in Sweden.

5 steps to hiring employees in Sweden using an employer of record:

Follow this simple 5-step process to find the best EOR in Sweden.

Step 1: Identify your business needs and the services you require when it comes to international hiring. Make a shortlist of potential providers and narrow your list down further by making a list of pros and cons of each provider.

Step 2: Make sure that the EOR has its own entity in Sweden, rather than outsource services to a third party. Using a partner-dependent EOR might have consequences for your business, as you may not have complete control over costs or security, due to a dependence on external companies.

Step 3: Check online reviews and client testimonials to discover insights about your chosen EOR provider’s services and how they operate. You could review their company website, online press coverage, or third-party review sites to see what their clients are saying about them.

Step 4: Since the EOR hires employees on your behalf and handles everything from onboarding to payroll, ensure that they offer your employees an exceptional experience. For example, are they available to quickly respond to questions or support employees if needed? Do they pay salaries on time? Is their onboarding process engaging?

Step 5: Make sure your EOR provides a fair and competitive compensation and benefits package to attract and retain the best candidates. You can work alongside the EOR to create an equitable benefits package that takes into consideration the employee’s role, skill level, and experience, as well as local employment policies. To protect your intellectual property and company data, also ensure that your chosen EOR has a high level of security and compliance.

Step 6: Select your partner and onboard your business to get started with global hiring. An established and respected EOR makes the process seamless for your organization, and memorable for your future employees.

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What are the benefits of using an employer of record in Sweden?

The employer of record is the on-paper employer — a sort of middle-man that allows businesses to hire internationally without establishing an entity in each country they want to hire workers in.

Once you’ve decided to hire employees in Sweden, you can use an EOR to take on the legal responsibility of managing employees, from the recruitment process to all HR functions going forward. An EOR onboards employees, handles all the legal documentation, submits the relevant paperwork and taxes, and manages payroll for workers in Sweden.

An EOR typically offers a suite of services that cover all local requirements, including

Employee compensation and benefits
Global payroll
Employment contracts that outline holidays, remuneration, and termination procedures
Taxes
Intellectual property protection
Employee classification
Compliance with local labor and employment laws

Partnering with a global employment provider like Remote can help you do all of the above and more, without the cost and hassle of opening and managing a new entity in Sweden.

If you’re still deciding whether an EOR is the right solution for your business, read our article to learn more about why to use an EOR for your hiring needs.

How much does it cost to use an EOR in Sweden?

The costs of hiring an EOR varies based on the services required, the location of the workers, and how many workers you want to hire. Generally, prices can be as low as $599 to upwards of $2,000 per employee, per month.

Some EORs offer special prices for startups and social enterprises. If your worker is a refugee, there are some EORs who provide specialized packages for hired refugees. If you find EORs that offer low rates, check to ensure that the company is offering the same level of security and compliance as seasoned EORs.

When it comes to pricing, it’s best to find an EOR that provides a transparent, flat-rate pricing structure for the full stack of services — onboarding, benefits, taxes, payroll, compliance, and data protection.

Hiring in Sweden

Sweden has several labor laws in place that employers must adhere to. There are also specific guidelines around termination, contracts, compensation, and other aspects of employee hiring and management. You can learn more about these topics below.

While hiring employees in Sweden, you’ll have to consider collective bargaining agreements, in addition to Swedish labor laws. Each industry has its own collective bargaining agreements that regulate it, so it’s important to understand which agreements apply to your workers while recruiting employees in Sweden. Some industries have more complex agreements than others. Additionally, there are labor and employment laws that are regularly updated.

Employment contracts and agreements in Sweden

Employment contracts generally detail information regarding leave, compensation, and benefits. Each employee must have a contract outlining the scope of work and terms of employment, though there aren’t guidelines about this unless specified in the industry’s collective bargaining agreement.

Unless otherwise stated, such as for seasonal or temporary roles, an employment contract is considered indefinite. For fixed-term contracts, if the worker has been in the role for more than two years, the contract is then considered indefinite.

There aren’t formal requirements regarding how employee contracts are negotiated. If employment lasts for more than three weeks, a written contract is required. Employment contracts may be oral, but this isn't the norm.

Labor law compliance in Sweden

Labor laws in Sweden offer worker protections and benefits and are drawn from the following laws:

Employment Protection Act
Work Environment Act
Employment Act
Annual Leave Act
Paternal Leave Act
Discrimination Act
Working Hours Act

In Sweden, an employee's regular working hours cannot exceed 40 hours per week. Within five weeks, a worker can’t work more than 48 hours of overtime. There is a maximum of 200 hours of overtime for one year. Employees are required to take a break after five hours of working. They also need to have a break of 11 hours every 24 hours of work. There are also special regulations in place for underage and night workers.

Employees are also entitled to data protection in Sweden. Employers must notify workers if their information is accessed and gain consent to do so.

Sweden’s discrimination laws protect several classes of workers, and employers cannot discriminate based on:

Gender
Transgender identity
Ethnicity
Religion or beliefs
Disability
Sexual orientation
Age

Payroll and payroll taxes in Sweden

Swedish workers expect to be paid monthly. While there is not a minimum wage set in Sweden, collective bargaining agreements do establish a minimum wage by industry. Employers can expect to pay a tax rate of 31.42% per employee. Income up to 613,900 SEK is taxed at 0%, and income over 613,900 SEK is taxed at 20%.

An EOR can manage payroll for your company, so you don’t have to worry about currency conversions or paying additional tax rates. Partnering with an EOR will give you peace of mind and expert guidance on hiring, managing, and paying employees in Sweden.

Sweden employee benefits and compensation

Swedish workers are paid in Swedish krona. The average salary in Sweden is 46,000 SEK per month. Salaries depend on the job title, the type of work, and collective bargaining agreements that are in place for the industry.

Any hours worked over the standard 40 are considered overtime and paid at a 150-200% rate of regular wages. It’s essential that your EOR provider pays your global employees fairly and offers a compensation package that is in line with local salary expectations. You also have to ensure that you offer additional benefits for your employees in Sweden, such as pension schemes, additional paid leave, flexible work schedules, vision insurance, other insurance, dental insurance, and more. Remote can even help you offer benefits to your contracted workers.

Employees are entitled to 25 days of paid leave. They are also allowed various other types of leave, including:

Maternity and paternity leave of 480 days with 80% of wages
Sick leave with 80% of pay for the first 14 days
Bereavement leave
Military service leave
Compassionate leave
Entrepreneurship leave
Childcare leave
Education leave

Collective bargaining agreements usually set the guidelines for additional types of leave. Each sector and industry could have different guidelines based on these agreements. When hiring globally, you’ll have to go beyond offering the standard benefits and offer competitive benefits that can attract and retain top talent.

Severance pay and employee terminations in Sweden

Individual collective bargaining agreements outline how you can terminate employees and the notice period required. To terminate an employee, you must provide a valid reason and give notice to the employee beforehand. Termination notice periods range from zero to six months depending on the duration of employment.

Most employment contracts outline what is considered a valid reason for dismissal. When terminating an employee, they must be given a written notice with outlined steps on how to appeal, terms of re-employment, and the reason they are terminated. Severance pay is also determined by agreements. Employees will receive regular wages while they complete their notice period.

For industries with collective bargaining agreements in place, employers should consult union representatives before terminating an employee, or they could risk facing financial penalties.

Sweden —

15 min

Employee benefits in Sweden: a complete guide

Learn about the mandatory benefits you must provide if you hire employees in Sweden, as well as some extra tips to attract elite Swedish talent.

What are the risks of employee misclassification in Sweden?

Swedish labor laws define employees and contractors differently. While hiring workers in Sweden, you’ll have to ensure that you’re classifying them correctly or face penalties and fines associated with misclassification.

Employers are generally not required to pay taxes or benefits for contractors, unlike employees. Payroll is more straightforward as well, as you don't have to make payroll deductions towards social security or other contributions. For this reason, employers may deliberately misclassify their workers as contractors. However, even if misclassification is an honest mistake, employers can be fined heavily or face legal problems.

If you misclassify a worker as a contractor, but their role changes over time, and they start taking on the tasks of an employee, then the employment relationship changes. You'll have to update the contract to reflect the change in job role to stay compliant with labor rules or risk the consequences of misclassification. Misclassification has less to do with how your workers are classified in their employment contract and more to do with intent or how you’re actually treating them.

When hiring globally, it’s important to understand the nuances of laws around worker classification. Apart from hefty fines, penalties, and legal disputes, you might even have to pay back wages and benefits to your misclassified worker.

Working with an EOR is the best way to classify your workers correctly and comply with labor rules in Sweden. Remote’s team of local employment experts is experienced in Swedish labor laws and can help you avoid the risks of misclassification.

Get started with an EOR in Sweden

International hiring is no mean feat. Understanding complex labor laws in Sweden, opening a legal entity in the country, and managing your global employees — these tasks can seem daunting and may put you off hiring in Sweden.

But global employment doesn’t have to be an expensive and burdensome process, as long as you have a trusted employer of record on your side. A global HR platform, like Remote, gives you everything you need to scale your business operations globally while ensuring compliance with labor, employment, and other local laws.

Remote offers a seamless experience when it comes to recruiting, hiring, and onboarding your workers in Sweden, and globally. Partner with Remote and you get:

An intuitive platform that allows you to view and manage all your global employees in one place
Tailor-made benefits and compensation packages for your employees
A fast and simple onboarding process, and an effective payroll system
Personalized HR and admin services to handle all aspects of employee management
Strong intellectual property and data protection for your business and employees.

Are you ready to start your hiring journey in Sweden? Get started with Remote’s EOR services today!

Your guide to switching EOR providers

Use this guide to learn how easy it is to switch from a different EOR provider and start employing your global team with Remote. We walk you through the key steps so you understand what’s involved.