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Sweden 4 min

Employee benefits in Sweden: All you need to know

Written by
Bruce Gilbert

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Beyond its Scandinavian charm and chilling winters, Sweden is rapidly becoming a hotspot for businesses hiring globally.

And, why not?

With some of the world’s happiest workers, stellar human development ratings, advanced infrastructure, and a highly-skilled professional workforce, Sweden has been at the forefront of the global economy, especially since remote work has been normalized.

If you’re looking to break into the Swedish labor market, you need to understand the statutory benefits according to Swedish labor laws, as well the optional perks you could consider to attract and retain employees in one of the world’s most competitive labor markets.

In this article, we’ll explain:

  • how to determine whether a worker qualifies for mandatory benefits under Swedish law
  • the benefits you must provide to your Swedish workforce
  • the additional benefits you can offer to attract quality Swedish talent, and
  • a basic breakdown of the process of expanding to Sweden so you can start hiring right away

Who is entitled to benefits in Sweden?

Swedish labor law separates workers into employees and independent contractors and most of Sweden’s regulations around benefits and entitlements apply only to the former. 

Of course, that shouldn’t prevent you from offering consistent and competitive benefits to attract and retain Swedish contractors (more on this in our guide to offering benefits to international contractors).

Statutory employee benefits in Sweden

With 75% of their labor force fully employed, Sweden has the seventh-highest employment rate globally. Such a competitive labor market means that businesses must provide a strong benefits package to attract and retain quality talent.

If you’re looking to build a workforce of Swedish employees, it’s important to understand the statutory benefits you’re obligated to provide as well as additional benefits and perks that will make your business an appealing employer in a highly competitive market.

Swedish leave entitlements

The Swedish Annual Leave Act states that employees are entitled to a minimum of 25 days of vacation per year with benefits equivalent to 12% of their gross wages in the preceding year plus 0.43% of their monthly salary.

Employees who’ve been employed for three months or less may not qualify for annual vacation but will be entitled to vacation pay. Employees can negotiate collectively for more days off.

Maternity and paternity leave in Sweden

Female employees are entitled to 14 weeks of maternity leave split seven weeks before and after delivery.

Fathers are entitled to 10 days of paternity leave within 60 days following childbirth.

Following maternity leave, both parents are entitled to 480 days of paid parental leave where one partner can exercise up to 390 days with parental benefits paid by the Swedish Social Insurance Administration (Försäkringskassan).

Pension plans and retirement contributions

Swedish employer payroll contributions amount to 31.42% of an employee’s wages. This covers pensions, health insurance, occupational injury insurance, and parental benefits. 

Minimum wage

Like its Scandinavian neighbors, Sweden has not had a statutory minimum wage for decades now. Wages are determined by collective bargaining between unions and employers.

The average Swedish salary hovers around 32,000 SEK, equivalent to US $3,700 per month, or roughly US $45,000 annually.

Overtime

The Swedish Working Hours Act of 1982 states that working hours cannot exceed 40 per week. Any time spent working beyond this is considered overtime, up to a maximum of 50 hours per month.

Overtime can be compensated with anywhere from a 50 - 100% bonus.

Insurances

The Swedish social security system covers benefits such as general pension, parental leave, sick leave and health care.

Employers contribute to the National Insurance scheme through the social security fee which equals 31,42 % of the employees’ gross income. The general rule is that if a wage element is to be taxed, social security fee should also be calculated.

The employer files the PAYE return on a monthly basis and makes monthly payments to the tax account. The social security fee is an employer cost and the employee does not contribute to the cost.

Sweden has a nationwide healthcare program that subsidizes costs for individual patients. Employers are required to issue sickness benefits starting on the second day up until the 14th day of an illness.

After 14 days of an illness, employees can apply for benefits from Försäkringskassan, the Swedish Social Insurance Agency, with benefits covering up to 80% of an employee’s normal wages.

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Additional benefits to consider for Swedish employees

With the seventh-highest employment rate and the world’s fourth-happiest workers, Swedish employees are used to having safety nets and benefits as part of a normal career.

As such, you’ll need to offer more than the basics to stand out in one of the world’s most competitive labor markets.

Private and supplemental health insurance

Since Sweden’s public health insurance covers all employees, private healthcare is most often an avenue to get expedited access to healthcare. 

Supplementary private health insurance is by no means an expected benefit for employees looking for a job change but this provision might still help you stand out from competitors and retain top employees.

Additional perks and benefits

Employers can look to provide extra provisions to Swedish employees, but local taxation legislation should be factored into these decisions. The employer may compensate for expenses and provide benefits, but many of these are considered part of a taxable income for the employee. Taxable benefits may include the following:

  • Company car or car allowances
  • Daily travel allowance (not to be compared with per diem)
  • Meals and expense vouchers
  • Private hotel stays and flights paid by the company
  • Mobile phones
  • Life insurance
  • Dental insurance
  • Optical insurance

This doesn’t mean Swedish employees won’t appreciate these benefits. But you should consider the cost to your business versus the perceived value for the employee. 

Benefits like flexible working hours, additional annual leave provisions, and even unlimited paid time off policies are becoming more commonplace in Sweden. These types of perks can be the difference between snagging a top-quality candidate, or missing out to a competitor.

Creating a competitive and compliant global benefits package

Remember that no matter how many additional perks you offer, you’ll struggle to attract top-quality global talent if your offer doesn’t include an internationally competitive salary.

As a rule of thumb, set a benchmark to pay your employees a salary that competes with the global industry average wherever you’re hiring. Remote’s guide to calculating global compensation details a number of mechanisms you could consider to create fair and competitive offers.

You need a strategy that’ll help you offer competitive international benefits to attract top talent. Like you’ll see in our soft benefits guide, remote workers are growing to expect certain perks, and offering these soft benefits gives you an edge in a global labor market. 

If you’re a smaller business looking to delight your global workforce without breaking the bank, our small business benefits guide will help you explore cost-effective alternatives that will still appeal to remote employees.

In a global labor market, doing the bare minimum for your employees just won’t cut it any longer. Remote helps you get proactive with perks and benefits for your global team so you can hire and retain the best brains from across the globe.

link to What is the Modern Benefits Stack for 2022?
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What is the Modern Benefits Stack for 2022?

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How to set up and manage benefits for international employees

Whether you’re hiring a graphic designer from Sweden, software engineers from Silicon Valley, or a general counsel from the United States, you need to understand how benefits work in each local market to stay compliant and attract the best talent.

More importantly, you need a global employment partner to automate all the time-consuming manual work, and manage the complicated compliance requirements, so you can focus on growing your business.

And that’s why we built Remote. By partnering with Remote as your global employer of record, you can scale your team across borders without worrying about any of the headaches. Remote takes care of the difficult tasks involved with hiring across borders, like:

  • Eliminating paperwork and manual HR tasks
  • Managing contracts and handling onboarding requirements 
  • Collecting all of your employment data and documentation in one simple hub
  • Handling terminations and severance requirements
  • All of this while avoiding expensive compliance fines

When should you use an employer of record?

An EOR can help you streamline and scale global growth right away. Remote’s EOR service provides you with the service of dedicated local employment experts to offer the insight you need to create a competitive benefits package in Sweden and other global markets. The partnership will also give you the foundation to develop compliant employment contracts and HR processes at scale. 

We’ve previously dedicated an entire guide to when should you use an employer of record, but there are a few critical trigger areas where an EOR can dramatically minimize your risk:

  • Creating a strong global benefits package
  • Managing the delivery of benefits in compliance with all local labor laws
  • Terminating an employee in compliance with local employment regulations, and
  • Protecting any IP & patents produced by your remote employees

An employer of record like Remote manages the complicated parts of international employment. Learn more about how Remote simplifies international hiring so you can start hiring international talent to power your business.

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