How to Hire Remote Employees In 

Sweden

The Basics

Currency
Swedish Krona (SEK)
Employer Taxes
31.42%
Payroll Frequency
Monthly
Official Language
Swedish

Employment in 

Sweden

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Time savings: Hiring through a subsidiary or EOR can take months of onerous paperwork and legal wrangling. This is only multiplied if you want to hire in multiple countries.
Reduced overhead: You can save tens of thousands of dollars in onboarding costs by hiring through a company like Panther. You also have fewer responsibilities to provide benefits, further reducing overhead.
Greater flexibility: Contractors can be brought on as-needed. If they are not a good fit, you can choose not to renew them without incurring significant additional termination costs.
Reduced legal risk: Contractors generally don't have the host of legal protections that typically cover full-time employees.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: While it's important to understand local contractor law, for most firms, misclassification risk is minimal.
Lack of Control: For a worker to be classified as a contractor, they should be allowed to work independently on their assigned tasks. Hiring full-time employees offers a wider range of management options.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.

Set up a subsidiary in 

Sweden

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Sweden can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Sweden, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Sweden.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Sweden is not the same as paying workers in your own country. Employees have to be paid using Sweden's employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Sweden

 Specific Information

Working Hours

Full time employment is considered 40 hours weekly. Workers are entitled a break after 5 consecutive hours of work, and an 11 hour break for every 24 hour period.

Overtime

Overtime should not exceed 48 hours over a four-week period, 50 hours per month, or 200 annual hours. Overtime rules should be in a collective agreement or employee contract, and typically compensated with pay or leave. For overtime worked before 8pm on weekdays, overtime allowance is the monthly salary divided into 94 for each hour. For overtime worked after 8pm or weekends, allowance is the monthly salary divided into 72 for each hour. Employees who are excluded from overtime pay include, employees who hold managerial or comparable positions, those who organize their own working time.

Payroll Tax

Employer

Employer

  • Health Insurance
  • Parental Insurance
  • Retirement Pension
  • Survivors Pension
  • Labor Market Fee
  • Occupational Injury
  • General Payroll Tax

Employee Income Tax

  • Up to 519,400 SEK -   0%
  • Above 519,400 SEK -20%

Minimum Wage

There is no official national minimum wage. Minimums are determined through collective bargaining agreements through trade unions.

Payroll

Pay Cycle

Salaries are paid on a monthly basis on the 25th of each month.

Leave

Paid Time Off (PTO)

Employees are entitled to 25 days of paid vacation each year after one year of work at the company. Once accrued, vacation days can be held for up to five years.

Vacation pay accounts for 12% of an employee's gross annual salary.

Public Holidays

There are 13 public holidays in Sweden.

Sick Days

An employer is responsible for paying 80% of an employee’s salary for the first 14 days of sick leave.

After 14 days employers report to the Swedish Social Insurance Office, and the employee applies for the benefits. Social insurance pays for sick leave starting on day fifteen.

Maternity Leave

Mothers receive 240 days of paid leave with the right to start 60 days before the expected birth.

Paternity Leave

Fathers are entitled to 240 days of paid leave.

Parental Leave

Swedish parents are entitled to 480 days of paid parental leave with each parent having an exclusive right to 90 of those days. Leave shouldn’t be taken at the same time, except for the first 10 days following the birth. Single parents are given the full 480 days.

Bereavement Leave

10 days

Termination

Termination Process

The employer must have a valid reason to terminate an employee.

Before termination, an employer must try to find the employee a different role in the company before terminating the employee.

For companies with more than five employees, employers are obligated to notify the Employment Service. Companies are also obligated to negotiate with trade unions if relevant.

After negotiations, the employer must provide a termination notice in writing and in person. If this is not possible then a registered letter may be sent to the employee’s address.

Notice Period

Notice periods in Sweden are determined by employment contracts, collective agreements, or by the Employment Protection Act.

Employers:

With a collective agreement – Notice periods should be agreed upon between employer and employee and stated in the employment contract. The most common notice period is one month.

Without a collective agreement –

  • Less than 2 years – 1 month
  • 2 years but less than 4 years -2 months
  • 4 years but less than 6 years – 3 months
  • 6 years but less than 8 years – 4 months
  • 8 years but less than 10 years – 5 months
  • 10 years or more – 6 months

Employers may dismiss employees without notice if they have grossly misbehaved.

Employees:

With a collective agreement – Notice periods should be agreed upon between employer and employee and stated in the employment contract. The most common notice period is one month.

Without a collective agreement – According to the Employment Protection act notice period is one month.

Severance Pay

Companies have no obligation to pay any severance pay but it may be included in an employment agreement.