Sweden Employee Benefits
Swedish Employee Benefits
Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Sweden might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labor contracts for employees in Sweden including local benefits.
When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Sweden, benefits are guaranteed by national legislation as well as collective agreements with trade unions or workers’ councils.
What are the Employee Benefits in Sweden?
Benefits and entitlements for Swedish employees are based on a framework of statutes, European Union (EU) directives, case law and collective and trade union agreements. Foreign companies hiring employees in Sweden must operate within this fluid arrangement of legislation that provides safeguards and guarantees for the workforce.
However, unlike many European nations Sweden’s employment market does not have a comprehensive labor code. Individual legislation includes the Employment Protection Act, Working Hours Act and Sick Pay Act, for example, alongside statutes prohibiting discrimination and promoting equal pay for men and women. Additionally, the Swedish Work Environment Authority oversees employees’ welfare in the workplace.
Minimum guaranteed benefits, either from legislation or agreements, include:
- Minimum wages
- Paid vacations
- Working hours
- Termination, severance, and notice periods
- Sick leave
- Maternity allowances and benefits
The responsibilities of foreign companies reach further than simply complying with tax, social security, and payroll regulations. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.
What Compensation Laws exist in Sweden?
The employer-employee relationship in Sweden is based on a mix of contractual arrangements, statutes, European Union (EU) directives and case law. Collective and trade union agreements also feature and are drawn up in conjunction with the Confederation of Swedish Enterprise.
- The Employment Protection Act (1982) lays down mandatory benefits for employees covering such as termination and dismissals, notice periods and other areas of employment, as well as contracts. The Act’s provisions can be improved by Collective Bargaining Agreements (CBAs), but not diminished
- The Annual Leave Act (1977) stipulates a minimum 25 working days’ leave per year and also provides rules on calculating vacation pay as well as pay in lieu of taking vacation days. Again, CBAs can improve benefits
- The Working Hours Act (1982) restricts working hours generally to 40 per week and no more than 48. It also covers rest periods and restrictions on overtime. The Act excludes managerial and executive staff
- The Sick Pay Act (1977) enforces mandatory requirements in favor of the employee and employers’ obligations
- The Parental Leave Act covers maternity benefits and leave for mothers and fathers before and after the birth of their children
The requirement for employers to respect employees’ rights stretches further than simply complying with tax and payroll procedures. Statutes and binding collective agreements apply to such as maternity allowances and benefits, holidays, sick pay and severance payments, minimum wages and working hours.
Drawing up contracts is tricky enough, but in Sweden it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Do not take the risk of paying penalties for ignoring these responsibilities.
Compensation, entitlements, and benefits include:
- National Minimum Wages: There are no nationally applied minimum wages in Sweden. Salaries are agreed either contractually between employers and staff or through trade union or CBA agreements. By mid-2021 the average maximum hourly rate was SEK 183 (€17.87, US$20.22) with an average hourly minimum of SEK 134 (€13.08, US$14.81)
- Sick Leave: The Swedish Sick Pay Act decrees that for the first 14 days the employer pays ‘sick pay’ at 80% of salary, up to an hourly maximum of SEK 810 (€79, US$89.50). The employee must provide a medical certificate if ill for more than one week. After 14 days, ‘sick pay’ becomes ‘sickness benefit’ from the Swedish Social Insurance Agency (Fӧrsäkringskassan), also at 80% of salary
- Working Hours and Breaks: The Working Hours Act states full time workers cannot exceed 40 hours in a standard week up to a maximum of 48 including overtime, on-call time and additional hours for other reasons. The Act is based on European Union directives. Workers should receive 36 hours of continual rest in seven days. Employees should not work more than five hours without a break and are entitled to leave the workplace for lunch breaks
- Overtime: Overtime depends on collective agreements and the particular business and sector. The Employment Protection Act (EPA) nevertheless restricts overtime to 50 hours in a month or 200 over 12 months, including time spent on call. Outside of collective agreements, overtime depends on contracts but can range between an extra 50% and 100% of hourly pay for additional hours worked. Some employers offer extra vacation days in lieu of remuneration
- Paid Vacations: The Annual Leave Act stipulates a minimum of 25 days’ vacation annually, with days for part-time workers calculated pro rata. Employees starting after August 31 receive only five days paid vacation until April 1 of the following year. Contracts or collective agreements can allow for extra days. Vacation pay is calculated on the ‘qualifying year’ before the following ‘vacation year’, which run from April 1 until March 31. Qualifying pay is based on monthly salary and any supplements and bonuses, regulated by the Act and adjusted if the individual has been employed for less than a full qualifying year. Employees not entitled to vacation pay still receive their minimum vacation
- Maternity / Paternity / Parental Benefit and Leave: Mothers take seven weeks each before and after birth, with fathers entitled to 10 days paternity leave taken at the same time as the mother. Mothers can begin drawing benefit 60 days before the birth. Benefit for parental leave is paid by the state for 480 days (roughly 16 months) for a single child. Within this allowance, 390 days of ‘sickness benefit days’ are based on 80% of income capped at SEK 1,006 (€98, US$111) while the remaining ‘minimum level’ days are paid at SEK 180 (€17.60, US$20) per day. Both parents can share a maximum of 30 ‘double days’ during the first 12 months after birth, so if the full quota is taken 60 days will come off the 480-day allowance. In the case of multiple births extra parental leave days are 660 days for twins, 840 days for triplets and 1,020 days for quads.
- Termination and Severance: Employers must prove ‘just cause’ for termination over personal reasons, such as poor performance or misconduct. Employers must give at least two weeks’ notice to the employee and trade union of the intention to terminate employment, allowing time for consultations; termination cannot begin until these have been completed. Termination or redundancy for economic reasons such as restructuring, or closure must comply with stringent controls applied by the EPA and cannot violate the Discrimination Act or the Parental Leave Act. If five or more employees are affected by potential redundancy at the same time the employer must inform the Swedish Public Employment Service in writing. There is no mandatory requirement for severance pay although it is common in medium to large companies, especially at the managerial or executive level.
- Notice Periods: Under the Employment Protection Act the statutory minimum notice period is one month, which increases by one month for each two years’ service to a maximum of six months for 10 or more years’ employment. Swedish case law has established that the CEO / COO level of staff is always entitled to six months’ notice. During probation periods either party can terminate with two weeks’ notice and without giving a reason