Employer of Record in Sweden

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in Sweden if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Sweden below, to avoid any compliance issues.

Employment Contract Requirements

In Sweden, employers must provide a written agreement outlining the specifics of the employment arrangement. They are obligated to communicate the following terms to employees within a week or month of commencing their employment:

• Identification of both parties
• Starting date
• Workplace and working hours
• Contract duration
• Job title and description
• Payment information
• Overtime hours and pay
• Notice period for termination and changes to working hours
• Collective agreement (if applicable)
• Training by employer (if applicable)
• Paid annual leave entitlements
• Rules for termination
• Employers social security contribution

Onboarding Process

We can help you get a new employee started in Sweden quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Probation Period in Sweden

The employment contract or collective agreement typically sets a probationary period of up to 6 months. If termination doesn't occur within this period, employment automatically becomes permanent. The employer must give a two-week notice before the probationary period ends, with the salary and benefits remaining the same.

The regular workweek in Sweden spans 40 hours across five days, and after 5 consecutive working hours, employees are entitled to a break. A minimum meal interval of 30 minutes must be observed by employees who work more than 5 consecutive hours in a day.

According to Swedish Labour Law, any hours worked beyond the standard 40 hours per week qualify as overtime and must be compensated. Overtime is limited to 200 hours annually, with a 50-hour monthly cap.

Overtime compensation often includes a 50% premium for the first two hours and 100% (double pay) thereafter. Weekend or holiday overtime typically starts at higher rates. Some workers may opt for compensatory leave - 1.5 to 2 hours off per hour of overtime - instead of cash payment, depending on their contract or collective agreement.

‍

Setting up a local legal entity in Sweden can be time-consuming and expensive. It often involves complex paperwork, local representation, banking, registrations, and ongoing tax filings, which isn't cost-effective if you're simply looking to hire a few employees or test the market. An Employer of Record removes these barriers entirely. Instead of spending months establishing a presence, an EOR lets you hire and onboard employees within days while staying fully compliant.

This enables faster market entry and greater agility. Whether you’re launching a pilot program, supporting a regional client, or adding specialized talent, you don't need to commit to long-term infrastructure to explore new business opportunities. The EOR handles local employment logistics while you retain day-to-day oversight of your hires. This model lets you scale up or down based on business needs, giving you more flexibility with less overhead and risk.

Employers in Sweden must navigate a structured payroll system that includes income tax withholding, social security contributions, and VAT compliance. Accurate tax calculations and timely remittances are essential to avoid penalties and ensure compliance with the Swedish Tax Agency's regulations. Social security contributions, set at 31.42% of an employee's gross salary, play a crucial role in funding benefits such as pensions and healthcare. Employers must also stay informed about progressive income tax rates and VAT obligations, which can impact overall business operations.

Utilizing payroll management software can streamline tax calculations, improve record-keeping, and help businesses stay compliant with Swedish payroll regulations.

One of the biggest risks in global hiring is payroll mismanagement. In Sweden, even small errors in tax reporting or social contribution payments can trigger audits, fines, or reputational damage. For companies without in-country expertise, the risk isn’t worth taking. An Employer of Record removes this burden by owning the legal responsibility of payroll, executing every step with built-in compliance.

Key Ways an EOR Supports Payroll in Sweden:

• Mitigates Compliance Risk: Oversees all legal obligations for payroll, tax filings, and recordkeeping.
• Local Regulatory Expertise: Interprets and applies Sweden’s latest labor and tax changes in real time.
• Free Processing: Reduces mistakes in wage calculations and reporting through built
• Payroll Record Management: Maintains compliant payroll audit trails and documentation for each employee.

In Sweden, work permits and visas are essential for employers hiring foreign workers. The process involves advertising job openings, securing union approval, submitting applications, and ensuring compliance with local labor laws. Key visa types include the General Work Permit for non-EU/EEA nationals, the EU Blue Card for highly skilled workers, and the Intra-Corporate Transfer Permit for employees transferring within multinational companies. Additional options, such as the Working Holiday Visa and Seasonal Work Permit, are available for specific employment scenarios.

Employers must meet salary thresholds (currently at least SEK 29,680 per month as of June 2025), provide insurance coverage (including health, life, employment and pension), and handle visa sponsorship procedures to ensure legal compliance.

Mandatory Leave Entitlement in Sweden

The annual leave entitlement in Sweden is 25 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Sweden

Sweden observes 13 public holidays each year, which are separate from the minimum paid leave entitlement and are taken in addition to the annual leave. The following are Sweden's officially recognised national holidays:

Paid Time Off in Sweden

Employees in Sweden are obligated to take at least 20 days of paid holiday each year, with any remaining days rolling over to the next year. Beyond the initial 20 days, excess days can be carried over to the next year. Accumulated vacation days can be retained for up to five years. When an employee takes leave, they are entitled to a mandatory holiday allowance representing 12% of the annual gross salary.

Maternity Leave In Sweden

There is no statutory maternity leave in Sweden due to the comprehensive parental leave system. However, pregnant women who have physically demanding jobs or are working in environments that may pose a risk to their health or the unborn child can take leave before the birth. This benefit can be accessed for up to 50 days before the expected delivery date.

Paternity Leave In Sweden

In Sweden, spouses are elgible to 10 days of paid paternity leave.

Sick Leave In Sweden

Employers in Sweden cover paid sick leave from the 2nd to the 14th day, providing compensation at a rate of 80.00% of the regular pay. Sickness exceeding 14 days is reimbursed by Social Security at a rate of approximately 80%. The first day of sickness is unpaid. If sick leave extends beyond 7 calendar days, a medical certificate is required.

Parental Leave In Sweden

Employees in Sweden receive 480 days of parental leave, which can be divided between parents or taken by one parent. This leave can also be utilised to reduce working hours until the child reaches 8 years old.

In Sweden, benefits play a central role in attracting and retaining top talent. Employees often expect more than just a paycheck – they're looking for stability, healthcare coverage, pension plans, and other perks that show a company is invested in their well-being. If you're not familiar with what’s standard or required, you risk falling short. An Employer of Record helps bridge that gap by administering a locally competitive benefits package that meets both legal requirements and employee expectations.

An EOR doesn't just check boxes, they make sure your employees receive benefits that are timely, properly communicated, and well-managed from the moment they’re onboarded. From managing healthcare contributions to adjusting for regional differences in leave or bonus entitlements, an EOR acts as both a legal and operational partner. The result is a better employee experience, less administrative burden on your internal team, and greater confidence that your offer is aligned with what top candidates in Sweden actually want and need.

Termination Process in Sweden

In Sweden, terminations without cause are not permitted, but can be initiated by either the employer, employee, or through mutual agreement. Both parties must give proper notice to terminate the contract. Acceptable terminations include:

• Voluntarily by the employee
• Mutual agreement
• Contract expiration
• Unilaterally by the employer (due to reasons like the probationary period, objective justifications, performance issues related to job suitability, misconduct, collaboration issues, or refusal to work)

Notice Period in Sweden

The notice periods are specified in the employment contract or collective bargaining agreements. Individuals covered by collective agreements have a one-month notice period stated in their employment contract. For those without a collective agreement, the notice period is determined by the duration of their employment:

• Less than 2 years of service: 1 month notice
• 2-4 years of service: 2 months notice
• 4-6 years of service: 3 months notice
• 6-8 years of service: 4 months notice
• 8-10 years of service: 5 months notice
• More than 10 years of service: 6 months notice

Severance in Sweden

Severance is not obligatory in Sweden, but it may be necessary if specified in a collective agreement or individual employment contract.