General Overview

Sweden is a highly developed, export-driven economy in Northern Europe known for its innovation, high standard of living, and strong welfare state. Its labor market is governed by a mix of statutory regulations and collective bargaining agreements, ensuring robust employee protections and clear employer obligations.

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Employment Contracts

• Written Requirement: All contracts must be in writing.
• Backdating: Contracts may be backdated within the same month without tax implications, though additional payroll costs may apply.
• Fixed-Term Contracts: Fixed-term contracts can be used for a cumulative period of up to 2 years, provided they are justified with objective criteria.

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Probation Period

The maximum trial (probation) period permitted is 6 months.

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Working Hours

Regular Hours: Generally 8 hours per day and 40 hours per week.‍

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Overtime Limits:

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• Maximum overtime in a 4-week period is 48 hours.
• Total overtime is capped at 150 hours per calendar year.

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Vacation Days

Annual Holiday Entitlement: Employees earn 25 days of paid holiday for 12 months of work in the holiday year (April 1 to March 31).‍

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Holiday Pay: Paid out in May, calculated as 0.43% of averaged wages plus 12% of qualified variable bonuses from the previous holiday year.

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Sick Leave

Initial Sick Leave: Employers usually cover the first day of sick leave (though not legally required).‍

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Subsequent Sick Leave:

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• From the 2nd to the 14th day, employees receive their regular salary paid by the employer.
• After the 14th day, the employer is no longer required to pay; employees may claim sickness benefits from local social authorities.

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Wages and Salary Payment

Salary Payment Date: Salaries are typically paid on the 25th of every month.‍

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Minimum Wage: There is no legally set minimum wage in Sweden; wages are generally determined through collective agreements and individual negotiations.

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Public Holidays

Sweden observes the following national public holidays (additional regional holidays may apply):

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• January 1: New Year’s Day
• January 5: Twelfth Day
• January 6: Epiphany
• 15–18 April: Easter (movable dates)
• May 1: Labour Day
• May 26: Ascension Day
• June 4: Pentecost
• June 5: Whitsun
• June 6: National Day
• June 24: Midsummer Eve
• June 25: Midsummer Day
• November 5: All Saints’ Day
• December 24: Christmas Eve
• December 25: Christmas Day
• December 26: Boxing Day
• December 31: New Year’s Eve
  If a public holiday falls on a Sunday, a substitute day off is generally provided within the following three months.

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Employer Taxes

• Social Security: Employers are required to contribute 31.42% of the total taxable remuneration (with no cap).
• Pension-Related Wage Tax: Employers with a permanent establishment in Sweden also pay a specific wage tax of 24.26% on pension costs associated with tax-qualified company pension plans.

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Employee Taxes

Income Tax:

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• For taxable income from 0 to 540,700 SEK, the national income tax is 0%; for income above 540,700 SEK, the rate is 20%.
• In both ranges, the average municipal tax rate is approximately 32%.

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Pension Fee: Employees pay a 7% pension fee on gross earnings, capped at SEK 38,500 for incomes up to SEK 550,400.

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Notice Period

Employer's Notice:

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• For employment under 2 years, notice starts at 1 month.
• Notice periods increase with longer tenure, reaching up to 6 months for relationships lasting 10 years or more.

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Termination and Severance Pay

Termination Process: Terminations should consider accrued and untaken holidays, which are paid out upon termination.‍

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Severance Pay:

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• Severance is not legally mandatory; however, it is common to include provisions for severance in negotiated or mutually agreed terminations.
• Typically, severance pay corresponds to 6–12 months’ salary, depending on seniority and tenure.

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Legal Recourse: Employees may appeal to a court if they believe their dismissal was unjustified, and additional compensation may be awarded if a court finds the termination unfair.