Employer of Record in Sweden

Discover how partnering with a Sweden employer of record can simplify the hiring process and help you save on employment costs.

From $199/month per employee

Sweden has a highly educated workforce, an innovative economy, and a strong social support system. However, setting up a local legal entity to hire in Sweden can be complicated, slow, and expensive.

As remote work and globalization increase, companies want to hire talent from across the world without facing the obstacles of foreign investment. This is where an Employer of Record (EOR) becomes a smart option.

An EOR helps companies hire employees in Sweden easily, without setting up a physical business there. Swedish labor laws are detailed, and social costs are high because they protect workers well. For companies unfamiliar with the local laws, EOR services take care of legal and administrative tasks, reducing non-compliance risks and saving you time.

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Sweden Economy Overview

As of early 2025, Statistics Sweden (SCB) reports an unemployment rate of 8.8% and an employment rate of 68.9%. These figures highlight a steady labor market. Sweden also has a deep-rooted culture of work-life balance with generous leave policies and standard working hours. Employers doing business in Sweden must respect these laws to attract top talent.

How to Hire Employees in Sweden

When hiring in Sweden, companies typically choose between:

Setting Up a Local Entity

Creating a Swedish office gives full control but involves complex registration, compliance, and high costs.

Working with an Employer of Record (EOR)

An Employer of Record (EOR) like Remote People becomes the official legal employer for your Swedish team, while you remain in control of day-to-day management and performance. This partnership lets you focus on growing your business while we take care of the compliance, payroll, and HR administration that comes with local employment.

Employment Compliance: Remote People ensures your business operates in line with all Swedish labor laws. We navigate essential regulations including the Employment Protection Act, Working Hours Act, Annual Leave Act, Discrimination Act, and the Work Environment Act. Additionally, we manage collective agreements, which are widely used in Sweden, and ensure that every employment contract adheres to these strict standards.
Payroll Management: We guarantee accurate and on-time salary payments in Swedish Krona (SEK), covering all statutory deductions such as income tax and social contributions.
Tax Filing and Contributions: Remote People handles all tax-related tasks and ensures the timely submission of reports to the Swedish Tax Agency (Skatteverket).
Employment Contracts: We prepare and manage legally compliant employment contracts tailored to Swedish laws and your needs. These contracts protect you and your employees, helping you form a strong working relationship.
Benefits Administration: Remote People manages all required employee benefits, including pensions, parental leave, sick pay, and paid vacation. We also help administer any additional benefits you offer.
Engaging Independent Contractors: Hiring contractors comes with risks. Misclassifying employees as contractors can lead to penalties and back payments. Remote People’s Contractor of Record (COR) service helps businesses engage contractors compliantly, reducing these risks.

Hiring Independent Contractors

Hiring contractors comes with risks. Misclassifying employees as contractors can lead to penalties and back payments. Remote People’s Contractor of Record (COR) service helps businesses engage contractors compliantly, reducing these risks.

Sweden Employer of Record vs Legal Entity in Sweden

The most common alternative to a Sweden EOR service, is for an international company to set up its own incorporated entity in Sweden. If you were to set up a legal entity in Sweden, the most common company structure is a limited liability company (LLC). A Swedish LLC must have two directors and a single shareholder, but at least one director must be a member of the EEA. The Swedish LLC requires a minimum share capital of €5620 and a formal letter, also known as the Swedish Memorandum of Association, describing why you wish to establish a legal entity in Sweden. A draft of the Articles of Association must be included and submitted to the Swedish Companies Registration Office, which is a government agency that provides a certificate of registration. A company bank account must be opened, and the company must be registered for tax. You’ll need to apply to the Swedish Tax Agency for F-tax and VAT.

It takes approximately two weeks to register an LLC in Sweden, but if you want to avoid the hassle of opening a company, you can rely on the services of a Sweden EOR company.

Employer of Record vs. Professional Employer Organization in Sweden

What’s the difference? An EOR acts as the legal employer for companies without a Swedish entity. The EOR assumes full responsibility for compliance and liabilities. A PEO co-employs staff alongside your existing Swedish entity. This model supports HR functions but may require a registered presence in Sweden.

To make the differences clearer, here’s a quick comparison:

Feature	EOR	PEO	Direct Hire	COR
Local Entity Required?	No	Yes	Yes	No
Legal Employer	Remote People EOR	Client Company & PEO (Co-employer)	Client Company	Contractor (Self-employed)
Payroll & Tax Admin	Handled by EOR	Shared/Handled by PEO	Handled by Client Company	Handled by COR
Benefits Admin	Handled by EOR	Shared/Handled by PEO	Handled by Client Company	N/A (Contractor manages own)
Compliance Risk for Client	Significantly Reduced	Shared	High (Client bears full risk)	Significantly Reduced
Best For	New market entry, speed, no local entity, risk aversion	Companies with existing entity needing HR support	Long-term, large-scale presence	Project-based work, specialized skills

Ready to get started with a Sweden EOR?

Let us handle the complexities of hiring, compliance, and payroll in Sweden while you focus on growing your team.

Hire employees in Sweden with a Sweden EOR
No local entity is needed
Pricing starts at USD 199 per employee
Remote People can also help you find the best talent in Sweden

👉 Get Your Customized Sweden EOR Proposal Today!

How Much Does an Employer of Record Cost in Sweden?

EOR pricing in Sweden can vary based on the provider, the level of service, and the complexity of your employment needs. Most Sweden EORs charge either a flat monthly fee, typically ranging from $599 to $1,200 per employee, or a percentage of the employee’s gross salary (usually between 10% and 15%).

This fee usually covers key services like payroll processing, tax withholding, onboarding, benefits administration, and compliance with Sweden’s employment laws. Some providers also include additional support such as employee lifecycle management or localized HR guidance.

To get the best value, it’s a good idea to request a detailed quote from multiple EORs and compare what’s included in each package, especially if you’re hiring in niche industries or at scale.

Employment and Labor Laws in Sweden

Sweden’s labor market combines strict laws with strong collective bargaining, creating a well-regulated but stable employment environment.

Laws and Collective Agreements

Sweden uses a dual system for regulating employment. National laws set basic worker rights, but collective agreements build on these laws. These agreements are negotiated between employer groups, like the Confederation of Swedish Enterprise (Svenskt Näringsliv), and trade unions.

About 90% of Swedish employees are covered by collective agreements. These agreements cover wages, working hours, benefits, and more. All employers must follow the rules of any applicable collective agreement for their industry and employees.

Employment Contract

Types of Employment Contracts

Indefinite Term Employment: The default and most common type of contract is permanent by nature.
Fixed-Term Employment: Used for specific situations, including:
- Specific fixed-term employment
- Temporary substitute roles
- Seasonal work

If an employee works more than 12 months in five years under fixed-term contracts, the position may convert to indefinite employment.

Working Hours

The typical Swedish workweek is 40 hours, spread over five days. Any hours beyond the standard 40 are considered overtime. Total working hours (including overtime) are limited to an average of 48 hours per week, calculated over four months. There are also specific caps:

50 overtime hours per month
200 overtime hours per year

Overtime

Overtime compensation is usually handled through collective agreements.

Swedish labor laws also ensure workers have enough rest:

Daily Rest: At least 11 consecutive hours off during each 24 hours. The rest should include time between midnight and 5:00 AM.
Weekly Rest: At least 36 consecutive hours of rest per week.
Breaks: A break is mandatory if an employee works more than five consecutive hours.

Night work is generally limited but allowed in certain industries or when necessary for public needs.

Probation Period

Allowed for up to six months. If neither party ends the contract during this time, it becomes permanent.

NOTE: Full-time is the default. Unless stated otherwise, all contracts are assumed to be for full-time work.

Learn more about probationary period in Sweden

Payroll and Employment Taxes in Sweden

Managing payroll correctly is important for any business in Sweden. Employers must follow strict payment schedules, provide accurate documentation, and keep thorough records to stay compliant.

Fiscal Year

Sweden’s fiscal year usually follows the calendar year from January 1 to December 31.

Payroll Cycle

Salaries are typically paid once a month.

Minimum Wage

Sweden does not have a statutory minimum wage. Wages are set through collective agreements. If no collective agreement applies, wages are decided through individual negotiation between the employer and the employee. For typical earnings, see the Average Salary in Sweden.

Bonus Payments

Bonuses are not required by law, but may be part of employment contracts or collective agreements. Bonuses are subject to the same deductions as regular salary.

Payslip Requirements

Employers must provide a detailed payslip each pay period, clearly showing gross pay, deductions, net pay, and other details, such as accrued vacation days.

Record-Keeping Obligations

Accurate payroll records help employers meet tax obligations, assist employees with tax reporting, and are necessary in case of tax audits. Mistakes can lead to penalties, so a reliable payroll system is a must. Remote People offers Payroll Outsourcing in Sweden to handle this service.

Employer Tax Contributions

Employers in Sweden pay most of the social security costs through employer contributions called arbetsgivaravgifter. For employees born in 1959 or later, the employer contribution rate in 2025 is 31.42% of the employee’s gross salary and taxable benefits.

Age-Related Contribution

Employers only pay 10.21% old-age pension contribution for employees 66 years or older (born 1938-1958) in 2025. No employer contributions are required for employees born in 1937 or earlier. From January 1, 2026, the 10.21% rate will apply to employees 67 years or older.

Special Payroll Tax on Pension Costs (SLP)

Employers also pay a special payroll tax of 24.26% for providing occupational pension benefits to employees.

Contribution Type	Percentage Rate
Health insurance	3.55%
Parental insurance	2.60%
Old-age pension	10.21%
Survivor’s pension	0.60%
Labour market	2.64%
Work injury	0.20%
General payroll tax	11.62%

Employee Payroll Contributions

Employees in Sweden pay income tax, automatically deducted by the employer through the PAYE (Pay As You Earn) system.

Municipal Income Tax: This is a flat tax set by the municipality where the employee lives. Rates vary slightly by region but average around 32%. It makes up the largest part of an employee’s income tax.
National Income Tax: This is a progressive tax applied only to higher incomes. For the 2025 tax year:
- 0% on taxable income up to SEK 625,800
- 20% on taxable income above SEK 625,800
Basic Tax-Free Allowance: Everyone is granted a basic tax-free allowance, which lowers their taxable income.
Public Service Fee: People who live and pay taxes in Sweden may also owe a public service fee, which helps fund public broadcasters.

Pension System

Sweden’s pension system includes the national public pension, occupational pension, and private savings.

National Public Pension: This is the state pension, managed by the Swedish Pensions Agency. It’s earned based on your taxable income over your lifetime and consists of:
- Inkomstpension: 16% of pensionable income
- Premiepension: 2.5% of pensionable income. It’s a premium pension where individuals can choose how it is invested
- Garantipension: A basic, guarantee pension for those with little or no income pension
- Inkomstpensionstillägg: A supplement for pensioners with moderate incomes
Occupational Pension: Employers must pay the special payroll tax of 24.26% on occupational pensions.
Private Pension Savings: While still possible, private savings now play a smaller role due to changes in tax benefits. Still, some people choose to build additional savings for retirement.

Work Permits and Visas in Sweden

If you’re a citizen of a country outside the EU/EEA or Switzerland, you usually need a work permit before you can work in Sweden. The Swedish Migration Agency (Migrationsverket) handles these applications.

To be approved for a work permit, Migrationsverket requires that you meet the following conditions:

Valid passport
Signed employment contract
Fair employment terms
Employer insurance
Sufficient salary

The Swedish employer starts the application process by submitting an offer of employment to Migrationsverket.

Time Off and Leave in Sweden

Sweden strongly protects leave entitlements, governed by the Annual Leave Act (Semesterlagen 1977:480) and enhanced by collective agreements.

Every employee in Sweden, whether full-time or part-time, is entitled to at least 25 paid vacation days per year. If an employee starts after August 31 in a given year, they are entitled to five unpaid vacation days during that holiday year.

Holiday Year vs. Qualifying Year

The holiday year runs from April 1 to March 31, when the vacation is taken. The qualifying year is the previous April 1 to March 31 period, when vacation days are earned. Some collective agreements align the holiday and the qualifying year.

Holiday Pay (Semesterlön)

Calculated as 12% of gross earnings from the qualifying year. A holiday pay supplement (semestertillägg) may also apply, around 0.43% of monthly salary per vacation day, or as per the collective agreement.

Scheduling Leave

Employees are entitled to at least four consecutive weeks off between June and August unless there’s a different agreement.

Carry-Over of Vacation Days

If an employee has more than 20 paid vacation days in a year, the extra days can be carried over. These carry-over days must be used within five years. Unpaid vacation days cannot be carried forward. Any unused, accrued vacation must be paid out in the final paycheck upon termination.

Public Holidays

Sweden observes several public holidays, referred to as red days (röda dagar), which are typically non-working days. You can view all the official holidays listed in the Lag 1989:253 om allmänna helgdagar.

Sick Leave

Employees must notify their employer on the first day of illness. Employers are responsible for paying sick pay for the first 14 calendar days of an illness. The first day is a qualifying day with a pay deduction up to 20% of a typical week’s sick pay (no pay on day one). Employees receive at least 80% of their regular pay from day two.

If the illness lasts beyond 14 days, the employer must report it to Försäkringskassan (Swedish Social Insurance Agency). A doctor’s note is required from day 8 of illness. The employee can also apply for sickness benefit from Försäkringskassan with the note.

Parental Leave

Parents are entitled to 480 days of parental benefit (föräldrapenning) per child. For parents with joint custody, each parent receives 240 days. Parents can transfer days with some conditions.

A pregnant employee can take full leave for seven weeks before and after the expected delivery. Parents can take full-time leave until the child is 18 months old. Until the child turns eight or finishes their first year of school, parents can also take full-time leave while receiving parental benefit, or reduce their working hours by up to 25%.

NOTE: Employees must notify their employer at least two months in advance of taking parental leave (or as per any collective agreement).

Terminations and Severance in Sweden

Sweden has strict rules governing employment termination, and employers can only terminate workers based on objective grounds.

Grounds for Termination

Redundancy / Lack of work
Personal reasons / Misconduct
Summary dismissal
Mutual agreement

Notice Periods

Both employees and employers must observe minimum notice periods when ending an indefinite-term contract.

Employer’s obligation based on length of service:

Length of Service	Notice Period
Less than 2 years	1 month
2 to < 4 years	2 months
4 to < 6 years	3 months
6 to < 8 years	4 months
8 to < 10 years	5 months
10 years or more	6 months

Employees are generally required to give 1 month’s notice unless otherwise agreed.

Severance Pay

Swedish law does not mandate severance pay by default. However, it can arise through collective agreements or negotiated settlements.

Expand into Sweden Easily with Remote People’s Employer of Record in Sweden

Expanding into Sweden can be complex, but Remote People makes it simple, fast, and cost-effective. With our EOR service, you can onboard employees in days, without setting up a local entity, saving time and avoiding high legal and administrative costs.

Our transparent pricing starts at just $199 per employee per month, a great deal compared to market rates, which vary from $599 to $1,200 per employee per month or are charged as a percentage of salary.

We ensure full compliance with Sweden’s labor laws, tax regulations, and collective agreements. Our in-country experts handle everything from contracts and payroll to benefits and terminations, so you can focus on scaling your business.

Remote People provides the local expertise, legal protection, and operational efficiency you need to succeed in Sweden and over 150 countries worldwide.