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Employer of Record (EOR) in Sweden

Key Takeaways

  • A Sweden EOR company enables international companies to quickly and cost-effectively hire employees in Sweden in full compliance with local laws. 
  • Sweden EORs hire employees through their own subsidiary and act as the legal employer of your Sweden-based team. This means they take care of payroll, employment taxes and labor law compliance. 
  • The top three Sweden EORs in 2024 are Horizons, Swapp Agency and Remote

Companies looking to tap into the Swedish market without establishing a local entity have an alternative in the form of an Employer of Record (EOR) in Sweden. An EOR is a third-party organization that hires and pays local staff on behalf of a foreign company, taking on the legal responsibilities of the employer.

Read on to find out who the top Sweden EOR companies are, and how the Sweden EOR model works. 

What Is a Sweden Employer of Record?

A Sweden Employer of Record is a legal entity that formally employs an individual in Sweden on behalf of another company (often an international company). This means the EOR handles all formal employment tasks including payroll, taxes, employee benefits, and ensuring compliance with local labor laws. They facilitate businesses to hire employees without having to establish a legal entity in the employee’s location, which is particularly beneficial for companies expanding internationally.

Engagement with EOR allows a company to:

  • Access global talent pools
  • Minimize the complexities of international labor laws
  • Expedite the hiring process

Sweden Employers of Record typically:

  • Draft and maintain employment contracts
  • Administer payroll and taxes in accordance with the local laws
  • Manage risk mitigation and compliance
  • Offer support with visa applications and work permits, if necessary.

A Sweden EOR company is very similar to a Sweden Professional Employer Organization (PEO) which acts as the administrative co-employer of your Sweden-based team. 

 The Legal Framework for Sweden EORs

The legal framework for Sweden Employers of Record involves strict adherence to the employment and labor laws of the country where the employee works. It is essential for an EOR to stay updated with any changes in legislation to maintain compliance and protect both the employee and the client company. In Sweden, the EOR must navigate:

  • Swedish labor laws and regulations
  • Taxation requirements, including social security and income tax
  • Required employee benefits stipulated by Swedish law

An EOR in Sweden has to ensure:

  • Contracts align with Swedish employment standards
  • Employees receive mandatory benefits like health insurance, pension contributions, and paid time off
  • Proper registration with relevant Swedish authorities and payment of employer contributions

By addressing employment from a legal standpoint, the Employer of Record ensures that international employment practices remain transparent, legal, and efficient for all involved parties.

Top 3 EOR Companies in Sweden

HorizonsWith Horizons, clients companies can easily hire employees in Sweden, in full compliance with Swedish labor and tax law. With in-house recruitment and visa support, Horizons offers a complete Sweden hiring solution.
Swapp AgencySwapp Agency are a leading EOR, specializing in employment support in the Nordic region. In addition to EOR services, they provide mobility and co-working support ensuring that you have everything you need to set up your team in Sweden.
RemoteRemote is a respected global EOR, hiring employees in more than 100 countries, including Sweden. They also offer a jobs/talent acquisition platform known as Remote Talent

Benefits of Using an Employer of Record in Sweden

An Employer of Record (EOR) in Sweden offers strategic advantages to companies expanding into the Swedish market. They facilitate compliance with local regulations and streamline the process of setting up operations.

1. Compliance with Local Laws

An Employer of Record ensures adherence to Swedish labor laws, tax regulations, and employment contracts. Sweden has stringent rules regarding employment, and non-compliance can result in significant penalties. By using an EOR, a company can trust that its employment practices meet local standards because the EOR is well-versed in Swedish employment law, collective agreements, and workplace safety regulations.

2. Ease of Market Entry

Engaging with an EOR accelerates a company’s entry into the Swedish market. The EOR can quickly onboard local employees, without the need for the company to establish a legal entity in Sweden. This service is crucial for businesses aiming to test the market or start operations promptly.

3. Cost-Effectiveness

An EOR can be a cost-effective solution for managing a workforce in Sweden. The table below showcases potential cost savings:

Without EORWith EOR
Legal fees for entity setupNo legal entity required
HR staff for complianceEOR manages compliance
Payroll setup costsEOR provides payroll services
Ongoing legal consultation feesEOR offers continual legal updates

By reducing the need for local HR and legal infrastructure, an EOR can lower a company’s overhead costs associated with expanding into Sweden.

Key Considerations when Choosing a Swedish Employer of Record

When selecting a Swedish Employer of Record (EOR), it is essential to consider factors such as their experience, service range, and client support. These elements are critical to ensure compliance with Swedish employment laws and to facilitate a smooth operation for your business in Sweden.

1. Experience and Reputation

The EOR’s experience operating within Sweden’s regulatory environment is crucial. Companies should look for an EOR with a history of successful client engagements, as this indicates a proven track record. Potential employers must check testimonials and reviews to gauge the EOR’s reputation in the market.

2. Range of Services

Prospective employers need to assess the breadth and flexibility of services provided by the EOR. Essential services include payroll processing, tax filing, and human resource management. Furthermore, the ability of an EOR to offer customizable solutions to fit the specific needs of businesses is an important factor.

3. Client Support

The level of client support offered by an EOR must be scrutinized. Support should be available in both English and Swedish, enabling clear communication. The EOR should have a reliable point of contact for any inquiries and issues that may arise, providing prompt and competent assistance to clients.

Employment Regulations in Sweden

Employment in Sweden is heavily regulated to protect the rights of workers, with clear laws regarding contracts, working hours, and termination procedures.

1. Contract Norms

In Sweden, employment contracts can be either indefinite or fixed-term. Indefinite contracts don’t have an end date and are the norm for continuous engagements, while fixed-term contracts are used for temporary work and have specific end dates. All contracts must be compliant with the Swedish Employment Protection Act, and any changes to the contract’s terms must be mutually agreed upon in writing.

2. Working Hours and Vacation

The standard workweek in Sweden is capped at 40 hours, and any overtime must be compensated accordingly. Employees are entitled to a minimum of 25 vacation days per year. Additionally, there are regulations for paid leave which include circumstances like illness, parental leave, and care of a close relative. These leaves are governed by the Swedish Annual Leave Act and other related legislations.

3. Termination and Severance Pay

Termination of employment in Sweden requires a valid reason which can be due to personal reasons or redundancy. In cases of personal conduct, an employer must provide a warning and an opportunity for the employee to improve. For redundancy, the employer must follow the “last in, first out” principle. Employees are entitled to a notice period which can range from 1 to 6 months depending on tenure. Severance pay is not a legal requirement unless stipulated in a collective bargaining agreement or the employee’s contract.

Setting Up Process

Setting up an Employer of Record (EOR) in Sweden involves specific registration requirements and a well-structured employee onboarding process to ensure compliance with local labor laws and regulations.

1. Registration Requirements

In Sweden, Employer of Record services must register with the Swedish Companies Registration Office (Bolagsverket) and obtain a corporate identity number. They are also required to register with the Swedish Tax Agency (Skatteverket) for employee taxation purposes, including income tax and social security contributions. Documentation required typically includes:

  • Proof of company formation (certificate of registration)
  • Identification documents for company representatives
  • Application for F-tax (corporate tax) and employer registration

2. Employee Onboarding

Employee onboarding by an EOR in Sweden must align with national labor standards. The process involves several steps:

  1. Employment Contract: Drafting a contract that adheres to the Swedish labor laws, which protects both employee and employer rights.

  2. Personal Information Collection: Gathering necessary personal data from employees, ensuring compliance with the General Data Protection Regulation (GDPR).

  3. Registration with Authorities: Registering employees with the Swedish Social Insurance Agency (Försäkringskassan) and ensuring social security contributions are correctly processed.

  4. Introduction to Company Policies: Educating new hires about company-specific practices and benefits, such as pension plans, health insurance, and workplace culture guidelines.

Engaging a Sweden EOR — Our Take

A Sweden Employer of Record solution is a useful mechanism for hiring in Sweden without needing to establish a local subsidiary: It saves money, time and ensures full compliance with local laws. When choosing a Sweden EOR in 2024, we recommend you consider Horizons, Swapp Agency or Remote. 

Scandinavia Business Guides

Frequently Asked Questions

A Sweden Employer of Record becomes the legal employer for your team in Sweden, taking care of hiring, onboarding and employment compliance.

A Sweden EOR becomes the legal employer of your Sweden-based workforce while a Sweden Professional Employer Organization (PEO) becomes the administrative co-employer for your team in Sweden. 

In practice, these terms are usually used interchangeably. 

Milly is an international lawyer and tech entrepreneur who has advised companies on expanding globally for over 5 years. She is an advocate of remote hiring and regularly consults on future of work matters. Milly founded RemotePad to help employers learn more about building and growing international teams.