If you are an international company, looking to employ staff in Sweden, you might have questions about collective agreements, insurance, remuneration, secondary benefits, the rules and regulations around company cars etc.
We have gathered some information on the topic of remuneration in Sweden and spoken to Rickard Öberg, who shared this valuable insight with us.
How do collective agreements work in Sweden and must you, as an employer be a member of a union?
Sweden has a very decentralized employment market where most issues between employers and employees are solved not by mandatory legislation but rather through central agreements between employer organizations and unions, so-called collective bargaining agreements, or kollektivavtal (collective agreement) in Swedish.
As a result, almost 90% of Swedish employment agreements are covered by collective bargaining agreements. As a foreign employer, you can sign collective agreements by becoming a member of a Swedish employer organization and thereby become bound by a Swedish collective agreement. Although not mandatory the benefit of collective bargaining agreements is that the terms and conditions offered to the employees are representatives of what other employees are offered in the market the employer operates.
Which employee insurances are mandatory?
There are no mandatory employee insurances regulated in Swedish legislation. However, through the collective bargaining agreements most employees are offered occupational pension and health insurance through the occupational pension agreement ITP, safety insurance in case of a work injury (TFA), adjustment and skills support and severance pay (AGE), parental pay, service group life insurance (TGL) and other survivor protection for family members.
What are the most common secondary employee benefits and best practices that employers need to consider?
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Pension
Most Swedish employees are covered by the pension agreement scheme ITP through their collective bargaining agreement. It is possible for foreign employers with permanent establishments to enter into a similar agreement with a Swedish insurance company. If the employer does not have a permanent establishment in Sweden, this is usually resolved by providing the employee with a pension allowance to allow the employee to enter into a private pension agreement.
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Health
In Sweden private health insurance for employees is unusual as the public health insurance is quite comprehensive. However, there are employers that enter into private health insurance for their employees. In this case, it is regarded as a benefit for the employee and income tax must be paid on 60 % of the premiums paid on behalf of the employee.
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Disability
For employees covered by a collective bargaining agreement, disability is covered through the TFA insurance if they are injured at work. For employers without collective bargaining agreements, it is voluntary to enter into a disability agreement although in certain sectors it is mandatory for instance in the construction industry.
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Annual leave
Annual leave is regulated in the Swedish Annual Leave Act, which grants employees various benefits, including days of holiday (semesterledighet), holiday pay (semesterlön), and holiday remuneration (semesterersättning). The law gives the employee the right to 25 days of holiday and 4 consecutive weeks of holiday during the period June, July, and August unless otherwise noted in the collective agreement.
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Others, such as daily meal vouchers etc.
It is very common for employers to offer the employees a wellness grant (friskvårdsbidrag) which enables the employer to offer the employees a tax-free reimbursement for up to 5000 SEK per annum in order for them to purchase a gym membership or similar activities.
How common is it to provide a company lease car to employees who frequently travel to customers?
It is very common to provide a company lease car to employees. Usually, the car is used both privately and in the line of service, so a benefit value is attributed to the car depending on the make and model of the car. Income tax is then deducted for this value. In addition, the employee needs to maintain a drivers log and can be reimbursed for the mileage cost for when the car is used in the service.
