Swedish vacation regulations for foreign employers

As the summer approaches quickly, we are brough to the topic of summer vacation and the rules around it. As a foreign employer with employees in Sweden, it is important to understand Swedish vacation regulations and when there is a need to adapt to local regulations. These regulations do not only impact payroll management but also play a role in employee satisfaction.  

Here are some important things to consider when navigating Swedish vacation rules. 

Swedish vacation entitlement and accrual 

In Sweden, employees are entitled to a minimum of 25 vacation days per year. This entitlement accumulates from the start of employment and employees accrue vacation days proportionally throughout the year. The standard vacation earning period is from 1st of April to 31st of March, unless there is a specific agreement in a Collective Bargaining Agreement that is applicable, and the vacation is taken the year following the earning year. 

For employees who have not earned any vacation days, it is common to offer advance vacation which is considered a debt to the employer. If the employee resigns within five years, this debt is usually adjusted in the final pay to the employee. After five years of employment, this debt is written off. 

Vacation Pay for employees in Sweden 

Vacation pay is calculated based on different rules and circumstances. 

The same salary rule applies to standard monthly salaries, where the holiday pay is calculated at 4.6 percent of the monthly salary. An additional holiday pay supplement is calculated at 0.43 percent of the monthly salary. 

• The current monthly salary at the time the employees take vacation (monthly salary and fixed salary supplement).
• Vacation pay supplement is calculated with 0.43 percent of the current monthly salary for each vacation day. 
• Note that different rules may apply around calculation and payments if there is a Collective Bargaining Agreement in place. 

In addition, there is also holiday pay on variable salary components. This part of the holiday pay is calculated as 12 percent of the total sum of all variable salary components paid during the holiday year. Variable salary components in this context include commission, royalties, bonuses, overtime, premium pay, shift, on-call, standby and sick pay compensation, i.e. compensation that varies over time. 

The percentage rule is usually applied when the employee has a high proportion of variable salary components (more than 10 percent of the total salary), usually hourly paid employees. This can also apply if there is a changed employment rate between the earning year and the holiday period or if the employee has had varying employment rates during the earning year. 

• Vacation pay is calculated at 12 percent of the annual salary paid (fixed and variable parts).
• If the employees are entitled to more vacation days than the statutory 25 days, the percentage (12 percent) must be increased by 0.48 percent for each additional vacation day.
• Vacation pay is usually paid out the month after the employees have taken their holiday. 

Learn more about how our Expatriate Payroll experts can help you navigate payroll regulations in Sweden 

Vacation across borders – compliance and local requirements 

For foreign employers with operations or employees working in Sweden, managing vacation can pose challenges, especially regarding compliance with both Swedish regulations and those of the home country. Key differences may include entitlements and pay rates. 

• Local regulations: Foreign employers may be obligated to comply with Swedish labor laws regarding vacation entitlement, pay, and scheduling, regardless of where the company is based, depending on the circumstances around the employment. 
• Collective Agreements: Many sectors in Sweden have collective agreements that may stipulate additional vacation benefits and conditions. It’s essential to review and comply with these agreements if applicable. 
  
  

To effectively manage vacation for employees in Sweden while maintaining consistency in several countries, it is recommended to consider the following: 

• Make sure vacation policies are aligned with home country or Swedish regulations, depending on the requirements based on current circumstances, while integrating them with HR or assignment policies where possible. It is recommended to seek advice confirming what countries’ legislation to follow, especially when employees are working in multiple countries. 
• Ensure correct treatment of vacation regulations in payroll in home and host country to ensure that the company is not providing vacation benefits in more than one country, or worst-case scenario, in none of the countries. 
• Confirm support of multi-country operations, ensuring compliance with local regulations and efficient vacation tracking in payroll or HR systems. 
• Clearly document vacation policies in employment contracts or company handbooks to avoid misunderstandings. 
• Seek guidance from legal experts familiar with Swedish employment law to navigate complex regulations and ensure compliance. 
  
  

Navigating Swedish vacation regulations requires a proactive approach from foreign employers to ensure compliance and employee satisfaction.