10 common HR pitfalls to avoid
To succeed in Sweden it is good for you to know the most common HR pitfalls. When you are entering the Swedish market with a newly established company or expanding your business, you will eventually face a point where you need a bigger workforce. This means hiring employees. Given that your employees are likely to be amongst your biggest assets, it is obviously crucial to succeed in recruitment as well as in employee satisfaction. The employees will play a key role in the future as well as the success of your company going forward.
Thus, it is important to take some time to familiarize oneself with the local labor regulations and proactively put the essential processes and policies in place right from the beginning.
Not having the processes and policies in place can lead not only to employee dissatisfaction but also to expensive mistakes. Whilst taking a more proactive approach will quickly result in pay back in terms of consistency and legally approved employment practices, employee satisfaction as well as known procedural actions in case of any disputes.
Here we outline 10 common mistakes when starting or building up a new business in Sweden. And most importantly, we share some tips how you can avoid them.
Newcomer in the Swedish market? 10 common HR pitfalls to avoid
1. Failing to register oneself as an employer and forgetting reporting responsibilities
As soon as you employ someone, you become an employer. An employer must register with the Swedish Tax Agency. A company with employees is required to report and pay employer contributions and to deduct income tax for its employees.
As a registered employer, you will automatically receive a PAYE registration form from the Swedish Tax Agency. This needs to be reported on a monthly basis.
2. Inconsistent hiring
As mentioned earlier, employees are one of your biggest assets and often one of the biggest investments for a company. Thus, it is utmost important to have a clear plan for how to resource your business operations. Careful planning will cater for a consistent and effective recruitment process. In addition, this is likely to save time and money in the process itself. It will also help securing the right competences that support growth both today and in the future. Long term and smart planning of recruitments will also decrease the risk of discrimination claims.
It is important to think carefully about the skills required and to be able to justify why a person is selected for a job over and above other candidates. It is recommended to create a specific job description as well as tailored checklist for each role. The job description should be discussed during the interview process and used every time you recruit for this position to ensure consistency.
When it comes to making the hiring decision, ideally there are more than one person involved in the decision making to get a holistic view of the selected candidates – including an interview by a soon-to-be colleague, if possible.
3. Incorrect employment structures
When hiring employees, there are two forms of employment – permanent employment and temporary employment (fixed term). The main principle according to the Swedish Employment Protection Act is that an employment contract is in effect until further notice. This means that employment is always indefinite unless otherwise agreed. Employment usually starts with a probation period of maximum six months.
Should there be a reason for a temporary employment this must be clearly agreed in writing in order to apply. There are three types of temporary employments that are possible, they are called:
- Allmän visstidsanställning (for specific amount of time)
- Vikariat (replacing a specific person during for example maternity leave)
- Säsongsanställning (for a specific season, in seasonal businesses)
When an employee has been, in either an “Allmän visstidsanställning” or a “vikariat” for a total of more than two years during a five-year period the employment will be transferred to a permanent employment.
An employment contract may be oral but according to the Swedish Employment Protection Act, the employer must always provide written information about the terms of employment:
- personal data, the workplace and the start date of the employment
- description of the employee's work tasks or title
- form of employment and period of notice
- pay, employee benefits and salary pay-out schedule
- length of the paid annual leave and length of the normal working day or week
- applicable collective bargaining agreement, if applicable
It may also be worth including information about any insurance you have for the employee. All this information should be written down and signed by you and your employee in an employment contract.
If the employer prefers temporary workers or employees, it is possible to utilize, an example of which would be through interim hire companies, which provide employees for a specific need and time.
Using subcontractors is also possible. It could be e.g. self-employed individual providing services to another party. Self-employed individuals have few statutory employment rights, but are still entitled to certain rights, such as a safe working environment when working at a client’s premises and entitled not to be discriminated against based on a statutorily protected characteristic.
Lastly, should you employ a person who is not a Swedish citizen, it is important to contact the Swedish Migration Agency (Migrationsverket) for more information.
4. Off the shelf employment policies
There are plenty of employment policy examples available off-the-shelf. However, it is highly recommendable to evaluate your business carefully and focus on creating and taking into use such policies that are of most value to your company.
It is better to have fewer, but fit-for-purpose policies that will support your business operations rather than just taking random off-the-shelf policies, which at worst could even set unnecessary hurdles on running your business.
Typical employment related policies concern disciplinary procedures, bribery and data protection as well as non-disclosure.
Additionally, an employment handbook is a good way to establish common employment practices as well as to explain statutory rights. Typical areas to cover in an employment handbook are working time, salary, holidays and leave of absence practices, working environment, actions against discrimination, competence development as well as compensation and benefit policies.
5. Limited awareness of employee rights
You do not need to know everything about employee rights, but you do need a basic level of knowledge. If you do not, there is a risk that you end up breaching the law, which then may have a long-lasting impact. The minimum is to be aware of the content of the Swedish Employment Protection Act (Lag om anställningsskydd, LAS).
There is a lot of useful information and advices available online (particularly on government websites) to help you understand what employees are entitled to. In addition, plenty of legal services are available as well.
Here are examples of a few basic rights of employees:
- Employment contract
- Working hours
- Employer decides what working hours apply. However, employees may be interested in flexible working hours. Flexible working hours are governed by local agreements at the workplace. There is also a Working Hours Act with rules to be followed.
- Work schedule
- Safe working environment
- Compensation due to work related injury, when applicable
- Sick leave
- An employee must report sick. The first day of illness is a waiting day and the employee does not receive any sick pay. The employer then pays sick pay from the second day of illness until the fourteenth day (inclusive). After the fourteenth day, the employee receives sickness benefit from the Social Insurance Agency (Försäkringskassan).
- Temporary parental allowance when child becomes ill
- Employees are entitled to leave from work on temporary parental allowance until the child turns 12. (Called VAB, vård av barn, in everyday language). Both mothers and fathers have the right to be on leave to care for children.
- All employees are entitled to minimum 25 days’ holiday a year regardless of age and form of employment. Collective agreement or employment contract may grant more of holiday days.
- Parental leave
- A new parent has the right to be at home until the child is a year and a half old.
The minimum period of notice for both employer and employee shall be one month.
An employee is entitled to a period of notice of:
- two months, if the total period of employment with the employer is at least two years, but less than four years
- three months, if the total period of employment is at least four years, but less than six years
- four months, if the total period of employment is at least six years, but less than eight years
- five months, if the total period of employment is at least eight years, but less than ten years
- six months, if the total period of employment is at least ten years
If an employee who is on parental leave is given notice of termination due to a shortage of work, the period of notice should begin:
- when the employee fully or partly resumes their work or
- when the employee would have resumed their work according to the application for parental leave
6. Limited awareness of collective agreements
In some cases and especially in specific branches, it is common that the employer is a member of a trade association. And this may mean that you as an employer are bound by a collective agreement. A collective agreement is an agreement between an employer and an employees' organization that defines the conditions that will apply in areas such as salaries and employment. As collective and tie-in agreements are considered part of the personal employment contract, you are required to inform your employees of the content.
There is a variety of collective agreements and thus it is important to understand which one of them would apply to your specific field and company. Moreover, it is important to be aware that the law may sometimes be dispositive and paragraphs and clauses can be replaced by the collective agreement. Thus, you need to be aware of potential collective agreements that are applied and how they compare to the relevant law.
7. Overlooking employment environment work
It is important to secure a safe working environment for the employees to minimize the risk of accidents and illness’s. However, this is also important in order to ensure that employees have a working environment where they can feel reasonably happy which in turn is likely to increase productivity and quality of work.
The working environment refers to both the physical and the social environment. An employer known to have a good working environment helps in keeping employees as well as recruiting new personnel.
An employer is required to follow the working environment legislation and for securing that, the legislation is followed. However, employees also participate in the working environment development and there is an employee representative who acts on behalf of the personnel.
Examples of what can influence the working environment:
- Management and organisation
- Work tasks & roles
- Amount of work and working pace
- Possibilities to influence own work
- Dangerous goods
- Dangerous physical settings
- Atmosphere in general
8. Lacking a plan to prevent discrimination
All employees are to be treated equally. Discrimination is prohibited if it is due to:
- gender identity or expression
- ethnic background
- religion or other faith
- a disability
- sexual orientation
All workplaces should have a plan to prevent discrimination. Employees are entitled to report anyone who discriminates to the Discrimination Ombudsman (DO).
9. Poor management of workplace conflict
An employer should be well aware of the settings and working environment (both physical and social) at all times. If there is a potential workplace issue building up, it is utmost important to tackle it without any delay. Otherwise it could escalate into a full-blown dispute.
In these cases, it is very helpful to have a grievance policy and follow it: also encouraging those involved to read and follow this policy.
It is advisable to put a formal and documented plan in place if needed, especially for poor performance, as this could save you time and costs further down the line.
If someone has formally raised concerns about something at work, these concerns should be logged so you have a paper trail if things escalate.
10. Lack of vision and employee engagement
As your company grows, don’t forget about engaging your employees and keeping them motivated. Losing talent can be very harmful to your business, so make sure you communicate with employees regularly and pay attention to how to make your company a good employer and workplace. Your employees namely play a key role in employer branding as they are putting a good word out there regarding an employer.
Many things can be done in addition to the statutory rules, in order to engage employees and keep them motivated. It can be financial incentives such as share options or additional wellbeing benefits. But it can also be investments into social events or corporate social responsibility initiatives.
And in the end, what keeps employees motivated and wanting to contribute to the success of your company is naturally the belief in the future of the company. Thus, it is utmost important to have a clearly defined strategy for your company and to share it with your employees. Additionally, this can help each member understand how every one of them are playing a role in the success of the company.