Guide to Hiring Staff with Calculation of Salary Costs and Personnel Costs

Are you thinking of hiring? Maybe you need to hire someone because you don’t have time with your work and commitments, or maybe you want to proactively hire someone to develop your business? Regardless of your situation, you should think about why you need to hire someone. Are the tasks going to be long-term, or can you perhaps hire a consultant for a shorter period of time? What kind of skills do you need? In order to hire someone, you need to have a business. If you haven’t already started a business, you can read more about how to do it here. Calculating the cost of an employee can be tricky. There are more things than just salary that cost, such as telephone, computer, benefits, and more. Since employment is an investment, it is therefore important to think about what kind of skills and experience you need. But don’t worry - we’ll go through it all. In addition, we have developed a cost calculator where you can see what an employee costs your company. But remember, an employee is an asset to the company and the cost must be set in proportion to the value the colleague adds.

When Will You Hire?

There are two types of occasions when you may need to hire:

1. Reactive Hiring: If you hire someone reactively, it is because you or someone else in the company does not have time to fulfill their commitments in full. It could also be that you got a new client who is expected to require more working hours than you have available. Hiring someone reactively often means that things need to go a little faster than usual – the need for one or more colleagues is already there.
2. Proactive Hiring: If you instead hire someone proactively, it is about planning the business for additional business areas, a larger order volume, or the like. It is therefore not to cover an already existing need – one or more new colleagues are needed to achieve goals.

What Should You Think About When Hiring?

Competence

What skills your company needs is perhaps the most important question you have to ask yourself before a recruitment. It is both for your sake, your company’s, and your future employee’s sake. Try to clearly define what the person you are looking for will do on a daily basis. It gives you better opportunities to specify which knowledge requirements you have for the position.

Experience

Should the person you employ have large areas of responsibility and perhaps be the only one with the type of competence you are asking for, it may be a good idea to hire someone with more experience. If instead the person may be part of a team, has the opportunity to get help from other colleagues or from you, the person may not need a lot of experience - if any at all. Remember that an employee with long experience often demands a higher salary and may also be more difficult to recruit. This means that it may be more profitable to hire someone with less experience. In addition, you give a person the opportunity to gain experience and new skills. Therefore, think about what exactly your company needs.

Budget

Consider what budget you have for a job. There are several different types of initiatives that make it possible to hire someone at a lower cost. The youngest and oldest age groups are often the ones who have the most difficulty entering the labor market, while it becomes more difficult to get a job the older you are. Therefore, in several cases, there are reduced fees for special age groups.

Group	Charge
Born 2003 - 2005	Pays only the old-age pension fee of 10.21% for benefits up to SEK 25,000 per month
Born 1998 - 2002	Reduced employer contribution to 19.73% for benefits of up to SEK 25,000 per month
Born 1938 - 1955	Pays only the 10.21% old-age pension contribution
Born in 1937 or earlier	Pays no employer contribution

If your company has not previously employed anyone, you can also make use of Växa support. The support means that you only need to pay the old-age pension contribution (10.21 percent) on the compensation paid to the first employee you hire.

There are several other types of employment support you can use:

• New Start Job: If you employ a person who has been unemployed for a long time or is a new arrival to Sweden, there is an opportunity to receive financial support. The support corresponds to at least the sum of the employer’s contribution.
• Introductory Job: If you need to recruit in a shortage occupation and recruit someone who combines work for you with studies that are relevant to meeting the skills you are looking for, you can receive compensation of up to 80% of the salary cost.
• Wage Allowance: If you employ someone with functional variation, you have the opportunity to receive compensation for the costs incurred to adapt the workplace to the employee’s needs.
• Vocational Introduction Training: If you have the opportunity to offer practical experience in combination with supervision or training for the employee, you can receive a grant for part of the salary cost from the Employment Service.
• Work Experience: You can accept an intern at your workplace if you have the resources for it. Försäkringskassan pays activity support to your intern while you do not receive any employer costs.

Form of Employment

In Sweden, there are two types of employment - permanent and temporary employment. Permanent employment is the same as permanent employment. The main rule is that an employment is a permanent employment as long as nothing else has been agreed. If you intend to employ someone for a limited period, you must therefore specify this.

• Permanent Employment: Permanent employment means that you do not know in advance how long the employment will last. In everyday speech, permanent employment is called permanent employment. Employment ends by termination after a certain notice period. Permanent employment is the most common form of employment on the Swedish labor market today.
• Probationary Employment: Using trial employment can be a good way to get to know a person and how well the person performs their work and works with others in the company. The purpose of a trial employment is for it to be converted to permanent employment at the end of the trial period.

A trial employment may last six months at most. There is no notice period for probationary employees, but they have the right to be told that the probationary employment will end at least 14 days in advance.

• Part Time: A part-time position can be both permanent and time-limited. The only difference is that the scope of work is not 100 percent.

• Hourly Employment: An hourly position can be both permanent and time-limited. It is therefore not a form of employment but only specifies that the employee is paid per hour. According to law, the form of employment for an hourly employee may be one of the following: general fixed-term employment, temporary employment, seasonal employment or probationary employment.

• Temporary Employment: A fixed-term employment means that the employment has an end date. The end date must be stated in the employment contract.

• General Fixed-Term Employment: A general fixed-term employment is permitted for a maximum of 24 months during a five-year period. The employment turns into permanent employment if the employee has had one or more general fixed-term employments and these have lasted for a longer period of time than a total of 24 months.

• Temporary Position: If a person in the regular staff is to be away from work, for example due to illness, vacation, studies, parental leave or service leave, you can hire a substitute. It must be stated in the agreement who the person is substituting for. In addition, the temporary position must be fixed-term. An employee who has had a temporary position with the same employer for a total of more than two years within a five-year period will automatically be permanently employed.

Employment Agreement

An employment contract can be both written and oral. If you enter into an oral agreement with the employee, you must still inform in writing about conditions that have a significant impact on the employment no later than one month after the employment begins. However, we always recommend that you use a written employment contract. If you are bound by a collective or collective agreement, you must inform the employee and the content of these agreements. You must also take into account the provisions of the agreement.

The following information must be provided in writing:

• Employer’s and employee’s name and address
• Access date
• Where the employee will perform the work
• Job duties, professional title or job title. You can also supplement with a detailed job description
• What form of employment the position applies to - permanent, for a limited time or trial employment
• If it is a permanent employment, the notice period must be included, alternatively this is referred to the LAS or the collective agreement
• If it is a question of a trial employment, the trial period must be stated
• Starting salary and other benefits
• How often the salary is paid and which salary periods apply
• Normal working hours – the length of a working week
• Holiday conditions and any advance holiday
• If you as an employer are connected to a collective agreement
• Conditions for work abroad if the stationing is intended to last longer than one month
• What insurance policies you take out for the employee

More Personal

In certain industries, the Swedish Tax Agency requires that you keep a personal staff. A personnel list is a written list of who is active in the business premises or on the construction site. In the following industries, you need to keep a staff logbook:

• The construction industry
• The restaurant industry
• Hairdresser
• The laundry industry
• Service in motor vehicles
• Body care
• Beauty care
• Food wholesaler
• Tobacco wholesaler

Salary Program

Having a good payroll program makes it much easier to manage the payments to your employees. Think about which functions you might need. For example, if your employees can conceivably make expenses on behalf of the company, it can be convenient to have a software that can handle this. If you use Voitto as an accounting agency, you get access to an integrated payroll program that makes both bookkeeping and payroll payments smooth. You can read more about how to get started with salaries at Voitto here.

Calculate the Correct Personnel Costs and Salary Costs

Hiring someone is a big expense for a business. But in the case of a successful employment where the right skills and experience enter the company, it can be a good investment. We have created a calculator where you can calculate how much it costs you to hire a new employee. Remember that there are additional costs that are not included in the calculations, for example costs for a computer, internet, office, company car, training, etc. In addition, you may want to offer your employee different types of benefits, such as health benefits. It can turn out to be a good investment to offer the right types of benefits, especially if you want to keep the employee for a longer period of time and be an attractive employer. However, remember that benefits are a cost that you must include in the calculations.