We continue our series of articles by looking at what special procedures the global payroll profession must carry out in each country their employees operate, and what government support is available for businesses hit by the COVID-19 pandemic. In this article we turn our attention to Sweden and Finland.
We encourage you to visit previous installments of this series, linked below, or listen to our latest podcast on business continuity and global payroll:
For more information on country specific changes as they happen visit CloudPay’s COVID-19 and Global Payroll Hub.
The country has taken a more liberal approach to controlling the virus when compared with its European neighbours, and has not to date issued a total lockdown order, with many businesses remaining open albeit being required to respect the rules on social distancing for both employees and customers. Changes have been made to the sick pay regime, with employees now being able to self certify absence for up to 14 days before a Doctor’s certificate is required – this applies regardless of whether or not the employee has covid-19. For the period 1st April to 31st May the state will also bear the full cost of employee sick pay, regardless of the reason why the employee is absent through sickness. This will save employers the cost of the first 14 days of sick leave which they would usually bear. The refunds will be processed automatically by taking the data that the employer submits to the Tax Agency on the monthly employer declaration which includes a field for sick pay. The Agency will pass the data to the social insurance agency (Försäkringskassan) and an appropriate credit will be lodged in the employers tax account. The first credits will be made after 12th May.
A package of measures is also available from the Tax Agency to help employers through the pandemic. Firstly employers can qualify for a reduction in employers contributions for the period March – June. The reduction will reduce the employer contribution rate down from 31.42% to just 10.21%, and may be applied to up to 30 employees. The reduction is applied to individual salaries but is capped to a maximum salary level of SEK 25,000 per month – if salaries exceed this level, the portion over the threshold is subject to the usual 31.42% charge. The reduction is claimed by checking box 062 on the employer declaration. As the rule was only confirmed on 6th April, those who had already submitted the March declaration and who wish to claim the discount should re-submit their declaration with box 062 checked.
The employer may also apply for a deferral of payment of payroll taxes and employer contributions for up to one year. The deferral may cover a period of up to three months sitting between January and September 2020. The deferral does not come free however. The employer will pay an interest rate on the deferred amount of 1.25% and will also pay a deferral fee of 0.3% of the deferred amount for each whole calendar month the deferral runs for. Further information can be viewed here.
For those businesses looking at laying off staff or short time working, the government has updated the previous rules on short term leave and re-named the scheme short-term work (Korttidsarbete). The scheme commenced on 7th April, but applications for support may be backdated to 16th March. The aim is for the employee to continue doing some work for the employer, with a significant portion of the salary being paid for work performed covered by the state. The state then also provides a significant top up covering the portion of time not worked, but the employee does not receive full pay. There are three levels of support, based on whether the reduction in working hours is equal to 20%, 40% or 60%. The scheme can be used for either short time working or total layoff but the maximum support is limited to a reduction in working hours of 60%. Assuming that the maximum 60% reduction is being applied:
- The employer pays 40% of the salary for the working time actually performed
- The employer pays an additional 7.5% of the salary
- The state funds an additional payment of 45% of the salary
- The employee receives 92.5% of their usual salary having only worked 40% of their usual hours
The support provided by the state is limited to a monthly salary threshold of SEK 44,000. In order to be able to operate the scheme, the employer must undertake any consultation as required by their collective bargaining agreement. If no agreement is in place, the employer must get the consent of at least 70% of the workforce to introduce it. Administration on the scheme is being performed by the Swedish agency for economic and regional growth (Tillväxtverket) who have published detailed guidance in English here.
By contrast, Finland appears less prepared than its Nordic neighbours. Government websites still indicate that the normal rules continue to apply, but on 9th April the government conceded that those who had to stay at home to look after children in the wake of national school closures would be paid an allowance of €723.50 per month by the government – prior to the announcement employers were obliged to give the employee the time off work, but there was no obligation to pay the employee.
For those who are being laid off by their company, the method of support is not being amended because of the crisis. This is provided by the employee’s unemployment insurance fund, and where the employee is not a member of a fund the benefit will be provided by the social security authority (Kela). The government has introduced some changes to the general lay off arrangements effective from 1st April which will run until 30th June 2020. The required notice of lay off is being reduced from 14 days to 5 days. Furthermore the employee will no longer have to suffer the initial 3 waiting days when benefit is not paid once lay off starts. Details can be viewed here.
The tax authority (Vero) is also offering employers the possibility of coming to a payment arrangement if they are struggling to meet statutory deadlines. However this facility does not come free – default interest is still charged, albeit at the lower rate of 4% instead of 7%. If the reason for late payment is sudden illness or quarantine then an application may be made to cancel the default interest charges. The employer must apply to Vero for permission to defer tax payments, and the instructions on how to do this can be viewed here.