Compensation for High Sick Pay Costs Phased out

Lön & HR | 10.04.2024

by Katarzyna Kaniecka

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The Sick Pay Act

Since 2015, Swedish employers have been covered by a protection for high sick pay costs. This is managed by the Swedish Social Insurance Agency (Försäkringskassan) and is based on information that all employers submit monthly in their employer declaration to the Swedish Tax Agency (Skatteverket). Costs taken into account include statutory sick pay including social security contributions for the first fourteen calendar days, excluding the waiting period deduction. If the company is entitled to compensation, it is paid out through crediting to the tax account, and no separate application needs to be submitted. Whether and how much compensation the company receives depends on the employer's total wage costs and sick pay costs during the year. Administration is largely handled automatically, and after the decision of the Swedish Social Insurance Agency, compensation is paid out annually to the company's tax account at the Swedish Tax Agency.


Support for high sick pay costs repealed

The government now considers compensation for high sick pay costs problematic for several reasons. Among other things, the relatively high levels of compensation for smaller employers reduce incentives to prevent sick leave in workplaces and take measures to facilitate the return to work of sick employees. Therefore, the government has decided on a proposition to repeal these compensations. According to the proposition, the support will cease to apply at the end of June 2024.

Compensation for the period January-June 2024 will be decided and paid out by the Swedish Social Insurance Agency during the first quarter of 2025. The maximum compensation that can be paid out for this period is 125,000 SEK. If information in an employer declaration covering reporting periods up to June 2024 changes after the enactment, it may result in a change in the decision on compensation for high sick pay costs.


Special high-risk protection continues to apply

It is important not to confuse the above with special high-risk protection. This is compensation that employees can apply for in situations where they are at risk of frequent or long-term sickness absence. It may also apply to organ transplants or for a person receiving activity compensation. It is the employee who applies for a decision from the Swedish Social Insurance Agency, and the decision is then provided to the employer. In such cases, the employee may be exempt from the waiting period deduction. 

If the employee has applied for and been granted special high-risk protection, you as the employer can apply for compensation for the entire sick pay cost for that individual from the Swedish Social Insurance Agency. This option continues to apply as before even after the phasing out of compensation for high sick pay costs. Until the halfway point of the year, June 30, 2024, there is a certain connection at the Swedish Social Insurance Agency regarding these two different types of support, which means that the special high-risk protection is reduced if there is a decision on compensation for high sick pay costs. It is therefore important to understand the difference and how the administration works. 

The employer will continue to apply for compensation for high sick pay costs in conjunction with high-risk protection, either digitally on the Swedish Social Insurance Agency's website or via a paper form. 

Changes in legislation are also being investigated within the scope of support for high-risk protection: 

  • That the special high-risk protection will henceforth be referred to as high-risk protection, 
  • A changed administration and an expanded high-risk protection, 
  • Implementation of these proposals no earlier than January 1, 2025. 

Keep an eye on our newsletter to receive updated information as it approaches, and once decisions are made, to understand how you as an employer will be affected next year. 

If you are a customer of Azets and need assistance with applying for compensation, do not hesitate to contact us!


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About Katarzyna Kaniecka

Katarzyna arbetar som Business Process Improvement Manager på Azets