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Lower employer social security contributions for young people working the summer

Although youth unemployment rose during the pandemic, there is an incentive for employers to hire young people during the summer and give them a helping hand as they embark on their working life. Here are a few reminders if you’re planning on hiring summer staff. 

The coronavirus pandemic posed an additional challenge for our young people. Prior to the pandemic, many young people were employed in vulnerable sectors, such as hospitality and tourism, and subsequently lost their jobs. Some had their military service called off while others had to cancel their long trips and studies abroad due to travel restrictions. Youth unemployment in Sweden rose to 24.8% in 2021.

Although most of the support measures in the Covid crisis packages have ended, one support measure will continue to apply in summer 2022 with the aim of reducing youth unemployment. This measure is a reduction in employer social security contributions for young people.

Rules on social security contributions
We already have a temporary reduction in social security contributions for young people aged 19 to 23. From 1 January 2021 to 31 March 2023, the lower rate of 19.73% applies for remuneration of up to SEK 25,000 per person, per calendar month.

In the summer of 2021, the government introduced a further reduction in social security contributions for this age group and the same reduction will also apply during June, July and August 2022. This means that employers will pay only 10.21% on remuneration of up to SEK 25,000. Social security contributions on remuneration above this limit shall be calculated at the standard 31.42%.

Bear in mind that wages are often paid in arrears and that social security contributions are calculated using the cash basis method, i.e. they are calculated the month the payment is made – not the month the wages are earned. This means that young people who you employ in, say, August and who do not receive their wages until September, will not be covered by the additional temporary support that applies to payments made in June, July and August.

Remind your temporary employees of the tax rules
As an employer, you do not have to make a tax deduction if the employee will not earn more than SEK 20,431 during the year 2022. However, it is not the employer that makes that assessment and it cannot reach a conclusion on zero tax deductions by itself. Instead, it is the employee who has to submit a certificate and thereby assure their employer that they will not earn more than the above-mentioned amount.

It may be worth reminding your young staff employed in the summer about the certificate – form SKV 434, which can be found on the Swedish Tax Agency website and has to be submitted to the employer.

Employees who will earn more than SEK 20,431 in 2022 but will not work all year may be eligible for an adjustment for students and young people in school – apply using form SKV 4301 – and receive a lower tax deduction. In this case, the employee needs to await a decision from the Swedish Tax Agency and submit it to the employer for it to take effect.

If your company’s payroll system is directly linked to the Swedish Tax Agency via their API function for “FOS-förfrågan” (queries about tax deductions), you can avoid the paper administration for the adjustment and receive the decision digitally directly in your payroll system.

Also, don’t forget…
As an employer you also have to deal with a number of other things when employing summer staff. Things to consider:

  • rules on holiday leave and holiday pay
  • rules on pay levels
  • what applies for seasonal employees according to the company’s collective agreement
  • working hours for under 18s
  • insurance policies
  • employment contract or written information about terms of employment
  • what applies regarding sick pay
  • what applies in close companies if the owner employs their children

 Psst – don’t forget to state the end date in the employment contract!


Let our experts help
If you have any questions or concerns about HR and payroll, please don’t hesitate to get in touch with us at Azets.