Collective agreements limiting temporary employment unaffected by new statutory rules

Sweden's statutory rules on temporary employment contracts have been modified several times since they were introduced. Each time the question as to how these modifications will influence the collective agreements in force has arisen. An arbitration award in October 1997 confirmed that the mere intention of the legislator is not enough to change their contents. The decision supports the standpoint of the trade union side in other pending cases.

The statutory rules on temporary employment contracts have been controversial ever since they were first instituted with the Act on Security of Employment 1974. The principal rule of the Act was that employment contracts were valid for an indefinite period. Temporary contracts were permitted only in cases specified in the Act, namely:

  • when necessitated by the special nature of the work; and
  • with regard to substitutes and trainees.

If, however, employers and central trade unions managed to reach a collective agreement on the subject, they could allow for temporary contracts in other situations. Many such agreements were made, leaving the employers a great deal of liberty to act. For example the agreement between Wood Industry Workers' Union (Träindustriarbetareförbundet) and Employers' Association of Swedish Wood Products Industry (Träindustriförbundet) permitted employers to hire workers on temporary contracts in cases other than the abovementioned, but only for a period of three months at the most. According to another agreement between the organisations now named Industrial Union (Industrifacket) and Almega Industrial and Chemical Association (Almega Industri och Kemiförbundet) the same applied, provided that the employment contract was in writing and approved by the local trade union branch.

Some unions did not, however, accept any deviations at all from the legal provisions, and others applied the agreed deviations too restrictively from the employers' point of view. According to them, the restrictions promoted unemployment, as employers were not allowed, or did not dare, to employ people when they had a temporary job to offer.

Bargaining on adaptation

In 1982 the non-socialist Government consequently replaced the old Act by a new one, which allowed temporary contracts in five additional situations. Inter aliait gave the employers the possibility to employ a person on a temporary contract:

  • for six months over a period of two years, when necessitated by a temporary accumulation of work; and
  • for a probationary period of six months

The old collective agreements were, however, still in force. The employers initiated negotiations in order to have them adapted to the new legal provisions. An example of a trade union that accepted a comparatively far-reaching adaptation was the Painters' Union (Målareförbundet). The Industrial Union would still not allow probationary employments or temporary contracts for peak workloads without a preceding agreement between the employer and the local trade union branch, while the Wood Industry Workers' Union refused to accept any modifications at all. In practice probationary employments and temporary contracts for peak workloads could be used in all three sectors, but only for three months' duration.

This was too short, according to the employers, for whom not even six months was enough. Thus in 1994 a new non-socialist Government made further amendments to the Act. The maximum probationary period was prolonged to 12 months, as was the employment period by temporary accumulation of work. What is more, the Swedish Parliament decided that collective agreements in force which restricted these periods to less than 12 months were invalid in that respect. However, although they had been declared partly invalid, the wording of the three collective agreements was not changed.

New employers' strategy

The following year the Social Democrats won the general elections. They returned the Act on Security of Employment to its state before 1994. Nevertheless even the Social Democrats had been influenced by the employers' criticism. Therefore a new form of temporary employment was introduced in the Act on 1 January 1997, the "agreed temporary contract". The new provision allows the employer to employ a person for a total of 12 months during a period of three years, with the only restriction that not more than five workers must be employed on "agreed temporary contracts" simultaneously.

The trade unions in general were upset and declared that they would do their utmost to prevent the use of the new form of employment. The employers' organisations, for their part, have used a different strategy than before. They have not even tried to bargain, but have recommended their members to act as if the Act had superseded the collective agreements. Several disputes have already arisen.

The first one was placed before an arbitration board. The Painters' Union had sued a house-painter employer which had hired two workers for a couple of weeks. The collective agreement, which remains unchanged since 1982, allows explicitly all forms of temporary employments permitted according to the law before it was modified in 1997. This is meant as an exhaustive regulation, which precludes the use of other forms of employment as long as the collective agreement is not changed, the union claimed.

The employer in the first place argued along political lines. There are no provisional regulations to the effect that the 1997 modifications of the Act become incorporated in the old collective agreements. Nevertheless, the employer claimed, the legislator must have intended that they should have an impact on those agreements. Otherwise the new provisions will only affect areas that are not covered by collective agreements. In the second place, it claimed that the intention of the parties to the agreement was to allow all forms of temporary employment which the Act allows from time to time.

The dispute was settled in October 1997 (SE9710147N). The arbitration board rejected the first argument. Since there are no provisional rules to the modifications of the Act, the collective agreement must be interpreted in the light of: the conditions when it was made; how these conditions have changed; and other circumstances that are normally used as a base for the interpretation of contracts. The wording of the agreement is clear, and supports the trade union's standpoint. The arbitration board concludes that there is nothing indicating that the parties had intentions other than those which appear from the wording. It points out that the trade union was already reluctant to widen of the scope for temporary employments in the negotiations in 1982.

The Wood Industry Workers' Union has one and the Industrial Union two similar cases pending in the Labour Court. Apart from damages for the workers concerned, the Industrial Union claims that the court should declare that one of the workers is in fact employed for an indefinite period.

Commentary

The arbitration award confirms that traditional principles for the interpretation of contracts apply also if the Government might wish to influence them. Currently, only the Labour Court sets precedents in labour disputes. However the chair of the arbitration board in question is also a chair of the Labour Court, and it is plausible that the court will adhere to the same legal principles. (Kerstin Ahlberg, NIWL)

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