Judgment will cost municipalities SEK 1.3 billion in retroactive pensions

On 9 September 1998, the Swedish Labour Court finally decided that the Municipal Workers' Union did not have the authority to agree reduced pension terms for former members. It is estimated that the judgment will cost the municipalities SEK 1.3 billion.

In 1992, the Municipal Workers' Union (Kommunalarbetareförbundet, Kommunal) and the Swedish Association of Local Authorities (Kommunförbundet) agreed to change the collective agreement on pensions then in force, with the effect that pensioners did not receive the benefits they had expected (SE9709136F). A former sheet-metal worker, Knut Törling, sued his former employer, the City of Stockholm, claiming that pension rights are workers' acquired rights which a trade union cannot dispose of without special authorisation from each member concerned, and he had never given such an authorisation to Kommunal. Therefore, he argued, the city authority could not invoke the new collective agreement against him.

The city authority, on the other hand, invoked a modification clause which had been included in the pensions agreement for years. A crucial point in the case was if this clause were to be interpreted as an authorisation from the trade union members to change the agreement to their disadvantage.

The District Court of Stockholm ruled in Mr Törling's favour in December (SE9801163N). The City of Stockholm appealed to the Labour Court, and on 9 September 1998 the case was finally decided (case AD 1992/109). If it is ever to be possible to say that an authorisation of the relevant kind follows from a provision in a collective agreement, this regulation must be very clear, the Court states. The agreement in question cannot be interpreted this way. Consequently, Mr Törling's former employer cannot invoke it against him.

The City of Stockholm was ordered to pay Mr Törling SEK 10,589, plus interest on overdue payments. Since none of Mr Törling's colleagues throughout Sweden had given the trade union their permission to agree on inferior pensions, the judgment will mean much higher costs in total for local authorities. The Swedish Association of Local Authorities estimates that its members will have to find SEK 1.3 billion in retroactive pensions. plus interest.