European Court exempts construction workers from wage monitoring fees

A recent case brought before the European Court of Human Rights represents an important element in the ongoing bargaining round to reach a collective agreement between the Building Workers’ Union and the Swedish Construction Federation. The court’s ruling in this case allowed five workers the right not to pay the wage monitoring fee to the trade union. However, confusion has arisen on how to interpret the court ruling in terms of who will now have to pay the monitoring fee and how this issue will be dealt with in the future.

Five construction workers who were not members of the Swedish Building Workers’ Union (Svenska Byggnadsarbetareförbundet, Byggnads), or of any other trade union, appealed to the European Court of Human Rights (Europadomstolen) that the charge of the monitoring fees on their wages had violated their right to negative freedom of association under Article 11 of the Human Rights Convention (179Kb PDF). The workers argued that the fees represented the equivalent of forced trade union membership and had contributed to general union activities.

Court rules in favour of workers

On 12 February 2007, the court stated that the trade union could not prove that the fee was exclusively used to carry out wage inspections. Subsequently, the court regarded the fee as a form of private taxation and ruled that the five workers’ right of possession was violated. The court insisted that the trade union cannot demand a fee from workers who are not members of their organisation and the respective charges must be cancelled immediately. The court’s ruling does not explicitly declare if the trade union is abusing the system or not, or if it is ignoring the workers’ right to negative freedom of association.

According to the construction agreement between Byggnads and the Swedish Construction Federation (Sveriges Byggindustrier, BI), the local trade union representative has the right to inspect wage conditions on a continuous basis and is compensated by a fee of 1.5% of the workers’ wages. This corresponds to an annual amount of approximately €500 (around SEK 4,600) per employee. No official figures exist, but an estimation indicates that the trade union receives somewhere between €1 million and €4 million per year in wage monitoring fees.

Ultimately, it is the Swedish state that is held accountable by the court; according to the court ruling, therefore, the state has to compensate each of the five workers with about €5,000 (SEK 46,324) and cover the legal costs of the case amounting to €87,000 (SEK 806,000).

Social partner reaction to court verdict

The social partners reacted immediately to the court ruling, interpreting it differently. They argue that it could be difficult to translate the court ruling into national practice. The ruling states that charging non-members a wage monitoring fee must stop, contradicting as such the present model of negotiation whereby it has been collectively agreed that such a fee should apply to all workers in the sector. The Chair of Byggnads, Hans Tilly, sees no problem in maintaining the monitoring fee as long as there is transparency and openness regarding the accounting system in relation to the court’s verdict. To follow this approach, the trade union has proposed to establish an independent monitoring organisation. Mr Tilly considers that it is important to keep to the Swedish model of negotiation, and that a general agreement should apply to everyone regardless of trade union membership.

The Chief Executive Officer (CEO) of BI, Bo Antoni, assumes that this matter has to be dealt with during negotiations. He believes that the parties together can come to a common understanding since the respective fee is part of the collective agreement.

According to the Minister for Employment, Sven Otto Littorin, it is not reasonable to demand a monitoring fee from non-union members. Mr Littorin thinks that the court is supporting the government’s standpoint, and hopes that the social partners will take this into account in the ongoing negotiations.

Commentary

This court ruling could have a long-term impact. It points to a contradiction between the strong model of collective agreements in Sweden and the right of each worker to exercise their negative freedom of association by refraining to join a trade union. The case can empower those arguing against union-related fees. As a result, it can potentially be more difficult for trade unions to claim monitoring fees, in particular among non-union members. The Swedish bargaining model is based on a high level of trade union participation and collective agreements. If a trade union cannot explain the benefit of having a monitoring system for members and non-members, it may loose some of its bargaining power.

Jenny Lundberg, Oxford Research