Thematic feature - works councils and other workplace employee representation and participation structures

This article examines the Swedish situation, as of September 2003, with regard to works councils and similar workplace employee representation and participation structures. It looks at the regulatory framework, statistical data, evidence on practice and the views of the social partners.

The issue of works councils and similar workplace employee representation and participation structures is topical at present, with the EU Member States required to implement the recent Directive (2002/14/EC) establishing a general framework for informing and consulting employees in the European Community (EU0204207F) by March 2005 (though countries which currently have no 'general, permanent and statutory' system of information and consultation or employee representation may phase in the Directive's application to smaller firms up until 2008). The Directive applies to undertakings with at least 50 employees or establishments with at least 20 employees (the choice is left to the Member States). It provides employees with the following rights to information and consultation:

• information on the recent and probable development of the undertaking's or the establishment's activities and economic situation;

• information and consultation on the situation, structure and probable development of employment within the undertaking and on any anticipatory measures envisaged, in particular where there is a threat to employment; and

• information and consultation, with a view to reaching an agreement, on decisions likely to lead to substantial changes in work organisation or in contractual relations.

Information and consultation arrangements set out in agreements between management and labour, including at undertaking or establishment level, may differ from those laid down in the Directive.

While the Directive does not stipulate that information and consultation must be provided through any particular channel or structure, it defines such information and consultation as taking place between the employer and the employee representatives provided for by national laws and/or practices. It is these representatives, who in most EU Member States sit on standing 'works council'-type structures (and in many countries already enjoy all or most of the information and consultation rights laid down in the Directive) that are the focus of this article. The existence of workplace employee representation and participation structures, based on law or widespread collective agreements, is seen in some quarters as a distinctive and important feature of the (mainland) European industrial relations model. Indeed, the idea has been raised of using the coverage of such worker involvement arrangements as an indicator of 'quality' in industrial relations (as suggested, for example, by the European Commission’s June 2001 Communication on Employment and social policies: a framework for investing in quality).

In this context, in September 2003, the EIRO national centres in each EU Member State (plus Norway), were asked, in response to a questionnaire, to provide information about the current situation with regard to national (rather than European level) works councils and similar bodies - the regulatory framework, statistical data (or estimates where not available), evidence on practice and the views of the social partners. The Swedish responses are set out below (along with the questions asked).

Regulation

What is the legislative framework in your country concerning works councils and/or other workplace employee representation and participation structures? Please include here: definition; workforce-size threshold for establishment; composition/election; subjects for information, consultation and co-determination; conditions under which information, consultation and co-determination should take place (ie timing, methods, contents, level of representation, type of response by employees, form of interaction etc); meetings; confidentiality; protection of employees’ representatives. If there is no legislation on this issue in your country, please refer to widespread systems of works councils etc based on collective agreements.

There is no system of statutory works councils in Sweden, nor are such bodies established on a voluntary basis. Workplace employee participation and representation is based on the role of trade unions and their co-determination rights as set out in the 1976 Act on Employee Consultation and Participation in Working Life, the so-called Co-Determination Act (Medbestämmandelagen, MBL), as amended. Work councils (företagsråd) did exist in the 1950s and 1960s, but these disappeared with the implementation of the MBL.

The first part of the MBL sets out the overall rules for the system of collective bargaining. The second part of the MBL lays down the rules for participatory employee representation, information and consultation. The characteristic feature of these rules is that rights to participate in employer decision-making are mainly confined to trade unions that have concluded a collective agreement with the employer concerned. There is no workforce-size threshold for the application of these participation rules. Even in a small company there is almost always a local trade union - or two or three, depending on whether blue-collar, white-collar and professional workers are employed - as long as there are union members willing to form a local union (fackklubb). If there is no local union in the workplace, regional or national-level union organisations are likely to have the right to negotiate or receive information on behalf of the trade union members in that workplace.

Workplace trade union representatives - whose role is governed by the 1974 Workplace Union Representatives Act (Förtroendemannalagen, 1974) - are elected by union members, usually once a year. The MBL provides (in section 11) that, before an employer takes any decision regarding significant changes in its activities, it shall, on its own initiative, enter into negotiations with the representatives of unions with which it is bound to negotiate pursuant to a collective agreement. This also applies prior to any decisions by an employer regarding significant changes in working or employment conditions for employees who belong to the organisation. With regard to information, the MBL (in section 19) provides that employers are obliged to inform regularly union representatives about the manner in which the business is developing in respect of production and finance and over the guidelines for personnel policy. The employer must also give union representatives an opportunity to examine books, accounts, and other documents that concern its business, to the extent required by the union in order to protect the common interests of its members in relation to the employer. Where this can be accomplished without unreasonable cost or inconvenience, the employer must, on request, provide the union representatives with copies of documents and assist them with any examination that they require for the abovementioned purposes. In conjunction with negotiations over a decision to terminate employment due to shortage of work, the employer must (section 15) in good time notify the union representatives in writing of: the reason for the planned termination; the number of employees who will be affected by and the employment categories to which they belong; the number of employees who are normally employed and the employment categories to which they belong; the time period during which it is planned to carry out the termination; and the method of calculation of any compensation to be paid in conjunction with termination in addition to that which is required by law or applicable collective agreements.

In extraordinary circumstances, the employer may take and implement a decision before it has fulfilled the duty to negotiate or inform, thus limiting 'industrial democracy' in managerial decision-making. The employer must, however, as soon as possible thereafter inform the trade unions. Co-determination rights under the MBL fall within the employer's general right to direct and organise the work, laid down in a central collective agreement dating from 1906 (the 'December compromise'). This right must not, however, be exercised in a way contrary to good labour market practice. The Labour Court may impose damages on employers which do not fulfil their obligations under the MBL .

Meetings between trade union representatives and the employer are to be held regularly and whenever needed, and the initiative may come from either side.

The 1982 Employment Protection Act (lag om anställningsskydd, LAS, 1982) includes a number of important provisions on the rights of workplace union representatives. For example, it specifies (in section 29) that the provisions of the MBL apply in respect of the duty of employers to enter into negotiations before deciding on termination of employment on the grounds of a shortage of work, lay-offs or re-engagement following lay-offs.

Beyond workplace level, the 1987 Act on Private Sector Employee Representation on Boards (Lag om styrelserepresentation för de privatanställda, 1987), alongside the 1975 Companies Act (Aktiebolagslagen), regulates trade union representation on company boards (TN9809201S). Under this legislation, in all companies with more than 25 employees covered by a collective agreement, employees have the right to two board members. In companies with more than 1,000 employees engaged in at least two types of businesses, this rises to three board members. The employee representatives have the right to vote and take part in decision-making, except when it comes to collective bargaining matters, but may never be in a majority on the board. These board representatives are appointed by the local branches of trade unions bound by collective agreements with the employer. The 1987 Staff Representatives' Order (personalföreträdarförordningen) regulates board-level representation in the government sector. Here, the employee board members have the right only to be present and express their opinions, and cannot take part in decision-making.

Finally, the 1996 European Works Council Act (lagen om europeiska företagsråd) implemented the EU European Works Councils Directive (94/45/EC), providing for a range of statutory information and consultation rights concerning transnational issues in multinational companies.

Statistics

Please provide the most recent available statistics (in absence of statistics please provide estimates referring to sources) on the following (referring to other workplace employee representation and participation structures where works councils are not present and to widespread collective agreements on the issue where there is no legislation):

• the total number of employees and undertakings/establishments in your country;

In Sweden, there are currently around 4,622,000 workers, of whom 4,391,000 are employed and 231,000 unemployed. The total number of companies in 2002 was 842,358, of which 628,033 had no employees. Around 99% of all companies are in the private sector.

• the total number of undertakings/establishments covered by the works councils legislation in your country and their total employment (data should be as much as possible disaggregated by gender, company size and sector);

• the total number of undertakings/establishments in your country which have established works councils and their total employment (data should be as much as possible disaggregated by gender, company size and sector).

Please provide any other national data indicating the number/diffusion of works councils.

As outlined above, there is no statutory system of works councils in Sweden, with workplace employee participation and representation based on the role of trade unions and their co-determination rights. These apply in the great majority of companies, even the smaller ones - though not in those without employees. Around 90% of all companies with employees are covered by collective agreements, and thus co-determination rights, while trade union density stands at around 80% of the workforce. As noted, even in small companies there is almost always a local trade union.

Practice

If there are any other statistical sources or recent research on the current practice of works councils or other workplace representation/participation bodies, please give details of the results paying attention to the issues covered by Question 1 (Regulation). Please provide as much quantitative data as possible - eg how many meetings and how often, chair, agenda, composition (eg how many representatives of management, if any, workers, proportion of women members, proportion of women as head of works councils etc) and identify factors of success. Please indicate how the works councils (or works council-type bodies) institution has evolved over the years.

Considerable research has been conducted into co-determination, mostly in the 1980s and early 1990s. However, its is difficult to isolate from the voluminous literature data on practice as it relates to information, consultation and other 'work council-type' activities, while questions such as the composition and chairing of structures are not really relevant to the Swedish situation.

Social partners

Please summarise the views of trade unions on works councils etc and their operation, and outline relations between works councils and trade unions.

Please summarise the views of employers’ organisations on works councils etc and their operation.

Swedish co-determination legislation - covering information, consultation, negotiations, board-level representation and participation in decision-making - and practice have now been established for quite a long time, since the 1970s and 1980s. While there may have been a number of problems in the early years, the system is now functioning well. Many employers have indeed found it practical and useful to work together with their employees, either as trade union members and via workplace representatives, or as union-appointed representatives on company boards (SE9907181F). With average trade union membership levels of 80% in Sweden, joint union/employer work is relatively straightforward. The system of co-determination also has an old tradition of consensus to lean on. On the whole, there here have been no significant recent discussions or proposals on changing the current 25-year-old system. (Annika Berg, Arbetslivsinstitutet)