Social partners agree on treatment of foreign employers in Sweden

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At the end of August 2005, the Swedish Confederation of Trade Unions (LO) and the Confederation of Swedish Enterprise concluded a joint recommendation to their sectoral affiliates on the application and adaptation of Swedish sectoral collective agreements to foreign employers that bring their own workers to Sweden and become temporary members of an employers’ association.

On 30 August 2005, the Swedish Confederation of Trade Unions (Landsorganisationen, LO) and the Confederation of Swedish Enterprise (Svenskt Näringsliv), the private sector employers’ confederation, agreed a joint recommendation on the application and adaptation of Swedish national sectoral collective agreements to foreign employers bringing their own labour to Sweden and becoming temporary members of one of the employers’ associations affiliated to the Confederation of Swedish Enterprise. With regard to wage levels, it is recommended that is the sectoral social partners fail to reach agreement, the issue will be resolved by LO and the Confederation of Swedish Enterprise at central level.

It has become more and more common for foreign companies to being their own labour Sweden to do work on a temporary basis. Some of these foreign employers join a Swedish employers' association. In so doing, they accept the valid sectoral collective agreements, including the rules banning lock-out and strikes during the agreement's period of validity. They also have to accept the Swedish pay and conditions laid down in these agreements.

In February 2005, LO and the Confederation of Swedish Enterprise started talks over principles and starting-points for adding new rules to sectoral collective agreements to address foreign employers coming to Sweden and seeking membership of an employers’ association. The two parties wanted to create increased possibilities for free movement on the Swedish labour market, together with equal treatment of Swedish and foreign employees and employers. This should now be achieved by the social partners at sector level partially adapting their collective agreements, in line with the new recommendation from LO and the Confederation of Swedish Enterprise.

The recommendation

The recommendation contains practical regulations that the sectoral trade unions and employers's associations affiliated to LO and the Confederation of Swedish Enterprise should discuss and incorporate in their agreements. These should be revised at the latest by 31 October 2005.

The recommendation advises that the revised sector agreements should take into account the rules in the Working Time Act and the Holiday Leave Act, concerning issues such as how to calculate holiday pay. Issues concerning the work environment should also be considered in the new agreements.

As for wage matters, the social partners at sector level should agree on how their collective wage agreements should be interpreted in the case of foreign employers, and on a dispute-resolution mechanism if the parties cannot agree in an individual case. If this does not succeed, the issue should be referred to LO and the Confederation of Swedish Enterprise, which should then resolve the case together. In setting the wage level in an individual case, the wage principles in the normal collective agreement should be used. Further, the existing wage structure in the foreign company should be considered. Certain conditions in the collectively agreed social insurance schemes (pensions, work injuries etc) should also be adapted.

The sectoral social partners should agree on the procedure to apply when a foreign company applies for limited-duration membership of an employers’ association affiliated to the Confederation of Swedish Enterprise. The association in question, as soon as a membership has been granted, should immediately inform the LO trade union concerned. The information should cover the current conditions at company and state how the company intends to apply to the rules in the relevant sectoral agreement as regards working time, calculation of holiday pay, work environment issues, the wage structure for each occupation and collectively agreed insurance schemes.

Information

After the pay and conditions applying to the workers the foreign company brings to Sweden have been established, the employer should immediately inform every worker concerned in writing about the conditions. The employer should, when asked by an LO-affiliated trade union, give out the information necessary for monitoring of its employment conditions. Representatives of the LO union concerned have the rights to access the workplace and consult the workers involved.

If a foreign company belonging to an employers’ association affiliated to the Confederation of Swedish Enterprise lacks representation in Sweden (for example, if it has no office there), this employers' association will meet the company's information and consultation obligations towards the relevant LO trade union, during the period of the company's membership.

On 6 September 2005, the Federation of Salaried Employees (Privattjänstemannakartellen, PTK) bargaining cartel, which includes most of the trade unions affiliated to the Swedish Confederation of Professional Associations (Sveriges Akademikers Centralorganisation, SACO) and the Swedish Confederation of Professional Employees (Tjänstemännens Centralorganisation, TCO) reached a similar agreement with the Confederation of Swedish Enterprise.

Commentary

The new recommendation will apply only to foreign employers that join an employers’ association affiliated to the Confederation of Swedish Enterprise, and for a temporary 12-month membership period. Foreign employers bringing their own labour to Sweden without applying for such membership will be covered by the current rules. If there is a trade union member in the company, the member can demand the conclusion of a collective agreement, and the employer may be affected by industrial action by Swedish unions. Employers that have been a temporary member of an employers' association for 12 months and are going to remain in Sweden longer may apply for full membership. If this occurs, all legal rules and collective agreements that apply to Swedish employers will then apply to the foreign employer.

A Government commission has been working since June 2004 (Dir 2004:98) on a proposal for rules on how trade unions may monitor the observation of valid collective agreements in cases where a union lacks members in a certain workplace. The outcome of the commission's work will probably add to the social partners' new measures with regard to foreign companies and foreign workers.

There is currently a debate in Sweden over the case of Laval Un Partneri, a Latvian employer that brought employees to perform building work in Sweden in autumn 2004 (SE0412101N). This company did not apply for membership of an employers’ association affiliated to the Confederation of Swedish Enterprise, and was thus fully covered by Swedish labour laws, as well as not being protected against industrial action by a collective agreement's peace clause. After the Swedish Building Workers’ Union (Svenska Byggarbetareförbundet) blockaded work at the building site for several weeks, the company returned to Latvia. Before that, it took the trade union to the Swedish Labour Court (Arbetsdomstolen) arguing that the conflict actions were illegal. The court referred the matter to the European Court of Justice for a preliminary ruling, so the case is still open (SE0505104N)

The Confederation of Swedish Enterprise believes that more and more foreign employers will now apply for employers' association membership, when they see that there are advantages to be gained, such as the ban on strikes and lock-outs that applies when collective agreements are in force, a spokesperson said at a press conference on 30 August 2005. The sectoral social partners now have to negotiate new agreements based on the recommendations made by the social partners at central level. The Confederation of Swedish Enterprise and LO, TCO and SACO may experience again a little of the 'Swedish model' and spirit of cooperation that applied before 1990-1 when the Confederation of Swedish Enterprise's predecessor - the Swedish Employers’ Confederation (Svenska Arbetsgivareföreningen, SAF) - withdrew from much of the more important bargaining at central level. (Annika Berg, Arbetslivsinstitutet)

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