Arbitration board decides in favour of Swedish employers on sick pay

Blue-collar workers in the private sector in Sweden are not entitled to more than 75% compensation during their first four weeks of illness. That was the April 1997 verdict of an arbitration board, settling one of a number of disputes on supplementary sickness benefits. The Government now urges employers and trade unions to negotiate in order to ensure that employees are no worse off as a result of the modifications of the Sick Pay Act.

An arbitration award delivered on 11 April 1997 has decided that blue-collar employees who are members of trade unions affiliated to the largest union confederation, the Swedish Trade Union Confederation (LO) will face a reduction in sick pay entitlement.

According to law, an employee who is absent from work because of illness is entitled to compensation of 75% of his or her income. Before 1 January 1997 employers had to pay for the first two weeks, after which the public health insurance scheme assumed responsibility for the statutory entitlement. In addition, employers in all sectors also paid 10% extra from the 15th day according to the provisions of collective agreements, which resulted in a total of 85% compensation after the first two weeks had elapsed.

As from the beginning of 1997 however, the law obliges employers to pay 75% for four weeks instead of two. The former agreements on the extra 10% were made under different circumstances.

Disputes on this issue have arisen throughout the labour market (SE9702103F), and the dispute between LO and Swedish Employers' Confederation (SAF) in the private sector is the first to be settled. A similar test case on sick pay for salaried employees will not be settled until later this year although its outcome is by no means certain.

Both LO and SAF believe that it was a mistake to prolong the sick pay period in the first place. The Government has stated that it had no intention of reducing the sick pay entitlement of employees when it originally proposed an amendment to the law in Parliament. Nevertheless, the Government is not prepared to return to the old order but instead called a meeting with SAF and LO at the Ministry of Health and Social Affairs immediately after the arbitration board had delivered its award. Both sides were told that the Government has no intention of reducing employees' sick pay entitlement, and that it expects SAF and LO to negotiate an agreement to produce an acceptable solution.