Sweden: Proposal Would Impose Collective Agreements on Foreign Workers

Bloomberg Law for HR Professionals is a complete, one-stop resource, continuously updated, providing HR professionals with fast answers to a wide range of domestic and international human resources...

By Marcus Hoy

Trade unions could require that foreign workers posted to Sweden be covered by collective agreements under a proposal (2016/17:107) published by Sweden's Employment Ministry Feb. 17. While the proposed changes to the Posting of Workers Act (1999:678) have not yet been approved by parliament, labor market analysts tell Bloomberg BNA that the amendment is likely to take effect June 1 as scheduled.

Currently, posted workers are not required to be covered by collective agreements provided their wages, working hours and vacation entitlements are equal to or better than the established collective agreement in their sector. The proposal, which enjoys the support of the left-leaning government and some opposition MPs, is primarily aimed at forcing rogue companies in the construction sector to adhere to this obligation, though it would also apply to white collar specialists and experts posted to Sweden.

Under the amendment, trade unions could require that companies sign collective agreements covering posted workers even if the employer can demonstrate that the conditions applied to foreign workers are equal to or better than those provided in the prevailing collective agreement.

‘Increased Business Risk'?

While welcomed by trade unions, the proposal has been strongly criticized by the Confederation of Swedish Enterprise (SN), which issued a statement Feb. 20 warning that it undermines the European Court of Justice 2008 Laval ruling (C-341/05), which found that industrial action taken on behalf of foreign workers was illegal if the employer offered conditions of employment to posted workers similar to those contained in a collective agreement. While the Laval ruling was incorporated into Swedish law in 2010, its legality has been questioned by the International Labor Organization.

In a Feb. 22 statement provided to Bloomberg BNA, SN attorney and labor market specialist Niels Beckman said that his organization views the employment ministry proposal as unnecessary and protectionist.

“In our opinion there is absolutely no need to take industrial action against employers in such circumstances,” Beckman said. “If an employer does not apply conditions that are equal to or better than those in a collective agreement, unions can already require that the employer sign a collective agreement. And ultimately they can take industrial action to achieve this.”

“Should the proposal become law, it will still not be mandatory for employers that post workers in Sweden to sign collective agreements,” Beckman said. “However, there will be an increased business risk for employers that apply conditions that are equal to or better than those in the relevant collective agreements. Unions will be able to take industrial action regardless of the terms and conditions the employer has in place.”

Increase in Labor Disputes?

One of the main criticisms of the proposal, Beckman said, is that it appears to impose more stringent requirements on companies that enter into collective agreements voluntarily. Such companies, he said, would be subject to the Swedish Co-determination in the Workplace Act (1976:580), while companies facing the threat of industrial action would not.

“Companies that sign collective agreements after receiving formal notice of industrial action or after being subject to industrial action are only obliged to apply a much more limited set of rules that are contained in the Posting of Workers Act,” Beckman said. “This means that it will be more advantageous for companies to sign a collective agreement after receiving formal notice of industrial action. This aspect of the proposal has been criticized by many and is likely to lead to an increase in disputes.”

“There are also other elements in the proposal which will add to bureaucracy,” Beckman said. “For example, there is an obligation for companies to provide translated copies of employment contracts, proof of wage payments and similar documents.”

‘Competitive Neutrality'

In a Feb. 23 statement provided to Bloomberg BNA, Swedish Trade Union Confederation (LO) legal adviser Claes-Mikael Jonsson said that the current rules allow some companies, primarily in the construction industry, to claim that they are adhering to their obligations when in reality they are not. The new law is needed, he said, to ensure “competitive neutrality” for posted workers.

“There are certain companies that say they apply certain rules, and it is very difficult for us to prove otherwise,” Jonsson said.

“In our opinion, the adherence to a collective agreement should not be a problem for companies that say that they are already adhering to their legal obligations,” he said. “If they claim that this is an extra burden, it means they are not fully compliant.”

“The claim that this law will add more bureaucracy is not valid,” Jonsson said. “In our opinion it will actually reduce bureaucracy. Adherence to collective agreements is an easy way for companies to confirm that they are applying the rules correctly. The law also narrows their obligations down to core elements such as wages and working time. In reality, this is not going to make it more difficult for Swedish companies to recruit people.”

While the proposal is due to be debated by parliament, Jonsson pointed out that it enjoys majority support among Sweden's left-leaning government and some populist MPs who see it as a protectionist measure.

“I expect this to become law without any major changes” he said.

To contact the reporter on this story: Marcus Hoy in Copenhagen at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

Text of the amendment is available here, the SN statement here and the LO statement here, all in Swedish.

For more information on Swedish HR law and regulation, see the Sweden primer.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Bloomberg Law for HR Professionals