Employment Update, Sweden - February 2007

13 February 2007

Katarina Nordblom

New legislation

Amendments to the Employment Protection Act as of 1 July 2007

A number of amendments to the Employment Protection Act are due to come into force from 1 July 2007 following a resolution passed last spring (under the former government) by the Swedish Parliament. The incumbent government wishes to reverse these changes. The key changes are as follows:

  • Pre-Agreed Fixed Term Employment will be permitted for periods of two years (the current term is 12 months and this term was to be extended to 14 months). Employees are automatically deemed to be working on an indefinite basis after having worked for two years on a fixed term contract.

  • Temporary substitutes will, under the proposed legislation, become employed for an indefinite term after having completed an aggregate employment period of two years during the last five years. The current legislation sets the period at three years during the last five years.

  • Seasonal employment will continue to be a permitted form of employment. The current law (which is to be reversed) included provisions that would prohibit this form of employment from 1 July 2007.

  • Priority for re-employment. Where a contract of employment is terminated by reason of redundancy, employees who, at the time of receiving the notice of redundancy, have worked for a total of twelve months during the previous two years will be given priority in the event of re-employment opportunities arising. The current qualification term will remain in place. There is also a further planned change which provides for the priority period to be extended to twelve months (the current period being nine months) following termination.

Case update

“The Swedish model” of the Labour Market

In December 2004 two Swedish trade unions, the Swedish Building Workers’ Union and the Swedish Electrican’s Union took industrial action against a Latvian construction company, Laval, which was carrying out construction work at a school in the town of Vaxholm. The Swedish unions demanded that Laval should enter into a Swedish collective agreement for workers posted to Sweden from Latvia. When Laval refused to sign such collective agreements the unions initiated a blockade of the work place. As such, Laval was forced to end its work (a Swedish construction company taking its place).

Laval argued that the industrial action was in breach of the European Community Law of free movement of individuals and services. The Swedish unions contended that the industrial action was consistent with the European Community Law and cited the Posted Workers Directive (96/76/EC).

On 9 January 2007 the case (known as either Laval or Vaxholm) was heard by the European Court of Justice (ECJ). The main issue for the ECJ to consider was whether Swedish trade unions have a right to take industrial action to compel non-Swedish EU companies, which carry out temporary work in Sweden, to sign collective agreements on the same terms as Swedish employers. The ECJ decision will be of great value to the Swedish labour market where employment conditions are largely regulated by collective agreements.

The ECJ is also considering whether the Swedish Act “Lex Britannia” (which in certain cases allows Swedish unions to initiate industrial action in order to encourage foreign companies to sign Swedish collective agreements even where the foreign company is bound by domestic collective agreements) is consistent with European Community Law.

The final judgment from the ECJ is expected at the end of this year.

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