The employer's obligation to negotiate

By Riikka Heinonen, Simon Soderholm, Pia Skovgaard Hansen

09-2019

Our Nordic employment team gives a brief overview of the employer's obligation to negotiate in Denmark, Finland and Sweden.

Denmark

In Denmark, there is no overall legal requirement for employers to negotiate with employees on standard employment matters. The employer has a right to lead and manage the work and the employees have a general obligation to work as instructed as long as the instructions do not violate Danish legislation and as long as the instructions comply with the work tasks agreed between the employer and the employee.

However, at work places with at least 35 employees, the employer has an obligation to inform and hear the employees about terms which have or will have a significant impact on the employees' employment and/or work terms. This could e.g. be information regarding the company's financial status, future prospects, relocation plans, restructuring plans, plans of redundancies etc.

The employer's obligation to inform and hear the employee must be ensured through the employee's representatives at the work place. The relevant information must be given on regularly basis and (if possible) in writing.

The main purpose of the obligation to inform and hear is to start a dialogue between the employer and the employees, where the employees get a chance to inform the management about the employees' concerns and views on the matter. The role of the employee's representatives is to negotiate the best possible outcome of any changes.

The employer is not obligated to take the employees points and views into account, but the purpose of the dialogue is to reach an agreement, where both the employer and the employee can reconcile with the changes.

In a mass redundancy situation, the employer also has an obligation to negotiate with the relevant employees (or their representatives if such are elected). The purpose of the negotiations is to achieve an agreement between the employer and the employee, where the redundancies are limited to affect as few employees as possible and where the possibility of relocation and retraining of the relevant employees is discussed.

Under the Danish TUPE-act, both the transferor and the acquirer are obliged to inform and consult both the transferring employees and employees currently employed by the acquirer as well.

Finland

In Finland, all employers have a legal general obligation to improve their employee/employer relations which, naturally, requires dialogue between the parties. Legislation does not lay down certain measures how this general obligation must be fulfilled – that is something that each workplace shall determine themselves.
In addition to the general obligation, employers that employ regularly at least 20 employees (or at least 30 in certain situations) are covered by the Act on Cooperation within Undertakings. In practice, the Act lays down certain information and negotiation obligations as well as procedures how the obligations shall be undertaken towards the employers covered by the Act, such as an obligation to negotiate in case of changes in business operations affecting the personnel and arrangement of work and when reducing the use of personnel. Similarly as in Denmark, the Act lays down informing obligations in connection with transfers of business as well.

Currently, this matter is quite topical in Finland since a working group has been established to prepare a reformation of the Act on Cooperation within Undertakings. The working group has recently published an intermediary report containing, for example, evaluation of the current state of the Act and goals for reformation. In the report, the working group has considered whether more general method of regulation would implement the objectives and spirit of the Act more efficiently than the current, rather detailed one. No decisions, however, with this respect has been made. The actual proposal for reformation is intended to be published by 31 March 2020.

Sweden

An employer has no negotiation duty towards individual employees but a general duty to negotiate with a trade union if the trade union so requests.
In certain situations, the employer is required to initiate a negotiation with the trade union:

1. An employer, who is bound by collective bargaining agreement, must negotiate with the trade union before taking a decision on a significant business change or a change of employees' work or employment conditions. The negotiation must, as a main rule, be conducted with the trade union(s) which are party to the collective bargaining agreement.

2. An employer, who is not bound by collective bargaining agreement, must negotiate with the trade union before taking a decision on a redundancy dismissal or transfer of undertaking affecting employees. The negotiation must be conducted with all trade unions which the affected employees are members of.

There is no specific legal time frame for the negotiation process but the negotiation must be initiated and completed before the employer takes a binding decision. In the negotiation, the trade union must be informed of the contemplated decision and must be given the chance to present its point of view. The trade union has, however, no veto right in respect of the contemplated decision.

In the event of a breach of the negotiation duty, the employer is liable for damages towards the trade union(s).

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