Swedish labour law is regulated in different legislative acts and by collective agreements. There are approximately 680 collective agreements in the Swedish labour market. The key statutes concerning disputes are the Employment Protection Act, the Co-Determination in the Workplace Act and the Labour Disputes Act.
The purpose of the Co-Determination in the Workplace Act is that differences of opinion between employers and employees should be resolved through negotiations. If a party fails to do this, it risks having to pay damages. Therefore, disputes are resolved in the first instance through negotiation, of which there are three types: co-determination negotiation, dispute negotiation and agreement negotiation. Should the parties be unable to settle a dispute, the issue will be handled in court.
In the main, Swedish labour laws are more favourable towards the employee.
i Objective grounds for termination of employment
According to the Act on Security of Employment, dismissal of an employee must be based on objective grounds, which can either consist of personal reasons or be the result of redundancy. Objective grounds for terminating an employment contract do not exist if it would be considered reasonable for the employer to relocate the employee to other work.
When an employment contract is terminated, the burden of justification rests with the employer.
ii Claim procedure – unfair dismissal
A dismissal is the termination of a contract based on grounds relating to an individual employee. The dismissal may be with or without a notice period. A dismissal without a notice period may be justified only if the employee has grossly neglected his or her obligations to the employer. Even then, it may not be based on circumstances known solely to the employer for more than two months before the obligatory information is given to the employee and the local union regarding the planned dismissal.
An employer who wishes to dismiss an employee because of circumstances that relate to the employee personally shall notify the employee to this effect in advance. In cases of dismissal without notice, notice shall be given at least one week in advance and for dismissal with notice, two weeks. If the employee is a member of a union, the employer shall also give notice to the local organisation of employees to which the employee belongs.
The employee and the local organisation of employees to which he or she belongs shall enjoy a right to have discussions with the employer about the measure to which the notification and notice to the union relate. Damages may be awarded for procedural faults, both to the employee and the union. Dismissals, like other terminations, cannot be implemented while negotiations with employee representatives are taking place.
If the employment contract is terminated because of personal reasons, the employee can declare the termination invalid, to have the objective grounds tried in court. The declaration will have the effect that the employment contract is not terminated prior to the final result of the dispute. The contract will continue and the notice period might be longer than originally stated. This rule does not apply in the case of dismissal without notice.
An employee seeking to have his or her dismissal declared invalid must inform the employer within two weeks and must file for court proceedings within two weeks of the end of the notice period or the end of any negotiations between a union and the employer.
In some cases, the employee may not wish to keep or regain his or her contract but only claim damages. If an annulment is not sought but damages are, the employer must be told no later than four months after the events for which damages are claimed – a period extended to four months from the end of the employment contract if the employee has not been properly informed of his or her rights. The actual court proceedings must be initiated within four months of the end of the notice period or the end of the negotiations.
Damages may be payable not only for lost income (i.e., economic damages, which, as a general rule, are linked to length of service) but also for the offence that the violation may have caused (i.e., general damages). The union can also be awarded damages for any violation of its rights.
Even if the court rules that the termination is invalid, the employer may refuse to reinstate the employee. If so, the employer will have to pay compensation according to the fixed sums stated in the Employment Protection Act, which vary according to the duration of the employment (from 16 months' pay for less than five years, to 32 months' pay for at least 10 years of employment).
iii Claim procedure – redundancies
In general, it is accepted as redundancy when an employer decides to restrict its operation. The employer therefore normally decides alone when redundancy exists since the employer freely decides over its own organisation. When there is a redundancy situation, the employer must negotiate with the union – if the employer has a collective agreement or there are affected employees who are members of a union – before deciding what to do and carrying out the notices of termination.
Prior to any redundancy dismissal, the employer must first try to transfer the employee to another post. Other free posts within the company shall be offered to the employee.
The Swedish general rule states that the person who has worked the longest within the company may keep his or her employment. Therefore, the negotiations concern, inter alia, the order of priority of the employees and the necessary qualifications for remaining work tasks. If the two parties cannot reach a mutual understanding, the matter can be referred to discussions on a national level. Only after that is the employer entitled to make a final decision.
An employee who has left an employer because of shortage of work has the right of precedence, within his or her unit and collective agreement area, for nine months from the end of the employment. This right of precedence presupposes that the employment has lasted for at least 12 months, that the employee has informed the employer about his or her interest and that he or she is sufficiently qualified for the new job.
If the employer claims shortage of work as the objective grounds, but the employee believes that other reasons have been taken into consideration instead, the employee can claim that the termination should be declared void. The employee must do so within 14 days of the notice, as is the case with dismissal. An employer who breaches the rules shall be liable to pay not only salary and other employment benefits to which the employee may be entitled (i.e., economic damages) but also general damages. An employee who believes that the employer is in breach of the rules concerning the order of priority can only claim damages.
The union will be awarded substantial damages if the employer fails to consult the union in the prescribed manner.
iv Labour court, district court and arbitration tribunal
If local and central negotiations between the employee, or union, and the employer, or relevant employers' organisation, do not result in an agreement, the case is usually pursued in the Swedish Labour Court in Stockholm as the court of first and final instance. The Labour Court's procedure does not differ much from that of district courts.
If the employee is acting on his or her own, or is not a union member, or the employee is not bound by a collective bargaining agreement, the case is pursued in the district court. An appeal may be lodged with the Labour Court against a judgment by a district court. However, there are certain rules regarding leave to appeal.
Under some agreements, there are provisions for arbitration proceedings instead. Agreements on arbitration are normally permitted in employment agreements but, in some cases, may be modified by the courts on the grounds that they are unreasonable.
III TYPES OF EMPLOYMENT DISPUTES
Typically, all labour law disputes deal with issues concerning dismissal, redundancy, salary and benefits, vacations, relocation, discrimination, work environment, damages, protection of trade secrets and such.
A labour dispute can also relate to the interpretation or application of collective agreements or the right to take industrial action (such as strike, lockout or blockade).
IV YEAR IN REVIEW
There follows a short summary and assessment of the most significant cases during 2018.
Case AD 2018 No. 66
An employee had requested vacation for one week, which had not been granted by the employer. Nevertheless, the employee took the time off. During the resulting dispute, the employer argued that the employee had quit his employment when leaving and that there was an objective ground for dismissal. The court concluded that the employee had not left his employment but, by going on vacation without permission, his employer could dismiss him without notice.
Case AD 2018 No. 56
A company had ended an employment contract for an employee's personal reasons; the person had been on sick leave for several years. The employer argued that the employee was permanently disabled for all work tasks at the workplace. The union claimed that the employer had not fulfilled his responsibility to rehabilitate the employee, and that consequently there was no ground for dismissal.
The Labour Court concluded that the employer could, by producing a medical certificate, prove that the disability was permanent and that it was not possible through rehabilitation or by adjusting the work tasks to increase the work ability. Therefore, there were objective grounds for dismissing the employee.
Case AD 2018 No. 76
A hotel employed its own baker, but later decided to outsource all baking and informed the baker that he would be given notice of redundancy. The hotel claimed it informed the baker that there were other positions available, within the restaurant and elsewhere, but that the baker had responded by saying that he was only interested in the position of baker.
A dispute arose because the baker claimed the hotel had not fulfilled its responsibility to redeploy him. The Labour Court concluded that the information given by the hotel was too vague and had not been in writing. Therefore, the hotel had not fulfilled its responsibility to redeploy the baker. The termination was declared null and void and the baker was granted 80,000 kronor in damages.
Case AD 2018 No. 41
A photographer's employment within a media company was terminated owing to redundancy after 33 years of service. The photographer argued that he was qualified as a journalist and by not offering him a position as a journalist, the company had failed to redeploy him according to law.
The Labour Court explained that it is normally up to the employer to decide what qualifications are required for a certain type of role, including formal and social qualifications as well as personal aptitude. Since the employer could prove that for the journalist position one must be able to independently produce journalistic texts, and that the photographer had no skills or experience for that work, the employer had not failed to redeploy him. Accordingly, there were objective grounds for the termination.
iii Collective agreements
Case AD 2018 No. 35
The issue in this case was how to count the length of service after a transfer of undertaking. Several employment contracts had been terminated owing to redundancies at Company A. The employees had previously transferred to Company A, either by transfer or undertaking, from Company B and Company C. The collective bargain agreement applicable for Company B and Company C granted the employees 12 months' notice instead of six, provided they were over 55 years of age and had been employed for more than 10 years.
The same wording was found within the new applicable collective bargain agreement for Company A (and, when the redundancies occurred, more than one year had passed since the transfer). The Labour Court asked the European Court of Justice (ECJ) if Company A had to take into account the length of employment at Company B and Company C. The ECJ concluded that, because the new applicable collective bargain agreement required staff to have been employed continuously by Company A for 10 years, Company A did not have to count the length of service with the previous employers.
iv Trade secrets
Case AD 2018 No. 31
Four people left their employment with an assistance company and started working for a competitor. The assistance company argued, inter alia, that the employees had been disloyal during the notice period. According to Swedish law, an employee is bound by loyalty until the last day of employment.
The Labour Court found that the company had shown that, during the notice period, the employees had actively planned to take over the company's clients and to use certain templates, and had purchased shares in the competing business. By participating in the planning and preparation to compete, the former employees had acted in a manner that caused a financial loss to the assistance company.
The court had to estimate the loss, and damages of 800,000 kronor were awarded to the company, to be paid jointly by the four employees.
Case AD 2018 No. 61
An employment contract for computer game developers contained a non-recruitment clause, which stated that employees who left may not try to recruit or otherwise cause other employees to end their employment. The time frame for this condition had been agreed at 24 months.
When evaluating whether such a clause was valid or not, the purpose of the clause, the impact the clause would have on the employee and whether the employee would be granted compensation would all have to be examined. The specific clause affected all employees on the workforce, including those who had been employed after the affected employee had stopped working. The Labour Court added that a non-recruitment clause could be valid if the time for taking action was set to a short period, for example six months. Since the clause in question was too extensive and was applicable for 24 months, it was ruled not to be valid.
Case AD 2018 No. 4
A Swedish union asked an airline company to present written requests from its employees concerning base, duty and so on. According to the Co-Determination in the Workplace Act, the union has a general right to receive documents, which it needs to protect its members' interests. However, since the issues were clearly specified within the collective bargain agreement, they were not regulated under the Co-Determination in the Workplace Act and the information section within the Act would consequently not apply. Thus, the Labour Court concluded that the employer had no obligation to hand over the information to the union.
Case AD 2018 No. 74
A woman had been employed for a probationary period of six months from 14 December 2015. Before starting work, the woman had told the employer that she was pregnant. From 4 April 2016, she was on sick leave and then on maternity leave. On 10 May 2016, the employer told her that her probationary period was to be discontinued. The woman thereafter argued that she had been the subject of discrimination.
The Labour Court stated that discontinuing employment was a disadvantage for the woman. However, since the woman could not prove that the pregnancy itself had been a factor in the decision to end her employment, the court concluded that there had been no discrimination against the woman.
Case AD 2018 No. 51
A woman had applied for a job as an interpreter. At the interview, she refused to shake hands with the male interviewer, explaining that her reason for refusing was that her religion forbade her to shake hands with men, as it would be a sin. The recruitment procedure was cancelled, after which the woman sued the company, arguing that she had been indirectly discriminated against.
The company argued that it had a policy in which it was stated that all employees should be able to shake hands with one another. The company argued that its policy was suitable and reasonable and did not discriminate against Muslim women as most women do shake hands with men. The purpose of the policy was to counteract special treatment based on gender and that it would be uncomfortable for people to not have the offer of a handshake accepted.
The Labour Court concluded that by not employing women who do not shake hands with men, more Muslim women than women of other faiths were not able to meet the company's requirements. Therefore, the policy does discriminate against Muslim women and is not suitable and reasonable. The woman was granted 80,000 kronor in damages.
V OUTLOOK AND CONCLUSIONS
Sweden held national elections in September 2018. As a result of the outcome, Sweden has not been able to form a new permanent government. The crisis will most likely end in new elections. The outlook for the year 2019 is therefore hard to predict.
Disputes concerning discrimination issues will still be of significant interest in the future and the number of court cases will probably increase. The 'hand shaking' judgment (AD 2018 No. 74) discussed in Section IV has been a topic of lively discussion in Sweden. Many people argue that a company should be able to decide how its employees should greet each other in the workplace. We feel sure there will be other similar cases in the near future.
During 2018, there has been one verdict concerning non-solicitation clauses. As this type of clause, and others concerning customer protection, are becoming a more common feature of employment contracts, we are very likely to see additional disputes within this area.
With the increase in awareness resulting from the #MeToo movement, there have also been a fair number of sexual harassment cases arising in workplace environments. Swedish authorities and companies will continue to work on suitable policies and strategies to provide ways to handle and minimise this global issue.
1 Jessica Stålhammar is a partner at WSA Law (Wesslau Söderqvist Advokatbyrå).