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 2019.
Case AD 2019 No. 17
Three employees had carried out work for a painting company. A dispute occurred over whether the painting company or a staffing company was their employer. In that specific case, the workers had carried out the job on the painting company's premises, under the supervision of the painting company and using the painting company's tools. Therefore, the court ruled that the employees had been directly employed by the painting company and not by the staffing company. In addition, no one had informed the employees that the staffing company would enter into the employment relationship.
Case AD 2019 No. 2
An employee with a long length of service, and working at a distance, had repeatedly failed to report to the office and communicate with his manager. He was instructed to show up at the office more often. The employer had – both orally and in writing – informed the employee that he risked losing his employment if he did not improve his conduct.
Case AD 2019 No. 12
A CEO had terminated his employment without notice. No notice period was agreed between the CEO and the employer. The court stated that a reasonable mutual notice period for a CEO is six months.
Case AD 2019 No. 35
A company within the construction industry had dismissed its employee without notice because of allegations concerning the theft of tools. The court agreed with the company that, because of personal reasons, there were objective grounds for terminating the employment without notice, since the employer had met the burden of proof and shown that theft had taken place.
Case AD 2019 No. 38
An employee at the Swedish Migration Board was dismissed without notice for misuse of a database. The court found that there were no objective grounds for dismissal without notice, since the employee did not act for his own interests or to disrupt operations; neither did he breach any secrecy clauses or break the law.
Case AD 2019 No. 9
A redundancy situation had occurred at a workplace. A manager had informed five employees that a previous period of employment would be credited to the employees. The manager had no mandate to make a decision on this matter. Also, the claim of reliance on this by the employees was not justified since they had contented themselves with merely oral representations on the matter, without their having to provide information regarding their period of employment and without ensuring that the arrangement was checked higher up in the organisation. The case shows the importance of having detailed routines to establish which decisions may be taken by managers at various levels in the workplace.
iv Collective agreements
Case AD 2019 No. 34
A trade union had repeatedly summoned an employer to negotiate a collective bargain agreement. The employer had neither replied or appeared at the negotiations. The court ruled that the employer had to pay damages of 50,000 kronor to the trade 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.
V OUTLOOK AND CONCLUSIONS
Sweden held national elections in September 2018. As a result of the outcome, Sweden was initially unable to form a new permanent government, although the crisis was finally resolved in January 2019, following coalition negotiations that saw Social Democrat leader Stefan Löfven returned for a second term in office.
Disputes concerning discrimination issues will still be of significant interest in the future and the number of court cases will probably increase. The 'handshaking' judgment in Case AD 2018 No. 74, concerning a prospective employee's refusal to shake hands, on religious grounds, produced 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 was 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).