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ILO critical of Sweden’s handling of the Laval case

Sweden’s Labour Court and ”lex Laval” comes under severe criticism from the International Labour Organisation, giving the Swedish government plenty of food for thought.

Apr 16, 2013 | Text: Kerstin Ahlberg, editor EU & Arbetsrätt

The government must also decide whether to accept the European Commission’s criticism of Swedish rules on fixed-term work, or risk being taken to the Court of Justice of the European Union.

The ILO’s Committee of Experts each year investigates member countries’ reports on how they implement the ILO’s conventions, in this case convention 87 on the freedom of association and protection of the right to organise. The criticism aimed at Sweden partly covers changes made in the legislation on the posting of workers since the EU Court of Justice concluded the Swedish Building Workers' Union and the Swedish Electricians’ Union were in breach of EU law when they blocked the Lithuanian construction firm Laval from a site in Sweden. It is also aimed at the Swedish Labour Court’s final ruling in the Laval case. 

Big fines

The Labour Court sentenced the two trade unions to pay 550,000 Swedish kronor (€65,700) in so-called general damages plus interest and legal costs to Laval’s bankruptcy estate. The Committee of Experts says this constituted a severe breach of the freedom of association, and it recommends the government compensates the Swedish Building Workers' Union and the Swedish Electricians’ Union for what they were forced to pay. The industrial action was fully legal according to Swedish law when it was taken, and at the beginning of the conflict even the Labour Court gave the unions a green light to continue their blockade. 

The committee also has concerns over lex Laval, i.e. the limitations put on the right to strike which was introduced in the law on posted workers in the wake of the EU Court of Justice’s judgement in the Laval case. This allows foreign companies to send workers to Sweden without entering into any binding agreements whatsoever on wages or other employment conditions. All they have to do is ‘show’ that they broadly offer their employees the same conditions as the minimum conditions agreed in Swedish collective agreements. 

Even in cases where the posted workers are members of Swedish trade unions, which is increasingly common, the union cannot demand that the employer signs a collective agreement for the workers. However, the expert committee writes, foreign workers shall enjoy the right to be represented by the trade union of their choosing in order to safeguard their interests, and the trade union they choose shall have the right to defend their members‘ interests, which in the end includes the right to take industrial action. The committee therefore encourages the Swedish government to review the changes to the law on posted workers to make sure trade unions representing foreign workers are not restricted in their rights simply because of the company’s nationality.

Different interpretations

The question is what happens now. The recommendations from the Committee of Experts are not binding per se, but are usually regarded as a guide. This has also long been accepted by governments, trade unions and employers’ organisations. But in the mid 1990s the first signs of disagreement on what the committee can and cannot do emerged. The disagreement came to a head in the summer of 2012. 

Employers now claim that the committee has no right at all to an opinion on the right to strike, because ILO rules do not include the right to take industrial action. Therefore the committee is interpreting issues which are not covered by its mandate. The ink on this year’s expert committee report was barely dry before the Confederation of Swedish Enterprise published an article making that argument. The employers’ conclude that the government does not have to take the committee’s opinions on the right to strike into account.

Yet despite all this, it is no doubt problematic for a government which wants to protect trade unions’ freedoms to be criticised by the ILO's Committee of Experts. 

And while the government is considering all this, it has also been dealt a final warning from the European Commission to change the rules on fixed-term work in Sweden's employment protection legislation. The Commission argues Swedish employers can hire people on temporary contracts in perpetuity without ever offering workers permanent positions. This would be in breach of the EU’s fixed-term work directive. 

Government position unclear

The government’s position has been vague, to say the least. In its answer to the Commission the government claims the Commission is wrong. Nevertheless, in 2011 the Ministry of Employment presented a proposed change to the legislation. This was met with fierce criticism and later withdrawn. In the summer of 2012 the Ministry presented a new proposal. It was admitted in that memorandum that there was a risk of misuse, but this has not led to any changes either. In January this year the Minister for Employment, Hillevi Engström, said in an interview that the government had decided not to propose any changes, as this might deteriorate the situation in the labour market. 

The European Commission is now tired of waiting and has told the government to present an answer by 22 April: is or is it not considering changing the Swedish employment protection legislation? If not, the next step could see Sweden facing the European Court of Justice.