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Agreement on main contractor liability stopped strike

| Text: Kerstin Ahlberg, editor EU & Arbetsrätt

A bit of history was written in the evening of 31 March when a new collective agreement was reached on main contractor liability within the Swedish construction industry. It prevented strike action with hours to spare and will see the employers’ organisation the Swedish Construction Federation (BI) establishing a fund to guarantee wages for subcontractors’ workers.

Experience shows long chains of subcontractors increase the risk of a shadow economy and unfair competition from employers who don’t fulfil their obligations to their employees. During the 2013 wage bargaining round, the Swedish trade union for construction workers, Byggnads, demanded that BI’s members must take responsibility for subcontractors’ payroll liabilities. 

Already at this early stage, Byggnads gave notice of strike action to have its demands met. But with the help of mediators the parties agreed to establish a joint committee “for an ordered construction industry” which would investigate the issue further under the leadership of a neutral moderator. This way Byggnads and BI managed to avoid strike action and reached a collective wage agreement which would last for three years.

To make sure something would really happen, the committee was given only one year to come up with the goods. If it failed to present a result acceptable to both parties by 14 March this year, the three year wage agreement could be terminated prematurely. And that is what happened. Byggnads terminated the agreement and announced 1,400 construction workers would go on strike beginning on 1 April. Three mediators were appointed and the day before the strike was due they presented a proposal for a new collective agreement which both sides accepted.

Fund pays wages - as a last resort

The wage provisions remain the same. What is new is that the parties have agreed on a system of main contractor liability. Byggnads had demanded a joint liability model akin to what exists in Norway (and Germany), where employees who are not paid on time can demand that their wages are paid by any company higher up in the chain of contractors. The employers were fiercely opposed to this. Instead, the solution is that BI and its members will establish a fund which will give construction workers compensation for work carried out “when all other possibilities have been exhausted”.    

This means Byggnads and the main contractor will work together to try to get the employer to pay up. The fund will only kick in when this does not work. To help the trade unions investigate whether workers are paid the right amount, the general contractor will also have to have an up to date list of its own subcontractors and in turn their subcontractors.

Both sides happy

Both sides seemed very happy at reaching the agreement. Byggnads and BI have long been cooperating in various ways to deal with cowboy contractors. 

A BI press release says the organisation cannot accept “misuse or irregularities or the abuse of people though social dumping”.

“The conflict has never been about companies not wanting to take responsibility, we already do. The most important thing is that companies can't take financial responsibility for other companies’ actions. Today’s solution allows us to avoid this,” says BI’s CEO Ola Månsson.

Byggnads calls the agreement historic. 

“Together with the employers we will now continue our joint efforts to create a construction industry we can be proud of,” says the union’s Negotiating Secretary Torbjörn Hagelin.

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