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COUNTRY OVERVIEW

There are employee representatives on the boards of all but the smallest companies in Sweden. Sweden made a rapid start in transposing the directive, setting up an expert group in the summer of 2002. The proposals for employee involvement were uncontroversial, but there was greater discussion on the possibility that Swedish companies might use the new legal form to avoid taxation.

For further information on the SE legislation, such as the choice of SNB members, click on the more button.

Employees are represented on the boards of all companies with more than 25 employees (Sweden has a single-tier board system.) There are two or three employee members and they account for around one third of board members in most companies. They are chosen by the unions and are generally the key figures in a whole range of employer-union relations. The idea of employee representation at board level is very familiar in Sweden.

Sweden made an early start in transposing the directive. The government agreed to set up an expert group in June 2002 and it started work in August 2002. It was helped by a reference group made up of legal officers from the main union confederations and the employers. In the course of its examination of the issues, the group asked whether the two sides wanted to transpose the directive through a collective agreement, but both unions and employers considered that this would be inappropriate. In its report, published in June 2003, the expert group set out its proposals for legislation, stating that its starting point was “that the directive shall be implemented in such a way as to follow the traditions of the Swedish labour market as far as possible” (Utredningen om arbetstagarinflytande i europabolag SOU 2003:64). In practice this means that it is the unions who choose employee representatives.

In March 2004 the Swedish government presented draft legislation implementing the directive to the Swedish parliament which approved it in May 2004. Two other linked pieces of draft legislation were presented to the parliament at around the same time. Legislation adapting Swedish company law to the Regulation on European companies was also presented in March and approved in May 2004, and legislation making changes to the Swedish tax system to accommodate European companies, was presented in April and approved in May 2004. The legislation on employee involvement was approved without debate in parliament, but there was more discussion on the other proposals, linked to the fear that Swedish companies might choose to become European companies and move their headquarters outside the country to avoid Swedish taxation. The legislation passed allows the Swedish tax authorities to intervene to prevent this in certain circumstances. For more details see the 2004 reports by Claes-Mikael Jonsson and Niklas Bruun.

Form of transposition

Directive was transposed by law in June 2004, four months before the October 2004 deadline.

The directive on employee involvement in European companies was transposed through legislation approved by the Swedish parliament on 13 May 2004 and finally adopted on 10 June 2004. Its full title is Act (2004:559) on the involvement of employees in European companies (Lag (2004:559) om arbetstagarinflytande i europabolag).

There was separate legislation making the changes necessary to adapt Swedish company legislation to the Regulation on European companies. It was also adopted on the same date in June 2004.

Special negotiating body (SNB)

Selection of national members

Swedish SNB members for a European company are chosen by the unions, normally by agreement between them but by the unions in order of size if they cannot agree. Only if there is no union are the SNB members directly elected by all employees.

Swedish members of the SNB are selected by the local union organisations that have collective agreements with the companies involved. In most Swedish companies the choice will normally be agreed between the two or three unions present. However, if there are several local union organisations and they cannot agree, then the body representing the largest number of employees has the first choice. If there are several members to be chosen and the unions cannot agree then the detailed rules which apply to the selection of employee board members in national Swedish companies are used (§16). These state for example that if one union represents 80% of the employees it appoints all Sweden’s SNB members but if no organisation represents more than 80%, the seats are shared between the two unions that represent the largest number of employees (Board Representation (Private sector employees) Act 1987:1245).

If the company or plants involved do not have a collective agreement with a union, the local union organisation with the largest number of members will choose the Swedish members of the SNB, unless it agrees otherwise with other union organisations (§17)

Where there is no local union organisation the SNB members are selected by the employees themselves (§18).

External trade union representatives

There is no specific provision allowing external union representatives from Sweden to be members of the SNB and under normal Swedish practice they would not be present.

The legislation does not specifically state that only employees must be chosen. However, normal Swedish practice is that external union representatives do not have this sort of role. It would be very unusual if SNB members from Sweden were not employees.

Financing of experts

Funding not formally limited to a single expert, but in normal cases a single expert will be sufficient

The Swedish legislation does not include a specific limit on the number of experts paid for by the companies. It states only that they should bear the expenses “to the extent required” to enable the SNB “to carry out its tasks in the appropriate manner” (§27).

However, the government proposal setting out the legislation states that, while no explicit limit will be applied, in most cases a single expert will be sufficient and companies will therefore only be expected to pay for one. Despite this, the government accepts that there may be cases where it is necessary to pay for more than one expert, for example to cover several separate issues. (Regeringens proposition 2003/04:122 Arbetstagarinflytande i europabolag 5.6.7)

Standard rules under the fallback procedure

Allocation of national seats on SE representative body

Members of the SE representative body are chosen in the same way as Swedish members of the SNB – by the unions. There is no provision for direct elections.

Swedish members of the SE representative body, known in the legislation as the employees’ council (Arbetstagarrådet) are chosen largely in the same way as Swedish members of the SNB. In other words, they are chosen by the local union organisations that have collective agreements with the companies involved, with rules setting out how this should operate if the unions cannot agree (§39). (See section on national SNB members.) If the company or plants involved do not have a collective agreement with a union, the local union organisation with the largest number of members will choose the Swedish members of the SNB, unless it agrees otherwise with other union organisations (§40). However, in contrast to the paragraphs on SNB membership, there is no provision for elections by the employees if there is no local union organisation.

Budget of representative body

The funding of the representative body should be sufficient for it to carry out its tasks in an appropriate manner. This will normally mean funding for a single expert. But there may be cases where more will be paid for.

The Swedish legislation states that the funding for the representative body – the employees’ council in Sweden – should be borne by the European company and should be enough to enable it “to carry out its tasks in an appropriate manner” (§54). There is no specific limit on the number of experts who should be paid for.

However, as with the SNB, the government proposal setting out the legislation states that, while no explicit limit will be applied, in most cases a single expert will be sufficient and companies will therefore only be expected to pay for one. Despite this, there may be cases where it is necessary for the company to pay for more than one expert, for example to cover several separate issues. (Regeringens proposition 2003/04:122 Arbetstagarinflytande i europabolag 5.8.6)

National procedure for the allocation of board seats

Employee representatives at board level from Sweden are chosen in the same way as the members of the representative body – by the unions.

The legislation states that board members who represent Swedish employees “shall be selected by the local trade unions in Sweden” and it refers to the paragraphs on the selection of the members of the representative body as providing the rules on how this should be done (§59). This means that they are chosen by the local union organisations that have collective agreements with the companies involved, with rules setting out how this should operate if the unions cannot agree (see section on national SNB members.) If the company or plants involved do not have a collective agreement with a union, the local union organisation with the largest number of members will choose the Swedish members of the SNB, unless it agrees otherwise with other union organisations. There is no provision for elections by the employees if there is no local union organisation.

However, the unions can, if they choose, transfer the right to select board-level representatives to the SE representative body – the employees’ council in the Swedish legislation.

Misuse of procedures and structural change

Misuse of procedures

European companies may not misuse procedures to deprive employees of their rights, and during the first year the burden of proof is on the company to show that changes which reduce or remove employees’ rights, were not made with this aim in mind. However, there is no reference to automatic renegotiation.

The Swedish legislation states clearly that the rules governing European companies “may not be misused with the aim of removing or denying” the right of employees to be involved.

More specifically, where there are major changes within one year or there are changes which mean that employees have fewer rights than would otherwise have been the case, then these are deemed to be a misuse, unless the company can prove the opposite (§67).

However, although the legislation makes it clear that misuse of this sort is not permitted, it does no state that the agreement must be renegotiated. It would be presumably for an employee body to take the company to court, and for the court to decide on the next steps.

Structural change

There is no requirement in the Swedish legislation to renegotiate the agreement if there has been structural change, although this could occur where the procedures have been misused to deprive employees of their rights.

The legislation does not include a requirement to renegotiate the agreement if there have been major structural changes. Changes designed to remove or curtail employees’ rights to be involved are not permitted, and could lead to renegotiation (see section on misuse of procedures). But in other circumstances there is no requirement for the agreement to be renegotiated.

Position of trade unions and employers

Unions and employers were consulted in detail on the introduction of the legislation and the main points do not appear to have been contentious. The key area of difference relates to what happens when the employees cannot agree on the make up of the SNB.

Legal officers from the main union confederations and the employers were deeply involved in the work of the expert groups, which made proposals to the government on the shape of the draft legislation and both sides appear to have been happy with the final report, which sought to follow the Swedish tradition of industrial relations and leave employee representation to the unions.

There were differences, however, on what happens when the employees cannot agree on the composition of the SNB.

In the employers view, the arrangements set out in the directive give the employees an effective veto over the establishment of a European company. This is because it cannot be set up unless there is either an agreement with the SNB or, after six months of negotiations, the two sides have failed to agree and the fallback provisions are implemented. In both cases an SNB is essential, and if the employees do not agree to set one up, no further progress can be made. The employers saw this as unacceptable and wanted the legislation to take account of this.

The unions, while accepting the logic of the employers’ argument, were unwilling to see changes in Swedish implementation, which would have gone beyond what the directive itself proposed. For more details see the March 2004 report by Claes-Mikael Jonsson and Niklas Bruun.

L. Fulton (2008) Anchoring the European Company in National Law - Country Overviews (online publication, prepared for worker-participation.eu)

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