The legislature recently amended the law known as 'Lex Laval', according to which the right to conduct collective actions against foreign labour stationed in Sweden has been limited. The amendments in Lex Laval, which entered into force in June 2017, bring expanded rights for Swedish trade unions to demand that workplaces with foreign labour are covered by Swedish collective agreements and to conduct collective actions against a foreign employer to this purpose.

In November 2004 the Building and Public Works Trade Union took collective actions against the Latvian company Laval un Partneri Ltd – which had posted workers to Sweden to work on Swedish building sites – in order to make Laval sign a Swedish collective agreement with the trade union. In 2007 the European Court of Justice made a preliminary ruling in the Laval case, stating that Swedish trade unions may not undertake collective actions against foreign employers with employees stationed in Sweden in order to make the employer enter into Swedish collective agreements with more favourable conditions than the minimum conditions in Article 3 in the EU Posting of Working Directive (96/71/EC), or regarding terms that relate to matters not referred to in Article 3. The outcome was implemented in Sweden in 2010 through the Lex Laval.

According to Article 3, member states must ensure certain minimum conditions for stationed foreign labour regarding working hours, holiday, site safety, non-discrimination and minimum wage. Such conditions should be laid down by law or in the member state's generally applicable collective agreements.

According to the Foreign Posting of Employees Act based on the directive, foreign employers should apply Swedish law for stationed labour regarding employment terms that fall within the scope of Article 3. There is no regulation on minimum wage in Swedish law. A right to minimum wage requires regulation in a collective agreement. Sweden has no generally applicable collective agreements.

Until now, according to Lex Laval, Swedish trade unions have had the right under certain conditions to require minimum wage or other minimum demands according to Swedish collective agreements for foreign labour by conducting collective actions against the employer if necessary, including the worksite. An important limitation of this right has been that such actions have been disallowed if the foreign employer can show that employee working conditions are already at least as good as the minimum conditions laid down in an applicable collective agreement (known as the 'rule of evidence').

Through the Laval case and the following Lex Laval, the right for Swedish trade unions to conduct collective actions against foreign-posting employers has been subject to more extensive limitations than for domestic employers. This has now been changed by the legislature through amendments to the Foreign Posting of Employees Act.

The new law has abandoned the rule of evidence. Collective agreements with limited conditions and effects for foreign labour have been implemented instead. Foreign employers can be forced to agree to collective actions – irrespective of the current employment terms – and if necessary, become subject to collective actions undertaken by Swedish trade unions.

Collective actions may be conducted irrespective of the employment terms used by the foreign employer, but should not be used in order to prevent the use of more favourable terms. Even foreign employees that are not members of a Swedish trade union are entitled under specified circumstances to demand certain employment terms as laid down in a collective agreement applicable to their employer.

From an EU law perspective, the expanded right for Swedish trade unions to conduct collective actions against foreign employers and require the use of Swedish collective agreements, affects EU regulations such as free movement of services, non-discrimination on the basis of nationality and the principle regarding mutual recognition.

That Swedish trade unions may now demand foreign employers to enter into customised Swedish collective agreements, and if necessary undertake collective actions against such employers, has been encouraged by the legislature as a way to ensure that foreign labour stationed in Sweden is guaranteed employment terms in accordance with the directive. According to critics, the new law risks deterring foreign companies from acting on the Swedish market, which inhibits the free movement. The new law has also been criticised for potentially conflicting with EU law and the principles on proportionality and mutual recognition. Swedish and EU courts will have to determine whether this is the case.

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For further information on this topic please contact Jörgen Larsson or Viktoria Hybbinette at Wistrand Advokatbyrå by telephone (+46 31 771 21 00) or email (jorgen.larsson@wistrand.se or viktoria.hybbinette@wistrand.se). The Wistrand website can be accessed at www.wistrand.se.