The industry-wide collective bargaining agreements will be renegotiated

During the industry-wide collective bargaining agreement renegotiations in 2016, the parties were unable to agree on a period longer than 12-13 months, meaning a new round of renegotiations will commence in 2017. The biggest bone of contention (as was the case in 2016) is likely to be the extent to which the Swedish export-oriented industries can sustain the wage increases that the trade unions request, given the low rate of inflation and the uncertainty of the development of the major European economies (Sweden’s main export market).

Further, certain employers’ associations and trade unions are challenging the normative influence of the industrimärke (the agreed wage increase for the traditional Swedish export-oriented industries) on wage increases in other industries.

However, it is not only wages that will be on the agenda. Unionen, the largest trade union for white-collar employees, has already confirmed that it will pursue its goal of ensuring that all its members have the option of partial early retirement (so called “flexpension”).

While, in global terms, Sweden generally experiences relatively little industrial action, or indeed threats of industrial action, it does tend to occur during the renegotiations relating to the industry-wide collective bargaining agreements. There could therefore be a period of volatility in 2017 until the new agreements are in place.

Sweden to introduce enhanced protection for whistle-blowers

On 1 January 2017, new legislation came into force which introduces a prohibition on employers taking action that is harmful to an employee on account of the employee’s disclosure of serious irregularities in the employer’s business. In order for an employee to be afforded protection under the Act, the employee must make disclosures in accordance with the provisions of the Act, which includes a requirement on employees to report irregularities internally in the first instance (via the employer’s internal reporting channels).


New rules on non-compete clauses in employment agreements came into effect

Formally introduced at the end of 2015, during 2016 employers have had to adapt to a new collective bargaining agreement regulating the use of non-compete clauses in relation to white-collar employees (the “2015 Agreement”). The 2015 Agreement has been adopted by all major employers’ associations and trade unions, meaning that it applies to a majority of employers operating in Sweden. Under the 2015 Agreement, non-compete clauses can only be used in agreements with employees that have access to the employer’s trade secrets and the means to compete by utilizing them, and the restricted period cannot exceed 18 months unless there are special circumstances. As under the previous agreement, employers must compensate employees for loss of income during the restricted period.

Wage increases determined in the renegotiated industry-wide collective bargaining agreements

As part of the renegotiations relating to the industry-wide collective bargaining agreements during 2016, the major employers’ associations and trade unions agreed on wage increases for a 12-13 month period. The industrimärke was set at 2.2% for a 12-month-period. The industrimärke is generally seen as establishing the cap on the collectively agreed wage increases in other industry sectors, and it seems that this cap was largely respected throughout the Swedish labour market.

Employers’ responsibility for psychosocial work environment

Following reports that long-term sick leave is increasingly being taken due to mental health problems, the work environment and employers’ responsibility to address psychosocial health risks have been very much in focus. In March 2016 the Swedish Work Environment Authority adopted a new regulation setting out the obligations for employers to create and maintain a sustainable work environment. Further, the Swedish government announced an increase in funds to recruit more health and safety inspectors (citing the need to ensure a sustainable work environment).

Amended legislation on fixed-term employment contracts addresses complaints from the European Commission

In May 2016, the legislation on fixed-term employment contracts was amended to address long-standing complaints from the European Commission that the Swedish legislation was in breach of the Fixed-Term Work Directive. The Commission’s complaints had been that Swedish legislation allowed for the perpetual continuation of a fixed-term employment by combining different types of fixed-term employment contracts. With the implementation of the new rules, such unlimited application of fixed-term employment contracts is no longer possible.

With thanks to Jenny Welander Wadström of Roschier for her invaluable collaboration on this update.