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The democratisation of working life in Sweden has a long history that goes back to the inter-war years. Its development has always reflected the impressive growth of a strong and progressive trade union movement in alliance with Social Democratic governments that have ruled the country for all but nine years since 1932. The elaborate system of managed social corporatism that was developed in Sweden through the highly centralised organisations representing employers and trade unions has tended to emphasise the importance of voluntary collective bargaining without resort to the use of prescriptive legal rights imposed by the state.
It was not until 1973 and 1975 that legislation was passed that introduced company board representation for worker representatives. The shift away from voluntary negotiated agreements to the use of legislation marked an important change of direction in the industrial relations strategy of Sweden’s trade union movement. It aroused considerable opposition from employers and it was only after 1982 that agreement was reached that began to put the legislation into action.
But from the beginning the new laws – one for co-determination and the other on board representation – provided employer associations and trade unions with considerable autonomy and flexibility in the way that employee representation at company board level should be designed. A great deal is left to the initiative and creativity of local officials and company managers. Indeed, the open-ended nature of the worker participation laws has produced a considerable diversity in the range of structures and procedures.
But the legislation was rewritten in 1987 as the Board Representation Act. The far-reaching measure is designed to provide employees with the opportunities for using their knowledge and influence in company activities. It covers not only joint stock companies and limited-liability companies but also banks, mortgage institutions, insurance companies and economic associations who employ 25 or more workers. Employees in such enterprises are entitled to two representatives on the board of directors and one alternate for each member. But companies that employ an average of at least 1,000 employees in Sweden are also required to have three worker representatives on their board of directors. The most common size of the board in Swedish companies is seven members, two of whom are employee representatives.
Because all rights to co-determination, participation and negotiation at the workplace are distributed to the trade unions, which, by law, are responsible for the conclusion of collective agreements within the company, only the members of a trade union have the right to elect their representatives on the boards.
The decision to appoint employees’ board representatives is taken by a local trade union which is bound to the company by a collective agreement. If as many as 80 per cent of the employees covered by the collective agreement belong to the same trade union, that organisation can appoint all the employees’ representatives. If this is not the case the two seats have to be shared among the most representative trade unions in the firm. In practice unions have little problem in reaching agreement on the appointment of employee representatives. But the law requires that those representatives are employees of the company concerned. It is very unusual for full-time trade union officials from outside the company to be appointed onto its board as employee representatives. Under the law an employee representative is allowed to serve a term that does not exceed four financial years. Only the body that has appointed the employee representatives can dismiss them.
The law makes it clear that the employee representatives on the company board do not participate in the treatment of issues that concern the collective bargaining agreement. Nor are they involved in industrial action or other matters where a union organisation at the workplace has a material interest which may conflict with the interests of the company.
Indeed, it is not an exaggeration to argue that the relative decline in the power and influence of Sweden’s trade unions at the national level as social partners has been paralleled by a revitalisation of their organisations in the workplace.
The development of joint decision-making in Swedish companies is in tune with the country’s tradition of collective bargaining and social partnership. Moreover, the legislation of the 1980s was developed in line with the voluntary and negotiated approach to workplace change. Research does not suggest employee representation on company boards has altered the power relationship between managers and employees but it has helped in ensuring active cooperation and consent to work modernisation.
source: Robert Taylor (2004) in ETUI and Hans Böckler Foundation, The European Company - Prospects for board-level representation
DOCUMENTS: - BRIEF OVERVIEW: Company law and existing legislative provision for employee participation in Sweden (by A. Büggel).
(pdf)
 COUNTRY REPORT SWEDEN: Workers' participation at board level
(by Roger Nilsson)
prepared within the project "Prospects for participation and co-determination under the European Company Statute" - more about this project
download country report (pdf, 294kb) download whole report (pdf, 1.3 MB)
LEGAL TEXT: Board Representation (Private sector employees) Act
(pdf,  )
LEGAL TEXT: Co-Determination in the Workplace Act (SFS 1976:580)
(Link to pdf, )
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Report: Recent debates on the future of corporate governance and domestic company law in Sweden (Dec. 2006)
Magnus Lundberg, National Institute for Working Life (Sweden)
Since September 2006 there has been a new right-wing government in Sweden which has, among other things, announced changes to unemployment schemes. One of the effects of this change in the political climate is that labour-related discussions tend to focus on these unemployment schemes; hence, the corporate governance issue has been somewhat neglected. One issue that has been raised by the Swedish Trade Union Confederation – LO – is financial responsibility for the training of workers’ representatives on company boards. A list of eleven demands concerning the upcoming negotiation round of 2007 has recently been published by LO, and the financial responsibility for the training of workers’ representatives on company boards is on it. The background is that the training of board representatives and safety representatives has to a significant extent been government funded. The new Swedish government has, in its budget proposal, abolished these “training funds”. According to LO, the consequences will be uncertainties and disputes about the employer’s responsibility in these matters, and that the prerequisites for effective cooperation will be hampered. LO is therefore listing a common position, together with the employers’ associations (as a solution to the issue), as a demand in the upcoming negotiation round.
Download full report as pdf.
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(3) Transposition process
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Sweden adopted the law on employee involvement in the European Company (SE) in March 2005. (Documents)
Report: The European Cooperative Society (SCE) Regulation and the associated Directive on employee involvement & The Directive on takeover bids (by Magnus Lundberg, National Institute for Working Life, Sweden, September 2006)
The report deals with the transposition of the takeover directive and the two pieces of legislation governing the European Cooperative Society (SCE). Both acts have now been transposed in Sweden. One interesting issue in the Swedish discussions on the transposition of the directive on worker involvement in the SCE was the introduction of a time limit by which the special negotiating body needs to be set up. The background is the lack of regulation in the SE and SCE legislation concerning what happens if no special negotiating body is set up, in particular if the employees refuse to participate in the creation of such an organ or stall it. The effect of such a refusal – since the creation of a special negotiating body is a prerequisite of the formation of an SCE – would be that the employees are de facto given a right to veto formation. The Swedish legislator has now adopted a ten-week limit in the SCE act and has also amended the SE act by introducing the same time limit.
Download full report as pdf
Progress report on transposition of the directive on employee involvement in SEs in Sweden (Update: June 04)
This report provides a brief overview of Swedish implementation of the directive on employee involvement in SEs (prop. 2003/04:122). The SE directive will be implemented by a special law, the Act on employee involvement in SEs. The new act is accompanied by changes in the Act on private-sector employee board representation of 1972. We shall describe the new act in more detail below.
Transposition of the directive on employee involvement in SEs, and other complementary SE legislation, has now been completed in Sweden. Three separate proposals on SEs were approved by parliament in May. The legislative proposal on employee involvement (prop. 2003/04:122), together with a legislative proposal complementing the company law provisions in the SE regulation (prop. 2003/04:112) were presented to the Swedish parliament on 11 March 2004 and approved on 13 May. The third government proposal – on taxation of SEs (prop. 2003/04:134) – was presented to parliament in April and approved on 28 May. All three proposals will enter into force as legislation on 8 October 2004.
The proposal on employee involvement in SEs passed through parliament without discussion, while the proposal on complementary SE legislation caused some debate regarding the conditions of transferring an SE’s corporate seat to another Member State. The government proposal states that the tax authorities can, under certain conditions, hinder such a transfer. Not all MPs found this acceptable and asked for amendments to reduce the influence of the tax authorities on the creation of SEs.
The legislative proposal containing the new Act on employee involvement in SEs is largely based on the proposals of the inquiry committee (SOU 2003: 64) on transposition into national Swedish law of the Directive on employee involvement in an SE.
The act on employee involvement in SEs – in brief
The government decided against transposing the directive by making changes in existing law on workers’ involvement: in those parts of the directive where national interpretation is possible the underlying aim of the act is to adhere to existing law as far as possible.
The Act lays down that the special negotiating body is to negotiate arrangements for employee involvement with the employers. In Sweden, seats in the special negotiating body will be allocated among the employees of participating companies, subsidiaries and establishments, giving priority to the first. The principle of distribution is one seat for each company, with any extra seats being distributed on the basis of number of employees in a given company.
The Act lays down that selection of members of the special negotiating body shall take place according to the Swedish model of trade union representation in the workplace. If there is a collective agreement, members are appointed by the trade union organisations party to that agreement. If these organisations cannot agree, the Act says that selection of employee members in accordance with the Board Representation Act should form the basis of the procedure. If there is no collective agreement at any of the workplaces involved, the local employee organisation that represents the most employees in the participating companies, subsidiaries and establishments shall appoint the members of the special negotiating body.
The Act does not address what rules should apply in the event of a failure to establish a special negotiating body. The directive does not resolve this issue either. The issue also separated the social-partner delegates on the inquiry committee. The government declares in its legislative proposal that it does not believe that the employees are intended to have a veto on the creation of an SE; however, it does not think that the issue should be solved at national level, leaving the matter to be dealt with either by the Commission’s working group or in conjunction with a review of the directive. Nevertheless, the government also states in the legislative proposal that national measures might be considered if needed.
If the parties do not reach agreement, according to the Act the reference provisions on information and consultation shall apply on condition that the special negotiating body does not decide to relinquish employee involvement. Application of the reference provisions on participation further depend on various conditions related to the way the SE was established.
Claes-Mikael Jonsson and Niklas Bruun, National Institute of Working Life
DOCUMENTS: (Link to EU Commission website, inofficial translations are available for some countries)
Link to the legislative proposal complementing the company law provisions in the SE regulation (prop. 2003/04:112)
http://www.regeringen.se/content/1/c6/01/22/75/5b8bfc7d.pdf
Link to Legislative proposal concerning taxation of SE companies (prop. 2003/04:134) http://www.regeringen.se/content/1/c6/01/76/38/28fcc3eb.pdf
Download archived report (from March 2004)
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- ARTICLE: Employee Representatives on Company Boards in Sweden
Klas Levinson, Researcher, National Institute for Working Life in Stockholm. Earlier published in Industrial Relations Journal, nr 3, 2001.
Summary:
Data from a survey indicate that a large majority of managing directors in Sweden have a positive experience of employee representation on company boards, and regard it as a resource for the company. The survey also shows that employee representatives are well integrated in local union activities.
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(5) Other relevant information (Info-Box)
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Links
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