The provisions of a collective agreement must be followed. A person who is in breach of a collective agreement is liable subsequently to rectify this. The employer may also be liable to pay a substantial amount in damages.
The collective agreement automatically binds both the members of the trade union and the companies that are members of the employers’ organisation concluding the agreement.
A person who is not a member of the trade union usually has no rights under the collective agreement. The fact that, despite this, the employer applies the same rules to everyone is because he would otherwise be liable for damages in relation to the trade union organisation. The damages payable to the trade union is usually in that case at least equivalent to the gain made by the employer by paying non-union members wages that are too low. Those who are not members of the trade union do not receive damages in the event of a breach of the collective agreement.
Collective agreements and sales of companies
As a rule the collective agreement is transferred when a company or part of a company is sold, unless the new company already has a valid agreement for its operations. The conditions for the personnel who transfer to a company that already has a valid collective agreement are protected for 1 year. If the agreement at the company being sold would nevertheless have ceased to apply, then a shorter period is applicable to the protection of conditions.
Bringing a collective agreement into existence
The collective agreement is not the work of one person. It is a relay race that is run over generations and where each generation leaves its mark. In many of today’s agreements there are regulations that originate from the beginning of the century or even further back in time. In the collective agreement there are therefore points of balance between employer and employee where each party has established “here but no further”.
The first collective agreement in Sweden is said to have come into existence after a masons’ strike in 1869 in Stockholm. The strike was in protest against wage reductions. The collective agreement that was then concluded contained many of the features that still apply:
In order to obtain an agreement everyone must act in solidarity.
The agreed conditions must apply equally to everyone, otherwise the agreement would not be viable. If one employer was allowed to pay lower rates the other employers would either be forced to reduce their pay rates or would be ousted by the competition.
Without a trade union to gather together and represent the interests of the workers it would be difficult to retain what was achieved through the strike.
Collective agreements and the members
When new collective agreements are negotiated many trade unions have different kinds of consultative procedures for obtaining the members’ views as to what needs to be improved, changed or supplemented.
When the major negotiations then get started, most of the trade unions, at least among the LO affiliates, have large delegations who represent different occupational areas and parts of Sweden. In some trade unions the entire negotiating delegation still signs the agreement. Even if it is the Union Executive Committee that has the final say, it is the negotiation delegation that controls whether there will be an agreement or a strike during negotiations.
The way in which collective agreements are cocluded means that they have a high degree of legitimacy, meaning that they are respected, at least by the active trade unionists. They facilitate stable and long-term relations in the labour market.
Sectoral agreements and local agreements
The collective pay agreements in Sweden are usually sectoral agreements. They are concluded by trade unions with the employer’s association. The sectoral trade unions have various sectoral agreements for different industries. It is not very common to conclude central agreements for only one company. An application agreement with the same contents as the sectoral agreement is concluded with employers who are not members of an employers’ association.
The sectoral agreements are often supplemented by local collective agreements. About 90 per cent of the employees in Sweden are protected by collective agreements.
The contents of a collective agreement
A collective agreement may be an agreement concerning luncheon vouchers, pay and damages to an employee whose employment has been incorrectly terminated or the disposition of working hours at a local workplace. The main thing is that the formalities for a collective agreement are met. But when talking about collective agreements what is usually meant are the central pay agreements. These usually contain regulations concerning:
How pay is to be determined
The length and disposition of working hours in a twenty-four hour period.
Overtime, duty hours, standby etc and the compensation payable.
Payment for leave of absence and other leave.
Calculation of pay deductions.
Holidays and holiday pay.
Collective agreement insurance for supplementary pension, group life, severance pay etc.
Basic agreement
In addition, the collective agreement contains rules concerning the dealings and communication between the parties, i.e. negotiation rules. These may be:
- how and when negotiation must be requested so as not to lose one’s rights (claims are statute-barred)
- rules as to when and how the parties may carry out industrial action,
- regulations concerning protective work in the event of a strike,
- conflicts constituting a public danger, etc.
- These regulations are sometimes found in special basic agreements. The basic agreement that has served as a model for the rest of the labour market is that between SAF (the Swedish Employers’ Confederation) and LO (the Swedish Trade Union Confederation). It is called the Saltsjöbaden Agreement since it was signed after an epoch-making bargaining round at the Grand Hotel in Saltsjöbaden in 1938. The main parts of it still apply.
Collective agreements and employment benefits
A collective agreement functions for the employee in the same way as protective legislation, such as the Work Environment Act, the Working Hours Act or the Annual Leave Act. A protective statute implies that agreements that give worse benefits than allowed by law are invalid. If this were not so the employees would not have any protection. On the other hand, it is quite possible to agree on better conditions. The collective agreements protect against conditions that fall short of the minimum agreement level, but do not prevent agreements that are better.
The collective agreement is the employee’s most important protection of employment conditions and against arbitrary rules and harassment at work. In other countries this protection is often obtained through minimum wage legislation. In Sweden there is no such legislation. The collective agreements provide more effective protection.
The standardising effect of collective agreements
But is it not possible to agree to terms that improve conditions for both employer and employee outside the collective agreement? The formulation of present labour law entails problems, which we can illustrate with an example.
A collective agreement states that working hours are to be between 07.00 and 17.00 from Monday to Friday. An employee and an employer both think that it would suit them better if working hours were between 12.00 and 21.30. But then, under the agreement, the employer must pay overtime after 17.00, despite the fact that both are agreed that these working hours are in their own interest. Otherwise the employer must pay damages for breaking the collective agreement.
This isn’t very practical, though, is it? Couldn’t it be possible to allow such an agreement between an employer and employee in that situation? The first problem is that an agreement can be “voluntary” in such a way that the employee only gets the job on condition he or she does not demand overtime pay for the inconvenient working hours. In that case the person who agrees to work without overtime pay will get the job at the expense of those who want full pay. The most important task of a collective agreement is to prevent exactly this kind of pay competition.
The second problem with such an amendment of the collective agreement, taking away the “fence” around the disposition of working hours, is the formulation of labour law in Sweden. The amendment also gives the employer the right to order all employees to work until 21.30. If the agreement’s fence – the standardising effect – around working hours is removed, under the so-called section 32 authority, the employer can freely direct and distribute the work and thus freely set working hours within the scope of the Working Hours Act.
The collective agreement and the right of the employer to direct the work
The employer’s rights under section 32 are not a given principle. Put simply, that principle gives the employer the right to direct work. Through the Security of Employment Act and other protective laws and also through one or two judgements in the labour court, that right has been restricted.
But the main principle, which is based on the 19th century view of the master-servant relationship, still remains by and large intact. As long as this rule is applicable it is not possible to remove the fence formed by the agreement without risking a deterioration for everyone. Often the employee is at a disadvantage in negotiations on employment conditions. The employer’s unilateral right of determination means a great degree of dependence for the individual. The fences in the agreements are a block to this. The collective agreements are therefore of great importance as protection for employees. They are in fact the employees’ most important protection against arbitrary rules.
The collective agreement adapts regulations to each industry
Sometimes when Swedish employers are working in other countries they are astonished at the bureaucratic red tape that surrounds working life there. In Sweden both legislation and working conditions in other respects are adapted to each industry through the collective agreements.
In contrast to what many people say, for European conditions, Sweden has in the best sense flexible labour law. But it is a flexibility that is not a consequ-ence of the employer’s unilateral right to decide, but assumes the agreement of both parties.
Collective agreements and the individual
While a collective agreement reflects history it must also be able to meet the future. The employers, Confederation of Swedish Enterprise, want to have flexible agreements and decentralized wage negotiations - preferably at individual level, otherwise at company level.
The model many employers see for the future is, therefore, only a local collective agreement or preferably agreements only with the individual employee. In comparison with the model for collective agreements that applies in most of the trade union areas at present it means very small opportunities for improved individual adaptation. The difference in comparison with the present agreement model is that it allows agreements to be made giving worse benefits, which most central collective agreements at present do not allow. No changes are needed for better benefits. Those can already be agreed on today.
The trade unions’ model for the future is not like this. The present collective agreements reflect in many respects the values of a past time. The fact that the employer’s right to direct and distribute the work entirely without restrictions – his section 32 authority – in many agreements is still the prominent section can be seen as a failure on the part of the trade union movement.
The right to skills development at work is another important goal. Freedom of expression at work, the right to personal integrity are others. The trade union movement, in the circumstances prevailing, has mainly directed its efforts at defending the positions achieved by our forerunners. But the collective agreement is the most important instrument for advancing the workers’ positions.
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