Agreement on what constitutes minimum rates of pay for construction workers in Sweden

The famous 2007 Laval judgement made it necessary to define which of the elements of remuneration in different collective agreements are included in “minimum rates of pay”, as defined in the directive on the posting of workers. In that judgment, the EU court established that a member state cannot force foreign companies to pay their posted workers more than this minimum.

So the need arose to determine what was included in these minimum rates of pay – beyond a certain hourly wage. This has led to disputes in Finland and Norway where the Luxembourg courts have  pronounced on how EU law should be interpreted.

In Sweden, things have not ended up in court. In the construction industry, where the posting of workers is most common, most foreign companies sign the applicable Swedish collective agreement just as they used to before the Laval judgement. That means, of course, that they must respect all its provisions and not only the minimum terms.

But companies that have not signed, have not been able to get clear answers to what of minimum wages they are expected to pay when they post construction workers to Sweden. The parties to the collective agreement, Byggnads and BI, have disagreed on how to interpret the collective agreement. The employers in BI have claimed that what the collective agreement calls a basic salary is the lowest possible hourly wage for posted workers.

Byggnads, however, said the “basic salary” only applies in situations when it is impossible to carry out work, for instance when the weather is too bad, and that the lowest hourly wage must be the same as what is actually paid in the geographical area in question.

Ten years of conflict

This is what the organisations have been fighting over for nearly ten years. Right up until this spring. Finally, during this year’s wage negotiations, they managed to agree to a compromise.

The lowest hourly wage for posted workers is now slightly higher than the “basic salary”, but not on the level Byggnads earlier had wanted. The posted workers’ directive’s interpretation of the minimum rates of pay also includes supplements for shift work, diving work and underground excavation work, overtime pay or compensation for unsocial working hours plus daily allowances and compensation for travelling time “when the prerequisites for this are fulfilled”. On top of that comes holiday pay or holiday compensation. 

According to the agreement between Byggnads and BI, these conditions should also apply as special labour law contract performance conditions in public procurement in Sweden. Since 1 June this year, authorities are in some cases obliged to include such conditions in their procurement contracts.