A "Laval 2.0" case underway before the Swedish Labour Court?

Until 18 December 2007, Sweden operated on the assumption that foreign companies posting workers there were required to apply standard Swedish collective agreements and that trade unions could take industrial action to compel reluctant employers to sign such agreements.

Then came the ruling in the case between the Latvian company Laval un Partneri and the Swedish Building Workers’ Union. The EU Court of Justice held that it was not permissible to take industrial action to force foreign companies to enter into collective agreements containing more favourable terms than those specified in the Posting of Workers Directive.

After that, Swedish trade unions began developing special posting agreements based on the minimum conditions of the standard collective agreements. As long as the content did not exceed the framework of the Posting of Workers Directive, it remained lawful to take industrial action to compel foreign companies to sign.

However, this is rarely necessary, as companies usually sign voluntarily. One reason is that the Swedish contractors often require their subcontractors to be bound by collective agreements before awarding contracts.

The new case before the Labour Court concerns a Polish company, Meron Tadeusz Meronk (“Meron”), which refused until the last moment to sign one of IF Metall’s posting agreements. The reason was that the agreement obliges the foreign employer to pay contributions for various insurances for the posted workers, including occupational pensions and transition insurance. The company objected because it was already paying for equivalent insurances in Poland.  

However, Meron’s prospective contractor, Kone AB, informed them that IF Metall intended to exercise its union veto right. The veto right, contained in the Swedish Co-Determination Act, allows unions to prohibit employers from hiring contractors who are expected to breach labour laws or collective agreements.

If IF Metall imposed a veto, Kone would therefore not be able to engage Meron for work in Sweden. Under protest, Meron signed the posting agreement and then sued IF Metall before the Labour Court (AD).

The company argues that the threat of a veto amounted to pressure equivalent to industrial action and that such action was unlawful because the obligation to sign up for the contested insurances goes beyond what can be demanded under the Posting of Workers Directive.

Thus, it seems the company is setting the stage for a "Laval case 2.0," as the lawsuit repeatedly references the original Laval ruling. Meron also requests that the Labour Court seek a preliminary ruling from the EU Court of Justice if there is any doubt about Meron’s position.

IF Metall’s stance on Meron’s claims is still unclear, as the union has not yet responded to the lawsuit. One question is whether the union actually had decided to impose a veto. According to the lawsuit, Meron only has second-hand information from Kone about this. 

Another question is whether a veto declaration can be considered equivalent to industrial action.

It is difficult to predict the outcome. It is not uncommon for cases in the Labour Court to be settled before a judgment is issued. The unions would undoubtedly prefer to avoid giving the EU Court another opportunity to scrutinise Sweden’s rules on industrial action in the labour market.

For the Polish company, on the other hand, it appears to be a matter of principle to challenge the union veto right. It is worth noting that Meron could have been exempted from the obligation to take out the contested insurances by contacting the insurance company and proving that it already provided equivalent benefits in Poland. 

IF Metall had informed Meron of this possibility, but it did not help. The company argued that doing so would have been unreasonably difficult.