Newsletter EMPLOYMENT LAW AND PENSIONS

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1 NO. 23 FEBRUARY 2009 EDITOR: Jur kand Lena Wåglöf LEGALLY RESPONSIBLE: Advokat Magnus Wallander Stockholm CONTACT PERSONS: Advokat Magnus Wallander, Stockholm Advokat Henric Diefke, Göteborg Advokat Madeleine Rydberger, Malmö Dr. Christian Bloth, Rechtsanwalt, Frankfurt Newsletter EMPLOYMENT LAW AND PENSIONS In this issue of the newsletter we will be addressing a number of interesting decisions made by the Labour Court over the last few months. For example, Mannheimer Swartling has represented a company in the Labour Court in a case concerning sex discrimination and unfair treatment of an employee on parental leave. The Labour Court has also examined whether a municipality was guilty of ethnical discrimination and harassment. In addition, two of the Labour Court s decisions address the issue of freedom of association. NEWS FROM THE LABOUR COURT Whether a company was entitled to decode salary statements of nonunion employees and a matter concerning violation of right of association Before initiating salary negotiations with a union bound by a collective agreement, a company had decoded salary statements in the supporting documentation regarding those employees who were not members of the union. The company had also requested a number of union members to answer whether they belonged to a union and whether they wished the union to represent them at the negotiations. The dispute concerned the issue whether the company was in conflict with the collective agreement through these measures. Section 7 of the Co-determination in the Workplace Act defines the right of association as a right for employers and employees to belong to an employers association or a trade union and to make use of the membership. Pursuant to Section 8 of the same Act, a violation of the right of association is a measure that harms an employee for having made use of his right of association or aims at preventing an employee from making use of his right of association. The union had a contractual right to negotiate with the company on behalf of its members. In connection with the annual revision of salaries the company handed over a list of salaries as well as proposed salary increases to the union s negotiator. The personal information of the non-union employees was decoded in the list. The union took the matter to the Labour Court and argued that the company had committed a breach of collective agreement by withholding information on the non-union employees. The union also considered that the company had violated the right of association by requesting some of the union members to answer whether they wished the union to be informed of their salaries, negotiate on their behalf at the coming revision of salaries or state whether they were members of a union. Does the union have a right to study salary statements of non-union employees? The Labour Court pointed out that there was no express regulation in the collective agreements in question concerning a right to study salary statements of non-union employees. In addition, the Labour Court considered that there was no ground for interpreting the provisions of the collective agreements to the effect that there was such an obligation. An obligation for the company to furnish the employees names and employment numbers should be based on an express obligation in an agreement or be a mutual intention based on the parties negotiation practice. The Labour Court also noted that the treatment of the personal information of the non-union employees, without express consent, might be in conflict with the Personal Data Act. The Labour Court declared that the union s action should be dismissed in this respect. page 1

2 Violation of the right of association The Labour Court established that a violation of the right of association must be a concrete and well defined action aiming at persuading an employee not to make use of his right of association, or intervening because the employee had made use of this right. According to the Labour Court the company s request to the members to indicate whether the union should represent them at the negotiations or not, could be understood as if the members should consider not asking the union to represent them. The Labour Court therefore found that it had been reasonably proved that the company had attempted to persuade the union members to consider not asking the union to represent them at the negotiations. It was then up to the company to verify that it had had a reasonable ground for its measures, irrespective of the matter concerning the right of association. It was incontestable that the company and the union had had a good co-operation. Nor did the Labour Court find any other circumstances which indicated that the company s purpose of the measures had been other than that the salary negotiations could be started and carried out in compliance with the non-union employees right to integrity. The Labour Court thus dismissed the union s action on right of association. (Labour Court judgment 2009, number 3) Contact person: Lucas Geisler, lkg@msa.se Does an employer s written criticism of a union representative constitute a violation of the freedom of association, a violation of the Union Representative Act or an unlawful disciplinary action? A sawmill (the Company ) engaged a contractor to operate trucks at the Company. The contractor engaged ten truck-drivers who had previously worked for the Company and employed an additional thirteen truck-drivers. The deputy chairman, C.L., of the local branch of the union agreed with the Company s safety representatives to check the new truck-drivers in order to ensure that they possessed truck licences. Neither C.L., nor the safety representatives discussed the matter with the Company before performing the checks. On account of the checks the Company sent a letter to C.L. at his home address in which he was criticised for having abused his position as a union representative and exceeded his authority when performing checks of truckdrivers who were not employed by the Company but by a contractor. In addition, the Company stated that this kind of action was considered disloyal to the company and damaged the safety representatives reputation. The Swedish Forest and Wood Trade Union (the Union ) was of the opinion that the letter constituted or involved actions which were a violation of the freedom of association and that it damaged C.L. and prevented him from performing his union duties. In addition, the Union considered that the letter constituted an unlawful disciplinary action against C.L. under section 62 of the Co-determination in the Workplace Act ( CWA ) and a violation of the collective agreement under the existing agreement. However, the Company considered that the purpose of the letter was to explain how the efforts to improve the work environment should be managed and that it is the Company which should manage and distribute the work. This explanation was important since the action of C.L. and the safety representatives was in conflict with the system prescribed the Occupational Safety and Health Act. The Company contested that the letter constituted a disciplinary action or a warning in accordance with the Employment Protection Act. The Labour Court pointed out that an employer s criticism of a union organisation or the way a union representative conducts union activities does not constitute a violation of the freedom of association, whether the criticism is expressed in public or in private, as long as it concerns general statements. Since the letter also could not be considered to constitute an action under section 8 of the CWA, a violation of the right to form an association was not considered to be at hand. As regards the Union s action concerning violation of the Union Representative Act, the Labour Court considered that section 3 of the Act does not limit an employer s ability to express criticism to a larger extent than what is possible in accordance with the right to form an association. Since the Company s action did not constitute a violation of the right to form an association, it could also not be considered to contravene the Union Representative Act. Finally, the Labour Court considered that there was no reason to assume other than that the letter was written for the reasons expressed by the Company. There was no reason to assume that the page 2

3 letter was written as a punishment and as a result the letter was not considered to constitute an unlawful disciplinary punishment. The Union s action was therefore dismissed in all respects. (Labour Court judgment 2008, number 107) Contact person: Sam Seddigh, sms@msa.se Did a municipality have a good cause for suspending and permanently transferring an employee due to difficulties in co-operating and did the municipality discriminate against the employee due to his ethnic background through these actions? An employee at a municipal home for people with autistic and similar symptoms was transferred following conflicts with his colleagues and a new manager at the workplace. The employee, who was Gambian, had difficulties in co-operating with the employees and felt that his colleagues and manager harassed him by using derogatory comments of an ethnical nature. As a result of the conflicts the employee was released from work for a period of time before he was transferred to another workplace. Under the applicable collective agreement an employee could only be permanently transferred against his will if there was a good cause for the measure. The Discrimination Ombudsman (DO) brought an action against the municipality and claimed damages due to ethnic discrimination and violation of the collective agreement. In addition to the derogatory comments made at the workplace, DO was of the opinion that the manager at the home had neglected the obligation to investigate the circumstances surrounding the alleged harassment reported by the employee. DO also claimed damages due to violation of the law and the collective agreement based on the fact that the employee s suspension had been ill-founded as a result of his ethnic background and that there was no good cause for transferring him. Ethnic harassment and the employer s obligation to investigate and take measures against harassment The Labour Court found that damages due to ethnic harassment could not be established, since it did not consider that it had been proved that the employee had been subject to ethnic harassment. On the contrary, the analysis of the case showed that the employee had himself used derogatory expressions and had actively participated in the jargon used at the home. As regards the employer s obligation to investigate and take measures against harassment the Labour Court held that it is true that it is not necessary that harassment in the sense of the law has actually occurred, but it is sufficient that the employer learns that the employee himself feels that he has been harassed. However, the Labour Court found that it had not been established that the employee had informed the employer that he felt that he had been subject to harassment. Since the employee had not shown that he had been offended, the manager had no reason to suspect that the employee considered that he had been subject to harassment and there was no ground for further investigation according to the Labour Court. Good cause for transferring the employee In addition, the Labour Court found that it was not possible to award damages due to an incorrect transfer since the difficulties in co-operating at the workplace were mainly related to the employee himself. As a result, a less radical measure than transfer could not come into question for the employer and there was thus a good cause for transferring the employee in accordance with the collective agreement. The Labour Court also stated that the analysis of the case did not support the allegation that the municipality s measure to transfer the employee was caused by discrimination due to his ethnic origin. Suspension The Labour Court also found that there was a good cause for suspending the employee but since the employee had been suspended for a longer period of time than permitted in the collective agreement, damages for SEK 10,000 were awarded due to a violation of the fixed period. (Labour Court judgment 2009, number 4). Contact person: Bita Pourmotamed, bpo@msa.se Two court-decisions regarding unfair treatment under the Parental Leave Act Was a company guilty of sex discrimination under the Equal Opportunities Act and did it treat a woman unfairly as prohibited in the Parental Leave Act? Mannheimer Swartling represented a company (the Company) in a fundamentally page 3

4 important case concerning sex discrimination under the Equal Opportunities Act and unfair treatment of a woman under the Parental Leave Act. The Company paid an additional salary to its employees when they were on sick leave corresponding to the difference between 90 per cent of the salary and the compensation from the Social Insurance Office. A pregnant woman employed at the Company had been off work due to her physically strenuous duties and she had received a pregnancy benefit from the Social Insurance Office. The employee had not received compensation for loss of salary since this was only paid when employees were off sick in accordance with the Company s policy. The Company had also stopped paying pension premiums to the employee during the period when she was on parental leave. The Equal Opportunities Ombudsman brought an action in the Labour Court and claimed that the Company s action was in conflict with the Equal Opportunities Act and the Parental Leave Act. Equal Opportunities Act Section 15 of the Equal Opportunities Act provides that an employer may not treat an employee unfairly by treating him or her less favourably than any other employee in a comparable situation, if the unfair treatment is connected to sex. The Equal Opportunities Ombudsman argued that the Company had discriminated against the employee by not paying compensation for loss of salary in the same way as it did when employees were off sick. The Company claimed that the employee had not been treated unfairly due to her sex and argued that an employee who is off duty and receives a pregnancy benefit is not in a comparable situation with an employee who is absent due to illness. Initially, the Labour Court stated that the investigation had not shown that the employee had suffered from an illness that would have entitled her to a sickness benefit. Nor could the Company be required to make an independent assessment as to whether the employee should have been on sick leave instead of being off duty with a pregnancy benefit. The Labour Court established that the fact that the employee had not received compensation for loss of salary during her pregnancy leave had constituted unfair treatment in the sense of the law. However, the Labour Court stated that in order to decide whether unlawful sex discrimination existed it must be determined if the employee who is absent and receives a pregnancy benefit is in a comparable situation with an employee who is absent from work due to sick leave. Taking into account the difference when determining whether a sickness benefit or pregnancy benefit is payable, the Labour Court found that the employee had not been in a comparable situation with an employee on sick leave. The employee had therefore not been discriminated against due to her sex. In its assessment the Labour Court particularly took into account that in the case when a pregnancy benefit is payable there are only certain duties that the pregnant woman is unable to perform and it is not required that the woman is unable to work in other respects as in the case of illness. Parental Leave Act The Equal Opportunities Ombudsman also claimed that the Company had contravened Section 16 of the Parental Leave Act by not paying pension premiums to the employee s retirement pension insurance during her parental leave. Section 16 of the Parental Leave Act provides that it is prohibited to treat employees on parental leave unfairly, with the exception of if different conditions or treatment are a necessary consequence of the time off work. The parties were not in disagreement that the employee had been treated unfairly, but the dispute in this respect concerned whether it had constituted a necessary consequence of her time off work that the Company had stopped paying pension premiums and whether the Company s action therefore had been permitted under the Parental Leave Act. The Labour Court found that provisions for retirement pension insurance should be considered a form of deferred salary. Since the official explanatory notes to the Parental Leave Act show that it is a necessary consequence of the time off work not to pay salary to employees on parental leave, it was also, according to the Labour Court, a necessary consequence to lose salary benefits in the form of pension premiums. Employees on parental leave would otherwise be unjustly favoured to other employees who are off duty and who do not receive pension premiums or employees working part time who receive reduced pension premiums. The Labour Court also took into account that premium payments are based on the employee s salary and if no salary is paid, there is also no amount on which to calculate the premiums. The fact that some collective agreements contain agreements or recommendations that provisions should continue during the page 4

5 parental leave was not considered to be significant for the Court s assessment. Hence, the Labour Court found that the Company had not contravened the Equal Opportunities Act or the prohibition of unfair treatment contained in the Parental Leave Act, and the Equal Opportunities Ombudsman s action was dismissed in its entirety. (Labour Court judgment 2009, number 15) Contact person: Lena Wåglöf, lew@msa.se Did a company contravene the Parental Leave Act by not paying a gratuity to employees during their parental leave? Annonsfyren i Bohuslän AB and its subsidiary Bohuslänningen Aktiebolag (the Companies ) had decided in January 2007 to issue a gratuity to those employees who were employed at the Companies on 31 December If the employees had not worked full time during the entire year of 2006, the gratuity was paid out in proportion to the time worked in Three employees at the Companies had been on parental leave during parts of 2006 and received therefore a reduced gratuity in proportion to the time worked. The Equal Opportunities Ombudsman brought an action and claimed that the three employees had been treated unfairly for reasons connected to their parental leave, in contravention with section 16 of the Parental Leave Act. A question also arose whether the exemption in the Parental Leave Act was compatible with EC law. The Equal Opportunities Ombudsman argued that the employees had been treated unfairly since they had received a lower gratuity than they would have received if they had not been on parental leave. In the first place, the Equal Opportunities Ombudsman claimed that the gratuity should be considered a benefit of a reward or gift nature. Even if the compensation was to be considered a retroactive salary, the Equal Opportunities Ombudsman was of the opinion that the compensation had constituted an improvement of the terms of employment that employees should receive, irrespective of parental leave. The Companies argued that the employees had not been treated unfairly and that there was no causality between the reduced gratuity and the parental leave. The Companies also claimed that the reduction of the gratuity in any case had been a necessary consequence of the time off work since it had constituted a retroactive salary. The Labour Court found that it was undisputed that the three employees had received a lower gratuity than those who had worked the entire year. The Labour Court therefore found that the employees had been treated unfairly compared with the employees who had worked the entire year. The Labour Court also found that it was the parental leave that was the reason why the employees had not worked and that, as a result, they had not received a full gratuity. There was therefore causality between the unfair treatment and the parental leave. The question was then whether it could be considered a necessary consequence of the time off work that the gratuity had not been paid to the employees on parental leave and that the Companies action therefore was covered by the exemption in section 16 of the Parental Leave Act. The Labour Court found that since the gratuity had been paid in proportion to the degree of employment and time worked, it should be considered retroactive compensation for worked performed. The fact that the compensation was constituted by a lump-sum meant that it could not be regarded as an increase of the salary level. Since the gratuity was considered to constitute retroactive compensation, the Labour Court held that it was a necessary consequence of the time off work that the employees on parental leave had not received this compensation, in the same way as it is a necessary consequence of the time off work that the normal salary is not payable during the parental leave. The Labour Court came to the conclusion that it is this very situation that the legislator intended should be covered by the exemption in section 16 of the Parental Leave Act. The Labour Court did not share the Equal Opportunities Ombudsman s opinion that the gratuity should be considered an improvement of the salary terms. The Labour Court then dealt with the issue concerning the importance of EC law for the assessment. The Equal Opportunities Ombudsman had moved that the Labour Court obtain a preliminary ruling from the European Court of Justice, since the Equal Opportunities Ombudsman was of the opinion that the exemption in the Parental Leave Act was in contravention with the Equal Treatment Directive under EC law (76/207/EEC). However, the Labour Court found that the Equal Treatment Directive governs the conditions that the employees on parental leave are to receive when they return to work. Since the gratuity was considered compensation for work page 5

6 performed, it did not affect the salary that the employees would receive when returning to work. The Labour Court therefore held that no question as to whether the exemption was in contravention with the equal treatment directive had arisen, and it did not see any reasons for obtaining a preliminary ruling from the ECJ. The Equal Opportunities Ombudsman s action was therefore dismissed in its entirety. (Labour Court judgment 2009, number 13) Contact person: Lena Wåglöf, lew@msa.se Contact Details: STOCKHOLM Magnus Wallander Phone mw@msa.se GÖTEBORG Henric Diefke Phone die@msa.se MALMÖ Madeleine Rydberger Phone mry@msa.se FRANKFURT Christian Bloth Phone cbl@msa.se page 6