3.3.1 Facts and legal questions

95. Article 14 of Chapter 2 of the Regeringsformen (Swedish Basic Law) states that workers’ associations, employers’ organisations, and employers have the right to collective action, unless otherwise provided by law or agreement.10 The duty to maintain industrial peace, meaning that parties who are bound to a collective agreement are prohibited to take collective actions against each other is laid down in§41 Medbestämmandelagen (Co-Determination Act).11 Pursuant to §41(4) of the Act sympathy actions taken to support an unlawful collective action are unlawful themselves too. §42 Co-Determination Act clarifies under which circumstances a collective action – not being a sympathy action – is unlawful. §42(1) Co-Determination Act stipulates that employers’ organisations and workers’ organisations may not arrange, or in any other manner bring about, unlawful collective actions, or through support or in any other manner assist unlawful collective actions.12

When the trade unions initiated their collective actions against Laval, §42(3) Co-Determination Act was in force. This provision formed part of the Lex Britannia13, which was adopted in the aftermath of the Britannia case.14 In that case the Arbetsdomstolen had widened the scope of applicability of the prohibition adopted in §42(1) Co-Determination Act. With the Lex Britannia the Swedish legislature alluded to curtail the scope of applicability again and hence to limit the effect of the Arbetsdomstolen’s ruling. According to §42(3) Co-Determination Act the prohibition to take collective action adopted in §42(1) applies only if an association takes collective action by reason of terms and conditions of employment falling directly within the scope of the Co-Determination Act.15A contrario: when a foreign employer temporarily conducts operations in Sweden and an overall assessment of the operations results in the conclusion that the ties to the Swedish labour market are too weak for the Co-Determination Act to apply, collective actions against this company would be permitted.16 The latter scenario reflects the case of Laval.

96. As indicated, in Sweden minimum wages are not subject to statutory regulation. The remuneration of employees is determined by way of collective negotiation.17 In general, collective agreements do not provide for a minimum wage as such; in the collective agreement for the building sector, performance-related pay follows the usual model of remuneration in the construction sector. In respect of each construction project, new pay agreements must be concluded. Nonetheless is it open to employers and (branches of) trade unions to agree on the application of an hourly wage. The agreement on wages is concluded, in principle, at the local level between the trade union and the employer.18 In cases in which these parties fail to reach an agreement, the negotiations on wages are centralised.19 Then Byggnads comes into play as the central representative of workers in the construction industry.20 To the type of workers in the case at hand, no system of monthly wages is applicable.

97. The Arbetsdomstolen – being the court in last resort in labour cases in Sweden21 – made a reference to the Court of Justice for a preliminary ruling to ascertain whether Articles 18 and 56 TFEU and the provisions of the Posted Workers Directive preclude trade unions from attempting, by means of a collective action, to force a foreign undertaking that posts workers to Sweden to sign and to apply a Swedish collective agreement. The first question posed by the Arbetsdomstolen concerns the compatibility of these specific collective actions with the Treaty provisions on the freedom to provide services, the prohibition of discrimination on the account of nationality and with the provisions of the Posted Workers Directive. By means of the collective actions the trade unions attempted to force a foreign undertaking – a provider of services – to sign a collective agreement in the host country in respect of terms and conditions of employment for workers who are not a member of these trade unions.22

98. The second question concerns the compatibility of §42(3) Co-Determination Act with Union law. As indicated, this provision states that the prohibition to take collective action laid down in §42(1) Co-Determination Act is subject to the condition that a collective action must relate to terms and conditions to which the Co-Determination Act applies directly.23 On the basis of this provision Swedish trade unions are permitted to take collective action against foreign undertakings that temporarily post workers to Sweden to provide services and that are bound by a collective agreement subject to the law of another Member State.24 As a result, Laval, as a foreign undertaking, must tolerate the collective actions taken by the Swedish trade unions (Byggnads, Byggettan and Elektrikerna in Sweden).25 The Arbetsdomstolen questioned whether the condition laid down in §42(3) Co-Determination Act, which distinguishes between Swedish and foreign undertakings, complies with Articles 56 and 57 TFEU.26