Fundamental labour law in Sweden is laid down in legislation, for instance procedural rules for the right to negotiate and basic regulations for all who work in Sweden. Important examples of labour legislation are the Co-Determination Act and the Employment Protection Act. Labour legislation is to a high extent of a collective kind, and lays down frameworks and procedural rules.
The contents of individual labour contracts is to a high degree established in collective agreements. There is no statutory minimum wage. There is actually no legislation stipulating that wages should be paid at all. Collective agreements and individual contracts are the only ways to define how much a worker should be paid for the work performed.
Without a collective agreement, an employer can pay as low a salary as possible, as long as the employee accepts it. Some labour legislation is semi-discretionary, which means that labour legislation can be derogated from by a collective agreement but not by a personal contract between the employer and the worker.
The collective agreement model is based on strong trade unions and employers' organisations. A high membership rate is a key feature. About 90 per cent of the workers in Sweden are protected by collective agreements.About 70 per cent of all workers in Sweden are affiliated to a trade union. This high level of unionisation, together with the absence of legal provisions restricting the organisations' activities means that there is a considerable degree of autonomy for the social partners to conclude collective agreements.
National collective agreements covering pay and general conditions of employment are negotiated by the social partners, via a central bargaining process. There are over a hundred national contracting parties in the Swedish labour market, covering over 650 collective agreements at national level. During the contractual period, the parties are under obligation to maintain industrial peace.
The obligation to maintain industrial peace applies during the term of the collective agreement. The peace obligation means that industrial action may not be resorted to for the purpose of changing the agreement or to obtaining benefits that are not included in the agreement. During negotiations for a new agreement industrial action is allowed. Industrial action must be duly approved by a trade union organisation in order to be regarded as permissible.
According to the Co-Determination Act, a party intending to take industrial action must, in due time, give advance notice in writing to the counterparty and also to the National Mediation Office.