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Board-level Representation

Employees are represented on the boards of almost all companies with more than 25 employees (Sweden has a single-tier board system.) There are two or three employee members and they account for around one third of board members in most companies. They are chosen by the union and are generally the key figures in a whole range of employer-union relations.

Employee representation at board level is very widespread in Sweden, which has a single-tier board system. Under the 1987 Act on Board Representation for Employees in Private Employment, employees in almost all companies with more than 25 employees have the right to elect two board members and the same number of deputies (three in companies with more than 1,000 employees which operate in several industries, again with three deputies). The employee representatives, however, can never be in the majority.

The employee representatives on the board are chosen by the local union, with which the employer has a collective agreement. This is done either through local agreement between the unions in the company, provided they represent a majority of the employees, or, if agreement cannot be reached, a more formalised approach is adopted. This states that if one union has 80% of the employees in the company, then it is entitled to both the employee seats on the board, otherwise each of the two unions with the largest membership in the company has a seat. In practice in most cases, one of the employee representatives on the board come from the manual confederation LO and the other comes from one of the two non-manual confederations, TCO and Saco. They can be chosen in a number of ways including election at the union meeting in the company, appointment by the union or a membership ballot.

As boards have recently fallen in size, employee representatives make up one-third of board members in around three-quarters of companies covered by the legislation.

On most issues, board members representing employees have the same rights as those representing the shareholders of the company. However, they cannot take part in discussions relating to collective bargaining or industrial action, or other issues where there is a clear conflict of interest between the company and the union. Employee representatives have no power of veto and so cannot stop majority decisions taken against their wishes.

There is also a difference in approach between the legislation on board representatives and involvement according to the MBL Co-determination Act (see section on workplace representation). Employee members on the board, like other board members, are required to act in the best interests of the company, while the negotiating rights provided through the MBL legislation emphasise the differences between the parties’ interests. In addition, information rights under the Co-determination Act cannot be replaced by information an employee representative receives as a member of the board.

An employee board representative is covered by the 1974 Act on Trade Union Representatives. As such, he or she normally receives his or her ordinary pay for the work as a board member. Additional remuneration is exceptional.

L. Fulton (2013) Worker representation in Europe. Labour Research Department and ETUI. Produced with the assistance of the SEEurope Network, online publication available at http://www.worker-participation.eu/National-Industrial-Relations.