The division of competence between different trade unions is rather clear, according to the trade unions' own statutes. Therefore it is seldom questioned which trade union is to be representative and to have the right to sign a collective agreement.
Employers in the private sector are represented by the Confederation of Swedish Enterprise, while local municipalities are organised within the Swedish Association of Local Authorities and Regions, and state employers are represented by the Swedish Agency for Government Employers.
Collective agreements foster stable and long-term relations in the labour market.
The Co-Determination Act contains the definition of what a collective agreement is:
- The term collective agreement means an agreement in writing between an employers' organisation or an employer and an employees' organisation, regarding conditions of employment or otherwise regarding the relationship between the employer and the employee.
- The collective agreement is also required to cover the relationship between employer and employee and includes obligations for the parties.
- The collective agreement applies to all workers at the workplace in question, i.e., not only trade union members. The agreement may be local and apply only to one company or nationwide and apply to a whole industry. Only trade union organisations are entitled to conclude collective agreements, not individual workers.
- The collective agreement is automatically binding for both the members of the trade union and for the companies that are members of the employers' organisation concluding the agreement.
A worker who is not union member has no explicit rights under the collective agreement. But to avoid social dumping, trade unions claim that the levels of benefits laid down in the collective agreements should also be paid to non-members. This is in order to not make it more advantageous to employ a non-unionised worker than a trade union member. Collective pay agreements in Sweden are usually sectoral agreements. They are concluded between trade unions and employers' associations. The trade unions have various sectoral agreements for different industries. It is not very common to conclude central agreements for only one company.
A subisidiary agreement with the same contents as the sectoral agreement is concluded with employers who are not members of an employers' association, but want to have a collective agreement nevertheless. Sectoral agreements are often supplemented by local collective agreements. Local collective agreements often stipulate how sectoral collective agreements are to be applied more in detail.
Collective agreements usually contain regulations concerning:
- How pay is to be determined, both minimum pay and the level of pay for more experienced workers
- The length and scheduling of working hours
- Overtime, duty hours, standby etc and the compensation level
- Calculation of pay deductions
- Holidays and holiday pay
- Schemes for occupational pension, group life insurance, severance pay, sickness and work injuries insurances.