AD 2025 No. 44 – Safety representatives’ involvement in the sale of a business division and subsequent downsizing

In connection with the sale of a major business division and the subsequent reorganization and downsizing, the question arose as to whether a company had prevented safety representatives from participating in the planning, and whether the safety representatives had been involved too late in the risk assessment. The Labour Court found that this was not the case.

Background

The case concerns a company within a large food group that, in the spring of 2022, sold its online business to another company. The planned sale was announced in a press release on 14 December 2021 and was completed on 1 March 2022. In connection with this, the company entered into an agreement with the purchaser, under which the company’s warehouse workers would, for a period after the sale, continue to “pick goods” for the purchaser in the transferred online business. Shortly after the sale, however, the purchaser decided that all picking operations would gradually be taken over in-house from 1 June 2022.

According to the company, it became clear in March 2022 that a reorganization and downsizing would be necessary, and that the situation would have implications for employees from a work environment perspective. The company therefore started an analysis of any risks for the working environment due to the change on 1 April 2022, but without involving the safety representatives at that stage. The safety representatives and employees were informed about the upcoming reorganization and downsizing on 6–7 April 2022, and the safety representatives were then involved in the risk assessment. The parties agreed that the safety representatives were given the opportunity to participate in the risk analysis at least from 11 April 2022.

The union brought an action against the company, seeking damages for the union and the three affected safety representatives. According to the union, the safety representatives had been prevented from fulfilling their duties as safety representatives and union representatives (i) by not being involved prior to the sale of the business division, (ii) by not being involved earlier in the planning of the reorganization and downsizing, and (iii) by not being allowed to participate in the risk analysis for the reorganization and downsizing until too late in the process.

The company contested the claim, mainly arguing that it was not required to involve the safety representatives earlier than it did.

Legal framework

According to Chapter 6, Section 4, second paragraph of the Work Environment Act, safety representatives shall participate in the planning of, among other things, “new or changed premises, equipment, work processes, working methods, and work organization.” The preparatory works to the provision state that “the safety representative’s right to participate in planning applies to every stage of planning that is significant from a work environment perspective.” According to Chapter 6, Section 10, first paragraph of the Work Environment Act, a safety representative may not be prevented from fulfilling their duties (see also Section 3, first paragraph of the Trade Union Representatives Act), and Labour Court case law shows that such prevention can include not ensuring that the safety representative is allowed to participate in planning as required by Chapter 6, Section 4 of the Work Environment Act.

The Labour Courts assessment

Regarding the sale of the business division, the Labour Court found that, although the sale was naturally preceded by some form of planning, this did not mean that the company must be considered to have planned a change to the company’s “premises, equipment, work processes, working methods, and work organization” as referred to in Chapter 6, Section 4 of the Work Environment Act. The Court found that, according to the evidence presented in the case, the company was not planning any such change in December 2021 in connection with the intended sale, and therefore the company had not breached its obligations under Chapter 6, Section 4, second paragraph of the Work Environment Act.

As for the reorganization and downsizing in the spring of 2022, the Court found that the company had not involved the safety representatives too late in this process either. At the time when the safety representatives were involved, the company did indeed know how many warehouse workers would be made redundant and how it intended to address the redundancies. However, the details of how this would be carried out and how the remaining operations would be organized were, in the Court’s view, not yet clear. When the safety representatives were then involved in the planning of the upcoming reorganization, they were given the opportunity to participate and provide input before the reorganization was implemented. According to the Labour Court, the safety representatives were therefore not involved too late.

Regarding the analysis of the risks for the working environment, the Labour Court pointed out that the safety representatives were involved at an early stage of the actual planning of the reorganization and downsizing, and that they were given the opportunity to participate in the risk analysis before the changes were implemented. The fact that the employer had independently begun an assessment and analysis of the potential consequences of changes to the work organization, and what measures might therefore be needed, was, in the Court’s view, not remarkable. “On the contrary, in some cases this may be necessary in order for effective cooperation with the safety representatives to take place afterwards,” according to the Labour Court. Against this background, and since the safety representatives were involved in the risk analysis relatively soon after the company began work on it, the Court found that the company was not required to cooperate with the safety representatives at an earlier stage than it did. The company had therefore not breached Chapter 6, Section 4, second paragraph of the Work Environment Act in this respect either.

Read the full judgement here.

Setterwalls’ comments

The company’s decision to sell parts of its online business has previously been the subject of a dispute in the Labour Court. In AD 2024 No. 101, the union sued the company for breach of the duty to negotiate under Section 11 of the Co-Determination in the Workplace Act. The company argued that the divestment did not constitute a significant change to the business or to the working or employment conditions of employees who were union members, and that there was therefore no duty to negotiate under the Co-Determination in the Workplace Act. The Labour Court found that the company’s decision to divest was such a significant change to the company’s operations that it was required to negotiate with the union before making the decision, and the company was therefore held liable for damages. In the present case, AD 2025 No. 44, the basis for the claim is different; it is the Work Environment Act.

An interesting observation regarding the outcomes of the two cases is that, in the case the employer lost (AD 2024 No. 101, based on the Co-Determination in the Workplace Act), the timing of the union’s involvement may often be later than in the case the employer won (AD 2025 No. 44, based on the Work Environment Act). (According to the Co-Determination in the Workplace Act, the union must be involved before a decision is made, but the employer “must, of course, be able to carry out certain preparatory investigations and form an opinion on the various courses of action that may be available” (see AD 1984 No. 75). According to the Work Environment Act, safety representatives must be involved already at the “planning” stage of, for example, new or changed premises, equipment, work processes, working methods, and work organization.) Nevertheless, the employer erred in the first case. The reason for the employer’s misstep was an incorrect assessment of whether the sale constituted a significant change to the business. The cases highlight the importance of carefully planning changes and assessing which regulations apply and when.