AD 2025 No. 55 – Were the pilots employed by the airline?

The Swedish Pilots’ Association requested negotiations with an airline pursuant to Section 10 of the Swedish Co-Determination in the Workplace Act (the Co-Determination Act). The airline argued that the two pilots in question were not employed by the airline, but by a staffing agency, and therefore declined to participate in negotiations. The Labour Court found that the pilots were not employed by the airline and that the airline had not breached its duty to negotiate.

In this case, the Labour Court examined whether two pilots, who worked within an airline’s operations, should be considered employees of the airline or of another company within the same company group. The background was that the pilots had their employment agreements with another group company (the Crew Company) but performed their work within the airline’s operations.

The Pilots’ Association argued that the pilots worked under the control and direction of the airline, since it was the airline that held the flight license, controlled the aircraft, and was responsible for the results of the aviation operations. The Association also claimed that the arrangement was intended to circumvent legislation protecting employees and legislation on employee influence at the workplace. The airline disagreed, maintaining that the pilots were employed by the Crew Company and that there was no intention to circumvent the law. The fact that the pilots were then leased to yet another group company (the Support Company) – which, under its own control and direction, provided crew services to the airline – was, according to the airline, irrelevant.

The Labour Court began by noting that it was with the Crew Company, not the airline, that the pilots had written employment agreements with, and that it was the Crew Company, not the airline, that paid the pilots’ salaries. The Court then pointed out that the reason the pilots worked within the airline’s operations was that the airline had a written agreement with the Support Company – not with the pilots – and that the Support Company, through its scheduling, had instructed the pilots to do so. According to the Labour Court, this “[…] strongly indicates that the pilots were not employees of the airline, despite working within its operations. Only if the Association can prove circumstances showing that the airline, on a contractual basis, exercised control and direction over the pilots could it be relevant to consider the pilots as employees of the airline.”

The Labour Court did not find that the Pilots’ Association could prove such circumstances. While it was true that the airline, for example, appointed certain managers, issued manuals and procedures, ensured that the pilots had the necessary training, and assigned the pilots’ base locations, these obligations followed from legislation and not from any agreement between the airline and the pilots. Instead, according to the Court, it was the Support Company that, through scheduling, exercised ongoing management over the pilots and in practice determined when and where the pilots would work and with what duties – that is, exercised control and direction over the pilots.

Regarding the Pilots’ Association’s claim that the arrangement with the three sister companies was intended to circumvent legislation, the Labour Court referred to previous case law (AD 1986 No. 50), which establishes that it is not enough to prove that the measures in question constitute circumvention. In addition, it must be assumed that the purpose of the measures was to avoid the application of legal rules. Furthermore, the conduct must, considering the circumstances of the specific case, appear improper. The Labour Court found that such conditions were not present in this case. The Court particularly noted that the limitation that there is no obligation to negotiate under Section 10 – or Sections 11–13 of the Swedish Co-Determination Act – when the trade union does not have any members who are employees of the employer, has been retained in the legislation even after the legalization of labour leasing. This is despite the fact that the trade union representing the leased employees, due to this limitation, often does not have the opportunity to exercise influence in relation to the client company.

Since the pilots were not employed by the airline and no intent to circumvent legislation was demonstrated, the airline had not breached Section 10 of the Co-Determination Act. The Pilots’ Association’s claim was dismissed.

Read the full judgment here.

Setterwalls’ comments

The Labour Court firmly upholds the presumption that employees are employed by the company with which they have a written employment agreement and from which they receive their salary. Referring to the Swedish Agency Work Act and the directive this Act implements – where a fundamental purpose is that the staffing agency should be recognized as the employer – the Court also explains that, in staffing situations, questions of who exercises control and direction over the workforce take on a different significance than in other contexts. The Court acknowledges that it is a natural part of such situations for someone other than the employer – the client – to exercise control and direction, without this making the client the employer of the workforce. In short, the Labour Court clearly recognizes that staffing is, as a starting point, a legitimate way to organize one’s workforce. In this case, the Court also takes the opportunity to elaborate on how the Agency Work Act should be understood in different situations. Interested readers are encouraged to read the case and review the Labour Court’s reasoning.