Employee representatives in limited companies

Employees of limited companies and economic associations can appoint employee representatives to the board of directors.

Which businesses have to have employee representatives?

Two conditions have to be met in order for employees to be entitled to representation:

• The business has to be of a certain size.
• A decision has to be made by an employee organisation (trade union) that has a collective agreement, see below.

The size of the business and the number of representatives

• If the business had an average of at least 25 employees in Sweden over the past financial year, the employees are entitled to two board members and two deputy board members.
• If the business operates in various different industries and had an average of at least 1,000 employees in Sweden over the past financial year, the employees are entitled to three board members and three deputy board members.

The number of employee board members cannot exceed the number of other board members.

Are the employee representatives the same as the other board members?

The employee board members are part of the board of directors that a business has at all times. They are not, however, among those board members that the business has to have under its articles of association and the Swedish Companies Act (for economic associations: statutes and the Economic Associations Act). This difference is due to the fact that the employee representatives are not appointed by the annual general meeting (general meeting of members).

The decision is made by the trade union

A decision to have employee representatives can be made by a local employee organisation which has a collective agreement with the limited company or economic association. The trade union must then inform the board of directors of this in writing.

The same rules as for other representatives

The employee representatives are members of the board and have essentially the same standing as board members and deputy board members appointed by the annual general meeting (general meeting of members), or in the manner stipulated in the articles of association (statutes).

When the entire board has to sign an important document, such as the annual report, the employee representatives’ signatures are also required.