"British Jobs for British Workers" - EU rules may need to be re-written to clarify workers rights

It will be interesting to see what the outcome will be at an unusual meeting between the EU's top business and trade union leaders on Wednesday (25th feb). The crunch summit between John Monks, general secretary of the European Trades Union Confederation (ETUC) and Ernest-Antoine Seilliere of BusinessEurope, hosted by the European Commission, will tackle the thorny issue of how best to prevent workers being undermined when a company from another Member State brings across its own employees to service a contract.

The Posting of Workers Directive, which has been in force since 1996, means that so-called "posted workers" would be covered by the host country's terms and conditions and that collective agreements reached between unions and employers should apply to posted workers. In other words, if you had to move country for a limited period of time, you should expect to enjoy the same benefits as host country workers as a minimum. However, a recent spate of wildcat strikes in the UK in protest of foreign companies eschewing the local labour force in favour of its own workers has got people asking whether the EU rules surrounding "posted workers" are perversely undermining employment standards; an indigenous workforce being sacrificed for the hgher cause of free movement of people in the European single market.

The ETUC blames a recent European Court of Justice judgement for undermining the founding principles of the "Posted Workers" directive. Suddenly, it seemed that the conditions set out in the directive were no longer the minimum that an employer was obliged to honour but rather the maximum. BusinessEurope will be adamant at Wednesday's meeting that no revision of the directive is necessary. They say that to go further would mean posted workers would be discriminated against. Wednesday's meeting will be critical for the European Commission which is itself reluctant to review the directive. The Commission says that the court ruling merely reflects the variety of industrial relations in member states. Although, the pressure will be hard to resist, particularly when the British Nationalist Party is making hay out of the issue in its Europan elections campaign, the Commission will want to avoid any risk of protectionist tendencies creeping in. I have to say that the Commission cannot just wish the problem away. The Services Directive will be implemented this year and this will only increase the amount of workers being posted to another Member State.

The Political Fall-Out in the UK

The row over the posted-workers at IREM, an Italian company, of work it is doing at Total oil refinery in Lincolnshire that has caused something that looks suspiciously like a rift in the Cabinet.

Lord Mandelson has defended the European directive that provides for the arrangements where workers are posted from one EU country to another, while Alan Johnson has said that the EU directive needs to be reviewed.

Nevertheless, the Government line now is that it has been assured Total that the work was open to British workers and that the terms and conditions for Italian workers than would have been to the local workforce.

So That's What They Meant By "Social Dumping"?

Some MEPs from the Socialist Group in the European Parliament have long argued for measures that prevent "social dumping" whereby companies take advantage of the gap between the conditions of the Member State of the guest company and those of the host state.

Now the European Court of Justice says that the Directive limits the level of protection guaranteed to posted workers. Neither the host Member State nor the social partners can ask for more favourable conditions, that go beyond the mandatory rules for minimum protection in the Directive. In effect, while it provides minimum employment protection, it does not guarantee for posted workers rights to be negotioated by collective bargaining in the host state where the employment conditions of host workers are better than the guest workers.

The ETUC wants Member States to revisit the directive and build in extra employment protections into the directive.

The Directive itself is not controversial and has been succesfully freeing up labour mobility for years. However a recent judgement on the directive - called "Laval, Rüffert and Commission v Luxembourg " *has rather negatively interpreted the local workers rights assumed in the directive.

The European Parliament adopted a report by a broad majority on 22 October 2008 ( “Challenges to collective agreements in the EU”) and the Commission’s forum on ’Workers’ rights and economic freedoms’ organised on 9 October 2008 also considered the need for a review. The ETUC is already mobilising support for a review of the directive since it believes the recent ECJ rulings have challenged the original intention of the European legislator.

Whats the Laval Judgement?

Laval, a Latvian company won the tender for construction work at a school in Sweden. They posted their workers from Latvia to Sweden to fulfil the contract. The Swedish unions started negotiations with Laval in order to sign a collective agreement with regard to wages and other working conditions. Laval did not want to pay the wages requested and so they signed a collective agreement in Latvia - and not Sweden. In response, the Swedish negotiations, the Swedish trade unions took action by blockading the construction site.

With regard to the right to strike as a fundamental right, the ECJ applied the "proportionality test". The Court said that collective action for the protection of the workers of the host State (Sweden) against "social dumping" (undermining the conditions for host state workers) may constitute an overriding reason of "public interest". The means of blockading action by a trade union falls within the objective of protecting workers. But in the actual case concerned the action could not be justified due to an incorrect implementation of the posting of workers Directive.Most of the judgement concerns the interpretation of this Directive. The ECJ found that negotiation at the place of work, on a case-by-case basis, when minimum rates of pay are not determined in accordance with one of the means provided for by the posting of workers directive, are not permissible under the Directive. The Court heavily criticised the Swedish collective bargaining system, saying that it created uncertainty for businesses since they had no way of knowing what the conditions they would have to guarantee before they would post their existing workers from Latvia to Sweden.

The ETUC wants regulation for the joint and several liability of main contractors and intermediaries, at least where the payment of tax, social security contributions and wages is concerned. The Commission produced a paper on this on 2 July 2008 but the ETUC says it doesn't go far enough. They are looking for further rights to transnational collective bargaining, not available under the Posting of Workers Directive.

A Resolution drafted by Jan Andersson MEP and adopted by the European Parliament in October last years says that the ECJ in recent rulings has interpreted the directive in such a way that effectively changes the directive from one setting minimum standards to one setting maximum standards.The Jan Andersson Resolution says it is up to Member States to implement the directive - the way it was intended to be since labour market legislation and rules concerning negotiations and collective agreements are the competence of Member States.At EU level it proposes:new legislative proposals to prevent conflicting interpretation in the future. This should include a partial review of the PWD, "with specific regard to the issues of applicable working conditions, pay levels, the principle of equal treatment of workers in the context of free movement of services, respect for different labour models and the duration of posting".re-casting the directive so that it is made explicit that it does not prohibit member states and social partners from "demanding more favourable conditions, aimed at equal treatment of workers, and that there are assurances that Community legislation can be implemented on the basis of all the existing labour market models."new EC measures to combat "letterbox-companies" "which have been created, sometimes even directly by the main contractor in the host country, for the sole purpose of carrying out business in the host country, in order to circumvent the full application of host country rules and regulations in particular with regard to wages and working condition"immediately adopt the Temporary Agency Workers Directive.