Viking - Laval - Rüffert - Luxembourg
Economic freedoms versus fundamental social rights – where does the balance lie?
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in collaboration with Notre Europe |
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How to balance the application of the European Union’s free movement rules - in particular, the right to work and provide services in another member state - with the maintenance of different national social systems?
In particular, how will these freedoms affect trade union rights such as the right to collective action and collective bargaining?
These questions are the object of much debate, following three recent rulings adopted by the European Court of Justice.
The ETUI and Notre Europe have therefore decided to launch this forum, in which users will find information on the different cases and analysis offered by a variety of experts.
Europe’s reaction to the judgements
1) Critical assessment
2) Articles in academic literature on the judgements
3) Social partner reactions on the judgements
4) Articles – Press – etc.
5) Your comments/articles/point of view
The cases
Viking C-438/05
Laval C-341/05
Rüffert C-346/06
COM v LUX C-319/06
- The facts
The shipping line Viking runs ferry services between Finland and Estonia under the Finnish flag. The company’s management decided to re-flag their ferries - using the Estonian flag. The decision was also taken to employ Estonian labour in order to take advantage of the fact that wages are lower in Estonia. In response, the Finnish Seamen’s Union (FSU) warned the company Viking that they might take collective action to stop the re-flagging process. To avoid the danger of being undercut, it also asked the International Transport Workers’ Federation (ITF) under its “Flag of conveniences campaign” to ask their members not to start negotiations with Viking unless they were based in Finland. According to this campaign, the ITF affiliates agreed that only trade unions established in the state of beneficial ownership should have the right to conclude collective agreements covering the vessel concerned.
- The judgement
The ECJ recognised the right to take collective action, including the right to strike as a fundamental right which forms an integral part of the general principles of Community law. Nevertheless, this right might be restricted, as reaffirmed by Article 28 of the Charter of Fundamental Rights of the European Union which states that it is to be protected in accordance with Community law and national law and practices. Furthermore the exercise of this right may be subject to certain restrictions.
In the Laval and Viking cases the ECJ states that national employment law comes inside the scope of Community’s free movement legislation. This means that no special treatment is applied in the employment law sphere. The judges go even further when they consider that the freedoms can be invoked against trade unions (this is called: horizontal direct effect), meaning that employers can now take trade unions to court, to get a judgement on the legality of a collective action.
The ECJ sees the right of trade unions to take collective action as a restriction on the freedom to provide services or the freedom of establishment. Collective action must be justified. It must have a legitimate aim, respond to overriding reasons of public interest and be suitable for securing the attainment of the objective pursued and not go beyond what is necessary in order to attain it. Those conditions are often called the proportionality test, which is now introduced by the court with respect to the trade union rights.
The protection of workers is a legitimate interest, which in principle justifies a restriction of one of the fundamental freedoms guaranteed by the Treaty. It is in principle up to the national courts to ascertain whether the objectives pursued by means of collective action concern the protection of workers. However the court lays out very strict guidelines to national courts with regard to how they have to judge those cases. The question they have to answer is, if the jobs and conditions of employment are really jeopardised or under serious threat by the behaviour of the enterprise.
Read the judgement
Read the opinion of Advocate General POIARES MADURO
top of page
- The facts
The Latvian company Laval won the tender for construction work at a school in the town of Vaxholm. They posted their workers from Latvia to Sweden to fulfil the contract. As is standard practice in the Swedish industrial relations system the Swedish unions started negotiations with Laval in order to sign a collective agreement with regard to wages and other working conditions, which are always laid down by negotiation on a case-by-case basis. As Laval did not want to pay the wages requested, they signed a collective agreement in Latvia. Following the failure of the Swedish negotiations, the Swedish trade unions took action by blockading the construction site. Solidarity actions then followed from the electricians trade unions.
- The judgement
With regard to the right to strike as a fundamental right and the scope of the freedoms, the Laval judgement developed the earlier position set out by the Viking ruling. The ECJ again applies the proportionality test and says that collective action for the protection of the workers of the host State against social dumping may constitute an overriding reason of public interest, which in principle justifies a restriction on one of the fundamental freedoms. 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 is of the opinion 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 put into question the flexibility of the Swedish collective bargaining system, emphasising the alleged lack of certainty for business unable to ascertain in advance the conditions they would have to guarantee to their posted workers.
The objective of the Posting of Workers Directive is to lay down a set of mandatory rules for minimum protection to be observed in the host country by employers who post workers to perform temporary work in the territory of a Member State where the services are provided. The ECJ now judges 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, which go beyond the mandatory rules for minimum protection in the Directive. This is now often referred to as a change from a minimum to a maximum Directive.
Read the judgement
Read the opinion of Advocate General MENGOZZI
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- The facts
A German company won the tender with the Land Niedersachsen which involved construction work in a prison. The public procurement law of that Land states that “the contracts for building services shall be awarded only to undertakings which, when lodging a tender, undertake in writing to pay their employees, when performing those services, at least the remuneration prescribed by the collective agreement in the place where those services are performed …”. The German company subcontracted the work to a Polish company and it turned out that the 53 Polish workers actually only earned 46,57 % of their German colleagues on the site. Therefore the Land Niedersachsen applied the contractual penalties and annulled the contract and imposed financial penalties on the company.
- The judgement
Again the ECJ produced a judgement along the lines of the Posting of Workers Directive. In its view the situation in Niedersachsen did not fulfil the criteria to fix pay as set out in the Directive as the law does not itself fix any minimum rate of pay and the collective agreement in question had not been declared universally applicable. Again the Court argued that the Posting of Workers Directive outlines the maximum level of protection for posted workers and that in a collective agreement, as in this case, a higher level of protection cannot be laid down.
Again the Court underlines the need for justifying the restriction of the freedom to provide services. The ECJ sees no justification in protecting workers in this particular case, as the legislation only applies to the public and not private sector. The ECJ also rejected the following arguments: the financial sustainability of social security systems or ensuring the freedom of collective bargaining and the freedom of association.
Read the judgement
Read the opinion of Advocate General BOT
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- The facts
In July 2006 the European Commission brought an action against Luxembourg before the ECJ under the infringement procedure.
The European Commission argues that Luxembourg’s current labour legislation is not in line with the Posting of Workers Directive.
Luxembourg, it argues, interprets too widely the term 'public policy provisions' when bringing all their binding regulation in the field of labour law under that term. The result is that foreign service providers have to respect all labour law regulation in Luxembourg.
That first ground of the complaint regards, in particular:
(1) The obligation that foreign service providers can only employ employees posted in Luxembourg that have concluded a written contract of employment or prepared a similar document
(2) The automatic adjustment of pay to changes in the cost of living
(3) Rules governing part-time and fixed-term employment
(4) Respect of collective agreements.
Read the judgement
Read the opinion Advocate General Trstenjak
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Spotlight on ...
EWC Memorandum on September 8, in Brussels
Viking - Laval - Rüffert - Luxembourg : Economic freedoms versus fundamental social rights – where does the balance lie?
