Originally posted on 4.4.2012
For a change, something other than the Finnish paper industry but equally important. Cross-posted from the LabourNet-blog.
On the 21st of March, the European Commission published a proposal for a Council Regulation dealing with the right to collective action in the context of the freedom of establishment and the freedom to provide services. This proposal is of great importance, because it is a proposal for a Council Regulation, which means that is has direct, binding effect on all Member-States. The alternative instruments, a Directive or instruments of ‘soft law’ are rejected in this proposal because one of the core concerns of the proposal is the removal of legal uncertainty. With alternative instruments, national implementation of the Directive would not reduce this uncertainty, and ‘soft law’, i.e. a non-regulatory intervention would not be binding enough although it still carries a certain legal weight.
The relevance of this proposal, especially for relations between employees and companies, lies in the mere suggestion that the right to strike can be restricted in some circumstances. Before this issue in itself is discussed, it is important to explain what the difference is between work on the basis of the ‘free movement of workers’ and work on basis of the ‘freedom of establishment and to provide services.’ The former refers to employed persons, the latter to self-employed persons and companies. This is a simple distinction which does not do right to the large difference which is relevant for the proposal of the Commission, so for that reason I will try to explain each shortly. This is derived from the excellent ‘EU Law: Texts, Cases and Materials’ by Graig and de Búrca (4th edition, 2008).
1. Free movement of workers.
Through many court cases the European Court of Justice has upheld the fundamental right of freedom of movement for workers. Until this proposal, the EU has mostly refrained from issues regarding industrial action, as it wishes to respect and acknowledge the diversity of national laws on strikes, but also states that the right to strike is a fundamental right derived from the right of association (just like in Finland). The right to strike is also enshrined in the Convention for the Portection of Human Rights and Fundamental Freedoms, the Charter of Fundamental Rights of the EU and through the latter in the Treaty of Nice. The key issue here is that the free movement of workers concerns employees. This has been to some extent contested, regarding job-seekers, what is work, what is the purpose of work and so forth. Nowadays there are mostly court cases that handle the enforcement of this principle by Member States (i.e. that nowadays countries are not necessarily active enough in promoting this freedom).
2. Freedom of establishment and the freedom to provide services
This fundamental (economic) freedom is something different alltogether. It refers to self-employed people who move permanently or temporarily to other Member-States. This for example means that a national of Finland may provide services in Germany without actually living there. In fact, jurisprudence has concluded that also when this person would move to Germany to provide services, this is still covered by freedom of movement, but on the basis on a different legal paragraph. In the legislation there is nonetheless a crucial feature: the professional activity has to be on a ‘stable an continuous basis’, which includes taking into account periodicity, continuity and regularity.
Here a word about what constitutes ‘services’ is in order. In general, services are understood as e.g. barber shop services, taxi rides, mobile phone contracts etc. But in the context of EU law, services can include (see Art 50 EC) a) activities of industrial character, b) activities of commercial character, c) activities of craftsmen and d) activities of the professions.
Thus, considering the freedom to provide services, it is clear that persons who provide services, for example Polish construction workers, might not fulfill the requirements of ‘stable and continuous basis’. There is a Directive from 1971 on the Posting of Workers, which excludes posted workers from protection by the labour law of the country where they work. There have been so many issues in litigation, that either the EU Treaty itself or jurisprudence is more useful currently. Quite recently, the cases of Laval and Viking found that it must be taken into account to what extent national systems of industrial relations are compatible with EU law ( in the Viking case, it was found that the Swedish model of IR was in important aspects incompatible with EU law.) More importantly, because the employees in the cases of Viking and Laval are working on basis of the freedom to provide services, these court cases decided that the right to strike has to be justified in relation to this fundamental economic freedom. In particular the notion of proportionality is important here. But thus far, at least there was a right to strike, even though this was already somewhat restricted.
Returning to the present proposal it is clear why many labour unions are against it (and BusinessEurope for it). The danger lies in the proposal’s abstractness: it states that limitations or restrictions to the right to strike can be only provided by law and must still respect the essence of the fundamental rights and freedoms. Furthermore the restriction imposed by the fundamental economic freedom (i.e. to provide services) on the fundamental right (to strike) or vice versa ‘must not go beyond what is appropriate, necessary and reasonable to realise that fundamental right ( or freedom).
On a side-note, it must be said that until now the legal situation of the right to industrial action has been quite opaque, and the current proposal is directly aimed at providing a clarification of the current legal situation. One very positive aspect of the proposal is the inclusion of non-judicial means of conflict resolution. Here, the proposal states that in trans-national cases or cases with a cross-border dimension, which have some relation to the right to strike, Member States shall provide equal access to means of non-judicial conflict resolution as to domestic cases.
So, the intention of the proposal is to clarify the current messy legal situation resulting on the doctrine ‘justified restrictions for the protection of essential requirements in the general interest’ which was developed to cover issues the Directive does not cover. To some extent the proposed regulation would provide equal access in trans-national cases, but it must be said that there is an a priori danger of the right to strike taking a back-seat to the freedom to provide services. Even though it is stated that infringement of the one to the other should be judged by the same criteria, it is explicitly NOT stated that the right to strike and the freedom to provide services are on an equal level. It is not clear how much can be read into this but according the proposal the European Parliament in 2008 called for a more strict enforcement of the Posting of Workers Directive and stating that the freedom to provide services is one of the cornerstones of the European project (which nonetheless has to be balanced with the social aspects of Europe). This calling for an enforcement, which is echoed by other interested parties such as BusinessEurope, is for a minimum standard of labour protection which includes (Art 3(1) of Directive):
-working time (hours, holidays, pay)
-standards applicable to agency workers
-health and safety
-pregnancy and maternity protection
-in the building and construction trades, collective agreement standards that ‘have been declared universally applicable’ across a geographical area
Here, no mention of strike right. Taken together with the cases of Viking and Laval, it is difficult to escape the appearance of the intent of weakening the right to strike, even though this is (obviously) mentioned nowhere. Regarding the scope of the concept of ‘services’ and the growing use of posted workers in a wide variety of industries, it must be considered a dubious development that there might be soon an at least two-tier labour market (in terms of labour rights): those who are employed directly enjoy the labour laws of the country where they work (on the basis of the free movement of workers) and those that are either self-employed or categorized as posted workers, through outsourcing. The latter enjoy much less legal protection and substantive labour rights than the former. For example, Nathan Lillie and Markku Sippola have written about this in the context of the Finnish Olkiluoto 3 nuclear plant. This is a point that labour unions are right to be worried about. Economic growth can not take precedence over equality of labour rights.