IR Notes

The management of the Michelin group (62,000 employees in Europe) and the negotiators appointed by its European works council on 26 March signed a “European framework agreement on social responsibility and development”*, at Valladolid, Spain. This is the first time that the Michelin group has concluded a transnational agreement, and it represents a revolution: 1. Long dominated by a paternalistic culture and hostile towards trade unions, the group was found guilty of anti-union discrimination in France on several occasions and did not establish a European works council until 1999. 2. The document’s content deviates from standard international framework agreements thanks to protracted negotiations “for which the management found a way of working with the staff representatives,” emphasised Cyrille Poughon (CFDT), secretary of the European works council at Michelin. In the end, the agreement reflects the “new” culture of the group and its ambitions in terms of industrial relations; it contains specific commitments, such as that of making 50% of jobs available to older workers and women. 3. The text is a framework agreement, based on which the group’s social partners are going to initiate a cycle of transnational negotiations on different subjects listed in the agreement from 2015 onwards. It also paves the way for negotiation of an international framework agreement covering non-EU employees with the IndustriAll Global Union trade union federation. No-one could have imagined twenty years ago that the president of the group might say, as Jean-Dominique Senard did at the signing of the agreement, that “a successful company is a company which lives and breathes exemplary industrial relations”. The social partners have thus successfully converted a culture of confrontation and avoidance into a “constructive social dialogue”, and in this transformation, the dialogue rooted within the European works council has played its part. Hats off!

* The latter will be available on IR Share as soon as we have received consent from the management and the European works council.

• Public procurement: The three directives reforming the rules for awarding concession and public procurement contracts have been published in the Official Journal (OJEU, 28 Mars 2014, L 94). These are: 1. Directive 2014/23 of 26 February 2014 on the award of concession contracts; 2. Directive 2014/24 of 26 February 2014 on public procurement; 3. Directive 2014/25 of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services. From a social perspective, these texts are important because they allow those responsible for decisions on the award of public contracts: 1. To exclude businesses which have been convicted of “child labour and other forms of trafficking in human beings” and those which have failed to meet their obligations relating to the payment of taxes or social security contributions. 2. When awarding public contracts, no longer to base their decision solely on the lowest price, but also on the “most economically advantageous tender”, which is evaluated according to criteria including qualitative, environmental and/or social aspects. Thus, “the qualification and experience of the staff assigned to performing the contract in question” can be considered “where the quality of the staff assigned can have a significant impact on the level of performance of the contract”.


• Seasonal workers: Directive 2014/36 of 26 February 2014 establishing the conditions of entry and residence of non-EU citizens coming to the EU for seasonal work has been published in the Official Journal (OJEU, 28 March 2014, L 94). It determines the conditions under which people from third countries seeking seasonal work are allowed to enter and stay in the EU, and defines seasonal workers’ rights.

• France invited to review its social legislation: The European Commission on 28 March addressed two reasoned opinions to France concerning doctors’ working hours and the protection of pensions in the event of insolvency. In the first case, it notes that “supplementary on-call periods and training hours at university are not covered whereas Directive No. 2008/88 requires them to be considered as working time”. In the second opinion, it considers that the legislation does not sufficiently protect workers’ rights to an occupational pension if their employer becomes insolvent, contrary to the requirements laid down in Directive No 2008/94 on protecting employees in the event of insolvency (see European Commission press release).


• Ireland required to review its taxation of termination payments: The European Commission on 28 March asked Ireland to amend its legislation on termination payments because its discriminates against individuals who work in group companies in other Member States. The Commission finds faults with how the tax relief on such payments is calculated, stating that the present method does not take into account the number of years of service in group companies in Member States other than Ireland (see European Commission press release).

• Railway sector: The European social partners in the railway sector  – CER (Communauté européenne du rail) and ETF (European Transport Workers Federation) – on 11 March adopted joint recommendations for identifying and preventing psychosocial risks (PSR) in their industry. The signatories are looking to achieve a “cooperative corporate culture” in the framework of “an overall risk assessment process” founded if possible on a “joint approach”.


• Cleaning industry: The European social partners have issued a joint position to the European Commission as part of the second stage of consultation on undeclared work.


• Extractive industry: The European social partners have adopted a joint declaration on the recommendations of the scientific committee on occupational exposure limits at the workplace for NO₂ and NO.

• Maritime transport and collective action: The Advocate General of the European Court of Justice on 1 April issued his conclusions on a case concerning two collective actions (obstruction of operations to load and unload a ship) taken by Swedish trade unions in a Swedish port against a vessel flying the flag of a third country but belonging to a Norwegian company – that is to say to a member country of the European Economic Area (EEA). The Swedish court which referred the matter to the European Court of Justice believes that the lawfulness of the trade union actions is decisive for the outcome of the case and that the Court should judge whether Swedish law on trade union actions is compatible with the rules under European Union law as regards the freedom to provide services. However, it has not questioned the Court on this point, believing no doubt that case law from the Laval un Partneri decision is sufficiently clear (judgement of 18 December 2007, Laval un Partneri (C‑341/05). The Advocate General, who believes that this is not a matter for the Court of Justice, rules only on the application of Regulation No. 4055/86 of 22 December 1986, which applies the principle of the freedom to provide maritime transport services between Member States and between Member States and third countries. This document “does apply to a company established in an EEA member state, which owns a ship flying the flag of a third country and carrying out maritime transport services between the member states of the EEA, provided that this company itself assumes responsibility for the operation of said ship”.

• Electronic meal vouchers: The National Labour Council has ruled in favour of rolling out electronic meal vouchers in an opinion dated 25 March (in Flemish). This wholesale and definitive switch will come into force on 1 January 2016.

• Posting of workers and low-cost airlines: The criminal chamber of the French Court of Appeal (Cour de cassation) on 11 March delivered two related judgements concerning the social status of flight crews performing their duties out of French airports on behalf of foreign budget airlines (Cass. crim. 11 March 2014, Easyjet, No. 11-88420 and Vueling, No. 12-81461). The Court rejected the appeals by the two companies convicted on appeal of undeclared working and non-affiliation under French social security legislation. It did not apply the case law of the European Court of Justice on the evidentiary value of E 101 certificates as long as they have not been withdrawn or amended by the issuing institution. The two airlines can still bring an action before the European Commission which could then lead to infringement proceedings against France.

• Draft law on a minimum wage: On 2 April the government adopted a bill “to strengthen tariff autonomy” which introduces a minimum wage into German law. The minimum hourly rate has been set at € 8.50 and will enter force on 1 January 2015.

• Interprofessional agreement for 2014: The social partners at a national level – the GSEE trade union confederation and the SEV, ESEE, GSEBEE and SETE employers’ organisations – on 26 March signed a new national collective interprofessional agreement (EGSSE) for the entire private sector (text in Greek) which will apply retroactively from 1 January. With this new agreement, the social partners are asserting their decision to keep alive collective bargaining and to restore the role of the EGSSE – which was called into question by 2012 legislation adopted in the framework of the memorandum of understanding negotiated with the ECB, the European Commission and the IMF. The signatories intend to undertake measures aimed at reducing unemployment and combating undeclared work; to conclude a programme agreement at a national level geared to the economic and social reconstruction of the country; to establish mutual cooperation based on the following subjects: jobs, education, training; social protection; competitiveness ; entrepreneurship and innovation; to conclude a related partnership proposal with the public employment service in order to take concerted action to benefit young people, and finally, to extend recourse to parental leave for fathers.

• Lowering of social security contributions: Royal Decree 3/2014, which sets employers’ social security contributions at € 100 for the first two years after taking on an employee on a permanent contract, has been published. The payment is reduced to € 50 in the case of part-time contracts. In addition, in businesses with fewer than 10 employees, the social security contributions paid by the employer will be cut by 50 % in the third year.

• More women in the boardroom: A recent report expresses satisfaction with the actions taken since 2010 to increase the number of women employed by companies at senior management level. As of 1 March 2013, women accounted for 17.3% of board members in undertakings listed on the FTSE 100 index of the top 100 companies and 13.2 % of board directors in those listed on the FTSE 250 index, compared to 12.5% and 7.8% respectively in February 2011 (2011 report); this is an increase of nearly 40 %. Furthermore, women have secured 34% of all FTSE 100 and 36% of FTSE 250 board appointments since 1 March 2012.

• Air liquide: The management of the Air liquide group and the members of the European works council established by the agreement of 16 May 2000, on 26 March concluded an amendment (in French) in the context of the revised 2009 directive. The agreement covers the principal points of the directive (definition of information and consultation, linking with the national level, adaptation clause, etc.), while at the same time strictly maintaining the EWC’s remit to deal with issues affecting the group as a whole or at least two subsidiaries in two Member States. The amendment establishes an EWC bureau with five members, of different nationalities, which can be consulted directly in particular when the economic consequences and repercussions in terms of jobs “are on a limited scale compared to the group’s activities in Europe”. Consultation of the extended bureau, including the representatives of the countries concerned, is provided for if the consequences “are significant, but affect only a limited number of countries”.


• Deutsche Bahn: The European works council of the German railway company Deutsche Bahn on 6 March complained that it had been “snubbed” by the company’s general management during the council meeting held on 16 February in Berlin (see press release, in German). The EWC felt that the management had not complied with the information and consultation procedure in connection with a proposal to create a shared service centre for the company’s European accounting personnel.

• SAP: The German group SAP, a world leader in business applications, on 21 March concluded an agreement with a special negotiating body on worker involvement when SAP AG is converted to become a European Company (SE). The agreement includes a section on the SE works council, which will replace the European works council, and another on employee representation on the supervisory board.  For a period of one year the present members of the supervisory board, all of whom are German, will remain in post, but will be joined by one representative each for France and Slovenia, who are currently members of the EWC. Thereafter, an election will be held in each country. As for the SE works council, it will meet 4 times a year instead of once in the case of the EWC. The members will benefit from the same protection as that provided to the German representatives. Excluding Germany (20,000 employees) which will receive 7 seats, all other countries will have just one representative, be they France with the second-biggest workforce (2,000 employees), or Estonia (only 1).

• Coca-Cola: The trade union coordination group initiated by the Effat European trade union federation met on 20 and 21 March in Madrid to strengthen cooperation between the unions present at Coca-Cola and to oppose the restructuring conducted in Spain. A joint European manifesto for a “sustainable system of industrial relations” at Coca-Cola was adopted.

• Banco Itaù: The private Brazilian bank Banco Itaù (80,000 employees), based almost exclusively in South America, and the UNI Global Union international trade union federation on 26 March signed a global framework agreement (see press release).

• Pilots’ strike at Lufthansa: The Cockpit pilots’ union called out its 5,400 members who work for Lufthansa on strike for three days from 2 to 4 April. Cockpit gave its assurance that the strike would end before the Easter holiday period. The airline cancelled 3,800 flights involving nearly 500,000 passengers, and it believes that the strike will cost it € 50 million. This collective action is the result of a restructuring plan which, among other things, calls into question a rule allowing pilots to retire at 55. At present, the company pays them up to 60% of their final salary until they reach the statutory retirement age. Lufthansa claims the withdrawal of this benefit is necessary because of increased global competition. The trade union insists that this measure does not involve additional costs since it allows young pilots to be hired who are paid less. Reacting to the strike, a representative of the Christian Democratic CDU party (a partner in the present coalition government) criticised the fact that the economy was “being blackmailed” by a small group of employees, and called for the right to strike to be reformed. The Labour Minister, Andrea Nahles (of the Social Democratic SPD party), replied that the question of any such reform was not on the agenda.

• Pattern of labour costs: According to Eurostat, average hourly labour costs in the whole economy were estimated to be € 23.70 in the European Union and € 28.40 in the euro area in 2013 (see Eurostat press release).


• Unemployment: The unemployment rate in the EU continues on its slow decline, with a figure of 10.6% in February 2014, which was down on the January 2014 rate of 10.7%. In the euro area, the unemployment rate is 11.9%, unchanged since October 2013 (see Eurostat press release).


• Impact of the crisis on working conditions: The European Foundation for the Improvement of Living and Working Conditions (Eurofound) on 3 April published a study on the Impact of the crisis on industrial relations and working conditions in Europe.  The report particularly highlights an accelerated trend towards decentralisation in collective bargaining, an increase in the scope for derogation from higher-level agreements, the reduction in extension procedures and the abolition of continuation mechanisms for collective agreements upon expiry. Another novel aspect is the identification of new forms of social movements, such as the “Indignados” protests or the 15 May Movement in Spain and other types of action in Portugal, Slovenia and Greece.


• European Companies (SE): The European Trade Union Institute (ETUI) has compiled an overview (in English) of SE foundations in Europe. If the absolute number of SE foundations is tending to fall as consulting firms in the Czech Republic, which have created around one-hundred SEs in recent years, are making less use of this form, never before have their been so many announcements of planned conversions to an SE, such as Airbus Group, Christian Dior, Schneider Electric and LVMH Moët Hennessy Louis Vuitton. The document also summarises employee involvement at management and supervisory board level.

On 18 December 2007, the European Court of Justice delivered a judgement in a case concerning collective action taken by a Swedish building workers’ trade union to compel a Latvian company, which had posted workers to a Swedish construction site, to sign the collective agreement in force in the sector so that the Latvian workers would be paid at the same rate as Swedish workers, thus avoiding any social dumping. The Court recognised that the right to strike was a fundamental right of the European Union, which was immediately applauded by the trade union movement. However, a little further on, the judgement asserted that the exercise of this right is not such as “to render Community law inapplicable to such action”: it must be reconciled with other fundamental rights, such as the freedom of establishment or the free movement of services. This position caused outrage among the trade unions. See the European Industrial Relations Dictionary (in English) for further details.