IR Notes

The management of Lactalis, the world’s leading producer of dairy products, has been issued with a summons, by the European trade-union federation Effat and nine affiliated national trade-union federations, to appear at a hearing before the Laval Regional Court in France, on 26 March. The trade unions accuse the group, which employs 35,000 people in Europe, of refusing to set up a European Works Council, despite repeated requests submitted to the management in 2014 and 2016. In a reply sent to Effat in July 2017, which is quoted in the summons issued by the unions’ barrister, Maître Rachid Brihi, Lactalis management takes the view that Effat has “illegitimately taken advantage of a power to represent the employees of our group or of a trade union mandate […]”, whereas in fact “the national federations […], either directly or via Effat, are not empowered to initiate a request to set up a special negotiation group, in the light of European legislation or of the French Employment Code”. The unions intend to demonstrate that their requests are admissible, and that Lactalis should therefore be ordered to establish a European Works Council, which should have been set up no later than September 2017, i.e. six months after the latest request submitted to management (see press release of the Effat). This dispute will serve a purpose as it will enable some of the terms of directive 2009/38 on European Works Councils to be clarified. The directive states that a company’s management must embark on negotiations with a view to setting up a European Works Council “at the written request of at least 100 employees or their representatives in at least two undertakings or establishments in at least two different Member States” (Article 5 of the directive). So, who are these “workers’ representatives”? In light of the principle of subsidiarity, the diversity of employment relations models within the EU and the fact that the Union has no powers to act in the field of employment relations (Article 153.5 of the treaty), the directive indicates that “‘employees’ representatives’ means the employees’ representatives provided for by national law and/or practice” (Article 2.1 d). This provision makes it necessary to examine the legislation of each of the countries of origin of the trade-union federations seeking the creation of a European Works Council. For example, the French Employment Code stipulates that the members of the special negotiation group or the European Works Council shall be appointed by the trade unions from among their “elected representatives holding a seat on works councils or committees or their trade union representatives within the company or group”, based on the results of the latest workplace-level elections. Spanish legislation is more explicit and specifies that “the status of workers’ representatives corresponds to that of trade union representatives, works council representatives and workforce delegates”. Likewise in Italy, the application may be submitted by “trade unions that have signed the national collective agreement that applies to the company or group of companies concerned”. Will the courts take this information into account and recognise that national trade-union federations are lawfully entitled to seek the creation of a European Works Council and to take legal action to achieve this goal? This case will also show to what extent a European trade-union federation, such as Effat, can apply on behalf of its affiliated national trade-union federations for negotiations to be initiated.

• Trade unions are worried about the impact of Brexit on aerospace: trade union representatives from the aerospace sector affiliated to the IndustriAll Europe union federation have adopted a position that seeks to prevent Brexit having a destructive effect on employment in this sector, especially in the United Kingdom (see IndustriAll press release).

• A mechanism to facilitate the mobility of young people in the chemical industry: the European social partners in the chemical sector have launched the Mobility & Mentoring portal to help young people who are planning to move to a different EU country to find a job in this sector. This portal, which is supported by the European Commission, puts a young person in contact with a mentor who works in the chemical industry in the country to which he or she wishes to move. More than 150 mentors from various companies throughout Europe have been trained by project partners and are registered on the portal (see press releases issued by IndustriALL Europe and the ECEG).

Court of Justice takes a first step towards combatting fraud linked to posting of workers: the Court of Justice has imposed a limit on the obligation requiring the social security authorities of the host State to accept the effects of the A1 certificate given to posted workers by the social security scheme of their sending country. This certificate provides proof, in the host country, of their affiliation to the social security scheme of their country of origin. In this case (CJEU, 6 February 2018, case C-359/16, Ömer Altun), the Belgian Social Security Inspectorate initiated legal proceedings against a Belgian construction company that only employed workers who were posted by Bulgarian companies and were in possession of an A1 certificate. An investigation ordered by a Belgian investigating magistrate showed that these Bulgarian companies did not have any real activity in Bulgaria, which is against European law governing the terms under which workers are posted (directive 96/71). However, the Bulgarian social security scheme had granted A1 certificates to these posted workers, showing that they subscribed to the Bulgarian social security scheme and were therefore paying much lower social security contributions than they would have to pay in Belgium. The Court of Justice has hitherto always taken the view that the authorities of the host country had to accept an A1 certificate unless a specific procedure was followed right through to the end, even if the certificate had been produced in error (see CJEU, 27 April 2017, case C-620/15, A-Rosa Flussschiff GmbH). This time, the question was whether the authorities of the host country, Belgium, was entitled to reject these certificates without following the specific procedure through to completion, on the grounds that the certificates had been obtained fraudulently, i.e. with the clear intention of “fraudulently or wrongfully obtaining advantages provided for by EU law”. The Court of Justice found in favour of the host country. It takes the view that “the application of EU legislation cannot be extended to cover transactions carried out for the purpose of fraudulently or wrongfully obtaining advantages provided for by EU law”. Jean-Philippe Lhernould, Professor of Law at the University of Poitiers, writing in the newspaper Le Monde (07.02), points out that the Court of Justice “has overturned a dogma”, by accepting that, in such circumstances, the authorities of the host country can reject the A1 certificate and thus force the employer to pay social security contributions in Belgium, thereby bringing an end to a premeditated situation involving social dumping linked to the differential in social security costs between the two countries. To entitle them to reject an A1 certificate however, the Court requires the authorities of the host country to provide those of the sending country with “concrete information suggesting that these certificates have been obtained fraudulently”. This information must of course extend well beyond mere suspicions of fraud.

• The government unveils a project to reform apprenticeships: on 9 February, the government unveiled a major reform of apprenticeships, which is designed to simplify the scheme for the benefit of businesses, to provide better information and incentives for future apprentices, to open up new funding sources and, above all, to give individual industries a bigger say in defining the content and amount of training provision on offer, so that this can be aligned as closely as possible with companies’ actual needs (see government press release).  The reform was generally well received by the social partners, and especially employers.

IG Metall secures the right to switch to part-time working: the social partners in the metalworking industry – the IG Metall trade union and the employers’ organisation Gesamtmetall – have reached agreement on a renewal of the collective agreement covering the sector. The main points are as follows: 1° employees will be granted the right to switch to part-time working (a 28-hour week) for a period of between six and twenty-four months. At the end of this period, employees will take up their job again on a full-time basis. This switch to part-time working does not involve any wage compensation. 2° Wages will rise by 4.3 % on 1 April 2018. 3° Employees will also be paid a fixed bonus of 100 euros. 4° For 2019, the agreement provides for payment of a 400 euros bonus and a bonus equal to 27.5 % of one month’s wages. Employees who have dependent children, who care for a close relative or who work shifts, will be able to convert this bonus into an additional eight days’ leave, two of which will be paid for by the employer. 5° The employers, for their part, will be able to ask a larger number of employees than is the case at present, to increase their working time from 35 to 40 hours, in order to meet production requirements. “This agreement”, declared Jörg Hofmann, President of IG Metall, “marks a turning point in terms of working hours. Flexibility has long been a privilege reserved for the employers, and now, for the first time, employees are securing the right to work fewer hours, for their own benefit, and for that of their health and their family”. “Using this model, we have been able to agree the flexible-working arrangements that we have been looking for, which involve working both longer and shorter hours”, emphasises Rainer Dulger, Chairman of Gesamtmetall.
>To find out more: press releases issued by Gesamtmetall and IG Metall

• Cracks appear in payment of the minimum wage: according to a report on honouring payment of the statutory minimum wage, published by the Institute of Economic and Social Research (WSI) of the Hans Böckler Foundation, approximately 2.7 million employees were paid less than the minimum wage in 2016, i.e. almost 10% of the employees who should be receiving it. The phenomenon mainly affects the following sectors: workers employed by private individuals (42.6%), the hotel and catering industry (38%) and retailing (19.5%).
  > See the report and the press release.

• Clarification regarding the new expertise entitlement: a Grand-ducal regulation of 15 December 2017 has clarified employers’ responsibilities regarding payment of fees to experts appointed by the staff committee.  Unless previously agreed, the budget allocated for expert consultants’ fees must not exceed 0.10% of the company’s total annual wage bill. An employer’s responsibility is limited to one expert consultation a year. The employer must be informed in advance of the nature of the expert’s remit.

• ORPEA: on 6 February, the European Public Service union (EPSU) organised a meeting of its affiliates within the ORPEA group (50,000 employees), in Brussels, with a view to setting up a trade-union network within the group and securing the creation of a European Works Council. This meeting was part of a broader initiative taken by the federation, aimed at organising the employees of large groups involved in the business of providing care for the elderly.

Vinci: the management of the Vinci group and the European Works Council have drawn up a joint declaration relating to essential and fundamental actions concerning occupational health and safety, which covers all of the group’s entities worldwide. The declaration represents a roll-out of commitment no.5 (“Working together towards zero accidents”) in the “Vinci Manifesto”, which is a common framework designed to guide the actions of the group’s entire workforce around the world. The declaration was signed by Xavier Huillard, CEO of the Vinci Group, and Noureddine Boudjeniba, secretary of the European Works Council, at the plenary meeting of the European Works Council held on 1 June. It is the result of several months’ work involving the group’s various business units, its management and members of the European Works Council. To adapt the steps taken as closely as possible to local situations, the Health and Safety commitments are decided and implemented within each business unit, with a view to promoting that unit’s continuous improvement, and they are now being disseminated through the company’s employee representation bodies.  Furthermore, in addition to the annual information provided to the European Works Council, quarterly information will be sent to the Council’s office regarding accidents and incidents at work, road accidents and occupational illnesses.

• Kimberly-Clark: on 23 January, the US-based group Kimberly-Clark, which is specialised in the manufacture of personal hygiene products, announced between 5,000 and 5,500 job losses worldwide (12% of its workforce). The IndustriAll Global Union federation is critical of the company’s failure to consult workers’ representatives before taking and announcing the decision (see press release). An extraordinary meeting of the select committee of the company’s European Works Council was held on 8 February.

Fincantieri: on 10 January, at a meeting in Rome, the Italian metalworking industry trade-union federations FIM-CISL and UILM, and the French trade-union federation FO Métaux, reviewed the situation of the STX and Fincantieri shipyards, which recently merged to give birth to a giant among European shipyards. According to FO Métaux, the Italian unions believe “it is possible to build a joint framework of common rights and rules via a group negotiation at European level”. The federations are committed to cooperating on a regular basis.

• LafargeHolcim: at the initiative of the IndustriAll Global Union federation, 73 trade-union leaders from 39 countries have signed a joint letter to Jan Jenisch, CEO of the cement manufacturing group LafargeHolcim, calling on him to ensure that his company honours its commitment to sign a global framework agreement covering basic social rights (see press release).

A snapshot of the minimum wage across the EU: on 9 February, the European Foundation for the Improvement of Living and Working Conditions (Eurofound) published the first findings of its annual update on the minimum wage in the European Union. This study will contribute to thinking on a European minimum wage and, above all, on the difficulties involved in achieving harmonisation across the EU. There still remains a large disparity between the Bulgarian minimum wage of 260.80 euros – which is well below the minimum wage in Shanghai (360 euros) – and Luxembourg’s minimum wage (1,998.60 euros), which is 7.7 times higher than its Bulgarian equivalent (according to Eurostat, the difference was a factor of 20 in 2005). This gap comes down to a factor of 3.3 when considered in relation to purchasing power parity. The group of countries with the lowest minimum wage (less than 500 euros) are all new Member States. In 2017, all these countries raised their minimum wage by a figure of between 5% (Croatia and Poland) and 52% (Romania).