IR Notes

On 18 October, the EU Court of Justice delivered a ruling in a case concerning compliance with German law on joint management, where the German group SAP was transformed into a European company (SE) (CJEU, 18 October 2022, Case  C-677/20, IG Metall, ver.di v. SAP SE, and, for the facts, see IR Notes 185) (see European company). The question referred to the Court was whether a specific ballot, as provided for by German law, which allows trade union representatives to be elected to the supervisory board, should be maintained where the German company transforms into a SE, under Article 4, paragraph 4, of Directive 2001/86 (the ‘before-after’ principle), or whether it can be dispensed with on the grounds of the autonomy of the parties, within the framework of negotiating the agreement on employee involvement in a SE, as referred to in Article 4, paragraph 1, of the directive. The Court of Justice takes the view that this ballot “constitutes an element that characterises the national system of participation of employees’ representatives” and that German law “makes it […] mandatory in nature”. Consequently, that procedural element must be regarded as forming part of ‘all elements of employee involvement’ within the meaning of Article 4, paragraph 4, which must be maintained when the company is transformed into a SE.  So the principle of autonomy of the parties cannot justify dispensing with this procedure in the agreement on employee involvement in the SE. This is a logical decision given that, as emphasised by the Court, the intention of the directive and of the EU legislature, is “to eliminate the risk that the establishment of an SE, in particular by means of transformation, might lead to a reduction, or even a disappearance, of the rights regarding involvement that the employees of the company to be transformed into an SE enjoyed under national law and/or practice.” The trade union federations IG Metall and ver.di have welcomed this ruling, emphasising that “a SE must not be misused to withhold workers’ participation rights”. They call on the government to review, as provided for by the coalition agreement, the legislation governing SE (SEBG), in order “to prevent joint management being circumvented” (see press release and interview with Kerstin Jerchel, who is in charge of the joint management matters at ver.di).

Minimum wage : Directive 2022/2041 of 19 October 2022 on adequate minimum wages in the European Union (see IR Notes 192 and IR Notes 188) has been published in the OJEU (L 275 of 25.10.2022). This new directive establishes a framework for 1/ guaranteeing the “adequacy of statutory minimum wages with the aim of achieving decent living and working conditions”; 2/ promoting “collective bargaining on wage-setting”; 3/ enhancing “effective access of workers to rights to minimum wage protection where provided for in national law and/or collective agreements”.

“Platform workers” directive : On 14 October, eight EU Member States sent a letter to the Czech Presidency, copied to European commissioner Nicolas Schmit, calling for the European Commission’s proposal for a directive to improve the working conditions of platform workers not to be watered down during discussions on the Council (see Platform work). The Czech Presidency, which has set itself the objective of reaching agreement on this law by the year end, is proposing to weaken the presumption of salaried status in its compromise text. The eight countries in question (Belgium, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain) are calling for “an effective and strong, but rebuttable, legal presumption of the employment relationship” reflecting “the actual control and management exercised by digital labour platforms”. They warn that “establishing restrictions or derogations from this legal presumption would only perpetuate the existing imbalance between platforms” and workers, “which has led to the existence of thousands of bogus self-employed workers in Europe, and precarious working conditions through the abuse of atypical contracts”. The Spanish Minister of Employment, Yolanda Diaz, at whose initiative the letter was written, pointed out that the proposal is inspired by Spanish legislation passed in May 2021, and that her government cannot “allow workers’ rights to be watered down in this new framework of employment opened up by platforms” (see IR Notes 164). A few days later, on 25 October, the former Uber lobbyist-turned-whistleblower Mark MacGann appeared at a hearing before the European Parliament’s Committee on Employment and Social Affairs to answer questions on Uber’s lobbying of European institutions (see press release). In addition, the NGO Multinationals Observatory has published a report, commissioned by The Left group of the European Parliament, examining the lobbying practices employed by Uber and its networks inside these institutions and its meetings with European decision-makers (see press release). This lobbying activity is now focused on weakening the proposal for a directive.

• Tripartite Social Summit : European social partners sounded the alarm bell at the tripartite social summit held on 19 October (see Tripartite Social Summit). The European Trade Union Confederation placed the emphasis on protecting purchasing power and jobs in energy-intensive industries, via a new instrument similar to SURE (which is used to finance short-time working). BusinessEurope alerted those present to the risk that these industries could move off-shore, with the associated risk of site closures (see press release). The Spanish Minister of Employment, Yolanda Díaz, who attended the meeting ahead of Spain taking over the EU presidency in July, emphasised the “lack of implementation of shared solutions among European social partners”, and expressed regret that “we haven’t signed a major agreement on social dialogue in Europe for more than 12 years now”.

• ETUC expands into Ukraine and Moldavia : The European Trade Union Confederation (ETUC) has welcomed the Ukrainian trade union confederations FPU and KVPU and the Moldavian confederation CNSM to its ranks. ETUC, which also supports the accession of Georgia to the EU, “hopes to welcome Georgian trade union GTUC in to the ETUC in the near future” (see press release).

Citizen’s allowance : On 13 October, Hubertus Heil, the Federal Minister of Labour, set out the plan for a citizen’s allowance (Bürgergeld) to Parliament (see speech). This involves a wide-ranging rethink of the system for assisting and compensating the long-term unemployed, using training to bring these people back into the labour market on a permanent basis. This is “one of the biggest social reforms for 20 years”, according to Hubertus Heil: it will see the abolition of the Hartz IV system for paying long-term unemployment benefit, which has plunged many Germans into poverty. The reform is due to come into force on 1 January 2023 (see press release and article published by the Jean Jaurès Fondation).

> Related story: The government has opened up the short-time working scheme to temporary workers (see press release) and confirmed the increase in the minimum wage to 12 euros per hour on 1 October (see press release).

• Equality plan : At a conference devoted to the theme of gender equality, Cristina Antoñanzas, the deputy secretary general of UGT, emphasised that just 24.22% of a total of 24,666 companies (with 50 or more employees) had conceived, drawn up and registered an equality plan at 30 September 2022, despite such plans being compulsory since 7 March 2022 (see UGT press release).

• Free crèches : When she presented the 2023 draft budget to Parliament, the Minister of Labour and Social Security, Ana Mendes Godinho, emphasised that the government had succeeded in putting free crèches in place “in record time”. “In September 2022, 37,000 children were already covered. In 2023, we’ll reach the figure of 70,000 children and 100,000 in 2024”, she declared, emphasising that “this is a transformative measure”, forming part of a programme to combat poverty and promote equal opportunities.

Protecting future parents : On 21 October, the government announced that it would be supporting the bill put forward by a MP to offer greater protection for future parents (see press release and research briefing). At the present time, a woman on maternity leave whose job is being made redundant, is entitled to be offered (before the end of her employment under her existing contract) alternative employment, in any suitable vacancy available that offers work appropriate for her and terms not substantially worse than her previous job. The objective of the bill is to authorise the government to pass legislation enabling this redundancy protection to be extended so it applies to pregnant women, as soon as they have informed the employer of their pregnancy, as well as to new parents returning to work from maternity leave, adoption leave or parental leave. The proposal offers protection for 18 months following the child’s birth.

• Help for carers: On 21 October, the government announced that it would be supporting a bill introduced by a MP, which seeks to grant entitlement to one week’s unpaid leave for employees who are caring for a dependent family member or friend. There is currently no statutory leave entitlement for these informal carers in place, meaning that they have to resort to taking other forms of leave to ensure they can care for those who are dependent on them. Employees will be eligible to take this leave from the first day of their employment (see press release).

Inflation and the issue of wages (continued) : In our last edition (see IR Notes 194), we devoted an article to the role played by European Works Councils during this period of inflation. Further reactions have since reached us. Some replied that they had not yet been able to tackle this issue, despite requests submitted by several of their members (SAP), while others plan to do so in the near future (Vaillant). At Solvay, where the EWC addressed the matter of offsetting inflation at its plenary session in June, management has announced an allowance for each country, based on calculating the differential between the ‘official’ rate of inflation and the wage rise fixed at the latest wage negotiations. However, the position adopted by most company managements is to refer the issue of wages to local level. The Amex GTB EWC, which raised the subject of inflation and rising energy prices at its annual meeting, was told by Europe executive management that it was “relying on managements at local level to take the necessary measures”. The competence of managements at local level is emphasised by the senior management of the Legrand group.  On the other hand, the managements of J.P.Morgan and Thales take the view that this is not a matter that lies within the EWC’s competence. However, without exceeding the EWC’s powers in the process, the discussions on European bodies have sometimes borne fruit. For example, at a Thales EWC meeting, members denounced the attitude of managements who were refusing to enter into negotiations in several countries, especially Spain. “This exchange prompted central management to ask the country managements in question to enter into negotiations”, says the company’s EWC secretary Anthony Perrocheau. Some EWCs are addressing the issue in a different way. For example, the angle adopted by the BNP Paribas EWC in tackling the subject is to examine the quality of social dialogue. It plans to discuss with central management the imbalance between those countries where social dialogue is properly institutionalised, and the capacity exists to negotiate offsetting mechanisms, and other countries, where there is merely an annual process in place for revising wages and salaries at individual employee level. EWC secretary Alexandre Huchet points out that “this situation risks creating a two-speed wage policy for dealing with the same issue”.  If managements fail to come up with a response, further demands may follow. At Legrand, where the EWC has submitted several questions regarding financial compensation, and at the same time asked management to offset energy price rises against the dividends paid out by the company, management has “responded in vague terms, while affirming the need to protect shareholders”, says EWC secretary Cristina Filippelli. This EWC has therefore instructed its expert to perform an analysis both of wages in the various countries represented on the EW C, and of working hours. The idea is to see “whether one of the options for resolving the crisis might be to cut working hours”.

A low-cost works council : In February 2022, the management of Westwing Group (2,300 employees), a German e-commerce website selling furniture and decorative objects, signed an agreement on the involvement of employees in a European company (SE) when it is converted into a SE. The group commenced negotiations in mid-2021, when it had around 1900 employees, to avoid having to introduce equal representation of management and employees. Under German law, this equal representation is required on a company’s supervisory board where it has a workforce of more than 2,000 employed within Germany. Like other German start-ups (Zalando, Delivery Hero, HelloFresh), Westwing therefore opted for SE status in order to circumvent this restriction. The SE works council comprises 8 members: three each from Germany and Poland, one from Spain and one representing small countries (i.e. Italy and the Netherlands, at the present time). Switzerland and the United Kingdom are excluded from the scope of the agreement. Only topics that concern more than 15% of the company’s European employees are dealt with at its one annual plenary session. Matters are referred to the select committee in exceptional circumstances if they concern at least 30% of the total European workforce (i.e. at least 700 employees) and the select committee is informed if 90% of the employees of a single country are affected by a plan. Telephone or video conferences are the norm, and face-to-face meetings are the exception. The works council can offer training courses, but management reserves the right to dispute their utility before a court. The same goes for recourse to an expert.