IR Notes

On 18 October, MEPs rejected a resolution submitted in particular by German MEPs from the EPP, which sought to deprive Directive (EU) 2022/2464 of 14 December 2022 on Corporate Sustainability Reporting (the “CSRD” directive) of its substance (see IR Notes 196). This resolution called on Parliament to reject the delegated regulation presented by the Commission on 31 July, which sets out details of the European reporting standards governing the sustainability information (Environmental and Social Reporting Standards or ESRS) that will be published in sustainable development reports (see IR Notes 214) and Sustainability reporting). The rebel MEPs argued that this regulation introduces “a high administrative burden for companies due to the high complexity of sustainability reporting standards” at a time when companies are having to cope with a number of major challenges (inflation, high energy prices, labour shortages, etc.). The resolution was rejected (359 votes against, 261 votes in favour and 11 abstentions). With this vote, Parliament approved the delegated act, so it can now enter into force as soon as it is published in the OJEU. From 2025, companies with more than 500 employees, to which the current 2013/34 Non-Financial Reporting Directive (NFRD) already applies, will be required to produce a sustainability report based on their 2024 data. However, the European Commission’s work programme (see below), in which it announces that it wants to reduce the administrative burdens on companies by 25%, sows a certain amount of confusion, as it is accompanied by a series of legislative proposals, which were also published on 17 October and seek to ease these reporting obligations or make them more flexible. Firstly, a delegated directive issued by the Commission adjusts the total balance sheet and turnover thresholds set in the 2013/34 Accounting Directive, raising them by 25% to allow for inflation since the time the directive was passed. As a result, the total balance sheet (20 million euros) and turnover (40 million euros) thresholds will rise on 1 January 2024 to 25 and 50 million euros respectively. This change will also alter the thresholds of the CSRD directive. In other words, this 25% increase will remove approximately 6% of these companies from the scope of application of the obligation to produce a sustainable development report, and goes to show that lobbying is still going on as intensively as ever, even after Parliament has passed a directive. Secondly, a proposal for a decision amends the Accounting Directive, with regard to the deadlines for adoption of sustainability reporting standards specific to the financial markets. These are currently due to be adopted by the end of June 2024, but the proposal calls for this deadline to be postponed by two years. The same goes for preparation of the ESRS standards to be used by some companies from third countries that are doing business in the EU. However, this means that very little time remains for companies to complete the indicators set out in the appendix of the delegated regulation and for the workforce representatives who will have to be involved (see “A question for…”). And from 2026 onwards (for the 2025 data set), the obligation will be extended to companies that have more than 250 employees on average and exceed one of the two thresholds mentioned above.

The Commission’s work programme : On 17 October, the European Commission adopted its final work programme before the European elections. It says that it has delivered 90% of its commitments during the course of its term and puts forward just a handful of initiatives (see press release). The main one is a 25% reduction in the burdens associated with citizens’ and companies’ obligations to submit declarations “without lowering social, […] environmental or economic standards”. This will have an impact on sustainable development reports (see Lead story). In the field of social affairs, the Commission announces “an initiative on European works councils in 2024”. The annexes to the programme state that this initiative may be either legislative or non-legislative, including an impact study. The Commission also confirms that, under the Belgian Presidency of the EU, “a social partner summit in Val Duchesse” will be held in the first half of 2024 » (see Val Duchesse). This location, which witnessed the birth of European social dialogue under the presidency of Jacques Delors, will be the setting “to discuss the challenges facing our labour markets, workers and businesses, including from skill and labour shortages, and artificial intelligence”. Lastly, the simplification chapter provides for “the timely agreement and widespread implementation of a common form of electronic format for posted worker declarations” using a multilingual portal “for all Member States who decide to make use of this tool”. However, there is no mention of a revision of the European quality framework for traineeships.

> Find out more: The Danish trade union confederation FH is disappointed by the programme. Its Vice-President Flemming H. Grønsund emphasises that “the fact that workers are mentioned just twice in the Commission’s entire work programme is almost laughable!” (see press release).

• Part-time work : The Court of Justice has delivered a ruling interpreting Directive 97/81 of 15 December 1997 on part-time work, in a case concerning an airline pilot who worked 90% of full-time working hours. It holds that the additional remuneration linked to the exceeding of certain trigger thresholds for flying duty hours must be proportionate to the length of a person’s individual working time, otherwise it constitutes discrimination against part-time workers (CJEU, 19 October 2023, Case C-660/20, MK and press release).

Health and safety : The European Agency for Safety and Health at Work (EU-OSHA) has launched its new “Healthy Workplaces” campaign, which this year focuses on “Safe and healthy work in the digital age”. The campaign examines the impact of technologies such as robots and artificial intelligence, and new work formats, such as digital platforms and remote working. Within this framework, a series of studies have been published (see press release and website dedicated to the campaign).

Teleworking negotiation : A final meeting of European social partners is scheduled for 9 November, on the European Commission’s premises, to decide the fate of the draft framework agreement on telework and the right to disconnect, which was arrived at on 23 October (see Right to disconnect). Each delegation is currently re-examining the text, after it was tidied up to take account of the Commission’s comments. They will decide at the meeting whether or not to submit it to the executive bodies of their respective organisations, for adoption. If the green light is given by the year end, the social partners would not be arriving empty-handed at the European social dialogue summit at Val-Duchesse, which is scheduled for January. If agreement is reached, the Commission has promised to do everything it can to ensure that the directive, which is due to take account of the framework agreement, is adopted by the end of its current term. If the parties fail to reach agreement, the finger of blame will be pointed at the employers’ delegation, which is highly divided.

Minimum wage : On 24 October, the government fixed the amount of the gross minimum wage for 2024 at 840 euros, representing a 20% increase (the minimum wage for 2023 is 700 euros). This is the largest increase in Croatia’s history. The aim is to improve the situation of the least well-paid workers. According to the latest statistics, the average wage in August 2023 was 1614 euros. Next year’s minimum wage therefore represents 52% of the average wage.

Shorter working hours : The government agreement signed on 23 October between the PSOE and Sumar, contains a flagship measure: this is a reduction in the length of the working week with no corresponding cut in wages, from the current figure of 40 hours to 37.5 hours per week in 2025, via an intermediate cut to 38.5 hours in 2024. The UGT and CC OO trade unions have welcomed the measure (see press releases issued by CC.OO and UGT), whereas the employers have dismissed it, arguing that this subject should be tackled through social dialogue rather than via legislation (see press release). The agreement stipulates that all other employment-related measures will be implemented within the framework of social dialogue. Other social measures include: creating an employment status for interns, extending maternity leave from 16 to 20 weeks, strengthening protection against dismissal and making substantial changes to the contract of employment, improving the logging of working hours by using new technology and encouraging companies to offer hybrid working days that combine face-to-face and remote working, accompanied by more adaptable and flexible working hours.

• Breast cancer: On 19 October, which is World Breast Cancer Day, the UGT trade union confederation issued a proposal to negotiate memoranda of understanding within companies, aimed at helping employees who have suffered cancer to return to work. Any such return to work should be made possible in a way that provides flexibility and is safe, while being organised around the worker themselves, and by adapting the work to the person and not the other way round (see press release).

Delivery drivers’ employment status : On 20 October, the Supreme Court handed down a very important judgment, whose relevance is not limited to Irish law, as Judge Brian Murray offered a superb lesson in law, extending to almost 200 pages, on the definition of an employment agreement as opposed to a contract for services. Karshan (Midlands) Ltd, a company operating under the name “Domino’s Pizza”, was presented with a tax assessment amounting to 215,000 euros, covering non-payment of taxes due on wages. The company contends that no contract of employment exists as there is no ongoing reciprocal commitment between the employer and the worker, extending “into the future”, to provide work, and in the case in point, every delivery was covered by a contract. This assumption enables Karshan to set aside the principle of “mutuality of obligations”, which in Irish law, it argues, is the sine qua non for classifying an employment relationship as a contract of employment. However, the judge holds that the existence of a mutual obligation to provide work into the future is not the sine qua non of an employment contract. For the purpose of establishing whether in any given case a worker is an employee, he first of all identifies three preliminary questions: 1/ Does the contract involve the exchange of remuneration for work? 2/ Does the contract stipulate that the worker undertakes to provide their own services to the employer, rather than those of a third party? 3/ Does the employer exercise sufficient control over the worker to render the agreement one that is capable of being deemed an employment agreement? If these three criteria are met, the decision maker must then determine, on the basis of the facts (the “factual matrix”), whether employees are working for the company rather than for themselves. The judge therefore examined the circumstances in which the delivery drivers’ work was performed, and it was an examination of this “factual matrix” that led him to classify the service as an employment relationship, regardless of how the relationship is described in any contracts concluded between the company and its delivery drivers.

Domestic violence: : On 19 October, the Council of Ministers passed a decree-law allowing victims of domestic violence to receive unemployment benefit, in addition to benefitting from the social protection regime provided for by law (see press release). Cases where a victim of domestic violence chooses to terminate their contract of employment will therefore be treated as involuntary termination.

Protected employees: : As of 22 September, pursuant to the law of 28 July 2023, in the event of legal action following the termination of their contract of employment, under the new Article 755(5) of the Code of Civil Procedure, a protected employee enjoys the benefit of an obligation requiring their employer to reinstate them in their previous job or to give them a new job throughout the term of the legal proceedings, from the moment they apply to the court for this. This right applies to the following categories of employees: women who are pregnant or on maternity leave, those who have reached early retirement age, militant trade unionists and works council members.

A new EWC : On 5 October, the private hospitalisation and healthcare group Ramsay Santé (36,000 employees) signed a European Works Council agreement within the framework of a negotiation that began after it purchased the Swedish Capio group, which has its own EWC (see press release). The agreement contains a number of interesting clauses. For example, the EWC will be competent to deal with issues which are important “to Ramsay Santé staff, regardless of the number of Member States involved”. In terms of confidentiality, where management indicates that information is confidential, “it will state why [this information] is deemed to be confidential, the public for which it is deemed to be confidential, and for how long”. Management is entitled to share, with the 5 members who make up the select committee, information of a confidential nature “as an initial step in the information/consultation process”. The EWC has to be consulted on a fairly broad range of information topics (sustainable development, quality policy, global policy for the care and service offer, etc.) and sharing best practices, which makes sense in a group providing patient care. As regards the resources available to it, the EWC is entitled to set up working groups, and to consult an expert or a representative of the European trade union federation. However, the time credit allocated to members is modest, with just 20 hours for full members, 60 hours for select committee members and 100 hours for the secretary.

• Correction: In our previous edition, we reported that the revision of the Safran EWC agreement negotiated between management and the EWC, extended the consultation period from 4 to 10 weeks, whereas in fact it has risen from 4 to 6 weeks.

Social dialogue : On 25 October, the management of the Clariane SE group (70,000 employees), its SE European works council (CE-SE) and the European Public Service Union (EPSU) signed a European Charter for the Fundamental Principles of Social Dialogue. The group wishes to ensure that a social dialogue can be held in each of its establishments and at the level of each country (to discuss health and safety issues among other things, on a body with equal representation of management and employees). A “place for social dialogue” should be set up in each country, including those where such a central body does not yet exist or has not yet been put into effect, in order to propose a “common vision”, to circulate information among workforce representatives, and to monitor agreements signed or texts negotiated at European level. The agreement will have to be implemented within 6 months in the group’s various countries, and its application will be checked by a monitoring committee, using seven indicators set out in appendix (percentage of employees covered by a collective bargaining agreement, mapping of sites that have their own employee representation body, etc.).

Parental leave : On 10 October, the Italian food production group Barilla (8,700 employees) announced its decision to grant a minimum of 12 weeks’ paid leave for every one of its employees who becomes a parent through birth or adoption, with effect from 1 January 2024 (see press release).