IR Notes

The question is certainly provocative. How can the announcement of a restructuring that involves closing a site in Belgium which employs 2200 workers and another in Ireland which employs 250 workers be classed as good news? The answer is that Social Europe experienced rapid progress following similar announcements. In 1993, the Hoover group decided to close a factory in France in order to transfer production to Scotland. Over 600 jobs were to be lost. The affair provoked an indignant reaction throughout Europe. A year later, the European Commission managed to get Directive 94/45 on European works councils adopted. The scenario was repeated in 1997, when the management of Renault decided to close its site at Vilvoorde, near Brussels. The announcement was sudden and the Belgian workers were flabbergasted. Neither the European works council nor the local works council had been informed and consulted. Under pressure, the Commission worked on a draft directive establishing a general framework for informing and consulting workers in the European Community, which was adopted in 2002. In addition, it established the Gyllenhammar working group to make proposals as to how to deal with the economic and social consequences of industrial change and restructuring. This work then spurred the Commission into taking some initiatives in the matter. The closure announced by Caterpillar contains several common points: it seems brutal, motivated by the aim of increasing profitability; it destroys an area that is already in difficulties; it is happening in Belgium, close to the Commission, and, more than that, in Wallonia, where the political class is aiming to repeat the actions it took when the Renault site closed by putting pressure on the European Commissioners. In addition, it is producing a wave of indignation and a high degree of trade union mobilisation (see reports from IndustriAll and the Belgian trade unions). Finally, it is happening at a time when the Commission’s DG for Employment and Social Affairs has several sensitive issues to deal with: 1) It has to make a decision on the implementation of the revised directive on European works councils of 2009 and indicate whether it considers a new revision to be relevant. 2) It is supposed to working on a “consolidation” of the directives that include a right of workers to be informed and consulted, which has already resulted in a consultation of the European social partners. 3) It is assessing the effects of the “EU quality framework for the anticipation of change and restructuring”, adopted in 2013, in order to determine, once again, whether it is necessary to develop it further. “A good opportunity to check on the adoption of these good principles by large groups”, points out Fernando Vasquez, former deputy head of unit at the DG for Employment and Social Affairs, “and maybe to go beyond the purely voluntary framework left by the previous Commission?”. If the present Commission is as determined to achieve the triple-A social rating promised by its President, Jean-Claude Juncker, as it is to fight the reduced tax rates allowed to multinationals, then, thanks to Caterpillar, it now has a good opportunity to make progress with the issues in which it became bogged down during the Barroso era.

The trade union movement is in favour of the penalty imposed on Apple: the European Commission concluded, on 30 August, that Ireland had granted Apple undue tax advantages amounting to 13 billion euros (see European Commission press release). The commissioner responsible for competition policy, Margrethe Vestager, explained that “this selective treatment enabled Apple to pay an effective corporate tax rate of 1% on its European profits in 2003, a rate which went down to 0.005% in 2014.” For the trade union movement, this is a positive decision because it obliges companies to stop creating strategies to avoid paying taxes in some countries or even throughout the European Union, which deprives Member States of resources and therefore deprives citizens of various social benefits (see press release from the European Trade Union Confederation). Jan Willem Goudriaan, general secretary of the European Federation of Public Service Unions, is expecting a similar decision against McDonald’s (see press release). He gave his response to Apple’s press release, signed by Tim Cook, in a letter to the Financial Times in which he condemned Apple’s assertion that the Commission’s decision will have a negative impact on investment in Europe and therefore on jobs as reading “a little like blackmail”. In any case, the Commission’s chosen means of attack, the use of illegal state aid, enables it to avoid entering the area of taxation, which, under the Treaty on European Union, is a matter of national jurisdiction.

• Towards better social statistics in the EU: on 24 August, the European Commission adopted a proposal for a Regulation on new, integrated ways to collect and use data from social surveys, such as the European Union labour force survey (EU LFS), so as to better support policy-making in general and social policy in particular (see press release).


• European aid for retraining of workers made redundant by Microsoft: on 29 July, the European Commission proposed to award Finland 5.3 million euros from the European Globalisation Adjustment Fund to help 1441 former employees of Microsoft to find a job (see press release).

A pregnant worker does not necessarily continue to receive full pay: the Court of Justice of the European Union recalled that the system of continued payment for pregnant workers does not cover continued payment of “full pay” (CJEU, 14 July 2016, case C-335/15, Ornano). It therefore decided that payment of a “special judicial allowance” intended to cover the expenses related to performing the role of a magistrate was not payable to a magistrate during her maternity leave. On the other hand, in accordance with the case law of the Court, she retains “the right to the benefits attached to her professional status”. Furthermore, although Directive 92/85 obliges Member States to make provision for payment of an “adequate allowance” – that is, an allowance at least equivalent to that which the worker would receive when on sick leave – “no provision [of this directive] prevents” Member States or social partners “from providing that a pregnant worker should continue to receive all the pay components and allowances to which she was entitled before her pregnancy and maternity leave”.

• An allowance for paid leave is not payable to workers who have remained at home without performing their duties: the Court of Justice has ruled on several occasions on the right of workers who leave a post to obtain payment of an allowance for paid leave, even if they have been on sick leave for several months before leaving the company. In a new decision (CJEU, 20 July 2016, case C-341/15, Maschek), the Court was concerned with a public employee of the city of Vienna (Austria) who asked to retire after a short period of sick leave. This sick leave followed a long period during which his employer had continued to pay him, while asking him to stay at home without working. The Court of Justice considered that “the fact that a worker terminates, at his own request, his employment relationship has no bearing on his entitlement to receive, where appropriate, an allowance in lieu of paid annual leave which he has not been able to use up before the end of his employment relationship” because he had not performed his duties due to illness. Furthermore, with regard to the periods when the public servant stayed at home, the Court recalled the dual purpose of paid leave: 1) To enable the worker to rest. 2) To enjoy a period of relaxation and leisure. The Court considered that a worker who “was required not to report to his place of work during a specified period preceding his retirement is not entitled to an allowance in lieu of paid annual leave not taken during this period, unless he was not able to use up that entitlement due to illness” (see press release).

• Illegal restrictions imposed on foreign ski instructors: the European Commission referred Austria to Court of Justice of the European Union on 22 July (see press release), because of the restrictions that it imposes, in certain of its provinces, on ski instructors from other Member States.

Publication of the law on the reform of employment legislation: after lengthy discussions and a high degree of mobilisation by some trade unions, the law “on employment, the modernisation of social dialogue and safeguarding career paths” was promulgated on 8 August and published in the Journal Officiel of 9 October. This law, which relates in particular to working time, social dialogue, redundancy and incapacity, contains one article in particular that has been the focal point of the opposition from some trade unions. This is article 2, which is intended to establish that, as regards working time, company agreements take precedence over agreements made at branch level. Although the length of the working week remains at 35 hours, the law contains several measures that offer some flexibility, for example, fixing the additional payment for overtime hours (with a statutory additional payment of 10% where there is no agreement), the possibility of exceeding the maximum length of the working day (up to a limit of 12 hours) or of exemption from the minimum daily rest period. This major reform of working time, which precedes an extensive revision of the Employment Code that must also give priority to company collective bargaining, requires more than a hundred decrees to be passed to enable all the provisions to enter into force.

• Collective agreement in the banking sector: the social partners in the banking sector have reached an agreement on pay that covers the sector’s 230,000 workers for a period of 33 months. The text provides for a pay increase in three stages: a 1.5% increase in October 2016, then 1.1% on 1st January 2018 and 1.1% on 1st November 2018.
  > For more details and other results of collective bargaining in Member States, see the newsletter Collective Bargaining (Issue 7-8/2016).

• Transposition of the Electromagnetic Fields Directive: on 2 September, the Government Council enacted a grand-ducal regulation transposing Directive 2013/35 of 26 June 2013 on the minimum health and safety requirements regarding the exposure of workers to the risks arising from physical agents (electromagnetic fields) (see report in French).


• Improvements in family leave: on 29 July, the Government Council passed a draft law modifying certain types of family leave. The text proposes an increase in postnatal leave from 8 to 12 weeks. In addition, instead of providing for two days’ leave per year for family reasons, which are lost if they are not used during a calendar year, the text provides for a certain number of usable days per age category, each of which covers several years (see report in French).

SABMiller: on 11 July, the European works council of the brewing group SABMiller gave its opinion concerning the process for the acquisition of its businesses by the group AB InBev, which began on 11 November 2015. The council was assisted by the firm Syndex UK and the European trade union federation EFFAT. It views this takeover as posing risks to jobs and working conditions. In advance of the general meeting on 28 September, EFFAT has published a document on its website, addressed to the shareholders of SABMiller and AB InBev and also containing the council’s opinion (see report).

• EDF: the management of EDF and the worldwide trade union federation IndustriAll Global Union decided, in early July, to review the implementation of the global framework agreement made in 2008, IndustriAll is demanding that the future GFA covers “all operations of the company throughout the world, without exception” (see report).

• Lufthansa Technik: under the aegis of the International Transport Workers’ Federation (ITF), several trade unions represented within Lufthansa Technik (25,500 workers), the maintenance subsidiary of the German airline Lufthansa, have adopted an action plan that sets out a “structure and joint programme that will lead to transnational social dialogue within Lufthansa Technik”, the ITF pointed out (see report).


• Deutsche Telekom: several European trade unions have created “One Telekom Union”, a trade union to represent all of the group’s 170,000 workers in Europe. This organisation wants to create a network comprising the national trade unions, the works councils, the European works council and worker representatives on boards of directors (see report, in German).

• Variable systems of remuneration and reward: on 1st September, the European Foundation for the Improvement of Living and Working Conditions (Eurofound) published a study of supplementary reward systems, collective or individual (Changes in remuneration and reward systems), such as schemes for profit sharing, performance-related pay, and payment by results.


• A year of social relations and changes in working conditions in the European Union: the European Foundation for the Improvement of Living and Working Conditions (Eurofound) has published its annual report on changes in social relations and working conditions in the past year (Developments in working life in Europe: EurWORK annual review 2015). The report is based on the results of various European surveys and studies, and on the work of the Foundation’s network of correspondents. It covers ten topics (including working time, collective bargaining, and health and well-being at work) and provides information on developments recorded at European Union level and changes observed within member states.