IR Notes

In its Employment Outlook 2018 report, the OECD notes significant improvements in the situation in employment markets, whose performance is returning to levels comparable to those that existed before the financial crisis. The OECD also emphasises the virtues of collective bargaining (see press release). Here are some the findings of this report, which is always instructive: 1/ The OECD countries have overcome the economic and financial crisis. For the first time there are more people with a job today than before the crisis, and unemployment rates are below, or close to, pre-crisis levels in most countries. 2/ These good news stories are however accompanied by two worrying trends: firstly, the picture continues to be mixed in terms of jobs quality and security (poverty has grown among the working age population, reaching 10.6% in 2015 compared to 9.6% a decade earlier). And secondly, nominal wage growth in the OECD area was only half of what it was ten years earlier. “More worryingly”, the OECD adds, “wage stagnation affects low-paid workers much more than those at the top”. 3/ The decentralisation of collective bargaining, i.e. favouring collective bargaining at company level rather than branch or national level, has not yet proved its worth. The OECD prefers co-ordinated collective bargaining systems, which lead to higher levels of employment and lower unemployment rates, including for young people, women and less well qualified people. It also contributes to a better quality work environment and “greater resilience of the labour market to shocks”. 4/ Collective bargaining could be the answer to growing wage inequality, which is more pronounced in situations where there is no collective bargaining or where companies themselves set remuneration levels. 5/ If coordination of collective bargaining is to work effectively, the social partners must be powerful and independent. They must have the legitimacy they need to take sectoral initiatives in order to promote adaptations in the employment market by facilitating workers’ transitions to new jobs and by providing employees with the skills they need in order to cope with a changing world of work. 6/ The OECD advocates extending social dialogue to SME and, in terms of cover, to workers concerned by non-standard forms of employment. The OECD recommends using an agreement extension procedure that will broaden the cover provided by collective bargaining agreements to include start-up companies and vulnerable workers.

• Publication of the “Posting of Workers” Directive: Directive 2018/957 of 28 June 2018 amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services was published in the OJEU on 9 July. This directive “shall ensure the protection of posted workers during their posting in relation to the freedom to provide services, by laying down mandatory provisions regarding working conditions and the protection of workers’ health and safety that must be respected”.

Sexual harassment: On 10 July, the MEPs on the Women’s Rights and Gender Equality Committee adopted, by a very large majority, a draft report proposing measures to combat mobbing and sexual harassment in the EU (see press release). This report, which is not yet available (see procedure file), will be presented at a plenary session of Parliament in September. The report emphasises that cases of sexual harassment “are significantly under-reported”. The draft report underlines “the urgent need for Member States, local and regional authorities, employers’ organisations and trade unions to understand the barriers that women face in reporting cases of sexual harassment, and gender-based discrimination and violence” and therefore to “help women and offer them full support to report cases of sexual harassment, gender-based discrimination, and harassment linked to pregnancy and maternity, without fear of possible consequences”. MEPs once again invite the Commission to present “a proposal for a directive against all forms of violence against women and girls and gender-based violence, which includes joint definitions of the various types of violence against women, including a revised and comprehensive definition of harassment and joint legal standards covering criminalisation of this violence”.

• Reconciling employees’ careers and private lives: On 12 July, the European Parliament’s Committee on Employment and Social Affairs adopted the proposal for a directive on work-life balance for parents and carers, presented on 26 April by the European Commission.  The text was adopted by 34 votes in favour, 14 against and 4 abstentions. The tripartite negotiations with the Commission and the Council, which has already finalised its position, are due to begin in September (see press release). The MEPs’ position is more generous than that of the Council (see IR Notes 101, Lead story). They propose setting a remuneration or allowance that is equivalent to at least 78% of the worker’s gross wage for parental and carers’ leave, and 80% in the case of paternity leave.

Taking over employment contracts in the context of a succession involving a contract to provide services: the Court of Justice has issued a ruling on a case concerning the security guards protecting the Museo de las Peregrinaciones, Santiago de Compostela, whose contract of employment was transferred from their former employer to the undertaking that was awarded the contract to provide the museum’s security service (CJEU, 11 July 2018, case C-60/17, Hermo). One of the employees concerned believed that, in addition to taking over the contract of employment, the new employer should also be liable to pay monies owed by the former employer. The new employer contended that it was not liable for the monies in question, arguing that the contract of employment was transferred merely via the application of a provision of the collective agreement applicable, which obliges the undertaking holding the contract “to take over the rights and obligations arising for the transferor undertaking from the employment contracts”. It submits “that that subrogation obliges it to assume only the obligations arising from the employment contracts from the date on which it is awarded the contract and that it exempts it from liability for earlier obligations”. To ensure the employee can recover the monies owed to them, the guarantees granted by Directive 2001/23 should be applied. The latter provides for all of the former employer’s rights and obligations to be transferred to the new employer, and not just the contract of employment. The Court of Justice rules that the directive should apply “to a situation in which a contracting entity has terminated the contract for the provision of services relating to the security of buildings concluded with one undertaking and has, for the purposes of the provision of those services, concluded a new contract with another undertaking, which takes on, pursuant to a collective agreement, the majority, in terms of their number and skills, of the staff whom the first undertaking had assigned to the performance of those services”. The domestic courts will now have to check whether “the operation is accompanied by the transfer of an economic entity between the two undertakings concerned”. This is not really in doubt, given that the Court indicates that “the identity of an economic entity (…), which is essentially labour-intensive, can be retained if the majority of its employees are taken on by the presumed transferee”.

• Towards an increase in the minimum wage: the commission responsible for setting the level of the minimum wage has proposed a rise in the minimum wage over a two-year period. When it was first introduced on 1 January 2017, the minimum wage was set at 8.84 euros per hour. This proposal would see it rise to 9.19 euros on 1 January 2019 and subsequently to 9.35 euros on 1 January 2020 (see press release). The government will adopt an order passing these changes into law.

• A decree-law to limit precarious employment: On 2 July, the new government presented its draft “Dignity” decree-law, which is intended to curb precarious employment of workers. Several parts of this piece of legislation are devoted to employment law. In particular, the draft decree-law plans to reintroduce justification grounds for the renewal of fixed-term contracts of employment and to limit their maximum term to 24 months, including renewals. It also plans to increase the amount of compensation payable in the event of unjustified dismissal and to force companies that move away from the area to repay any public investment funds that they may have received in the past. At the same time, the government is preparing draft legislation that will confer the status of employees on workers operating via digital platforms, which is something that case law recently denied to workers delivering food on behalf of Foodora.

Johnson & Johnson: On 13 June, the pharmaceuticals group accepted the offer made by the private equity investment firm Platinum Equity, announced on 16 March, to purchase its LifeScan business for 2.1 billion dollars. LifeScan is a player in the market for self-monitoring of blood glucose (diabetes control). The operation should be finalised by the end of 2018. On 20 May, the company’s European Works Council issued a negative opinion regarding this operation. The opinion firstly reminds the group of its “Credo”, issued in 1943 to express its values. In particular, this states that employees ”must have a sense of security in their jobs” and that the group “must be mindful of ways to help our employees fulfill their family responsibilities”. Accordingly, the European Works Council emphasises that management cannot merely rely on implementing the minimum provisions laid down by law to manage the consequences of this operation. It also invites Johnson & Johnson, as part of the deal, to include the initiation of a negotiation process with Platinum Equity aimed at setting up a European Works Council, given the size of its workforce in the Union (16,000 employees). While the Council believes that this purchase represents a good opportunity for development, it also highlights the uncertainties faced by the 1362 employees in the EU (total workforce worldwide: 2,339), especially those working for bodies that do not constitute a distinct legal entity, such as LifeScan. In its three-page opinion, the committee concludes that it appears to be difficult to remove these employees from their eco-system.  “The deal is now concluded”, says Gijs Laureys, “but we still haven’t had any response to our opinion. We don’t have much of an impact on the decision-making process”.

• EDF: At the meeting, on 26 June, of the EDF group’s committee responsible for monitoring its global agreement on corporate social responsibility, management presented its initial vigilance plan, which incorporates the requirements laid down by the French law of 27 March 2017 relating to the duty of vigilance incumbent on parent companies and work providers. Under this legislation, the vigilance plan should make it possible to identify risks and prevent serious breaches of human rights and fundamental freedoms, and health and safety issues relating to people and the environment. The vigilance plan includes: 1° Risk-mapping (for individual production sites and risks) ; 2° Evaluation procedures for subsidiaries, subcontractors and suppliers with which an established business relationship is maintained. 3° Appropriate actions to mitigate risks and prevent serious breaches. 4° A mechanism for raising the alert and logging any issues reported. 5° Arrangements for monitoring the measures implemented and evaluating their effectiveness.

• ArcelorMittal: At a meeting held on 10 and 11 June this year in Luxembourg, which was attended by 70 trade union leaders from 18 different countries, a Global Union Network was established under the auspices of the IndustriAll Global Union federation. The network identified as a key aim, a written commitment from management to promote a more formal, structured and regular global social dialogue. The network is also calling on the group to support the creation of a global works council in addition to the committee established within the framework of the global agreement on health and safety in the workplace, signed by the group in 2007 (see press release IndustriAll Global Union).

A social portrait of the EU in 2018: On 13 July the Commission published the 2018 edition of its yearly Employment and Social Developments in Europe (ESDE) review (see press release). This document is vast in scope and it contains a huge quantity of data broken down by country, as well as cross-disciplinary analyses of the options and risks linked to technological innovation, to demographic changes and to globalisation. A chapter on the initiatives taken by European social partners in respect of issues associated with digitalisation is worthy of particular note.

• Study of European Works Councils: following the delayed publication of its evaluation report on Directive 2009/38 (see IR Notes n° 98), the European Commission has also made public the Evaluation study on the implementation of Directive 2009/38/EC on the establishment of a European Works Council, produced by social policy consultants ICF, involving 37 companies that have set up a European Works Council under the auspices of the revised Directive 2009/38. On average, these councils have 16 members. 40% of European Works Councils meet between 2 and 4 times each year, usually over a two-day period. 42% of companies have held at least one extraordinary meeting over the past three years. Select committees meet three times a year on average. 36% of councils have set up working parties. Where restructuring proposals emerged, just 21% of the employee representatives questioned believe that consulting the European Works Council resulted in a change in management’s plans. 38% believe that this consultation had no effects at all. Part of the study relates to the costs associated with European Works Councils: it costs almost 120,000 euros to set one up (involving an average of three negotiation meetings over a 14‑month period). The annual budget associated with a European Works Council varies from 50,000 to 500,000 euros, depending on the company in question. 75% of companies believe that this cost is below 100,000 euros per annum.