IR Notes

On 14 January, the European Commission unveiled its social affairs road map for its term of office, in a communication on a “strong Social Europe for Just Transitions” (see press release issued by the Commission). This communication marks the opening of a period of consultation with all stakeholders and citizens (notably via a dedicated website) lasting until November 2020, and leading to the adoption, at the beginning of 2021, of an action plan to firm up the rights and principles contained in the European Pillar of Social Rights. In this context, the Commission has also launched a first-stage consultation of European social partners on how to ensure fair minimum wages. In this consultation document, the Commission still remains rather vague about its intentions. It implies that Member States should find solutions that will guarantee a wage providing a decent living (either in relation to a given standard of living, as in Ireland and the UK, or via the target of reaching 60% of the median household income, i.e. the at-risk-of-poverty threshold in the EU). This also involves guaranteeing that a sufficient number of workers will be covered by a minimum wage, and arranging in-depth consultation of the social partners regarding the level of this wage and a mechanism for updating its amount. In its communication, the Commission also remains somewhat evasive regarding the tools it plans to use to implement the European Pillar of Social Rights, certainly so as not to influence the consultation, but in all likelihood too, because the will to strengthen a social Europe is still lacking. Few binding standards are announced, with the exception of those that will feature in the new gender equality strategy announced for the first quarter of 2020, with a view to closing the gender pay gap, “including through binding pay transparency measures”.  On the other hand, there are no announcements regarding working conditions in the platform economy – “possible solutions” will be discussed at a “summit” to be held in the second half of the year. In terms of health and safety, new risks and exposure to dangerous substances will be addressed in a new strategy, though its adoption date is not specified. The Commission acknowledges that “fair working conditions are also about strong social dialogue”, which is “crucial, especially when companies are restructuring or undergoing significant change”. However, in concrete terms, the Commission does not announce any revisions of directives, and merely calls on Member States to “make full use of existing instruments on workers’ involvement such as the European Works Councils to promote the culture of information and consultation of workers”. Lastly, the communication emphasises the creation of a just transition mechanism, including a fund to support the regions most affected by the transition, and their workers (see press release issued by the Commission).

Protection against the employer’s insolvency : the Court of Justice has upheld the direct effect of Article 8 of Directive 2008/94/EC of 22 October 2008, on the protection of employees in the event of the insolvency of their employer. In this particular case, which arose in Germany, (CJEU, 19 December 2019, case C-168/18, Pensions-Sicherungs-Verein), a former employee was receiving a company pension worth around 600 euros/month, paid by a pension fund. The fund was experiencing financial difficulties, so the authorities had granted it permission to reduce the amount of the pensions it was paying. The former employee’s pension was cut by almost 14% (i.e. by 82.74 euros per month). The difference was made up by the former employer. However, this company itself subsequently became insolvent. PSV – the body responsible in Germany for payment of employment pensions in the event of an employer’s insolvency – then took over payment of this pension, though without guaranteeing to pay the compensation paid by the employer. The case was referred to the Federal Employment Court, which in turn referred it to the European Court of Justice. The latter ruled on three points relating to Article 8, which establishes protection of the interests of employees and of persons having already left their employer at the date of the onset of the employer’s insolvency, “in respect of rights conferring on them immediate or prospective entitlement to old-age benefits […]  under supplementary occupational or inter-occupational pension schemes […]”. First of all, the Court of Justice holds that the compensation paid by the employer shall enjoy the protection granted by Article 8. Next, the Court takes the view that the reduction in the amount of the pension is “manifestly disproportionate, even though the former employee receives at least half of the amount of the benefits arising from his or her acquired rights, where, as a result of the reduction, the former employee is already living, or would have to live, below the at-risk-of-poverty threshold determined by Eurostat for the Member State concerned.” Lastly, Article 8, which lays down an “obligation to provide a minimum degree of protection”, has “direct effect, so that it may be relied upon against an institution governed by private law that is designated by the State as the institution which guarantees occupational pensions against the risk of an employer’s insolvency […] ”.

• Postal sector: On 6 December 2019, the European social partners in the postal sector issued a Joint Declaration on Training in the Digital. The declaration emphasises the role played by the Social Dialogue Committee (SDC) and affirms that lifelong training and up‑skilling are essential to allow employees to acquire the necessary skills and offer new services. The SDC obtained the European Commission’s approval for the funding of a new project entitled “Postal Skills and Work Environment in the Digital Era”, which will go ahead in 2020-2021 (see PostEurope press release).

• Private security and cash-in-transit: On 5 November 2019, the European social partners in the private security and cash-in-transit industries – the employers’ organisations CoESS and ESTA, and the UNI Europa European trade union federation – issued a Joint Statement on the Need to Safeguard Cash, promising to promote collective agreements in order to ensure that workers employed in the cash-in-transit business experience a fair and sustainable transition.

Minimum wage : On 25 November, following a difficult negotiation between the Estonian Trade Union Confederation (EAKL) and the Estonian Employers’ Confederation (ETKL), the parties finally agreed to the compromise put forward by the national conciliation service, with a view to setting the national minimum wage for 2020. As a result, the minimum wage will rise by 7.6%, to 584 euros (3.48 euros per hour) in 2020. It was also agreed that in 2021, it will be fixed at 40% of the average wage, and that an impact study will be completed by summer 2021, to be used as the basis for a new formula to calculate the level of the minimum wage.

• Part-time working : Article 59 of Law 4635/2019 of 31 October 2019 increases the remuneration payable for overtime worked by part-time employees. Previously, part-time employees who worked more than the number of hours specified in their contract of employment, were not paid more money. They are now entitled to a 12% increase for any hours worked over and above the number of hours specified in their contract.

• Paid annual leave : On 16 October 2019, Parliament passed an amendment to Article 103 of the Employment Code, concerning the amount of paid annual leave. This amendment came into force on 1 January 2020. Under the previous version of this article, employees were entitled to at least four weeks’ paid annual leave, and an employee who, at the end of the calendar year concerned, was at least 33 years old, was entitled to at least five weeks’ paid annual leave. The amendment passed extends the amount of this leave to five weeks for employees who have not yet reached the age of 33 but are looking after a child on a permanent basis.

> Further national information is available in the October and November editions of Flash Report on Labour Law, which were recently published on the IR Share website.

Long-term transformation process : the Bosch group’s European Works Council (EWC) has set up a working party to monitor changes taking place in the drive trains used in the motor vehicle industry, which are affecting its “Powertrain Solutions” division. On 21 November 2019, this working party, in conjunction with the EWC’s executive committee, issued a joint declaration of solidarity to coincide with the mobilisation days held in Germany, Italy and France (see also: A question for… Kerstin Mai, opposite). In this document, workers’ representatives call for future prospects to be set out for the group’s various sites and for its employees, with the emphasis on training and redeployment, to enable the employees concerned to go and work in other sectors of the group. They also state that a deterioration in working conditions resulting from competition among different sites, linked to new products, is unacceptable. The signatories rule out redundancies on economic grounds and call for social dialogue to be reinforced on affected sites “so that the transformation process can be fashioned to work in employees’ interests”.

A vehicle for global social dialogue : the French tyre manufacturer Michelin (125,000 employees) and the IndustriAll Global Union federation have completed their negotiation aimed at setting up a global Works Council. The agreement, a copy of which has been obtained by IR Notes, is in the process of being signed and is due to be unveiled at the next plenary meeting of the group’s European Works Council, due to be held in late March. The French trade union FCE-CFDT says: “this new agreement, which is open-ended, reinforces social dialogue company-wide, but it does not take the place of employee representation bodies in individual countries” (see press release). The global Works Council “will enable employee representatives and management to discuss and share ideas, and to work on selective studies concerning major international issues facing the group”. Up to 50 employee representatives will sit on the Michelin Global Council (CMM). They will be appointed on the basis of their country or economic area, either from among trade union representatives, or via an election, in accordance with local practices. The employee representatives from EU countries will come from the group’s European Works Council, which retains all of its powers. The Council, which is entitled to hold up to two meetings per annum, is conceived as “a social dialogue body allowing information to be exchanged with workforce representatives who are CMM members, regarding economic, financial, social and environmental matters that are global and transnational in scope.” At meetings, senior management will share information with the group’s employee representatives on subjects such as: 1) the group’s economic results, social indicators and strategic orientations at global level; 2) economic, social and environmental benchmarks and forecasts; 3) raising awareness of issues and transformations facing the company; 4) thinking on external changes and cultural trends that are unfolding. The body will be there to act as the group’s “economic, social and environmental observatory”.

On 28 November 2019, the Board of Management of the German chemicals manufacturing group Bayer and its European Works Council (the Europa-Forum Bayer) signed a joint declaration relating to the group’s reorganisation. This reorganisation is seeking to cut costs linked to platform functions by 1.4 billion euros per annum. Approximately 7,000 jobs in these functions will be concerned at global level, by the end of 2021. The reorganisation of global functions and the objectives set in terms of achieving productivity gains will also lead, in European countries, to jobs and functions disappearing or to jobs being transferred to shared service centres. In this context, the signatories have defined “terms of fair treatment”, to be adhered to in all of the countries affected. In particular, this involves guaranteeing “fair treatment for the employees affected”; an “open and transparent information and consultation process” and exhausting “all internal possibilities to safeguard jobs”, while at the same time avoiding “dismissals for operational reasons wherever possible”.