IR Notes

Seeking in any way possible to find a useful role for itself in a European Union that seems to be forgetting that solidarity is one of its constitutional values (Article 2 of the EU Treaty), on 2 April, the European Commission submitted a Proposal for a Regulation for financing short-time work schemes. The Commission is not proposing a readymade system to finance the cost of short-time working, but rather a financial instrument. Known as SURE (Support to mitigate Unemployment Risks in an Emergency), it “will provide up to €100 billion in loans to countries that need it to ensure that workers receive an income and businesses keep their staff.” (see press release and Questions and answers press release and Factsheet on the SURE instrument). The President of the Commission, Ursula von der Leyen, is well placed to defend short-time working. According to the OECD, during the 2008 crisis, Germany resorted to short-time working on a massive scale: between 2007 and 2010, it spent 10 billion euros in this way (compared to 1 billion in the case of France), providing assistance to 1.5 million employees and saving 235,000 jobs (0.8% of total employment) in the process. The length of time for which the State paid a proportion of employees’ wages during a period of short-time working was raised to 24 months at the height of the crisis in 2009. The trade unions also fought to ensure that companies maintained the recruitment level of young people joining apprenticeship schemes. In the end, “the choices made here enabled Germany to emerge from the crisis with fewer unemployed workers than it had in 2008”, explained Gerhard Bosch, Head of the Arbeit und Qualifikation institute, in an interview published in 2011 (1). At the end of 2012, the then Minister of Employment, Ursula von der Leyen, relaxed the rules governing short-time working in order to provide support to the car industry, by extending the length of time for which the State paid part of employees’ wages, from six to twelve months. At the end of 2019, the German government once again relaxed the conditions governing eligibility for assistance with short-time working, to help its struggling car industry. The German government estimates that 2.35 million employees will have to be placed on short-time working due to the Covid-19 crisis. At the end of the 2008 crisis, many studies highlighted the merits of the short-time working arrangements adopted by several countries that did not previously have this scheme in place (see 4. Studies and reports). Regrettably however, the issue of short-time working did not remain on the agendas of the Commission and the Member States. Yet the European Union prided itself on having created a lasting mechanism that allowed workers to enjoy the certainty of holding on to a significant proportion of their earnings and to their contract of employment when exceptional circumstances might arise. Having been caught unawares, and faced with the need for urgent action to deal with the public health and economic crisis, the Commission can only activate the weapon of financial aid — which is undoubtedly not enough in itself (see A question for…) – to encourage Member States to borrow from it on favourable terms, so that they can finance their short-time working arrangements or – something that is new compared to the 2008 crisis, their mechanisms for providing support to self-employed workers. Nevertheless, solidarity will be required: each loan will have to be approved by the Twenty-Seven. Likewise, the Commission has announced that it will be speeding up work on the European unemployment benefit reinsurance mechanism, which features in its work programme. This involves drawing on European solidarity to finance the unemployment system of a Member State that has suffered a significant deterioration in its employment market, as a result of an external shock. The European Trade Union Confederation has given the SURE initiative its full support (see press release).
(1) Liaisons sociales Europe no. 290, 17 November 2011

• Critical occupations: On 30 March, the European Commission presented Guidelines concerning the exercise of the free movement of workers during COVID-19 outbreak. These guidelines set out a list of workers who require continued free movement in order to do their job. (see press release).


• Dividend payments: The European Trade Union Confederation has issued a very clear appeal to companies, asking them to suspend payouts to shareholders and thus hold onto these financial resources (which it estimates to be worth 359 billion euros), in order to “protect jobs and wages” (see press release). Discussions are taking place at a number of groups, sometimes involving the European Works Council.

Suspicion of fraud linked to posting of workers : the Spanish low-cost airline Vueling has been the subject of two disputes in France, linked to employing flying personnel whose status was that of posted workers. In 2012, the Paris Court of Appeal found Vueling guilty of concealed employment for having unlawfully posted workers to France, and ordered it to pay a fine of 100,000 euros. The Court of Appeal noted that Vueling had deliberately disregarded the applicable rules, in particular by stating that the place of residence of 41 of the workers concerned was the address of its own head office in Spain, and was unable to provide a credible explanation capable of dispelling the suspicion of fraud. This judgment was confirmed by the Criminal Chamber of the French Court of Cassation in 2014. Following this judgment, a French pension fund to which Vueling personnel working at Roissy-Charles-De-Gaulle airport should have been affiliated, referred the case to the Regional Court (TGI) of Bobigny, France. This court in turn referred the matter to the Court of Justice, for a ruling on whether, in light of the criminal conviction for concealed employment, it could disregard the A1 certificates issued to the posted workers concerned. The Spanish social security system issues these certificates as proof that the persons concerned are affiliated to its system. Four years later, the French authorities asked the Spanish system to withdraw the certificates, under a procedure of dialogue between institutions as provided for by EU legislation, but the Spanish system maintained that they were still valid, on the grounds that retroactive withdrawal would pose too many practical difficulties in terms of implementation. By refusing to hold that a suspicion of fraud would allow a national court to disregard A1 certificates, the Court of Justice dashed the hopes of those who believed that the French authorities could take the law into their own hands by disregarding the A1 certificates, on the basis of the French criminal judgment proving fraud. The Court of Justice takes the view that the French authorities and courts “may make a finding of fraud and consequently disregard those certificates only when it has satisfied itself that”, first, that the procedure of dialogue was “promptly initiated” so that the Spanish system was put in  a position to check the validity of the certificates in the light of the evidence submitted to it by the French authorities. Second, the Spanish system must have failed “to undertake such a review and […] to make a decision, within a reasonable time, on that evidence, cancelling or withdrawing the certificates at issue, where appropriate”. Only if they comply with these various stages can the authorities of the host country disregard the A1 certificates. The Court of Justice also rules that the criminal conviction (which, it argues, is based on lack of knowledge of EU law) does not allow the civil court to which the pension fund has taken its case, to disregard the A1 certificates and to order Vueling to pay damages linked to social security contributions not paid by Vueling flying personnel. In the end however, this rigorous application of EU law has not eliminated the suspicion of posting-related fraud, as a result of the French authorities being slow to act (CJEU, 2 April 2020, case C‑370/17 and C‑37/18, CRPNPAC and Vueling).

• Transfer to several companies: A female worker was employed by a cleaning company to work on several buildings in the city of Ghent (Belgium). After her employer lost the contract following a call for tenders, these cleaning services were divided between the two companies that had won the contract. One of the two companies refused to take on the worker, on the grounds that no transfer of undertaking had taken place. For the first time, the Court of Justice held that a contract of employment can be transferred to two different companies in proportion to the extent of employment of the worker prior to the transfer, provided that it does not entail a deterioration in the working conditions and rights of the worker concerned. If the division of the contract of employment proves to be impossible or entails such a deterioration, “that contract may be terminated”. In that case, the termination must be regarded as the responsibility of the transferee(s), even when that termination has been initiated by the worker (CJEU, 26 March 2020, case C-344/18, ISS Facility Services).

• Joint statement : On 24 March, the European social partners issued a joint statement inviting governments to approve all of the measures proposed by the European Commission so far, “without any delay, nor with changes that could weaken their impact”. The signatories call on States to involve their national social partners in the process of designing and implementing national measures. The aim is to “keep workers in their jobs meanwhile, to protect from unemployment and loss of income, and to alleviate financial losses”. Financial assistance must reach “enterprises, especially all types of SMEs, and all workers, including the self-employed and those with precarious jobs who are most vulnerable.”

• Joint statements : The European social partners in several sectors of activity have recently issued joint statements with a view to tackling the Covid-19 crisis. This applies in particular to the financial sector, social services and the food and drink industry. Employers’ organisations have also issued statements, aimed at the authorities in particular, calling for employees to be provided with the necessary protective equipment (PPE) (cleaning industry). The websites of the European trade-union federations mentioned below (2. Member States) are monitoring these position papers. The main messages are about worker protection and issuing calls for support for the economy and maintaining employment.

The IR Notes editorial team is mobilising to keep you informed of the measures taken in each country to deal with the Covid-19 epidemic : With the help of our correspondents and contacts made with all Ministries of Employment and social partners in EU Member States, we can now offer you a new overview. Resources are also being posted on line on the IR Share website and on our Facebook page. You’ll find information in English and French on the countries we haven’t been able to deal with in this edition. Please feel free to download from our website any documents that you think will be useful and/or post information on our Facebook page. We also encourage you to keep an eye on the pages dedicated to this crisis on the websites of the European Trade Union Confederation (ETUC) and of the European Trade Union Institute (ETUI), which has turned its Reformwatch page into Covid Social Impact, for the purpose of monitoring the initiatives implemented, country by country. Other sources of information include: the pages of the European trade-union federations IndustriAll Europe (metal, well documented), EFBWW (construction) and EFFAT (food processing) as well as the OECD’s  on line resource centre.

Enhancing the conditions applicable to short-time working : The social partners at sectoral level have signed a number of new agreements to improve the legal framework governing short-time working, opening the way to payment of between 60% and 67% of the shortfall in people’s wages. Agreements have been signed in the metalworking (see IR Notes 138), chemical, paper and glass industries. In the chemical industry, the level of these payments has been increased to 90% of net wages. Short-time working can be introduced more quickly, with three days’ notice. There are also plans to facilitate remote working and to allow employees to work 12-hour shifts, so as to minimise the levels of contact and travel.

• Support for vulnerable people : The government has issued a decree, dated 31 March, providing for measures to offer support to specific groups of vulnerable people, such as domestic workers, temporary workers who have lost their job and are not entitled to unemployment benefits, people who are unable to pay their rent, women who are victims of sexist violence, and self-employed workers.

• Exemptions granted from the Employment Code : Prior to the adoption, on 30 March, of the law allowing Viktor Orban’s government to legislate by decree in the context of an open-ended state of emergency, the government had passed Decree no. 47/2020, Article 6, paragraph 4 of which allows an employer to waive all of the provisions of the Employment Code by means of reaching an agreement between the parties, regardless of whether such action is favourable or prejudicial to the employee.

A protocol establishing a list of “essential firms” : While most workplaces have been closed down by decrees passed by the government in order to limit the spread of Covid-19, workers employed by companies that are still operating have expressed serious concerns regarding their health and safety, and have called for the introduction of preventive measures in order to halt contagion in the workplace. Some employees went on strike and metalworkers in the Lombardy and Lazio regions organised a regional strike. This pressure prompted the government to discuss a protocol with the social partners, resulting in an agreement being reached, on 25 March, after “a very difficult and technical negotiation” (as the CGIL trade union confederation described it), on a list of “essential firms” that are allowed to continue operating.

Undermining the autonomy of the social partners : On 28 March, all of the social partners on the Social Dialogue Council, which is an independent consultative body comprised of the country’s eight representative employers’ and trade-union organisations, sent a joint letter to the government, to protest against “an attack by the authorities on the independence of this body” and on the autonomy of trade unions and employers’ organisations. The signatories state that the new Act related to combating Covid-19, as passed by the Lower Chamber that same day, contains a regulation authorising the Prime Minister to dismiss members of the Social Dialogue Council during the period of the epidemic threat. The European social partners have given Poland’s social partners their full support (see joint letter).

• An effort to help the self-employed: The measures adopted between 24 and 26 March in response to the Covid-19 crisis include the government’s plans to support self-employed workers by offering them interest-free loans and waiving payment of minimum advances due on sickness and social insurance contributions over a six-month period. In addition, self-employed workers who have been adversely affected by the restrictive measures imposed (shops having to close, etc.) and have no other sources of income will receive direct financial assistance amounting to 15,000 koruna (€549) per month. The State will pay 80% of the wages of employees of restaurants and shops that have had to close due to the epidemic, for a period of 10 days. Companies will be able to opt for short-time working arrangements whereby the State will pay between 50% and 80% of the cost of employees’ wages. The State is also making up the income shortfalls of parents with children aged under 13, who are having to stay away from school and to be looked after at home.

Trade union recommendations in the Covid-19 context : European Trade Union Federations have sent their affiliates Recommendations to EWC/SE Coordinators (and worker representatives in SNBs, EWCs and SEs) to help deal with the Covid-19 crisis. The federations want to “ensure that videoconferencing does not substitute for genuine face-to-face meeting, and that management does not use the COVID-19 crisis as an excuse to call off” ordinary meetings during 2020. On the other hand, they take the view that this crisis constitutes an “exceptional circumstance of a de facto transnational nature which justifies calling for extraordinary meetings to inform and consult on the potential impact of the crisis on workers’ interests”. They “exceptionally recommend the use of online meetings, under specific conditions to be agreed by both parties”. Moreover, “It must be made clear that holding meetings via videoconference is limited to the COVID-19 crisis period”. The federations believe that EWCs should ask management to provide regular updates on the situation and should ensure that each member of a European body reports back at regular intervals on the situation in their own country.

• Crisis temporary select committee : Following the cancellation of the inaugural meeting of the European Works Council of Coca-Cola European Partners (see IR Notes no. 135), members of the special negotiating body, supported by their European trade-union federation Effat, have asked management to set up a “crisis select committee” to ensure that they receive a minimum level of information and that a minimum level of consultation takes place during European Works Council meetings, and that a select committee is elected in due form.

Continuing to pay wages and setting up a solidarity fund : In the face of the Covid-19 crisis, the food production group Danone has announced the following four measures: 1° All employment contracts will be secured and the wages of its 100,000 employees worldwide will be guaranteed until 30 June. 2° Extensive cover (health, childcare, quarantine) is guaranteed for all employees worldwide. 3° There are plans to pay a specific bonus to all employees working on own site during the pandemic. 4° Financial support worth €250m to help “the 15,000 small businesses in our global ecosystem” (see press release and video clip posted by CEO Emmanuel Faber). Other groups have set up solidarity funds, financed in part by cuts in the fixed and/or variable remuneration payable to directors and/or dividend payments. The catering group Sodexo has announced the setting-up of a €30 million euro global Employee Relief Program for employees (see press release). The hotel group Accor has created a €70m fund to pay for the COVID-19-related hospital expenses of those of its 300,000 employees who do not have social security insurance (see press release). Other groups, such as Michelin and Plastic Omnium, have announced pay cuts for their directors. The money saved has not been earmarked for any specific purpose but is more a way of showing solidarity with employees who are working on short-time. The energy group Enel has drawn up an insurance policy to cover the Group’s over 68,000 employees worldwide in the event of hospitalisation should they contract the COVID-19 virus (see press release).

Short-time working in Europe : In Europe, prior to the 2008 crisis, around 12 States had established short-time working arrangements, while nine countries that did not already have an instrument of this nature in place set one up in order to tackle the crisis, according to a working paper produced by the Commission, and published in 2010. In a report published in 2010, the European Foundation for the Improvement of Living and Working Conditions studied 15 short-time working schemes, and emphasised the significant variation in the extent of the maximum working time reduction: these schemes may cut working time by between 10% and 100%, and compensate for between 55% and 80% of the foregone pay. In particular, the report recommends that such instruments be offered on a permanent basis, coupled with access to vocational training. A comprehensive OECD study, published in January 2011, also stressed that “short-time work schemes (STW) had an economically important impact on preserving jobs during the economic downturn”. Few recent documents offer an overview of the mechanisms in place in the various European countries, particularly since these are being rapidly adapted in line with the changes taking place in the national situation. However, Eurofound’s database on restructuring-related legal regulations, which was updated in 2019, provides a summary of the main existing schemes (when you do a search for ‘working time flexibility’ arrangements) for each country. A very recent study of short-time working during the corona crisis (Kurzarbeitergeld in der Corona-krise), performed by the WSI Institute (Hans-Böckler-Stiftung), examines the regulations in force in Germany (and also sector-based collective labour agreements that provide a top-up of the replacement income provided for by law) and in Europe. Lastly, another up-to-date document is the Briefing note dated 30 March and produced by the European Trade Union Confederation, which provides a summary, in table format, of short-time work measures in force, incorporating the latest changes made by Member States.