IR Notes

While the European Commission is beginning to take shape, with the nomination of the 28 European commissioners, its work will not actually commence until November, once the team has been appointed and endorsed by the European Parliament. In a social context, four major topics will feature on the agenda of the forthcoming Commissioner for Employment and Social Affairs: 1. Review of the “working time” directive. Two impact studies have been launched and will be concluded in early 2015. Next year will also see the publication of an implementation report on the directive based on the national reports filed by the Member States, including the position of the social partners. Finally, a public consultation exercise will begin in the autumn. With all these elements, the Commission should be able to present a proposal to amend the directive in the course of 2015. Thus, in the best case scenario, the current legislation should continue to apply until 2020. Apart from that, the Commission will periodically have to deal with breaches in the Member States which could end up before the European Court of Justice. 2. Application of the new posting of workers enforcement directive. This text has to be transposed into national law by the Member States, and the Commission must support them in this task, being mindful of the need for the Member States to have proportionate responses to combat “abuses”. 3. Monitoring recent national legislation aimed at curtailing social tourism, such as in Germany or Great Britain. 4. Review of information and consultation rights. The Commission has completed its “fitness check”, which has allowed it to ascertain the effectiveness of these rights provided by several directives. However, in some respects, it should initiate a consultation of the European social partners with a view to revising these directives, although the review would be limited to certain technical aspects. At the same time, the Commission should also launch its report on the application of the revised directive on European works councils next year, with a preparatory study to verify if the aims of the directive have been achieved. These are four important points on the European commissioner’s future road map.

• Support from the European Globalisation Adjustment Fund: On 5 September the European Commission put forward a proposal to grant aid to Belgium to the tune of 911,934 euros from the European Globalisation Adjustment Fund (EGF), to help 752 former employees of the steelmaker Carsid S.A. to find new jobs (see Commission press release). On 22 August it proposed that the EGF be mobilised to assist 479 workers in Genk made redundant by the car manufacturer Ford and its suppliers with finding re-employment (see Commission press release). On 12 August the Commission likewise suggested that support be provided to 300 workers made redundant in the metal sector in the Valencia region (see Commission press release).


• Working time directive: At the beginning of July the European Commission launched a consultation involving the national social partners concerning the application of directive 2003/88 relating to working hours. The replies will allow the Commission to gain an insight prior to initiating the process for reviewing the directive at the beginning of 2015.

• Compatibility between an actuarial factor and the principle of equality between women and men: The European Court of Justice has ruled in a case concerning the use, as an actuarial factor, of the different life expectancies of men and women (CJEU 3 September 2014, case C-318-13, X). An employee who was injured in an accident at work had received a lump-sum payment of compensation under the national social security system of close to 4200 euros. However, he submitted a claim for the amount of just under 279 euros, plus late-payment interest thereon, as the difference between the compensation he received and that payable to a women of the same age in a comparable situation. This discrepancy is explained by reference to an actuarial calculation which takes the different life expectancies of the sexes into account. The Court had never before expressly ruled in its case law on the legality of taking actuarial factors based on sex into account when determining payments granted under a statutory social security system. This has now been done: the application of such an actuarial factor cannot lead to the lump-sum benefit paid to a man being “less than that which would be paid to a woman of the same age and in a similar situation.”

• New employment legislation: The European Labour Law Network in its recent highlights section announced the adoption of a new law (Labour Act 2014) which entered force on 7 August 2014 and was the result of protracted negotiations between the social partners. The provisions concerning European works councils and employee involvement in European Companies (SE) and European Cooperative Societies (SCE) are no longer included in the law, but are dealt with separately. With regard to working hours, the text allows for exemptions from weekly working time limits, subject to collective agreement, permitting an average 45-hour maximum to be set over a period of four months. In other respects, it has become more difficult to initiate collective redundancies.

• Minimum wage: The social partners and the government on 4 September failed to reach agreement on the proposal to increase the minimum wage in 2015 by 700 koruna (25 euros). Currently standing at 8,500 koruna (309 euros), the minimum wage had gone up by 500 koruna (18 euros) for the first time since 2007, in August 2013. In June, the three parties had already agreed a rise of 500 koruna (18 euros), which the Confederation of Industry has now refused to go beyond.

• Wages: The Estonian Trade Union Confederation organised a conference on 27 August on ways of accelerating wage rises (information in Estonian).

• Law on gender equality: The new law No. 2014-873 dated 4 August 2014 concerning real equality between women and men” contains several measures with social implications, such as sharing the benefit paid by the family allowance agencies to compensate for the loss of income of a parent who gives up employment to take care of his/her child. By sharing this benefit between the two parents, the law aims to encourage fathers to take parental leave (which is extended if shared by both parents).


• New law to encourage employee buyouts: Law No. 2014-856 dated 31 July 2014 relating to the social and solidarity-based economy is intended to encourage ownership of small and medium-sized enterprises by their employees and reinforces the sanctions envisaged by the so-called “Florange law” by authorising the labour inspectorate to reject an employment protection plan if the employer (having at least 1,000 employees) has failed to comply with its obligation to find a new owner. In other respects, the law creates an obligation to inform the employees in the event of a stake representing more than 50 % of the shares in a company being sold, otherwise the sale will be rendered invalid. The objective is to allow the workforce to submit a purchase bid.


• Improving social dialogue: On 29 July, the labour minister sent a policy paper (in French) to the social partners, inviting them to initiate negotiations at interprofessional level on the quality and effectiveness of social dialogue in companies and improving worker representation. The talks will begin in September and are scheduled for completion by the end of the year so that the outcomes can be included in a draft law. Particular priorities are to find specific forms of employee representation in small enterprises, to streamline the various obligations surrounding collective bargaining and to simplify the structure of the various staff representative bodies.

• Occupational health and safety: The German cabinet on 27 August 2014 adopted a recast ordinance on occupational health and safety (Betriebssicherheitsverordnung). The reform aims to improve industrial safety when work equipment is being used by employees and to protect third parties. In parallel, it reduces regulatory constraints on SMEs in order to improve implementation of the legislation, while at the same time exempting businesses from certain formalities. The reform also seeks to make provision for the continuing employment of older workers.

• New law on insolvency procedure: The preceding legislation on insolvency procedures (law No. 85/2006), in the event of an employer’s insolvency or bankruptcy, derogated from the provisions of the labour code. In fact, it allowed for the liquidator to authorise the termination of employment contracts as an emergency measure without applying the procedure applicable to collective dismissals. However, several cases were determined not to comply with directive 98/59 on collective redundancies. As a result, the new law No. 85/2014 on insolvency procedures and the prevention of insolvency (published on 25 June 2014) revokes the previous law and imposes a new set of rules compatible with the provisions of the EU. According to the new law, the decision to terminate employment contracts can be taken by the judicial administrator or the liquidator only with due regard for the information and consultation obligations envisaged in the case of collective redundancy by directive 98/59.


• Day of leave to care for children’s health: Law No. 91/2014, published on 3 July 2014, grants parents or a child’s legal guardian a day’s unpaid leave to ascertain the state of health of their child. The day’s leave is granted when requested by the parents or the legal guardian. Its provision must be justified by a medical certificate from the child’s general practitioner indicating that the child has undertaken a medical examination. Failure to comply with this new rule on the part of the employer constitutes a violation punishable by a fine issued by the labour inspectorate.

• Validation of the collective negotiation system: The constitutional court (Sentencia 119/2014) on 16 July issued an important decision by declaring constitutional the most controversial provisions of the 2012 labour market reform. Thus, the court validated: 1. The supremacy of company level collective agreements over sectoral collective agreements; 2. The new employment contract which permits a trial period of one year; 3. Compulsory referral to arbitration before the national council for collective negotiation in cases where companies seek to withdraw from collective agreements.

• Manpower: The high court of Paris (tribunal de grande instance (TGI) de Paris) on 17 July 2014 issued an order rejecting an appeal lodged by several trade unions which were contesting the procedure for appointing the members of the special negotiating body (SNB) initiated by the management of the British subsidiary of Manpower, believing that it was the responsibility of the French management to initiate such a negotiation. The management in France (that is to say of the country having the most employees in Europe) was in fact approached by the French trade union CGT as well as the Italian unions CGIL, CISL and UIL to commence a negotiation. However, the group explained in its defence that, several years earlier, it had appointed the British management to represent it in connection with setting up a European works council. This argument was accepted by the court. Another appeal has been filed by the British trade union Unite with the Central Arbitration Committee in the United Kingdom. The first meeting of the SNB was held on 4 September in London.


• Lafarge/Holcim: With the merger of the Swiss and French cement groups Holcim and Lafarge in full swing, the IndustriAll Global Union international trade union federation and the European Federation of Building and Wood Workers on July 22 met representatives of the restricted committees of the European works councils of both groups. The trade unions voiced their concerns about jobs and, in a press release, denounced the process of information and consultation in the two entities as inadequate for discussion of the situation.

• BNP Paribas: The French bank BNP Paribas will, on 16 September, sign its second European agreement with the UNI Europa European trade union federation and the European Federation of Credit Establishment Managerial Staff (Fecec). Following on from the first European framework agreement on employment management, the new accord focuses on equality at work. The social partners will then begin work on a third negotiation about preventing psychosocial risks.


• Indosat: The UNI Global Union trade union federation and the Indonesian telecommunications group have signed an international framework agreement (see UNI press release). This is the fourth such agreement signed with an Indonesian company.

• Unemployment rate stable in July: In the European Union, the seasonally adjusted unemployment rate was 10.2 % in July 2014, unchanged over June 2014, but down on the 10.9 % figure of July 2013, according to a Eurostat press release on 29 August.


• Unemployment among citizens from non-EU countries: According to a Eurostat press release of 30 July, the unemployment rate for non-EU citizens (21.3%) aged 20 to 64 was more than twice the level of that for citizens of the reporting country (10.0%), referred to as “nationals”. As regards employment, the rate for non-EU citizens aged 20 to 64 in the EU stood at 56.1%, while it was 68.9% for nationals.


• Focus on trade unionism in Germany: The Friedrich Ebert Foundation has published a study (“The DGB Trade Unions since the Crisis“) which analyses the successes and weaknesses of Germany’s principal trade union confederation, the DGB, which has more than 6 million members. The authors believe that a shift could take place in the division of labour among the DGB trade unions, and that the role of the DGB as umbrella organisation could be accentuated in the coming years.

More commonly known as the European budgetary pact, this treaty is a mechanism adopted by 25 Member States of the EU to enhance convergence within their economic and monetary union, particularly within the euro area. Its objective is to obtain budgets that are in balance or in surplus. Signed on 2 March 2012, it entered force on 1 January 2013, having been ratified by 12 states in the euro area. It will be incorporated in the treaties within the next five years. In terms of impact on industrial relations, this treaty underpins the austerity and cost-cutting measures undertaken by the Member States which are translated in particular in the public sector by job cuts, wage freezes and, more generally, cuts in social services. It should not be confused with the stability and growth pact adopted in 1997, which encourages members of the euro area to coordinate their national budgetary policies and avoid the occurrence of excessive public deficits. See the Eurofound European Industrial Relations Dictionary (in English) for further information.