IR Notes

On 10 March, by a very large majority (504 votes in favour, 79 against and 112 abstentions), the European Parliament passed a resolution on corporate due diligence and corporate accountability) (see press release issued by Parliament), which, for the most part, follows the recommendations made in the report adopted by the Legal Affairs Committee in February of this year (see IR Notes 157). Noting that efforts to achieve self-regulation by introducing voluntary corporate accountability initiatives have been ineffective, Parliament is now demanding that a directive be passed, imposing obligations on companies. To this end, MEPs have drawn up a proposal for a directive that the European Commission will have to take into account when it puts forward its own proposal in June. The aim is to ensure that companies meet their obligations in terms of respect for human rights, the environment and good governance, wherever they operate in the world. The MEPs’ proposal is aimed at ensuring that undertakings “do not cause or contribute to potential or actual adverse impacts on human rights, the environment and good governance through their own activities or those directly linked to their operations, products or services by a business relationship or in their value chains, and that they prevent and mitigate those adverse impacts” (Article 1). This best efforts obligation extends to large undertakings and high-risk or publicly listed small and medium-sized undertakings, a notion that will have to be defined in more detail by the future directive, taking “into account the sector of the undertaking or its type of activities” but disregarding the size of its workforce or turnover. It is noteworthy that MEPs firmly rejected an amendment seeking to exclude small and medium-sized undertakings from the directive’s scope of application. Undertakings will be required to draw up a “due diligence strategy” for risk assessment purposes, including within their chain of sub-contractors and suppliers, and to adopt “proportionate and commensurate policies and measures with a view to ceasing, preventing or mitigating potential or actual adverse impacts on human rights, the environment or good governance”. Member States will be required to guarantee “the right for trade unions at the relevant level, including sectoral, national, European and global levels, and for workers’ representatives to be involved in the establishment and implementation of the due diligence strategy in good faith with their undertaking”. Workers’ representatives, including European Works Councils (EWCs) and European Company Works Councils (SE-WCs), will have to be kept informed of the company’s due diligence strategy and its implementation. An amendment has also been adopted to prevent undertakings explicitly passing the burden of their obligation on to their sub-contractors.
(Photo: Relatives are sourcing near on with portrait after Rana plaza collapsed at Enam Medical college hospital Savar, Bangladesh on 21 April 2013).

Minimum wage: : Following a request submitted by several Member States, the Legal Service of the EU Council has issued its opinion on the European Commission’s proposal for a directive in favour of adequate minimum wages in the EU (see IR Notes no. 151). In particular, the legal experts were asked to examine the legal basis of the proposal: is the Commission entitled to put forward a binding instrument concerning minimum wages under the powers devolved to it by the Treaty in the area of improving working conditions (Article 153 Recital 1), even though Article 153 Recital 5 states that the Union has no competence in terms of pay? For the most part, the opinion validates the proposal. Its provisions do not seek to establish the level of minimum wages and do not constitute direct interference in the area of setting wages in Member States. However, the Legal Service suggests either adjusting or deleting Article 6, which calls on Member States to “limit the use of statutory minimum wage variations and their application in time and extent” and to protect “statutory minimum wages against unjustified or disproportionate deductions”. These provisions limit the choices available to States and therefore interfere directly with the determination of pay, which is prohibited.

• Due diligence (reactions) : For the international NGOs mobilised by Global Witness (see press release), the French NGOs that campaigned for a French due diligence law (see press release) and the European trade union movement (see ETUC press release), the adoption of the proposal for a directive on due diligence (see Lead story) is already a major victory. These actors intend to remain mobilised, to ensure both that the Commission does not alter the substance of this text when it puts forward its future proposal and that a number of shortcomings are remedied.
  > Find out more: See the documents published on line by the European Parliamentary Research Service: 1/ EPRS Study: Corporate due diligence and corporate accountability; 2/ EPRS Briefing: Towards a mandatory EU system of due diligence for supply chains.

• Roma inclusion strategy : The Council has adopted a “recommendation on Roma equality, inclusion and participation” (see Council press release), inviting Member States to draw up national strategic frameworks by September 2021 and setting objectives to be achieved, in particular to promote access to employment for Roma.

Combining contracts with the same employer and consequences for rest periods : The Academy of Economic Studies in Bucharest (ASE) signed several contracts of employment with a number of researchers, who were hired to undertake various missions. As a result, these researchers combined the hours making up their initial contract of employment, i.e. eight hours per day, with the hours they spent carrying out other EU-funded research projects. This meant that over a period of several months, they had to work more than 13 hours per day, i.e. without benefitting from a minimum rest period of eleven consecutive hours between two working days, as provided for by Article 3 of Directive 2003/88. The Bucharest Regional Court asked the EU Court of Justice whether, in circumstances where a worker has signed several contracts of employment with the same employer, the minimum daily rest period of 11 hours applies to these contracts taken together or to each of the said contracts taken separately. The Court points out that: 1/ the right of every worker to a limitation of maximum working hours and to rest periods, and in particular daily rest periods, not only constitutes a rule of EU social law of particular importance, but is also expressly enshrined in the EU Charter of Fundamental Rights; 2/ the concept of a ‘rest period and the concept of ‘working time’ are mutually exclusive and Directive 2003/88 does not provide for any intermediate category between working time and rest periods. In the case of these researchers, hours considered to constitute rest periods under one contract might constitute working time under another contract. However, given that the same period of time cannot be classified both as working time and as a rest period, contracts of employment concluded by a worker with the same employer must be examined together. Consequently, where a worker has signed several contracts of employment with the same employer, the minimum daily rest period applies to these contracts taken together and not to each of the said contracts taken separately. If it were to apply to each contract, “the guarantee of that worker’s improved protection would thereby be undermined, since, by the combination of working time provided for separately by each of the contracts concluded with the employer it would be impossible to guarantee the daily rest period of 11 consecutive hours for each 24-hour period, even though that period has been considered by the EU legislature to enable the worker to be able to recover from the fatigue inherent in daily work.” It should be noted that the Court does not issue a ruling on the case of a worker who has accumulated contracts of employment with several employers (CJEU, 17 March 2021, Case C-585/19, Academia de Studii Economice din Bucuresti).

Classification of periods of time spent on stand-by duty : The Working Time Directive 2003/88 of 4 November 2003 (see Working time) includes two mutually exclusive concepts: ‘working time’, which constitutes any period during which the worker is working, at the employer’s disposal and carrying out his activity or duties, while the concept of a ‘rest period’ means any period which is not working time (see Rest periods). So how should stand-by duty, i.e. periods during which an employee is not carrying out his activity but is ready to intervene at any time, be classified? Are they working time or rest periods? The Court of Justice refused to add an intermediate category between these two concepts when it issued two rulings on the same day, delivering precise interpretation keys for use in classifying these periods of time spent on stand-by duty (CJEU, 9 March 2021, Case C-344/19, D.J. and Case C-580/19, R.J). Once case involves a firefighter who is required to be reachable at any time, so that he can intervene within his own town boundary if required, within 20 minutes (Case C-580/19). The other case involves a technician who maintains transmitters at a remote site in the mountains, and who may be contacted and have to travel from the accommodation provided by his employer to his workplace within a time limit of one hour, if necessary (Case C-344/19). Do the periods during which these employees are not working constitute rest periods? The Court of Justice explains that “a period of stand-by time during which the worker may, taking into account the reasonable time period allowed for him or her to resume his or her professional activities, plan his or her personal and social activities does not, a priori, constitute ‘working time’”. “Conversely, a period of stand-by time during which the time limit within which the worker is required to return to work is limited to a few minutes must, in principle, be regarded, in its entirety, as ‘working time’, since in that case the worker is, in practice, strongly dissuaded from planning any kind of recreational activity, even of a short duration.” However “the impact of such a time limit within which the worker has to react must be evaluated following a concrete assessment that takes into account, as appropriate, the other constraints imposed on the worker, just as in the case of the facilities granted to him or her during the period of stand-by time”. The Court thus invites a case-by-case analysis. If the worker is, on average, frequently called upon to provide services during his or her periods of stand-by time and, as a general rule, those services are not of a short duration, the entirety of those periods constitutes, in principle, ‘working time’. If the worker is only rarely called upon to act during the periods of stand-by time, these periods can be regarded as ‘rest periods’, but the situation is different if “the impact of the time limit imposed on the worker to return to his or her professional activities is such that it suffices to constrain, objectively and very significantly, the ability that he or she has freely to manage, during those periods, the time during which his or her professional services are not required”.
> Note: An important point in the ruling is that the Court states, in light of Framework Directive 89/391 on Health and Safety (see Framework Directive on health and safety), that “having regard to their obligation to protect workers against psychosocial risks that may arise in their working environment, employers cannot establish periods of stand-by time for their employees that are so long or so frequent that they constitute a risk to the safety or health of workers, irrespective of those periods being classified as ‘rest periods’”.

Insurance : After the telecoms sector (see IR Notes 154), it was the turn of the European social partners in the insurance sector to adopt a Joint Declaration on Artificial Intelligence (AI), on 16 March. According to the signatories, “it is important that the social partners engage in social dialogue” to promote the responsible use of AI. This includes: 1/ ensuring that “those concerned are able to challenge the outcome, decision or recommendation produced by AI”; 2 / ensuring that “the use of AI systems follows the principles of fairness, i.e. ensuring that employees are free from unfair bias and discrimination”; 3/ preventing any potential impacts on the health and safety of employees that could arise from the use of AI; 4/ ensuring information and consultation rights for employees and their representatives. The declaration also addresses the use of AI in human resources management and the idea of working towards a ‘people plan’ to introduce the responsible use of AI in mapping employees’ skill profiles, and in determining reskilling and upskilling needs.

Supervision of digital platforms : The Ministry of Employment and the social partners have reached a brief but innovative agreement on the status of platform workers: 1/ a presumption is created that delivery platform workers will be employees: persons who provide paid services involving the delivery or distribution of any consumer products or goods for employers who, via a digital platform, exercise commercial powers of organisation, management and control over them – either directly, indirectly or implicitly – by means of algorithmic management of the service provided or of their working conditions, will be presumed to be employees. 2/ For all platform companies: there will be an obligation to inform “the workers’ lawful representation body” of the “rules contained in algorithms and artificial intelligence systems that may affect the working conditions governing platforms, including access and maintaining employment and profiling”. According to Minister of Employment Yolanda Diaz, the aim is to neutralise “algorithmic sanctions”. (see joint press release).

Returning to work : On 13 March, the Department of Enterprise, Trade and Employment published a revision of the Return to Work Safely Protocol. The new document is called the “Work Safely Protocol” and incorporates the current advice on the Public Health measures needed to reduce the spread of COVID-19 in workplaces. Like the original protocol, this revision was carried out in consultation with the social partner members of the Labour Employer Economic Forum and was strongly supported by them.

• Short-time working: : On 19 March, the coalition parties adopted a new short-time working scheme (Kurzarbeit), to tackle the Covid-19 crisis. The social partners are calling for the final version of these short-time working arrangements to be quickly adopted by the government.

Creation : on 15 December 2020, the Swiss airport ground services group Swissport established a European Works Council by means of an agreement concluded under Irish law. The select committee can meet in exceptional circumstances if three cumulative conditions are met: the project must concern 5% of the group’s workforce within the EU, 50 or more employees in one State and 50 or more employees in another State. If the annual meeting cannot reasonably be organised, exceptionally the parties will be entitled to use videoconferencing. What is more unusual is that management is not obliged to inform and consult the EWC regarding any plans envisaged before the agreement was signed, in order not to hamper the group’s efforts to remedy the situation. Lastly, a clause removes the United Kingdom from the EWC’s scope of competence.

Conversion : As part of the process of converting the group into a European company, on 28 January the management of Valéo signed an agreement relating to the European Company Committee. The agreement allows the executive committee to hold a meeting via videoconferencing on a subject that does not require an information procedure to be initiated. Alternates can take part in plenary and preparatory meetings where they are organised remotely, even if titular representatives are in attendance. The agreement does not apply to the United Kingdom, but the EWC can invite a UK observer to attend during the first two years of the committee’s term of office.

Digital platforms : Digital labour platforms have increased five-fold worldwide in the last decade according to the latest edition of the World Employment and Social Outlook 2021, published by the ILO. The authors call for a more effective and consistent approach to ensure decent working conditions for platform workers (see press release).