IR Notes

The European Court of Justice has delivered a judgement on a politically very sensitive and highly controversial issue concerning the alleged damage done by “benefit tourism”. In this case, a Romanian woman residing in Germany with her young son, who was born in Germany, was refused a non-contributory benefit (i.e. financed by taxes and not by social security contributions) “intended to enable its beneficiaries to lead a life in keeping with human dignity” by the public employment service. She was already receiving child benefit (“Kindergeld”) of 184 euros per month and another benefit, linked to the fact that the father was unknown (an advance on maintenance payments), of 133 euros per month. The woman twice applied for benefits by way of the basic provision under unemployment insurance (Arbeitslosengeld II / Sozialgeld) which, given her situation, would have allowed her to receive 391 euros (as of 1 January 2014), together with a supplement for her son, as a child under six years old, of 229 euros. The German court hearing the case wished to verify that the refusal to grant her this benefit was compliant with EU law. Six member states (Austria, Denmark, France, Germany, Ireland, United Kingdom) intervened vis-à-vis the Court of Justice, wishing it to adopt a strict position. The Court, basing its decision solely on the application of directive 2004/38 on the right of residence rather than on regulation 883/2004 on the coordination of social security systems, concluded that the directive (article 7) “seeks to prevent economically inactive Union citizens from using the host Member State’s welfare system to fund their means of subsistence”. In the opinion of the Court, “A Member State must therefore have the possibility, pursuant to Article 7 of Directive 2004/38, of refusing to grant social benefits to economically inactive Union citizens who exercise their right to freedom of movement solely in order to obtain another Member State’s social assistance although they do not have sufficient resources to claim a right of residence”. Therefore, if the examination of the state of the applicant’s financial means – which must be undertaken from case to case – reveals that he or she does not have resources sufficient to meet his or her own basic needs, the host member state is justified in not paying a special cash benefit of a non-contributory nature whose aim is to ensure the subsistence of the beneficiary. Is this the end of benefit tourism? No, this is a relatively marginal case of an economically inactive individual who moves to another country of the EU without seeking employment on that country’s soil. This is very far from being true of most people who move to another country, who are looking to find work – a mobility which itself remains marginal, compared to the active population as a whole, and is consequently far from destabilising the social security systems of the member states.

• Work programme of the European Commission: The new European Commission on 12 November explained that it was going to prepare its 2015 work programme in liaison with the European Parliament and the member states. The aim is to adopt the 2015 Work Programme in mid-December (see press release, in English).


• Trade union position on the role of European works councils: The European Trade Union Confederation (ETUC) published a document to coincide with its annual EWC conference on 30 September – 1 October, on the role of European works councils in health and safety and the anticipation of change, which was discussed during the conference (the text is also available in Italian and Polish).


• Trade union position on the right to information and consultation: The executive committee of the ETUC at its meeting on 21-22 October adopted a resolution entitled “Towards a new framework for more democracy at work” which calls for a single directive which “should set high standards on information and consultation, and introduce ambitious minimum standards on workers’ board level representation as an additional source of workers’ influence” regardless of the company form. This marks a key contribution at a time when the European Commission is due to start work on a “consolidation” of the different existing directives relating to information and consultation, while at the same time preparing its report on the application of the recast directive on European works councils. This area is regarded as dangerous by Anglo-Saxon employers in particular, which fear new, related constraints.


• Assistance from the European Globalisation Adjustment Fund: The European Commission on 11 November 2014 proposed to grant 25.9 million euros from the European Globalisation Adjustment Fund (EGF) to help 3,886 of the 5,213 employees laid off by the French airline Air France to find new jobs (see Commission press release). It also requested payment of 6.4 million euros to Greece to help 600 former workers of the Fokas department stores (see Commission press release), and finally, it proposed to provide an envelope of 1.2 million euros to Poland to help 777 workers made redundant by the car maker Fiat Auto Poland (see Commission press release).

• A guide to awarding public contracts for private security services: The European social partners in the private security sector – UNI Europa and CoESS – have updated their “Best value manual” intended for the use of contracting authorities so that, when selecting a private security provider, they choose the offer giving the best price-quality ratio, rather than systematically choosing the lowest bid (see UNI Europa press release). The manual, which is translated in 14 languages, will be made available online by the social partners in the near future.

• Employees without a residence permit are protected by the “insolvency directive”: A Turkish worker lost his right to residence in the Netherlands following his divorce. He continued to work for his employer, but the latter became bankrupt. The worker, who had not been paid for nearly six months, saw any entitlement to the guaranteed payment of the wages owed denied on the grounds that he did not have a legal residence permit. The European Court of Justice considered that directive 80/987 of 23 October 1980 benefits all employees, including those from third countries who are not legally resident in the member state concerned (CJEU 5 November 2014, case C-311/13, Tümer). In any event, if national legislation excludes those employees from the salary guarantee system, they nevertheless must be offered equivalent protection, which was not the case under Dutch legislation. The Court also pointed out the “social objective of that directive, which is to guarantee employees a minimum of protection at EU level”.


• An employer can reduce an allowance paid to a part-time worker: The European Court of Justice has ruled on a case concerning the payment of a dependent child allowance to employees covered by the collective agreement of the banking sector in Austria (CJEU 5 November 2014, C-476/12, Österreichischer Gewerkschaftsbund). Can an employer reduce the amount of the allowance when it is paid to a part-time worker on a pro rata basis according to the hours worked compared to those of a full-time employee? Does this constitute discrimination against part-time workers contrary to Clause 4 of the Framework Agreement on part-time work (annexed to directive 97/81), which provides that such workers “shall not be treated in a less favourable manner than comparable full-time workers solely because they work part time”. In the opinion of the Court, this allowance represents additional remuneration in the meaning of article 157 of the Treaty and “it must be held that the calculation of the dependent child allowance in accordance with the principle of pro rata temporis is objectively justified, within the meaning of Clause 4.1 of the Framework agreement on part-time work, and appropriate within the meaning of Clause 4.2 thereof”.

• Wage increase or time off in the metalworking industry: The social partners in the metalworking sector (180,000 employees) on 5 November sealed a new unified collective agreement which provides for a 2.1% pay rise. However, in certain sectors (mining, steel and car manufacture), company-level agreements can convert the increase into time off, of 38.5 hours (see press release of the PRO GE trade union).

• Adoption of a strategy for equality of men and women: On 12 November the government adopted a strategy for equality of men and women (in Czech) (for the period 2015-2020) whose principal objectives are as follows: 1. To increase the representation of women in positions of power (in politics but also in business) to a level of 40% (as envisaged by the proposal for a directive of the European Commission); 2. To increase the female employment rate of women to 65%; 3. To reduce the wage gap between women and men, currently estimated at 22%, to the EU average (16.4%); 4. To raise the proportion of flexible work forms to 20%; 5. To meet the Barcelona objectives concerning childcare facilities for pre-school-age children. According to the “Global Gender Gap 2014” report published in October by the World Economic Forum, the Czech Republic is in 96th position out of 142 countries as regards equality of opportunity, the worst score of the EU apart from Malta.

• IG Metall calls for 5.5% pay rise: Following the recommendations of its regional sections, the IG Metall trade union for Germany’s metalworking industry on 11 November fixed the level of its pay claim in the context of renegotiating the sectoral collective agreement. IG Metall proposes a rise of 5.5%, which has still to be endorsed by the relevant trade union instances. The current collective agreement runs out at the end of December. The union is also seeking a right to continuing professional development and an improvement in the system of part-time employment for employees approaching retirement (see IG Metall press release, in German).

• Three collective agreements made compulsory: The council of government on 7 November approved the general extension of the 2014-2016 collective labour agreement for bank workers. The same applies to an amendment of the collective agreement applicable to the staff of security companies and the collective labour agreement on working conditions for seafarers.

• Plan supporting social responsibility by enterprises: The council of ministers on 24 October passed a resolution on the Spanish strategy for corporate social responsibility (CSR) 2014-2020 which comprises 60 measures aimed at strengthening the social responsibility of Spanish enterprises (see press release of the minister of labour, in Spanish).

Falck: The Danish emergency service group Falck (10,000 employees) in July revised its 2005 EWC agreement to take the provisions of directive 2009/38 into account. The new agreement was signed in October. The EWC comprises one member per country having more than 200 employees, plus one additional representative when the number of employees rises above 1,000 and a third representative for countries with more than 5,000 employees. The agreement states that the country in which the company has its head-office (Denmark) will always be represented by three members. The signatories undertake to hold all their meetings in English from 2015 (see press release of the European Federation of Public Service Unions (EPSU), and the EWC can invite representatives of employees from non-EU countries to attend its meetings.

• Crédit Mutuel Nord Europe: A request has been sent by Belgian and French trade unions to the management of the Crédit Mutuel Nord Europe cooperative bank, which has establishments in northern France, Belgium and Luxembourg, to set up a European works council (see UNI Finance press release).


• Sulzer Group: The EWC agreement of the Swiss industrial engineering and manufacturing company Sulzer (6,000 employees) was revised on 3 June 2014. The new agreement, which remains an anticipatory agreement as indicated by the signatories, is accompanied by rules of procedure which lay down the working methods and resources of the EWC.

• Deutsche Telekom: The alliance of trade unions represented within German telecommunications group Deutsche Telekom’s operations in central and eastern Europe (CEE Union Alliance) met in Bucharest on 30 – 31 October, at the initiative of UNI Global Union (see UNI Europa press release).

• AEON: The management of the Japanese retail giant AEON (420,000 employees) on 10 November signed a global framework agreement guaranteeing fundamental social rights with the international trade union federation UNI Global Union (see press release of UNI Global Union).

• One-quarter of Europeans are exposed to the risk of poverty: According to a study published by Eurostat, 24.5% of Europeans were at risk of poverty or social exclusion in 2013, that is to say 122.6 million people. The number of EU citizens in this situation has gone up compared to 2008, which has put paid to the EU objective, adopted in 2010, of bringing 20 million people out of poverty by 2020.


• Impact of unemployment insurance for the euro area: The research services of the European Parliament in September published a study on the effects of an unemployment insurance system for the euro area which would play a stabilising role within the economic and monetary union. Such a scheme would have reduced the fall in GDP in the Eurozone states by 71 billon euros in the period between 2009 and 2012 (see Cost of Non-Europe – an Unemployment Insurance Scheme for the euro area, in English).

The case decided by the European Court of Justice relating to “benefit tourism” (see Lead story), highlights directive 2004/38 of 29 April 2004, which puts into practice the right to free movement of European citizens. Initially limited to workers, the right to move freely was gradually extended until the Maastricht Treaty in 1992, which introduced the concept of citizenship of the European Union, conferring on every Union citizen a fundamental and personal right to move and reside freely without reference to an economic activity. For a period of residence lasting more than three months, however, citizens must prove that they have sufficient resources not “to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State”. Find out more from the European Industrial Relations Dictionary (in English).