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21 July 2009 : Column 255WH—continued
I know that the Minister wants to spring into the debate and answer some of the questions I am throwing up, so I shall put some specific questions to him. First, will he make the bold and responsible move of considering
an urgent change in domestic law to guarantee that the posted workers directive is implemented to the fullest extent possible in order to require the minimum wage payable by contractors to be higher than the minimum set down under the National Minimum Wage Act 1998? I am told that that could be done easily by requiring posting employers-to use the correct legislative terminology, or bosses who send workers to this country-to comply with wage agreements set by appropriate collective agreements that apply to particular sectors in given geographical areas. The Minister will be aware, because he will have done his research, that I asked the Prime Minister about precisely this point on 4 February 2009, when I asked what measures were being taken to improve the posted workers directive. The Prime Minister said that some work was being done, but I have not been updated about it since; perhaps the Minister can update me.
Secondly, does the Minister agree that in relation to the posted workers directive, we should introduce a system of declaring collective agreements as universally applicable? Thirdly, is he supportive of the European TUC's draft social protocol as a way of moving forward on protecting working people?
Fourthly, the Minister will be aware that the Government will submit to the International Labour Organisation, by 1 September, their report on ILO conventions 87 and 98. Will they express concern that the ECJ rulings mean that it sees trade unions as regulatory bodies that are equivalent to an arm of state, which is in direct contradiction to the underlying purposes of the freedom of association? Will they also say that the right of trade unions to take industrial action is being subordinated to overriding commercial interests so that the trade unions will always have to be justified as permitted restrictions to those freedoms? What will they say in their report to the ILO about compliance with ILO conventions 87 and 98 by reference to the impact of the four ECJ judgments on the UK? If the Minister is not in a position to respond to those points today, I am sure he will write to me.
Let me draw my remarks to a close and allow the Minister to respond. The ECJ decisions come at time that is crucial to the European unification process. We have increased economic integration together with reduced social protection; that is a highly explosive combination. Radical steps have to be taken by those who support the European project. The support of European citizens and workers will be secured only if the fundamental importance of social progress is at the forefront of all policies. Working people want a social Europe, and they will reject a market Europe.
1.48 pm
The Minister for Business, Innovation and Skills (Mr. Pat McFadden): It is good to see you in the Chair, Mr. Martlew. Like my hon. Friend the Member for Elmet (Colin Burgon), I, too, welcome you. I should also like to express my gratitude to him for securing this debate, because the European Court of Justice rulings that he has discussed have generated much discussion in recent months. I am glad to take the opportunity to set out the position and perhaps even to shed a little light on what can be a complicated area of legislation.
As my hon. Friend said, the underlying context for the Court's judgments is the posted workers directive, which came into force some 10 years ago. It operates
throughout the EU and allows companies to post their workers to another member state on a temporary basis in any sector of the economy. Its intention was to protect the posted worker and to ensure that he or she had access to at least the minimum conditions applying in the host country, rather than carrying what may be significantly poorer employment rights and standards from the country of origin.
The directive clearly states that companies must abide by the minimum worker protections in the host country, whether defined by national law or a universally applicable collective agreement. In the UK, that means that people are entitled to a range of universal protections that this Government have worked to develop: the national minimum wage, default limits on working hours, annual holidays, health and safety legislation and equality legislation.
My hon. Friend went through the judgments in some detail. I hope that I will not be too repetitive if I touch on several of them. As he said, the Viking case related to a Finnish operator that wanted to register its vessel to sail under the Estonian flag. The Finnish unions opposed that because the Estonian-Finnish crew would not need to be covered by the provisions of the Finnish collective agreement, and Viking sought an injunction against the unions' action. The Court ruled that the right to strike is a fundamental one, as recognised by the charter of fundamental rights, and that exercising the right can, as a matter of principle, legitimately interfere with single-market principles. But it also concluded that, in this instance, the extent of such interference went beyond what could be considered appropriate or proportionate.
As my hon. Friend said, the Laval ruling relates to a Latvian company that won a contract to refurbish a school. The company declined to sign the Swedish collective agreement, and the Swedish trade unions blockaded the school site. Laval's application to the Swedish court was referred to the ECJ, which reaffirmed its conclusion that the right to strike was a fundamental one but also concluded that, in this instance, the unions could not insist on Laval's participating in or being bound by the Swedish collective agreement because it had not been declared as being of universal application. My hon. Friend referred to that in his speech.
The Ruffert case was not so much about the right to strike as about the application of collective agreements. In that case, the Court found in favour of the company, again on the grounds that the collective agreement was not of universal application because it applied only to public sector contracts and only in one part of Germany.
All those cases deal with the balance that the directive seeks to strike between the freedom to provide services and the protection of workers' rights. The issue then is the real interpretation of the judgments, and how we should respond. Many trade unions, parts of the European Parliament and my hon. Friend have expressed concern about the rulings. The contention is that they have altered the balance of industrial relations, tipping it away from the right to strike and towards the freedom to provide services. As a result, some people have called for a review of the directive and demanded that the EU look again at the balance between workers' protection and the freedom to provide services.
Demands around the directive have also been fuelled by the recession, in which job competition is inevitably much tougher than during better times. Such issues of
course become more urgent when people are losing their jobs. We saw some of the effects of that in the industrial unrest earlier this year, to which my hon. Friend referred, which took place after the loss of several thousand jobs in the construction engineering sector.
I do not want to get too side-tracked by those disputes, but the contention was that the Italian posted workers were being paid less than the UK workers. The Government asked ACAS to step in. We wanted to try to get to the bottom of the matter, and to use the good offices of ACAS to help resolve a situation that involved a heated industrial dispute. I quote from ACAS's conclusions:
"Acas' inquiry has found no evidence that Total"-
the principal employer on the site-
"Jacobs Engineering"-
"or IREM"-
"have broken the law in relation to the use of posted workers or entered into unlawful recruitment practices. We have also received assurances from management that they will abide by NAECI agreement"-
which is the collective agreement governing workers in the construction engineering industry. What was contested was whether the collective agreement had been broken in the circumstances, and ACAS found that it had not been.
The judgments have given rise to concerns, as I said, particularly among trade unions. Through significant improvements to the position of people at work, we have over the years enhanced the protection to which posted workers in the UK are entitled. They are entitled to the protections in legislation on the national minimum wage, working hours, health and safety and so on.
Colin Burgon: I am conscious of the time, and I do not want to go over ground that has already been covered. I asked the Minister several specific questions to which, given the time, he obviously will not be able to respond verbally. Could I have his assurance that he will come back to me with written replies to the questions that I put to him?
Mr. McFadden: I am, of course, happy to write to my hon. Friend. The principal question that he asked, in several ways, was whether the Government would declare collective agreements universally applicable. The issue is important, because the existence of such a system will affect whether the rulings have a particular effect in individual countries.
We do not have a tradition of universally applicable collective agreements. The tradition supported up until now by trade unions has been for a voluntarist approach on collective agreements, which means that they are not applicable to those who do not sign them. I counsel some caution in this debate on posted workers, because that would be true of contractors from another country and also contractors from within the UK.
Therefore, I am glad that my hon. Friend said that he did not want this to be a debate about migrant workers. The interpretation of our collective bargaining law is
not concerned with migrant workers but with the parties to individual agreements. I hope that gives him some guidance on the issue.
What else has happened in Europe on this matter? I was present at the Employment and Social Affairs Council-my hon. Friend referred to his question on this to the Prime Minister some months ago-at which the UK Government supported the Commission's proposal to establish a high-level expert group to look at the operation of the posted workers directive. The group has been established and has begun to meet-I believe that it has met twice-and research has been commissioned into the operation of the directive. At the same meeting, we also supported the suggestion that social partners at a European level should enter into dialogue on the effect of the Court's judgments that my hon. Friend
outlined in his speech. Again, I believe that a couple of meetings have taken place. We have supported dialogue at the European level on both those fronts.
What we want to see going forward is, of course, workers being treated fairly in the workplace, but we also want to keep the open, outward-looking trading stance that has benefited the UK and workers in the UK. There are more British posted workers abroad than there are posted workers in Britain, according to information from the EU. In conclusion, we absolutely want fairness at work, but we also want openness in trade and the free movement of people that has benefited our economy and many other countries' economies, too.
2 pm
Sitting adjourned without Question put (Standing Order No. 10(11)).
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