7 The posting of workers and the right
to take collective action
(a)
(33787)
8040/12
COM(12) 131
+ ADDs 1-3
(b)
(33788)
8042/12
COM(12) 130
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Draft Directive of the European Parliament and of the Council on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services
Draft Council Regulation on the exercise of the right to take collective action within the context of the freedom of establishment and the freedom to provide services
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Legal base | (a) Articles 53(1) and 62 TFEU; co-decision; QMV
(b) Article 352 TFEU; unanimity; EP consent
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Documents originated | (a) and (b) 21 March 2012
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Deposited in Parliament | (a) and (b) 29 March 2012
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Department | Business, Innovation and Skills
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Basis of consideration | Letter of 12 September 2012 from the Vice-President of the Commission; and Ministerial letters of 11 and 22 October 2012
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Previous Committee Reports | HC 86-i (2012-13), chapter 1 (9 May 2012);
HC 86-v (2012-13), chapter 4 (20 June 2012)
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Discussion in Council | (a) No date set
(b) Not applicable
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Committee's assessment | Legally and politically important
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Committee's decision | (a) Do not clear; further information requested
(b) Clear
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Background and previous scrutiny
7.1 In March 2012, the Commission put forward a package of two
proposals. The first, a draft Directive, proposed a number of
changes to improve the implementation and enforcement of a 1996
Directive establishing a legal framework for businesses to send
("post") workers from their home Member State to another
(host) Member State in order to provide a service on a temporary
basis. The changes were intended to:
- help identify "letter-box" companies
that use posting as a means of circumventing the application of
employment or social security rules;
- improve access to information on the core terms
and conditions of employment (including any minimum wage requirement)
applicable to posted workers in the host State;
- strengthen administrative cooperation and mutual
assistance between national authorities responsible for monitoring
the application and enforcement of the 1996 Directive; and
- provide effective mechanisms for workers to lodge
complaints and bring proceedings in the host Member State, as
well as in their home State and, in the case of construction workers,
to recover unpaid wages from their posting employer or the host
State contractor by means of joint and several liability.
7.2 The second proposal, a draft Regulation, sought
to address concerns arising from Court of Justice rulings (notably
in the Viking-Line and Laval cases) which set out
the principles to be applied by national courts in determining
whether restrictions on the exercise of fundamental economic freedoms
guaranteed by the EU Treaties are justified, particularly when
those restrictions arise from industrial action to protect the
rights of workers. The Court's rulings have polarised opinion
because, although the Court recognises the right to strike (and
other forms of collective action in defence of workers' rights)
as a fundamental right which forms an integral part of the general
principles of EU law, that right has, in practice, on the facts
of each case, given way to the exercise of economic freedoms.
7.3 The draft Regulation attempted to achieve an
equilibrium between the exercise of economic freedoms and the
protection of fundamental rights (including the right to take
collective action) by stipulating that both had an equal status
in EU law. It also:
- described the principles which apply to reconcile
fundamental rights and economic freedoms in the event of a conflict;
- required any existing extra-judicial mechanisms
for the resolution of labour disputes at national level to be
made available for labour disputes with a cross-border dimension;
and
- established an early warning mechanism to give
notice of a serious risk of disruption to the internal market.
7.4 Our First Report of 9 May 2012 provides a detailed
overview of both proposals, as well as the Government's position.
7.5 The Government questioned whether there was a
need for further regulatory action at EU level. Commenting on
the draft Directive, the Government suggested that the scale of
difficulties encountered in applying and enforcing EU rules on
posted workers (in the UK, at least) was insufficient to justify
further regulation and highlighted, in particular, its concerns
regarding the proposed introduction of a system of joint and several
liability for the construction sector which would require a change
to UK law.
7.6 Turning to the draft Regulation, the Government
accepted that it was consistent with the case law of the Court
of Justice and accurately described the role of national courts
in applying that case law and, as such, would have no further
impact on UK law. It also noted that Acas (the Advisory Conciliation
and Arbitration Service) was already available, on a voluntary
basis, to parties involved in a dispute with a cross-border dimension
and that this aspect of the draft Regulation would have minimal
impact in the UK. The Government suggested that there was a case
for EU action, on subsidiarity grounds, since only a measure which
was "European in scope" would be appropriate to clarify
the general principles and rules of EU law applicable to forms
of collective action which affect the exercise of economic freedoms.
However, it did not consider that the draft Regulation was necessary
a prerequisite for EU action based on Article 352 of the
Treaty on the Functioning of the European Union (TFEU)
and indicated that other Member States, as well as businesses
and trade unions, shared this view.
7.7 By contrast, we thought that the lack of evidence
as to the necessity of the draft Regulation went beyond the question
of legal base, raising fundamental questions about its compliance
with the principle of subsidiarity, and issued a Reasoned Opinion
to that effect.[14] As
the evidence base for the draft Directive also appeared to be
weak, we asked the Government to provide some indication of the
magnitude of the problems encountered in applying and enforcing
the 1996 Directive and the extent to which the non-payment of
wages in the construction sector presented particular difficulties
which might require more active regulatory intervention.
7.8 The Government's response, described in our Fifth
Report of 20 June 2012, indicated that non-payment of wages to
posted workers within the construction sector had not been identified
as a significant problem in the UK, and that Member States should
retain the flexibility to determine what mechanisms should be
available to secure the payment of outstanding wages. The Government
offered to provide a summary of responses to its call for evidence
on the draft Directive which would help to illuminate the extent
of the problem and possible ways to address it.
7.9 Our Report also noted that, for the first time
since the Lisbon Treaty entered into force on 1 December 2009,
the threshold required under Article 7(2) of Protocol No. 2 on
the application of the principles of subsidiarity and proportionality
to trigger a formal review of the draft Regulation on collective
action (the so-called "yellow card") had been met. Twelve
national Parliamentary chambers, together accounting for 19 of
the 54 votes allocated to national Parliaments, had issued Reasoned
Opinions contesting the compliance of the draft Regulation with
the subsidiarity principle, and the Commission had indicated that
it would proceed to review the draft Regulation and determine
whether to maintain, amend or withdraw it.
The letter of 12 September 2012 from the Vice-President
of the Commission
7.10 The Vice-President of the Commission
(Maro efèoviè), in a letter addressed
to the Speaker of the House, sets out the Commission's response
to the issuing of a "yellow card" by national Parliaments
on the draft Regulation on collective action:
"The Commission has carefully assessed the arguments
put forward by national Parliaments in their reasoned opinions,
taking note that the concerns expressed relate in particular to
the added value of the draft Regulation, the choice of the legal
basis, the EU competence to legislate on this matter, the implications
of the general principle included in Article 2 of the draft Regulation
and the references to the principle of proportionality in Articles
3(4) and in recital 13 of the draft Regulation, equal access to
dispute resolution mechanisms and the alert mechanism. The Commission
has not found based on this assessment that the principle of subsidiarity
has been breached.
"At the same time, the Commission has taken
careful note of the views expressed as well as the current state
of play of the discussions on the draft Regulation among relevant
stakeholders, in particular the European Parliament and Council.
Against this background, the Commission recognises that its proposal
is unlikely to gather the necessary political support within the
European Parliament and the Council to enable its adoption.
"In view of this, the Commission would hereby
like to inform you of its intention to withdraw its proposal for
a Regulation on the exercise of the right to take collective action
within the context of the freedom of establishment and the freedom
to provide services."
The Minister's letter of 11 October 2012
7.11 The Parliamentary Under-Secretary for Employment
Relations and Consumer Affairs (Jo Swinson) encloses a summary
of responses to the Government's call for evidence on the draft
Directive, which includes the results of a roundtable discussion
with business organisations and trade unions from the construction
sector.[15] The main
findings are:
- broad support for clarifying what constitutes
a posting and ensuring that information on applicable working
conditions is widely available, but differing views on how to
achieve this;
- a lack of quantitative evidence on the extent
of problems associated with the posting of workers in the UK;
- sharp differences of opinion on the need for
stronger control measures and on the practical implications of
introducing joint and several liability, with business organisations
strongly opposing the latter and trade unions pressing for its
extension to the whole chain of contractors; and
- general dissatisfaction with the evidence and
estimates contained in the Commission's Impact Assessment.
The Minister's letter of 22 October 2012
7.12 The letter from the Minister for Europe (Mr
David Lidington) responds to the points we raised in our Twelfth
Report of 12 September 2012 concerning the Commission's annual
report on subisidarity and proportionality for the year 2011.[16]
In particular, we asked the Government for its analysis of the
Commission's response to the yellow card on the draft Regulation
on collective action (the Minister refers to the draft Regulation
as the "Monti II" proposal because it stems from recommendations
made in a report published in May 2010 by the former Commissioner
responsible for the internal market Professor Mario Monti
on the completion of the EU's Single Market). The Minister
states:
"The Commission's formal response to the Presidency
on 14 September states that although it did not agree
that the principle of subsidiarity had been breached it
has withdrawn the proposal because there was no prospect of achieving
political agreement. This suggests that the `yellow card' in this
instance was effective in demonstrating the strength of feeling
in national parliaments about this proposal, and this added to
concerns raised by several Member States.
"However, it is less certain how effective it
was with regard to specific concerns about subsidiarity. Reasoned
opinions were sent by 12 national parliaments, giving a total
of 19 votes. The reasoned opinions set out a range of views, including
arguments that the proposals were unnecessary, that the detail of
the proposals would be an infringement of national competence, as
well as some expressing dissatisfaction with the proposal itself.
"[....]
"The Government's position, as set out in the
Explanatory Memorandum provided to Parliament, was that the proposal
did not breach the subsidiarity principle because if the proposed
action was to be taken at all then it made sense for it to be
at EU level. Nevertheless, the Government was clear from the outset
that the Regulation was not necessary and would oppose it on that
basis.
"The Government welcomes the first ever use
of the yellow card. It is a significant step because it highlights
both the importance of the Commission demonstrating due consideration
in developing proposals, and of the role of national parliaments
in ensuring they do so. However, Monti II does not add up to a
clear demonstration of the effectiveness of the yellow card in
upholding the principle of subsidiarity because of the wide variety
of reasoned opinions issued, and because of the Commission's reasons
for withdrawing the proposal."
Conclusion
7.13 We thank the Minister for her letter providing
a link to the Summary of responses received on the draft Directive
on the enforcement of the 1996 Posting of Workers Directive. The
introduction to the Summary says that these responses "have
already informed the UK's negotiating position on this proposal
and will continue to inform this position as negotiations proceed."
As there appear to be sharp differences of opinion on some of
the key elements of the draft Directive notably the provisions
on joint and several liability within the construction sector
we would like to hear in more concrete terms how the responses
have influenced the Government's negotiating position. We also
look forward to receiving progress reports on the negotiations.
Meanwhile, the draft Directive remains under scrutiny.
7.14 Turning to the draft Regulation, we note
that it has been withdrawn by the Commission and we are therefore
content to release it from scrutiny. However, the means by which
the Commission has communicated its intention to withdraw the
proposal illustrates a broader concern we have with the inadequate
response of the Commission to Reasoned Opinions issued by national
Parliaments which we intend to pursue separately.
14 The House agreed to issue a Reasoned Opinion following
a debate in European Committee C on 21 May 2012. Back
15
A total of 16 responses to the Call for Evidence were received:
nine from business organisations, five from organisations representing
workers, and two from legal groups. Back
16
See (34095); HC 86-xii (2012-13), chapter 4 (12 September 2012). Back
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