Documents considered by the Committee on 15 June 2016 Contents

4Posting of Workers Directive

Summary and Committee’s conclusions

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; further information awaited; drawn to the attention of the Business, Innovation and Skills Committee

Document details

Proposal for a Directive amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services

Legal base

Articles 53(1) and 62, TFEU; ordinary legislative procedure; QMV


Business, Innovation and Skills

Document Numbers

(37591), 6987/16 + ADDs 1–2, COM(16) 128

4.1The Commission has proposed to amend current legislation on “posted workers”—those who are temporarily posted to work in one country by a company based in another Member State—in order to apply the principle of “equal pay for equal work in the same place”. Further details of the Commission’s proposal were set out in our earlier Reports on the matter.86

4.2The proposal, which has already been discussed by the Committee on four occasions, has engendered a great deal of controversy among national parliamentary chambers across the EU and 14 sent “Reasoned Opinions” to the Commission objecting to the proposal on the grounds that the EU is not best placed to tackle the identified issue (the principle of “subsidiarity”). The number of Reasoned Opinions was sufficient to trigger a “Yellow Card”, in response to which the Commission will either retain, amend or withdraw its proposal following a review which is now underway.

4.3The Committee did not recommend that the House adopt a Reasoned Opinion, since the identified objective—to resolve concerns arising from implementation of the existing Directive, which in itself applies to a cross-border policy—could only be achieved by EU-level action. We nevertheless expressed concern at our meeting of 13 April that the Commission’s own justification for EU-level action was inadequate, contrary to the Treaty requirement that “any draft legislative act should contain a detailed statement making it possible to appraise compliance with the principles of subsidiarity and proportionality”.87 We noted that this procedural failure was one of several recurring themes in the various Reasoned Opinions.

4.4In our appraisal of this issue, we have taken into account recent rulings of the Court of Justice that relevant material set out in the impact assessment accompanying a legislative proposal should be considered as part of the subsidiarity justification alongside material in the text of the legislative proposal or the Commission’s Explanatory Memorandum.88

4.5We now consider it appropriate to write to the Vice-President of the European Commission—within the framework of political dialogue between the European Commission and national parliaments—setting out our concern about the Commission’s failure to provide an adequate justification for action at the EU-level. In drawing our conclusion we have assessed all relevant material provided by the Commission, including the impact assessment. Our letter is available on our website.89

4.6We also reproduce in the Annex to this chapter the copy of a letter that we received from the Business, Innovation and Skills (BIS) Committee in response to our request for that Committee’s Opinion on the proposal in exercise of our power under Standing Order No. 143(11). A summary of the letter is set out below.

4.7We are very grateful to the BIS Committee for its helpful and prompt Opinion, which is one of very few formal Opinions submitted by Departmental Select Committees to the European Scrutiny Committee on European documents. In the context of the Yellow Card, it was particularly helpful to note the BIS Committee’s agreement that the rights of posted workers within the EU should be settled at the EU-level. We look forward to further engagement as negotiations on this important proposal progress.

4.8The Minister of State for Skills, Nick Boles, wrote to us on 26 May,90 informing us of the adoption of the Yellow Card and noting that the Government is yet to adopt a position on the proposal. We have responded, noting that the proposal remains under scrutiny and looking forward to receipt of the Government’s position.91

4.9We retain the proposal under scrutiny and draw this chapter to the attention of the Business, Innovation and Skills Committee.

Full details of the documents

Proposal for a Directive amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services: (37591), 6987/16 + ADDs 1–2, COM(16) 128.

Letter from Mr Iain Wright, Chair of the Business, Innovation and Skills Committee

4.10At its meeting of 4 May, the Committee requested the opinion of the Committee on Business, Innovation and Skills. The Chair of that Committee, Mr Iain Wright, responded to us on 25 May (see Annex).

4.11The key points of the letter were:

Previous Committee Reports

Thirty-second Report HC 342–xxxi (2015–16), chapter 3 (4 May 2016) and Twenty-eighth Report HC 342–xxvii (2015–16), chapter 6 (13 April 2016).

Annex: Opinion from Mr Iain Wright to Sir William Cash, 25 May 2016

4.12“Thank you for your letter requesting an Opinion from the Business, Innovation and Skills Committee on the proposed revision of the Posting of Workers Directive.

4.13“As you are aware, the proposals seek to harmonise working conditions within Europe by ensuring equal pay for posted workers, applying national rules on agency workers to posted workers from another Member State and enforcing a 24 month limit for separate labour law for agency workers.

4.14“In considering this proposal, we have not been able to take formal evidence in the time available but we have been informed by our attendance at the inter-parliamentary meeting organised by the European Affairs Committee of the French National Assembly in Paris on 18 May.

4.15“First, it is apparent that the proposals will not have the impact on the UK as it might on other EU countries because of the protection already provided here by the national minimum wage and by the absence of the type of large scale collective bargaining that exists in some Member States. That said, we note the Commission’s estimate that there were 50,000 posted workers in the UK in 2014—the majority in the construction sector—and that trend is upwards.

4.16“It is clear that the debate on this proposal has divided opinion between some of the more prosperous European nations from some of the newer entrants. It has raised questions that go to the heart of the debate on the future of Europe and the squaring of the economic interests of Member States with very different economies and levels of prosperity but operating in the single market.

4.17“On the one hand, this proposal is in line with a vision of a genuinely single European market with maximum harmonisation in terms of social and employment protection so as to ensure that competition within Europe is on a playing field that is as level as possible whilst maintaining national sovereignty over key economic levers, such as taxation. For some, this is the ultimate goal of what might be a lengthy transitional period for Europe and the current proposals represent a significant step in that direction. Equal pay for equal work should be viewed as a vital principle. It can be argued that whilst the harmonisation of pay upwards, in line with minimum rates in western European countries, may lead to a slight increase in costs and potentially consumer prices, the goal of fair competition within Europe and a clear leadership role for Europe in setting standards of social and employment rights is nonetheless important to pursue.

4.18“On the other hand, critics of the proposals argue that European companies should be able to compete within the single market on labour costs, as on any other costs, just as Member State governments are free to compete in attracting companies by setting different rates of taxation affecting business and devising other domestic business-friendly policies. In a European economy currently experiencing relatively weak levels of growth, the proposals might be seen to further increase costs and reduce the international competitiveness of European companies in the global economy. Opponents of the proposals argue that minimum rates of pay should be subject to the principle of subsidiarity, in line with other employment policies which are determined at a national level.

4.19“It is regrettable that the Government has not provided an explanation of its policy on the proposals, nor on its potential impact on the UK. This makes it difficult to provide a fully informed opinion on the desirability of the proposals. There is a legitimate debate to be had over how Europe can support fair competition within the EU, based upon high standards of employment protection, and maintain its international competitiveness. These proposals might ensure that companies in Europe are further incentivised to compete in the global market on other factors than cost, as many already do.

4.20“Whilst we agree that settling the rights of posted workers within the European Union should be settled at a European level, there are different views on our Committee as to the right direction of travel, as there will be in the House. We believe that the proposals are sufficiently important to warrant detailed scrutiny in the House, based upon a proper impact assessment by the Government.”

86 Thirty-second Report HC 324–xxxi (2015–16), chapter 3 (4 May 2016); Twenty-eighth Report HC 342–xxvii (2015–16), chapter 6 (13 April 2016).

87 Twenty-Eight Report HC 342–xxvii (2015–16), chapter 6 (13 April 2016).

88 Case C-547/14, paras 225–227; Case C-358/14, paras 121–124.

89 Letter from Sir William Cash MP to Frans Timmermans, 15 June 2016.

91 Letter from Sir William Cash MP to Nick Boles MP, 15 June 2016.

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17 June 2016