Documents considered by the Committee on 13 March 2019 Contents

1European Labour Authority

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; scrutiny waiver granted; drawn to the attention of the Business, Energy and Industrial Strategy Committee and the Work and Pensions Committee

Document details

Proposal for a Regulation establishing a European Labour Authority

Legal base

Articles 46, 48, 53(1), 62 and 91(1) TFEU, ordinary legislative procedure, QMV


Business, Energy and Industrial Strategy

Document Number

(39563), 7203/18 + ADDs 1–3, COM(18) 131

Summary and Committee’s conclusions

1.1The European Pillar of Social Rights establishes a framework for fair and well-functioning labour markets and welfare systems based on a set of rights and principles endorsed by the EU institutions in November 2017.1 In March 2018, the European Commission brought forward a proposed Regulation to establish a European Labour Authority (“ELA”). The impetus for its creation stems from the growth in labour mobility within the EU, prompting concerns that individuals and businesses may be ill-informed about their rights and obligations under existing EU laws and national authorities may lack the mechanisms needed to underpin effective cross-border cooperation. The broad objective of the ELA would be to ensure fair labour mobility within the internal market but it would have no direct regulatory or enforcement powers, nor would it be able to direct national authorities. Instead, it would play a supporting and coordinating role by:

1.2The ELA would replace various technical advisory bodies that already exist at EU-level to promote fair labour mobility, including the European Coordination Office of EURES,2 the Technical Committee on the Free Movement of Workers,3 the European Platform on tackling undeclared work4 and the Committee of Experts on Posting of Workers.5 It would also take over certain functions of the Administrative Commission for the Coordination of Social Security Systems, a body of Member State representatives which plays an important role in overseeing the application of complex EU rules on the coordination of national social security systems.

1.3The creation of a European Labour Authority was identified as one of the European Commission’s priorities for ensuring “a deeper and fairer internal market” in President Jean-Claude Juncker’s 2017 State of the Union speech. Our earlier Report agreed on 25 April 2018 provides a more detailed overview of the proposed Regulation.

1.4In his Explanatory Memorandum of 5 April 2018, the Minister for Small Business, Consumers and Corporate Responsibility (Andrew Griffiths MP) told us that the proposed Regulation would introduce “a few minor obligations” (for example, a requirement to provide the ELA with written reasons if a national labour market enforcement body does not wish to take part in an inspection coordinated by the ELA) but would not otherwise impose new obligations on Member States, individuals or employers, nor would it impinge on national decision making, legislation, or enforcement activities which would remain a Member State competence. He recognised that the ELA would not be operational before exit day—expected to be 29 March 2019—and that the UK’s longer-term relationship with the ELA post-exit would depend on the arrangements yet to be agreed for the UK’s future economic partnership with the EU.

1.5The Government’s Checklist examining the potential impact of the proposed Regulation on the UK noted that it would largely be up to each Member State’s national enforcement body to determine the level of engagement with the ELA, meaning that they could choose to engage “only when it was net beneficial to their objectives”, providing “a cost-benefit safeguard”. After leaving the EU, it would still be possible for the UK to participate in the ELA as a third country with observer status in the Authority’s Management Board. There could be “a mutual benefit in the UK Government continuing to work with the ELA” as “once the UK leaves the EU there is likely to continue to be a substantial number of EU citizens working and living in the UK, and a substantial number of UK citizens living in the EU”:

For instance, the ELA will, amongst other things, replace the Technical Commission, the Audit Board, and the Conciliation Board of the Administrative Commission for the Coordination of Social Security Systems, whose work includes overseeing payments between Member States for reciprocal healthcare. The UK could continue to participate in these areas, depending on final withdrawal arrangements from the EU.

1.6In our earlier Report we noted that if the draft EU/UK Withdrawal Agreement were to be ratified and enter into force, it would ensure the lifelong protection of the social security rights of UK and EU nationals who have exercised their right to freedom of movement before the end of a post-exit transition/implementation period. This alone suggested that the Government would retain an interest in the work of the Administrative Commission on Social Security and therefore in any social security-related tasks taken over by the ELA. We noted also the uncertainty as to the nature of any long-term post-exit working relationship between the relevant UK authorities and the ELA, not least because the proposed Regulation appeared to limit formal cooperation to third countries applying EU laws on labour mobility and social security coordination (such as the non-EU members of the European Economic Area). We underlined our interest in the proposed Regulation and asked the Minister to update us on the progress of negotiations.

1.7Whilst informing us that negotiations were making good progress, the Government told us that the UK and a number of other Member States had questioned whether the ELA should absorb some of the functions of the Administrative Commission for the Coordination of Social Security Systems.6 By December 2018, sufficient progress had been made for the Government to agree to a General Approach at the Employment, Social Policy, Health and Consumer Affairs Council, even though there was insufficient time for us to consider clearing the proposed Regulation from scrutiny or granting a scrutiny waiver. The Government supported the compromise proposed by the Presidency as it made clear that the ELA’s mediation role in cross-border disputes would not extend to EU rules on social security coordination.7

1.8In her letter of 8 February 2019, the Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst MP) indicated that substantial progress had been made in trilogue negotiations with the European Parliament and that the Government was keen to support a compromise text which was in line with the Council General Approach, adding:

Our strong preference would be to keep social security coordination outside the scope of the ELA mediation process; however, we may be able to support inclusion so long as the integrity and role of the social security Administrative Commission is protected.

1.9The Minister reiterated that the proposed Regulation “would not impose additional legislative obligations on Member States nor impact national competencies” and expressed the Government’s support for its overall aims.

1.10In her latest letter of 19 February 2019, the Minister asks us to release the proposed Regulation from scrutiny as she expects it to be brought to the Council for formal adoption in March. Whilst it now appears that social security coordination will be within the scope of the ELA’s mediation function, she explains that the compromise text negotiated with the European Parliament “provides more detail on the relationship between the ELA and the Administrative Commission, and will preserve the current acquis and ensure proper scrutiny by the Administrative Commission of ELA opinions on social security disputes”. On this basis, she is keen to support the adoption of the proposed Regulation.

Our Conclusions

1.11The Minister assures us that the proposed Regulation “does not impact Member State competence or national legislation” and considers that the European Labour Authority will “add value” by supporting Member States in resolving issues stemming from cross-border labour mobility and increasing cooperation between the UK’s three labour inspectorates—the Employment Agency Standards Inspectorate, HMRC’s National Minimum Wage enforcement team, and the Gangmasters Labour Abuse Authority—and their counterparts in other Member States.8 As the European Labour Authority will operate primarily as a coordinating body without any direct regulatory or enforcement powers of its own, we are content to grant a scrutiny waiver so that the Government can support the adoption of the proposed Regulation at a forthcoming Council meeting.

1.12We nonetheless ask the Minister to report back to us promptly on the outcome of the Council, including any changes to the provisions on third country cooperation with the European Labour Authority, to explain how the UK voted, and to provide a copy of the final text agreed. Before clearing the proposed Regulation from scrutiny, we would welcome a clearer steer from the Government on the possibilities for UK engagement with the European Labour Authority post-exit. We ask the Minister to clarify the scope of the provisions on cooperation with third countries (as set out in Article 43 of the Council General Approach or any successor text included in the final compromise text) and their application to the UK post-exit, given that cooperation with and participation in the European Labour Authority appear to be limited to third countries applying “relevant Union law on labour mobility and social security coordination”.

1.13We also ask her to explain:

1.14We draw this chapter to the attention of the Business, Energy and Industrial Strategy Committee and the Work and Pensions Committee.

Full details of the documents

Proposal for a Regulation establishing a European Labour Authority: (39563), 7203/18 + ADDs 1–3, COM(18) 131.

Previous Committee Reports

Twenty-fifth Report HC 301–xxiv (2017–19), chapter 1 (25 April 2018).

1 See the European Commission’s fact sheet and its website on the European Pillar of Social Rights.

2 EURES (the European Employment Services) provides information on labour mobility to workers, jobseekers and businesses in the European Economic Area and Switzerland. It includes job placement schemes run by national governments, such as the Department for Work and Pensions’ ‘Universal Jobmatch’ scheme.

3 The Technical Committee, which is composed of six members for each Member State, assists the European Commission in the examination of the application of EU law on free movement of workers.

4 The European Platform tackling undeclared work aims to enhance cooperation between EU countries in fighting undeclared work (UDW).

5 The Posted Workers Committee consists of EU-level trade unions and employers’ organisations, as well as Government representatives of the Member States of the EEA. It provides support to Member States in identifying and exchanging experience and good practice, promoting the exchange of relevant information, and examining any questions and difficulties which might arise in the practical application of the posting of workers legislation, as well as its enforcement in practice.

6 See the letter of 31 August 2018 from the Minister for Small Business, Consumers and Corporate Responsibility (Kelly Tolhurst MP) to the Chair of the European Scrutiny Committee.

7 See the letter of 3 December 2018 from the Minister for Small Business, Consumers and Corporate Responsibility (Kelly Tolhurst MP) to the Chair of the European Scrutiny Committee.

8 See the letter of 3 December 2018 from the Minister for Small Business, Consumers and Corporate Responsibility (Kelly Tolhurst MP) to the Chair of the European Scrutiny Committee.

9 See CP66, published on 6 March 2019.

Published: 19 March 2019