Documents considered by the Committee on 5 June 2019 Contents

2European Labour Authority

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; further information requested; 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

2.1The European Pillar of Social Rights enshrines a set of rights and principles which the EU considers are essential to underpin fair and well-functioning labour markets and welfare systems. It was endorsed by the EU institutions in November 2017.3 Shortly afterwards, the European Commission brought forward a proposed Regulation to establish a European Labour Authority (“ELA”). The broad objective of this new Authority is to ensure fair labour mobility within the internal market by:

2.2The ELA would have no direct regulatory or enforcement powers, nor would it be able to direct national authorities. It would, however, take over the work of various technical advisory bodies that already exist at EU-level, including the European Coordination Office of EURES,4 the Technical Committee on the Free Movement of Workers,5 the European Platform on tackling undeclared work6 and the Committee of Experts on Posting of Workers.7 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. Our earlier Reports listed at the end of this chapter provide a more detailed overview of the role of the ELA, its projected running costs and staffing.

2.3The Government does not anticipate that the creation of the ELA will impose significant new obligations on Member States, individuals or employers, nor that it will impinge on national decision making, legislation, or enforcement activities which will remain a Member State competence. In its Checklist examining the potential impact of the proposed Regulation on the UK, the Government indicates that it will largely be up to the UK’s own enforcement bodies—the Employment Agency Standards Inspectorate, HMRC’s National Minimum Wage enforcement team and the Gangmasters Labour Abuse Authority—to determine their level of engagement with the ELA. The Government notes also that it will still be possible for the UK to participate in the ELA as a third country, with observer status in the Authority’s Management Board, after leaving the EU. This could be to the mutual benefit of the EU and the UK 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”.8 The ELA could help to oversee the smooth operation of rules concerning the coordination of social security systems and reciprocal healthcare arrangements.

2.4The Council, with UK support, agreed a General Approach in December 2018. Trilogue negotiations with the European Parliament have made rapid progress. When we last considered the proposed Regulation in March, we granted a scrutiny waiver to enable the UK to support its adoption on the strength of assurances given by the Government that the final compromise text “[would] not impact Member State competence or national legislation” and that the ELA would “add value” by supporting Member States in resolving issues stemming from cross-border labour mobility.

2.5In our Report agreed on 13 March 2019, we requested a clearer steer on the possibilities for UK engagement with the ELA after leaving the EU. We asked the Government to clarify the scope of the provisions on third country cooperation contained in Article 43 of the Council’s General Approach which appeared to limit cooperation to third countries applying “relevant Union law on labour mobility and social security coordination”. In particular, we asked the Government to explain:

2.6In her letter of 23 May 2019, the Minister for Small Business, Consumers and Corporate Responsibility (Kelly Tolhurst MP) tells us that she expects the Employment, Social Policy, Health and Consumer Affairs (EPSCO) Council formally to adopt the proposed Regulation at its next meeting on 13 June. She confirms that the provisions in Article 43 on third country cooperation with the ELA have remained constant throughout the negotiations, adding:

Some Member States expressed an interest in future cooperation with and participation of third countries, however the UK did not engage in this conversation due to the commitment to engage ‘in good faith’ until such time as we leave the EU. The working groups would not have been the appropriate forum to engage on the UK’s future relationship with the EU.

2.7The Minister continues:

The Commission has been clear that in order to achieve the objectives of the organisation, the ELA can cooperate with ‘third countries to which the relevant Union law on labour mobility and social security coordination applies’.

She considers that the UK would meet the requirements for cooperation with the ELA as a third country if it leaves the EU on the terms envisaged in the draft EU/UK Withdrawal Agreement. Under Part Two of the Agreement on Citizens’ Rights, the UK would continue to apply EU laws on the coordination of social security systems in relation to EU citizens and UK nationals who have exercised their right to free movement before the end of a post-exit transition period. The UK would also continue to participate in the Administrative Commission for the Coordination of Social Systems, as an observer without voting rights, and to attend meetings of other related bodies in an advisory capacity.10 As one of the tasks of the ELA will be to mediate in cross-border disputes between Member States concerning the application of EU rules on the coordination of social security, the Minister considers that it would be “advantageous” for the UK to maintain a close relationship post-exit. She anticipates that the UK would also “benefit from sharing good practice and the aim to improve coordination across labour enforcement”. She makes clear, nonetheless, that the UK’s relationship with the ELA will be discussed “at a later date” as part of negotiations on the UK’s future economic partnership with the EU. Meanwhile, “the UK will continue to make representations through the appropriate channels about the benefits of future coordination with the ELA”.

2.8The Minister observes that the provisions on non-regression of labour and social standards contained in the Protocol on Ireland/Northern Ireland “ensure that both the UK and the EU cannot reduce labour standards in a number of areas”. She does not tell us whether the non-regression commitment means that the UK would continue to be bound to apply “relevant Union law on labour mobility and social security coordination” (bringing it within the ambit of the ELA).

2.9Finally, the Minister indicates that the commitments made in the Government’s Command Paper, Protecting and Enhancing Worker Rights after the UK Withdrawal from the European Union to consult Parliament on any diminution in pre-exit EU workers’ rights (by means of “a statement of non-regression”) or on any new EU laws enhancing workers’ rights (by means of “a statement of non-divergence”) will be included in the European Union (Withdrawal Agreement) Bill (yet to be published) and subject to amendment during its passage through Parliament.11 She adds:

If Parliament decides—whether through this mechanism or otherwise—to ensure UK law aligns with the necessary EU law, then the UK may be able to and decide to cooperate with the ELA.

Our Conclusions

2.10We question the Government’s assumption that constructive engagement in discussions on third country cooperation with the European Labour Authority (ELA) might put the UK in breach of its commitment to engage “in good faith” until it leaves the EU. The Government recognises that there may be a mutual benefit in continuing to cooperate with the ELA after the UK leaves the EU and any post-exit transition/implementation period has ended, not least to ensure continuity in the coordination of social security systems for EU citizens in the UK and UK nationals in the EU27. We consider that the UK should be taking an active part in discussions which seek to broaden rather than narrow the scope for third country cooperation, not least because these third country provisions will determine the framework for the UK’s future cooperation with the EU should the UK leave the EU without a negotiated agreement setting out the terms of its withdrawal.

2.11Despite the Government’s reluctance to engage in discussions on Article 43 of the proposed Regulation, we consider that the compromise text agreed by the Council and the European Parliament represents a good outcome for the UK. It makes some small, but in our view, significant changes to the provisions on third country cooperation with the European Labour Authority (ELA). In particular, Article 43 no longer limits cooperation with, and participation in, the ELA to third countries “to which the relevant Union law on labour mobility and social security coordination applies”. The only requirement is that cooperation must be “necessary” to enable the ELA to fulfil its objectives, with the detailed arrangements (including financial contributions and staffing) to be agreed between the EU and the third country. Continued cooperation with the ELA after leaving the EU would not therefore depend on the UK being bound to apply EU laws on labour mobility and social security coordination.

2.12We are content to renew the scrutiny waiver we granted in March to enable the Government to support the adoption of the proposed Regulation. Before agreeing to final clearance from scrutiny, we ask the Minister to:

2.13We 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

Fifty-ninth Report HC 301–lvii (2017–19), chapter 1 (13 March 2019) and Twenty-fifth Report HC 301–xxiv (2017–19), chapter 1 (25 April 2018).

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

4 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.

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

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

7 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.

8 See p.2 of the Government’s Checklist.

9 See CP66, published on 6 March 2019.

10 See Articles 31 and 34 of the draft EU/UK Withdrawal Agreement.

11 See CP66, published on 6 March 2019.

Published: 11 June 2019