Documents considered by the Committee on 31 January 2018 Contents

5Working Conditions Directive

Committee’s assessment

Legally and politically important

Committee’s decision

Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Energy & Industrial Strategy Committee and the Work & Pensions Committee

Document details

Proposal for a Directive of the European Parliament and of the Council on transparent and predictable working conditions.

Legal base

Article 153(1)(b) and Article 153(2)(b) TFEU; ordinary legislative procedure; QMV

Department

Business, Energy and Industrial Strategy

Document Number

(39396), 16018/17, + ADDs 1–2, COM(2017) 797

Summary and Committee’s conclusions

5.1Following the adoption of the European Pillar of Social Rights in November 2017, the European Commission in December last year tabled its first concrete proposal for a new piece of EU employment legislation: a draft Directive54 to “promote more secure and predictable employment while ensuring labour market adaptability and improving living and working conditions” throughout the European Union.

5.2The Commission is seeking to achieve this by updating the types of information employers must provide to new starters on their employment conditions under the existing 1991 Written Statement Directive,55 and expanding its scope by introducing an explicit definition of the type of “worker” covered.

5.3In addition, the Commission wants to rebadge the legislation as a “Working Conditions Directive” (WCD) by adding EU-wide minimum statutory employment conditions for workers with precarious or variable hours, including:

5.4Under the terms of the Commission proposal, workers would be able to challenge their dismissal from work if it was based on seeking to enforce any of these new rights.56

5.5The Parliamentary Under Secretary of State at the Department for Business, Energy and Industrial Strategy (Andrew Griffiths) submitted an Explanatory Memorandum and regulatory checklist on the proposal in January 2018.57 The Minister appears broadly supportive of the Commission’s objectives in proposing this legislation, and notes the overlap between the drivers behind this new Directive and the findings of the Taylor Review of modern working practices.58

5.6However, the Minister raises concerns of substance over the elements of the Directive on material employment rights; the apparent misunderstanding by the Commission of the link between probation and statutory employment rights in the UK; and the extent to which the proposal would allow for unfair dismissal claims from the very start of an employment relationship, given that under current UK law only employees who have been in service for two years or more can make such a claim.

5.7We have set out the substance of the proposal, and the Government’s position, in more detail in paragraphs 5.35 to 5.47 below.

5.8The proposal marks a significant expansion of EU employment law, and—as the Minister has noted—would require substantial changes to the UK’s domestic legislation if adopted in its current form. We therefore consider it both legally and politically important.

5.9Although the Committee sees the benefits of the proposed modernisation of the Written Statement Directive insofar as it relates to the types of information that must be provided to new employees, it is concerned about both the reasoning and substance of the Commission’s proposals on new material employment rights.

5.10In particular, the impact assessment prepared by the Commission contains a distinct lack of evidence to support its claim that “there is a risk of race to the bottom in standards applying to new forms of work where the regulatory framework is weaker and more patchy across Member States”. As a result, the proposed changes—in particular in relation to probationary periods and the requirements as regards reference hours for variable workers—may be disproportional to the Commission’s objectives.

5.11In addition, the drafting of the proposal leaves many crucial concepts—including “reasonable advance notice” in relation to variable hours; the “interest of the worker” test for extending probation periods; and the “legitimate reasons” test for using exclusivity clauses to prevent parallel employment—undefined, meaning the legislation could increase rather than reduce divergences in national practices if these concepts are interpreted in different ways by different Member States.

5.12With respect to the proposed restriction on probationary periods, we note from the Minister’s explanation that the time limit on probation seems to serve no meaningful purpose. It would require legislative change in the UK and Ireland only, even though there is no link in UK law between the length of the probationary period and the enjoyment of statutory employment rights. As such, the UK’s current approach to probation cannot be construed as conferring an unfair competitive advantage to British employers compared to those based elsewhere in the EU.

5.13Given the legal and political importance of the proposal, we retain it under scrutiny and ask the Minister to keep the Committee informed of developments within the Council and the European Parliament. We are particularly interested in:

Implications of Brexit

5.14Our conclusion that this new Directive is politically important is also based on the fact that this EU legislation might have to be implemented in the UK after it has ceased to be an EU Member State, under the proposed terms of the post-Brexit transitional period.

5.15To prevent economic disruption resulting from a departure from the EU in March 2019 before the necessary domestic regulatory architecture is in place, the Government is seeking to effectively remain in the Single Market and Customs Union for “around two years” after the end of the Article 50 period. The EU has made clear that such an arrangement would only be acceptable to it if the UK continued to apply the entire body of EU law, including legislation which only takes effect during the transition.59 Depending on the timetable for adoption of the WCD and the length of the transitional agreement, the Government might therefore be under an obligation to transpose this new Directive into UK law.

5.16We are particularly concerned that, in this scenario, the UK may not have a formal say over the adoption of the Working Conditions Directive if the Member States and the European Parliament reach agreement on the legal text shortly before, or indeed after, the UK’s expected date of withdrawal from the EU in March 2019. At that point, the UK will have lost its representation, both at official and ministerial level, when amendments to the legislation are discussed within the Council, and it would no longer have a vote over the final Directive.60

5.17The implications of the transitional period for the political legitimacy of adding new EU legislation to the UK statute book present a particularly acute problem in political terms if the Government was not supportive of the final legal text and had no meaningful influence over its contents, but had to implement it regardless.

5.18Given the substance of the proposal, and the possibility that the Directive may apply in the UK irrespective of Brexit (and potentially against the better judgement of the Government), we are seeking the views of the Business, Energy & Industrial Strategy and Work & Pensions Committees on this proposal, as they have been undertaking an inquiry into employment conditions in the UK. We are particularly interested in their views on:

5.19We will use their views to continue to scrutinise the Council’s deliberation of the Directive, and the Government’s efforts in Brussels to secure a good outcome, and report further developments in the legislative negotiations to the House.

5.20The Committee also has wider concerns about the political, legal and financial implications of the proposed transitional arrangement. In particular, the UK would effectively retain most, if not all,62 the obligations of a Member State without the attendant rights, in particular as regards representation and voting rights within the Council, COREPER and the technical Committees that assist the European Commission in the implementation of EU law. These implications should be carefully considered by Parliament.

Full details of the documents

Proposal for a directive of the European Parliament and of the council on transparent and predictable working conditions: (39396), 16018/17, + ADDs 1–2, COM(2017) 797.

Background

The Written Statement Directive

5.21One of the earliest pieces of EU employment legislation was the 1991 Written Statement Directive (WSD),63 which gives “paid employees” the right to be notified in writing of the essential aspects of their employment relationship within two months of starting a new job.64 The Directive was transposed in the UK via the Employment Rights Act 1996.65

5.22Application of the WSD varies by country, because it allows every Member State to define the concept of “employee” within its scope. It also contains derogations which individual Member States can use to restrict its ambit further: they are allowed not to apply the Directive to employees with a temporary contract of one month or less; to those with a working week of eight hours or less; or, most ambiguously, where the work is of a “casual or specific nature” and non-application is justified by “objective considerations”.66

5.23As part of its Regulatory Fitness and Performance (REFIT) programme, the European Commission carried out an evaluation exercise of the Written Statement Directive in 2016.67 It concluded that the legislation remains “fundamentally relevant”, but that changes in the labour market had also exposed “some gaps in its protection mechanisms”. In particular, the evaluation found that:

5.24The evaluation also found that the total number of workers in categories exempted from the Directive had grown substantially in recent years, and that vulnerable workers—such as younger, less-educated employees—and women were overrepresented in this group.

The European Pillar of Social Rights

5.25In addition to the specific evaluation of the Written Statement Directive, the European Commission has also been leading a broader initiative to push employment and social policy higher on the EU’s political and legislative agenda. It therefore announced in spring 2016 the creation of a “European Pillar of Social Rights”, a mixture of existing employment and social rights under EU law and ambitions for the future development of this policy area.

5.26The Commission ran a public consultation on the strengths and weaknesses of the EU’s social policy framework to help it prepare the Pillar of Social Rights.73 The consultation paper recognised the “large difference in employment conditions (…) across different employment contracts”, and proposed that the provisions of the Written Statement Directive should apply to “every worker”. Following the consultation, the Commission concluded in April 2017 that the WSD—and the current EU social acquis more broadly—did not “sufficiently address some of the new phenomena in the labour market”.74

5.27While acknowledging that flexible and non-standard forms of work “contribute to job creation and widen professional opportunities”, the Commission also concluded that workers in these types of employment often lacked the “fair and equal” access to a number of employment rights as required by the (then draft) Pillar of Social Rights. It considered that specific shortcomings such as a “lack of reasonable advance notice in case of on-demand workers, unjustified exclusivity or incompatibility clauses75 and long probation periods are measures which may put [these workers] in overly precarious situations”.76

5.28The Commission also noted that some Member States had taken steps domestically to address these problems, but that was not sufficient and could even be harmful in the long run:

“There is a risk of race to the bottom in standards applying to new forms of work where the regulatory framework is weaker and more patchy across Member States, and their efforts to ensure minimum protection of workers is likely to lead to increasingly divergent and even contradictory national solutions, creating regulatory loopholes when viewed from an EU perspective, and leading to inequality in the protection of workers and their living conditions. Eventually it could affect the quality of the workforce, the relative competitiveness of employers, companies and Member States, and the functioning of the EU internal market.”

5.29When the Commission published its final proposal for the European Pillar of Social Rights in April 2017,77 it therefore sought to explicitly address the need to ensure adequate working conditions in all forms of employment, and inform workers of their rights, in two of its principles:

5.30The Commission also decided that the subsidiarity threshold for further EU legislation was met to achieve these objectives. Subject to consultation of the European social partners,78 it began preparing a revision of the Written Statement Directive to remedy the shortcomings identified by the REFIT evaluation, and to address the divergence in Member States’ approach to securing basic employment rights for workers in the “flexible economy”.

5.31Other initiatives being prepared as part of the Pillar of Social Rights are a legislative initiative on access to social security for atypical workers and the self-employed;79 an evaluation of existing EU Directives on fixed-term contracts and part-time work;80 and legislative proposals for a European Labour Authority81 and a European Social Security Number.82 These will be subject to scrutiny in their own right in due course, if and when formal proposals are submitted to the Council. The remainder of this Report will be focused on the Commission’s efforts to revise the Written Statement Directive.

Revising the Written Statement Directive

Consultation of the social partners

5.32The EU Treaty83 requires the European Commission to consult the European social partners84 on possible new employment law initiatives before it can table a proposal of its own. The procedure consists of a first phase consultation—on the need for, and possible content of, a legislative proposal—and a second phase consultation—on the specific content of such a proposal, if the Commission still considers legislative action necessary after the initial discussions with the social partners.

5.33For the revision of the Written Statement Directive, the first and second phases of consultation took place between April and June 201785 and between September and November 2017 respectively.86 In the second phase consultation document, the Commission set out in some detail its proposed “avenues for EU action”, including a clearer, more expansive definition of which workers fall within the scope of the WSD and requiring additional information on employment conditions to be provided to all workers, for example on paid overtime, guaranteed paid hours and training opportunities. The Commission also suggested introducing new EU-wide minimum employment rights, including for those in atypical or zero-hours employment, such as requirements regarding predictability of hours, and restrictions on exclusivity clauses and probationary periods.

5.34The Treaty allows for the social partners to negotiate new EU social and employment law between themselves.87 Trade unions were in favour of clarifying and broadening the personal scope of the Directive, as well as supporting the introduction of new EU-wide minimum rights aimed at improving transparency and predictability of working conditions.88 Conversely, employers’ organisations opposed practically all of the Commission’s suggestions, including the extension of the scope of the Directive to more workers; adding more information to the statutory written statement; and the inclusion of new minimum rights.89

5.35Because of these diametrically opposed views, the social partners decided not to negotiate bilaterally on a new Written Statement Directive. The Commission took the view that, the employers’ organisations’ views notwithstanding, it was “important to improve protection in this area by modernising and adapting the current legal framework”. As a result, it decided to table a legislative proposal of its own for consideration by the Member States in the Council and the European Parliament.

The Commission proposal

5.36Following the consultation of the social partners, and based on the objectives set by the Pillar of Social Rights and the REFIT evaluation of the WSD, the Commission adopted a proposal for a new Directive on “transparent and predictable working conditions” in the EU just before Christmas 2017.90 The objective of the draft legislation is to “promote more secure and predictable employment while ensuring labour market adaptability and improving living and working conditions” throughout the European Union and the EFTA-EEA countries.

5.37In addition to broadening the overall scope of the Directive by introducing an explicit definition of which “workers” are covered by its provisions, the legislative purpose of the proposal is twofold. Firstly, it would modernise the 1991 Written Statements Directive by repealing it wholesale and replacing it with new requirements for information on employment conditions, which aim to address the shortcomings identified in the 2016 evaluation exercise. Secondly, the Directive introduces a number of new material rights for workers to reflect changes in the EU’s labour market, especially the precarious working conditions of zero-hours and casual workers.

5.38The Parliamentary Under Secretary of State at the Department for Business, Energy and Industrial Strategy (Andrew Griffiths) submitted an Explanatory Memorandum and regulatory checklist on the proposal in January 2018.91 The Minister appears broadly supportive of the Commission’s objectives in proposing this legislation, recognising that “new forms of work can bring certain challenges as well as opportunities”.

5.39The Minister also refers to the Government-commissioned Taylor Review of Modern Employment Practices, which recommended that “the same basic principles should apply to all forms of employment in the British economy”.92 He notes that certain elements within the draft Directive reflect the recommendations made by the Review, notably around extending certain employment rights to cover more employment categories including a “day one” right to an enhanced written statement and better reflection of actual hours worked in employment contracts. The Government says it will respond to the Taylor Review recommendations “shortly”, but has not so far committed to any legislative change to address the issues identified. Whether it does so will need to be taken into account as negotiations on the Directive progress.

5.40Irrespective of any domestic proposals being considered by the Government following the Taylor Review, the Minister’s Memorandum raises concerns of substance over the elements of the Commission proposal. Explaining that the Directive would require substantial changes to UK employment law (including the Employment Rights Act 1996 and the Employment Tribunals Act 1996), the Minister argues that the elements of the Directive relating to the probationary period, the basis for unfair dismissal claims, and the restrictions on exclusivity clauses, could create unintended effects that could undermine existing employment rights.

5.41We have considered the substance of the draft Directive in more detail below, drawing on the Commission’s own impact assessment and the Minister’s substantive comments on various elements of the proposal.

The scope of the Directive

5.42As noted, the wording of the 1991 WSD has led to divergent application of the scope of the legislation across Member States, depending mostly on their concept of a “paid employee” and their use of the derogations permitted by the Directive. The Commission is particularly concerned that the existing legislation will not apply to an increasingly large segment of the working population in non-standard forms of employment. It therefore proposes to clarify the scope of the Directive, by:

5.43In its Impact Assessment, the Commission argues that these changes would lead to “at least 2 to 3 million non-standard workers [entering] into the scope of the Directive”. The Minister has raised some concerns about the new, prescriptive statutory definition of “worker” proposed by the Commission, calling it “broad”.

5.44In UK employment law, all employees are workers, but the converse is not true.96 Employees have an employment contract which also grants them certain statutory entitlements, including the written statement required by the WSD, which non-employee workers—such as freelancers, agency workers or zero-hours workers—do not have. The Commission proposal would therefore substantially expand the scope of the Directive in the UK compared to the current situation.

Information on employment conditions

5.45Chapter II of the proposed Directive sets out requirements for the provision of information on working conditions by employers to their employees, effectively replacing the 1991 Written Statement Directive. Primarily, the Commission has proposed to:

5.46There are also consequential changes to the information employers must provide to employees who are to be posted abroad, for example on the currency of their salary and the duration of the posting.

5.47The Minister does not raise any substantive concerns about this element of the proposal, which in essence simply updates the existing Written Statement Directive. He notes that elements of the Commission proposal mirror the recommendations made by the recent Taylor Review,99and that the Government will “assess the merits of this provision (…) in this context”.

New material employment rights

5.48To address the lack of stability and predictability for workers in flexible modes of employment, including in zero-hours contracts and in the “gig economy”, the Commission has also proposed an expansion of rights compared to the 1991 Directive. These are contained in Chapter III of the proposed Directive. In particular, the Commission proposes to:

5.49The Minister has raised a number of concerns about the potential impact of Chapter III of the Directive on UK employment law, in particular as regards the link between probationary periods and statutory employment rights. We have set these out below.

Restrictions on probationary periods

5.50The Commission has proposed that probation at the start of an employment relationship should, in principle, be limited to six months (except where Member States allow it to be extended where “justified by the nature of the employment or [where it] is in the interest of the worker”). In addition, workers would have the right to challenge dismissal if they are sacked for challenging their employer if this maximum period is exceeded.

5.51According to the Commission, restricting the use of probation at the start of an employment relationship in this way would require legislative changes only in the UK and Ireland out of all 28 Member States.104 It has proposed to introduce an EU-wide maximum on probationary periods because:

“During probation periods, the conditions attaching to the termination of the employment contract are often light and some protective measures that normally apply in case of dismissal are absent (e.g. notice period and severance pay). Therefore, overly long probation periods, in which employment rights are inferior to standard employment, may limit worker protection.”

5.52However, the Minister’s Memorandum calls into question this line of reasoning, because there is currently no legal definition of a “probationary period” in UK employment law. As a result, a contractual probation cannot deprive a worker of any of their statutory employment rights, which all apply from the first day of work. Employees cannot file a claim for unfair dismissal until after two years of service, but this is not linked to any probation period as such. The issues identified by the Commission appear to be more general concerns about statutory employment conditions, including notice periods and redundancy pay, which do indeed differ depending on the length of service but are not linked to any probationary period.

5.53The Government’s specific concerns about the proposal on probationary periods are therefore:

Exclusivity clauses prohibiting parallel employment

5.54UK employment law already bans the use of exclusivity clauses in zero-hours contracts.107 The Commission proposal would go significantly further, by restricting exclusivity clauses for all types of employment relationships, subject to a “legitimate reasons” test. If that test were met, for example to protect a company’s trade secrets, an exclusivity clause would be lawful. However, the Directive itself does not specify conclusively how “legitimate” is to be interpreted.

5.55The Minister notes that there is already a “significant amount of case law in the UK regarding restrictive covenants”,108 and the Government is still considering how the “legitimate reasons” test would interact with the common law. In addition, he expresses concerns that the qualified limits on parallel employment could reduce the scope of the current unqualified right for zero-hours workers not to be subject to an exclusivity clause.

5.56Overall, the Minister says the Government is not convinced that exclusivity clauses put a disproportionate burden on the worker in all types of employment relationship, especially in circumstances in which workers have a full-time employment contract. He cites figures compiled by the Resolution Foundation, which found that 3.6 per cent of the UK’s total workforce has more than one job. However, he concedes that it is “not known how many jobs have exclusivity clauses stopping a worker from getting an additional job against their wishes”.

Minimum predictability of work

5.57The Commission has proposed that employees with variable work schedules should be notified of their “reference hours and days”, during which they could be required to work. This would allow such workers to use the time not covered by such reference times in other employment, in education or to fulfil care obligations. It would be unlawful for an employer to require a worker to work outside the reference times. In addition, the draft Directive would require employers to set out the “reasonable advance notice” they will give employees with variable schedules of the hours they are expected to work. The legislation does not define this concept any further.

5.58The Minister has explained that these provisions do not have any domestic equivalent in UK law. He notes the Government wants to clarify with the Commission what it believes a “reasonable period” in advance would be, and whether the Directive as drafted gives employers and employees sufficient legal clarity.

5.59He also notes that up to 5 million workers in the UK “could benefit from greater predictability in their working hours”, including those on zero-hours contracts, agency workers and those who perform regular overtime work. However, he adds that “it is unclear how many currently receive reasonable notice of future working hours, the number of hours they generally receive or how many workers change the number of hours they decide to work themselves at short notice”. As a result, the “actual benefit” of this element of the proposal is “difficult to quantify”.

Application and enforcement of the Directive

5.60The Commission proposal also contains a number of important horizontal provisions on the application and enforcement of the new Directive by the Member States. They include:

5.61The Minister notes that the Government “will be seeking further information about this element of the proposal as it extends the definition of who has a right not to be dismissed and will require legislative changes in the UK”. As noted, the Government is also concerned about the provisions on the maximum probationary period on the two-year qualifying period that currently applies before an employee can claim unfair dismissal (see paragraph 5.51).

Implications of Brexit

5.62The Minister also touches on the implications of the UK’s withdrawal from the EU on the Government’s approach to negotiations on the Directive. He says:

“While we remain members of the EU, the government has made a commitment to continue to act ‘in good faith’ on ongoing EU business. This means the UK continues to actively engage on current EU legislative proposals, assessing policies on their merits. (…) Against the backdrop of EU exit, the Prime Minister has firmly committed not to roll back workers’ rights, and to extend those rights when that is the right choice for the UK.”

5.63The Government has requested a post-Brexit transitional period, during which it would effectively stay within the EU’s economic structures (i.e. the Single Market and the Customs Union). With respect to the implications of such an arrangement for the UK’s adherence to EU law, the Minister states that “the precise nature of both the proposed time-limited implementation period and our economic relationship with the EU thereafter are both subject to negotiations, and as such we cannot provide certainty at this stage on whether the UK will be obliged to implement this piece of legislation”.

Timetable for consideration of the proposal

5.64The Bulgarian Presidency has noted it aims to reach a general approach within the Council at the June 2018 meeting of EU Employment Ministers. It is unclear at this stage whether the proposal as tabled by the Commission has sufficient support among the Member States to make that a feasible proposition. The European Parliament’s Employment & Social Affairs Committee has not yet established a timetable for its consideration of the draft Directive.

5.65The deadline for national Parliaments to submit a Reasoned Opinion on the proposal on the grounds of subsidiarity expires on 8 March 2018.

Our assessment

5.66The Minister notes that, since employment law is an area of shared competence between the EU and the Member States, “the Government “is examining whether this proposal is sufficiently flexible to allow for national implementation that complements existing national arrangements”.

5.67Although the Committee supports the proposed modernisation of the Written Statement Directive insofar as it relates to the types of information that must be provided to new employees, we have reservations about the proposed definition of “workers” within the scope of the new Directive. It is very broad, and would make the Directive more prescriptive in its scope than previous pieces of EU employment law.

5.68As regards chapter III of the draft Directive on new material employment rights, the Committee is concerned at the lack of substantive evidence adduced by the Commission to support its claim that “there is a risk of race to the bottom in standards applying to new forms of work where the regulatory framework is weaker and more patchy across Member States”. As a result, the proposed changes—in particular in relation to probationary periods and the requirements as regards reference hours for variable workers—may be disproportional to the Commission’s objectives.

5.69In addition, the drafting of the proposal leaves many crucial concepts—including “reasonable advance notice” in relation to variable hours, the “interest of the worker” test for extending probation periods; and the “legitimate reasons” test for using exclusivity clauses to prevent parallel employment—undefined, meaning the legislation could increase rather than reduce divergences in national practices if these concepts are interpreted in different ways by different Member States.

5.70With respect to the proposed restriction on probationary periods, we note from the Minister’s explanation that the time limit on probation seems to serve no meaningful purpose. It would require legislative change in the UK and Ireland only, even though there is no link in UK law between the length of the probationary period and the enjoyment of statutory employment rights. As such, the UK’s current approach to probation cannot be construed as conferring an unfair competitive advantage to British employers compared to those based elsewhere in the EU.

5.71Given the legal and political importance of the proposal, we have retained it under scrutiny and have asked the Minister to keep the Committee informed of developments within the Council and the European Parliament. We are particularly interested in:

Implications of Brexit

5.72Although the UK is scheduled to have left the EU by the time this new Working Conditions Directive would take effect at the start of the next decade, the Minister notes the Directive may have to be transposed into UK law under the terms of the post-Brexit transitional arrangement which the Government is seeking.

5.73The Committee agrees that, if the Government wants a post-Brexit transitional period during which the UK effectively stays in the Single Market to avoid the abrupt imposition of trade barriers when it becomes a “third country” in March 2019, EU law would continue to apply. The other Member States have said explicitly that such an obligation would also include EU legislation that only takes effect during the transitional period. Whether this new Working Conditions Directive will apply in the UK therefore depends on whether the legislation is agreed, and takes effect during the transition.

5.74The new Directive is not expected to take effect until late 2020 at the earliest. However, given the current uncertainty about the potential length of the transition, the UK could be under a legal obligation to transpose it into domestic law. The Committee therefore considers full and continued scrutiny of the proposal will be necessary in view of its potential impact on UK employment law. The Committee has written to the Business, Energy and Industrial Strategy and Work and Pensions Committees to seek their views on the proposal before considering it further, in view of their inquiry into employment conditions in the UK.

5.75The Committee has wider concerns about the political, legal and financial implications of the proposed transitional arrangement. In particular, the UK would effectively retain most, if not all,111 of the obligations of a Member State without the attendant rights, in particular, as regards representation and voting rights within the Council, COREPER and the technical Committees that assist the European Commission in the implementation of EU law. These implications should be carefully considered by Parliament.

Previous Committee Reports

None.


54 Other initiatives the Commission is preparing as part of the Pillar of Social Rights are a legislative initiative on access to social security for atypical workers and the self-employed; an evaluation of existing EU Directives on fixed-term contracts and part-time work; and legislative proposals for a European Labour Authority and a European Social Security Number. See “Background” for more information.

55 Directive 91/533/EEC, transposed into UK law under the Employment Rights Act 1996.

56 Article 17: “Member States shall take the necessary measures to prohibit the dismissal or its equivalent and all preparations for dismissal of workers, on the grounds that they exercised the rights provided for in this Directive”.

57 Explanatory Memorandum submitted by the Department for Business, Energy & Industrial Strategy on 15 January 2018.

60 The Government has suggested some elements of the proposed Directive may require a different legal base, which would in turn impose a unanimity requirement. It is unclear if the contentious elements (which relate to claims for unfair dismissal) could dropped or split off into a separate Directive.

61 https://publications.parliament.uk/pa/cm201719/cmselect/cmworpen/352/35209.htm#_idTextAnchor048.

62 For example, it is still unclear where the UK will have the ability to negotiate new international agreements that fall within the remit of EU law during the transition (even if they would only enter into force afterwards).

63 Directive 91/533/EEC on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship. It was adopted by unanimity under then-article 100 of the Treaty on the common market. The EU did not have a specific competence to legislate in respect of employment conditions until the entry into force of the Treaty of Amsterdam in 1999.

64 The Written Statement Directive was transposed in the UK in 1993 via the Employment Rights Act 1996.

65 Other EU employment legislation focuses on health and safety protection; limits on working time; anti-discrimination and equal treatment measures; employment conditions for posted workers; and information provision on transfers of undertakings (TUPE) and collective redundancies.

66 19 Member States, including the UK, use at least one of these derogations.

67 REFIT Evaluation SWD(2017) 205 (26 April 2017).

68 For example, the UK does not apply the Directive to agency workers whereas most Member States do. See for more information the overview on pages 11–12 of the Commission Impact Assessment (SWD(2017) 47).

69 Those employed in the gig economy are referred to as “platform workers” by the European Commission, to the extent that they are not self-employed (and therefore outside the scope of EU labour law).

70 European Commission Impact Assessment SWD(2017) 47, p. 9.

71 Idem, p. 15.

72 Idem, p. 16.

73 European Commission document COM(2016) 127. Cleared from scrutiny on 8 February 2017.

74 European Commission Impact Assessment SWD(2017) 47.

75 Under exclusivity or incompatibility clauses in employment contracts, a worker cannot take up parallel employment with another employer.

76 Impact Assessment SWD(2017) 47.

77 The Committee considered the Pillar of Social Rights in more detail in its Report of 29 November 2017. The Pillar was formally adopted by all Member States, the Commission and the European Parliament on 17 November 2017.

78 The Commission said in April 2016: “Together with the European Pillar of Social Rights, the Commission is launching a first-stage consultation of the social partners on the revision of Directive 91/533/EEC (the Written Statement Directive). As part of this consultation, the social partners will be consulted on whether to amend the Directive more substantially with a view to introducing minimum standards applicable to every employment relationship and prohibiting abuse”.

79 The first phase consultation of the social partners on an EU initiative on “access to social protection”, which is focused on the rights of those in non-standard employment and the self-employed (which are not covered by EU employment law) took place in May 2017. The second phase consultation opened in November 2017. The Commission is expected to announce in early March what, if any, next steps it intends to take with this initiative after hearing the views of trade unions and employers’ organisations.

80 Council Directive 99/70/EC on fixed-term work and Council Directive 97/81/EC on part-time work. The REFIT evaluation of these Directives had been due for publication in 2017, but this appears to have been delayed.

81 The proposal for a European Labour Authority, currently scheduled for publication in early March 2018, is expected to focus on strengthening cooperation between labour market authorities, especially with respect to EU nationals who live and work in two different Member States.

82 The proposal for a European Social Security Number is expected to introduce a unified social security number (e.g. national insurance number) for EU nationals which can be used in all Member States.

83 Article 154 TFEU.

84 The European Trade Union Congress on behalf of national trade unions, and on the employers’ side BUSINESSEUROPE (private firms), UEAPME (small businesses) and CEEP (public employers).

87 Article 155 TFEU

88 The trade unions requested more rights than those proposed by the Commission in its second phase consultation document, including “a complete ban on forms of contractual arrangements not guaranteeing workers a minimum of paid hours and a right to adequate remuneration”. See Commission Impact Assessment SWD(2017) 478, p. 29.

89 The employers’ organisations preferred not to express views on specific minimum rights set out in the consultation document, “arguing that such issues were a matter of national competence and that it was not necessary, or even contrary to the principle of subsidiarity, for the EU to act in these fields”. See Commission Impact Assessment SWD(2017) 478, p. 29.

90 European Commission document COM(2017) 797.

91 Explanatory Memorandum submitted by the Department for Business, Energy & Industrial Strategy on 15 January 2018.

93 The European Commission explains that its proposed criteria are based on the case law of the Court as developed since case C-66/85 (Lawrie-Blum), most recently recalled in its judgement in case C-216/15 (Ruhrlandklinik).

94 Member States can currently exempt workers from the Written Statement Directive where the employment relationship is of less than one month; entails a working week of 8 hours or less; or where it is “of a casual and/or specific nature”.

95 The Commission has also proposed that, to avoid placing disproportionate burdens on private households, Member States can disapply certain specific rights for domestic workers: the right to request a new form of work, to mandatory training without charge, and to application of favourable presumptions in case of missing information with respect to natural persons employing domestic workers.

97 The introduction of information on overtime into the written statement reflects the case law of the European Court of Justice, which ruled in Case C-350/99 (Lange) that “such information forms part of the ‘essential aspects of the employment relationship’ about which the worker should be informed”.

98 In order to reduce burdens on employers, the proposal also requires Member States to produce templates and models for the written statement and to make information on national laws or provisions and relevant collective agreements available to employers in an accessible format.

99 The Taylor Review recommended that the right to a written statement should be extended to non-employee workers, and should be made a “day one” right.

100 This provision reflects Principle 5(d) of the European Pillar of Social Rights: “5(d): Any probation period should be of reasonable duration”.

101 The Commission explains that these restrictions on employers do not apply “in cases where the employer sets a task to be achieved, but the worker is free to determine the time schedule within which he or she performs the task”.

102 The Commission argues this provision reflects Principle 5(a) of the European Pillar of Social Rights: “The transition towards open-ended forms of employment shall be fostered.”

103 Employers will have to respond to a written request for a more stable employment relationship within one month for larger organisations, and but Member States can extend that period to three months for natural persons and small businesses.

104 Commission Impact Assessment SWD(2017) 47, p. 190.

105 Non-employee workers are not normally entitled to protection against unfair dismissal.

106 The proposed Directive is based on Article 153(1)(b) on working conditions and subject to the ordinary legislative procedure, i.e. the European Parliament is co-legislator and the Council decides by qualified majority. By contrast, EU legislation that affects “protection of workers where their employment contract is terminated” must be adopted under article 153(1)(d) TFEU, which requires the Council to act by unanimity and only requires the European Parliament to be consulted.

107 See Section 27A of the Employment Rights Act 1996. The Minister says this “reflects the government’s position that the use of exclusivity clauses in zero hours contracts undermines choice and flexibility for the individuals concerned, and that it is unjustifiable for an individual who is not guaranteed work to be prevented from seeking and carrying out work elsewhere in order to boost their income”.

108 “Restrictive covenants” are usually agreements between employee and employer in order to restrict the employee’s activities if the employment is terminated.

109 See article 14 of the proposed Directive. In the case of favourable presumptions, employers would have the possibility to “rebut the presumption”, the effects of which are not made clear. The complaints mechanism was proposed after the REFIT evaluation of the Written Statement Directive found redress systems based on claims for damages are less effective than those based on other forms of penalty such as lump-sums.

110 Article 19 of the proposed Directive.

111 For example, it is still unclear where the UK will have the ability to negotiate new international agreements that fall within the remit of EU law during the transition (even if they would only enter into force afterwards).




2 February 2018