Memorandum by BusinessEurope
SUMMARY1. BUSINESSEUROPE
supports EU actions to Promote labour market flexibility and welcomes
the launching of a debate on the modemisation on labour law. However,
the competence to modernise labour law lies first and foremost
with the Member States. Most of the measures will therefore need
to be taken there. The role of the EU should be to organise exchanges
of experiences and monitor national reforms using the instruments
of the European growth and jobs strategy.
2. European law can prevent the national
legislator from introducing reforms in national law. Taking a
top-down legislative approach at the EU level would be counter-productive.
BUSINESSEUROPE would strongly oppose measures aimed at harmonising
the definition of "worker" at the EU level.
3. Increased flexibility in traditional
standard contracts must be improved. However, there is no one-size-fits-all
solution to meet different employers and workers flexibility needs.
Ensuring the availability of a variety of contractual arrangements
is essential. The green paper presents an unjustified negative
picture of flexible forms of work This is incompatible with the
flexicurity approach.
4. Similarly, the green paper does not sufficiently
underline the importance of self-employment for the development
of the entrepreneurial mindset Europe so badly misses. Having
competitive companies is a prerequisite for employment. The development
of commercial contractual relations is not a threat to labour
law. On the contrary, it is a pre-condition to create jobs in
a market economy.
5. Labour law reforms must focus on facilitating
the creation of new jobs as opposed to trying to preserve existing
ones. Rather than imposing restrictions on possibilities to terminate
individual employment contracts, or introducing restrictions on
the use of flexible forms of work, reforms should focus on supporting
companies and workers efforts to adapt to market changes. Workers
protection should become less dependant of labour law instruments
and rely more on education and training measures to assist individuals
in their career development. In line with the flexicurity approach,
work to follow on the green paper must promote flexible labour
law.
INTRODUCTION6. On
22 November 2006, the Commission adopted a green paper entitled
"modernising labour law to meet the challenges of the 21
century". The purpose of this document is to launch a public
debate on how labour law should evolve to support the European
growth and jobs strategy. In the light of the replies received,
the Commission will issue a follow-up communication in 2007. This
work is part of the wider debate on flexicurity on which the Commission
will also prepare a communication setting out common EU principles
in June 2007 to help Member states steer reform efforts.
7. BUSINESSEUROPE supports EU actions to
promote labour market flexibility across Europe. It welcomes the
launching of a Europe-wide debate on the modernisation on labour
law. The 2006 annual progress report on growth and jobs rightly
underlines that "increasing the responsiveness of European
labour markets is crucial to promote economic activity and high
productivity" However, the competence to modernise labour
law lies first and foremost with the Member States. Most of the
measures will therefore need to be taken in the Member States.
The role of the EU should be to organise exchanges of experiences
between Member States and monitor national reforms using the instruments
of the European growth and jobs strategy. Taking a top-down legislative
approach at the EU level would be counter-productive for national
reforms. BUSINESSEUROPE would strongly oppose measures seeking
to harmonise the definition of "worker" at the EU level.
8. The modernisation of labour law must
be based on sound analysis. Flexibility in the labour market is
crucial to create more jobs. BUSINESSEUROPE fully agrees that
increased flexibility in traditional standard contracts must be
improved. However, there is no one-size-fits-all solution to meet
different employers and workers flexibility needs. Ensuring the
availability of a variety of contractual arrangements is essential
for effective functioning of labour markets. An unjustified negative
picture of flexible forms of work underpins the Commission flawed
concept of "insiders" and "outsiders" and
is incompatible with the flexicurity approach.
9. Similarly, BUSINESSEUROPE regrets that
the green paper does not sufficiently underline the importance
of self-employment for the development of the entrepreneurial
mindset Europe so badly misses. Having competitive companies is
a prerequisite for employment. Bogus self-employment and undeclared
work must be combated but the development of commercial contractual
relations is not a threat to labour law. On the contrary, it is
a pre-condition to create jobs in a market economy.
10. In order to contribute to the debate
launched by the green paper, the present position paper sets out
BUSINESSEUROPE's views on how to modernise labour law.
FLEXICURITY AND
THE MODERNISATION
OF LABOUR
LAW
11. Research shows that people feel secure
because it is relatively easy to find a job rather than because
they are safeguarded by employment legislation. Labour law reforms
must therefore focus on facilitating the creation of new jobs
as opposed to trying to preserve existing ones.
12. The essence of the flexicurity approach
is that it does not seek to organise trade-offs between flexibility
and security. On the contrary, flexibility is seen as a way to
improve employment security. In order to be consistent with this
approach, work to follow on the green paper must promote:
— flexible labour law with job protection
legislation which does not hamper recruitment under indefinite
duration contracts; a choice between various types of flexible
employment contrasts to answer diversified needs of companies
and workers; and a commitment to fight undeclared work which creates
insecurity on the labour market and unfair competition for law-abiding
companies and workers,
— effective active labour market policies,
which requires that the necessary budgetary margins have been
created to allow such an investment, and
— employment-friendly social protection
system and in particular unemployment insurance which links rights
and obligations for the unemployed as opposed to giving unconditional
income support.
13. It must also be recognised that there
is not one single model of flexicurity policies that can be generalised
across Europe. Each country has to decide on its own on the sequence
of reforms and different components of the policy mix to be put
in place.
INSIDERS AND
OUTSIDERS ON
THE LABOUR
MARKET
14. The green paper is based on a flawed
concept of "insiders" and outsiders". It classes
as insiders only those who are permaently employed on a full-time
basis. In reality, in the flexicurity approach, the "outsiders"
are the unemployed. All those legally employed, whether under
a full-time indefinite duration contracts, working part-time,
under a fixed-term contract, or doing temporary agency work should
be considered as "insiders".
15. The report Employment in Europe 2006
and the 2006 European working conditions survey published by the
Dublin foundation provide useful data to understand recent trends
on Europe's labour markets. These documents indicate that
— 80 per cent of workers say that they
are satisfied or very satisfied with their working conditions
and with their work life balance.
— With 78 per cent of labour contracts,
indefinite duration employment remains the most widespread form
of employment in Europe.
— 18.4 per cent of employees in the
EU working part-time in 2005, part-time work has risen noticeably
over the years but remains low in new Member States. Even if it
continues to be predominantly a feature of female employment,
working part-time is a choice for 70 per cent of those workers
and a useful step to enter the labour market for the remaining
30 per cent. Since part-time workers are protected against discrimination
following the framework agreement negotiated by the European social
partners implemented by a European directive, it cannot be regarded
as "precarious" work.
— The same protection applies to fixed-term
work contracts which, after a significant rise since the mid-1980's,
seem to stabilise around 14 per cent of the EU workforce. Fixed-term
work has no significant gender dimension but a strong cyclical
component. With regard to the share of fixed-term contracts in
the labour market, important variations exist within Europe. They
represent a higher proportion of the workforce in some countries
as a consequence of excessive rigidities in permanent contracts.
Hence the importance of removing the rigidities in indefinite
duration contracts to address the real causes of this phenomenon
rather than further penalising job creation by introducing further
restrictions in the use of non-permanent contracts.
— 41 per cent of agency workers are
in longer-term employment within a year of their assignment. Far
from being a threat, with only around 2 per cent of employment
across the EU, temporary agency work remains an underexploited
stepping stone into the labour market in most EU countries. Temporary
agency work does not necessarily mean temporary employment. Workers
will sometimes have a fixed-term work contract with the temporary
employment agency and sometimes have a permanent work contract
with them.
How to Create a Flexible and Inclusive Labour
Market?
16. The priorities for a meaningful labour
law reform agenda are to remove unnecessary rigidities which hamper
job creation and to find new ways of providing security in the
labour market. Flexibility of labour law has tended to be improved
through the introduction of various flexible forms of employment
without sufficiently adapting the traditional standard employment
model. Rather than imposing restrictions on possibilities to terminate
individual employment contracts, or introducing restrictions on
the use of flexible forms of work, reforms should focus on supporting
companies and workers efforts to adapt to market changes. Workers
protection should become less dependant of labour law instruments
and rely more on education and training measures to assist individuals
in their career development.
17. Reforms aimed at a simplification of
regulatory and administrative procedures will be particularly
beneficial for SMEs. Fully applying the Commission's approach
of "think small first" by carrying out, before revising
existing legislation or taking new initiatives, an in-depth impact
assessment especially concerning very small enterprises is essential.
18. However, since the existing rigidities
mostly stem from national legislation, the detailed agenda for
labour law reforms can only be decided upon at the national level.
19. Depending on their content, labour law
and collective agreements can contribute or not to a smooth functioning
of labour markets. The relationship between legislation and collective
agreements is complex and varies from country to country. The
EU level should respect these differences and avoid adverse interferences
in national negotiations. Furthermore, European law can prevent
the national legislator from introducing reforms in national law,
notably due to the fact that EU directives contain non regression
clauses.
20. Examples of over prescriptive minimum
requirements or badly designed EU legislation which can create
difficulties in their implementation are:
— The rules on defence of rights contained
in directives 2000/43 and 2000/78 on non-discrimination can lead
to considerable bureaucratisation of human resources management
by making it necessary to keep many documents for a long period
after a human resources management decision to be able to establish
the employers good faith in case of unjustified judicial claims.
— Article 7 of the transfer of undertakings
directive makes an open ended requirement to inform individual
employees on the date, reason and implication of the transfer
when there are no employees representatives without setting any
limits to this requirement. This creates legal uncertainty. Such
an opened door to unjustified individual contestations even a
long time after the transfer is damaging.
— The visual display unit directive
requires the employer to evaluate technical details of software
packages when designing, selecting, acquiring or modifying them
to see whether they can be adapted to match the user's level of
knowledge and experience. This is very difficult to apply in SMEs.
Similarly, the rules governing breaks when working on visual display
units should be limited to monotonous activities which genuinely
cause a strain.
21. The following examples illustrate how
labour law or collective agreements have impacted on the situation
of employment in different European countries.
Examples of balanced measures to answer both
the employers and employees flexibility needs are set out below:
— In the UK, a right to request working
arrangements for parents of young children or with adult caring
responsibilities, with employers being able to refuse a request
where there is a recognized business reason for doing so. In 90
per cent of the cases, requests have been accepted by the employer
or a compromise reached, with little differences in acceptance
rates between large and small firms. This indicates the success
of the approach which creates benefits for employees without creating
undue burdens on companies. Employers have realized improved benefits
in terms of improved recruitment and retention of staff, with
many reporting increased productivity. 86 per cent of mothers
return to work with the same employer meaning that fewer trade
down their job in order to combine work and family responsibilities.
— In Spain, collective bargaining plays
a crucial role in promoting change in labour relations. National
surveys indicate that some elements of flexibility are slowly
being developed in relation to working time frameworks (annual
period of reference, irregular distribution of working time schemes),
classification of workers (using more flexible parameters to group
workers), and remuneration systems (the variable part of remuneration
gaining weight). Employers and trade union organizations have
also been promoting changes in the content of collective bargaining
through different national agreements from 2001 onwards. However,
these changes are too slow. The regulatory framework does not
always facilitate change.
— In the Netherlands, transition from
full-time to part-time work and vice versa has successfully been
promoted by the social partners and later introduced as a legal
right. The employer is able to refuse a request for business reasons.
The law on flexibility and security allows deviation by collective
agreement from the rule limiting renewal of fixed-term contract
to a maximum of three contracts of maximum two years each. Finally,
the concept of "working smarter" was introduced by employers,
in consultation with trade unions, and aims at measures to increase
productivity and employment in companies.
Examples of obstacles still to be removed in
the Member States are set out below:
— In Germany, the law on protection
against dismissals should be amended to open up possibilities
for the employer and the employee to agree on severance payment
as an alternative to the employee's right to take legal action
for wrongful dismissal.
— In Germany, restrictions to the use
of fixed-term contracts limiting employers' possibilities to employ
person on a fixed-term contract if this person has been employed
by the same employer before should be removed.
— In Spain, more flexibility is needed
to allow companies to change working conditions (grouping of workers,
tasks and functions, timetables, working time internal frameworks,
remuneration systems) when it is necessary to anticipate change
and meet market demands as the regulatory framework only allows
it on the basis of too rigid requirements.
— In Spain, the requirement to haven
an administrative authorization prior to a collective dismissal
slows down adjustment to change and distorts negotiations as in
practical terms this authorization increases significantly the
employment termination cost beyond already high legal provisions
(it can even triple this cost). This deters companies from hiring
workers for an indefinite duration.
— In Luxembourg, because private employment
agencies can only provide temporary work services, a company looking
for a permanent position will not be able to use the services
and expertise of a temporary work agency to fill this job vacancy.
This lack of flexibility creates less work opportunities for job-seekers
and prevents them from accessing a further path to enter the labour
market.
— In the Czech Republic, employers
believe that there is a need for radical labour deregulation to
ease the conditions for temporary contracts, lift limitations
to their renewal, removing constraints related to the reasons
to be given when notifying termination of an employment relation,
and having a simpler and faster dispute settlement system.
— In the Netherlands, legislation on
dismissals remains complex, rigid, and costly. Prior authorization
is required, resulting in long procedures. Moreover, very high
compensation costs are imposed on the employer. This deters employers
from hiring workers for an indefinite duration.
How to ease labour transitions?
22. As indicated above, there is a need
for more flexible employment protection legislation and more efficient
assistance to the unemployed in a number of countries. However,
the role of the European Union in this debate is to encourage
Member States to introduce the necessary changes and organise
exchanges of experiences so that different countries can learn
for each other.
23. With regard to access to training, the
experience of countries which instituted a right to training shows
that it has little impact for the workers who are most in need:
the less qualified. In reality, personal motivation remains the
most important driver for the development of life long learning.
The key elements to successfully increase participation in life
long learning are the following:
— Ensuring that education and training
offers are attractive and correspond to labour market needs,
— Having efficient guidance services
to help companies and workers identify courses or programmes which
meet their needs,
— Giving an appetite for learning to
individuals from the very early stages of education and supporting
them in their efforts to up-grade their skills,
— Creating the right framework conditions
to encourage companies to invest in life long learning,
— Develop instruments to validate the
competencies acquired through informal learning such as on the
job-learning.
24. Legislation is not the right instrument
to influence learning behaviours. By contrast, agreements between
the social partners can Play a useful role in promoting a life-long
learning culture. The framework of actions on the life-long development
of competences and qualifications negotiated by the European social
partners and subsequent implementation reports have shown that
agreeing on a common approach to life-long learning contributes
to changing attitudes. Examples of practical tools developed by
social partners to promote life-long learning range from the creation
of funds to mutualise training costs incurred by enterprises,
systematising the use of individual competencies development plans,
designating learning representatives in companies, creating individual
learning accounts, concluding collective agreements defining the
respective roles and responsibilities of the employer and the
employee with regard to life-long learning, etc. However, when
developing policies to promote life-long learning, it should be
borne in mind that motivation to learn cannot be decreed. The
key is to create the conditions that will induce companies and
individuals to invest financial resources, time and efforts to
up-grade skills. The tools have to be adapted to local specificities
and should be defined as close as possible to the end beneficiaries.
25. Concerning legal definitions of self-employment
and employment, BUSINESSEUROPE believes that existing national
legal definitions are generally sufficiently clear to establish
the real status of a worker. There is no general need to clarify
legal definitions across Europe.
26. There are important distinctions in
the fiscal social security and legal regimes applied to self-employment
and employment. These distinctions correspond to the specific
features of a commercial activity versus a labour contract situation
and are generally justified. BUSINESSEUROPE is not in favour of
establishing a minimum floor of rights regardless of the workers
status. Some Member States created an intermediary legal category
between employment and self-employment in order to facilitate
transitions from one status to the other. Sharing experiences
on such national initiatives at the EU level so that Member states
can learn from each other could bring added value. However, BUSINESSEUROPE
sees no need for the generalisation of new legal categories such
as the so-called "economically dependant workers" across
Europe and is strongly opposed to measures aimed at explicitly
or implicitly harmonising national definitions of employees and
self-employed at the EU level.
27. With regard to the establishment of
a "floor of rights for workers regardless of the form of
their work contract", existing EU provisions protecting workers
against discrimination already do that. It should be borne in
mind that:
— comparisons must be made between
comparable situations on a proportional. basis, and
— differences in treatment justified
for obiective reasons are not discrimination as foreseen in the
social partners agreements on part-time work and on fixed-term
contracts.
28. Negotiations of a similar agreement
on temporary agency work have failed and the directive proposed
by the Commission is currently blocked in Council due to over
prescriptive provisions on how to define the application of the
principle of non-discrimination in the case of this triangular
relationship. This shows that seeking to impose detailed EU provisions
on issues which are best dealt with in Member States is neither
appropriate nor effective.
29. Generally speaking, BUSINESSEUROPE believes
that terms and conditions of employment of workers are best defined
by the social partners or the legislator in Member States and
that existing EU legislation, already amply cover what could be
legislated at the EU level. Hence, the need to avoid over-regulation
at the EU level.
How to deal with triangular relationships?
30. Temporary agency work does not necessarily
mean temporary employment contracts. As indicated above, a distinctive
feature of temporary agency work is that it establishes a triangular
relationship where the employer is the agency, with the agency
having the obligations of an employer and agency workers protected
by applicable legislation. The agency then sends its workers to
a user company to perform a task and delegates power to give instructions
to this user company.
31. Situations in which an employment agency
acts as an interface to put a worker in contact with an employer
and for which the employer and worker establish a work contract
directly is not temporary agency work.
32. Similarly, sub-contracting, which is
essentially a commercial relationship with contractual obligations
but no subordination between the client and the service provider,
must not be confused with temporary agency work.
33. The specificities of agency workers
described above need to be born in mind to avoid misunderstandings
when discussing the issue or comparing experiences at EU level.
34. Furthermore, it should be born in mind
that a recent study of the European Foundation for the improvement
of living and working conditions underlined that temporary agency
work and the employment status of temporary agency workers is
comprehensively regulated by national law and collective agreements.
Clarifications of the status of temporary agency workers, if any,
can only take place in Member States.
35. Subsidiary liability is not an appropriate
solution to establish responsibility. All sub-contractors must
ensure that they follow relevant labour law when dealing with
their employees—contractors and user organisations must
therefore be able to expect that sub-contractors are fulfilling
their responsibilities. Ensuring their sub-contractors comply
with the law is not their responsibility. The subsidiary liability
principle would also place a considerable burden on the main contractor.
SMEs in particular do not have the administrative resources to
make a thorough examination of their subcontractors, let alone
situations where there is a chain of subcontractors. In any event,
the main contractor is not in a position to control compliance
in practice. BUSINESSEUROPE is therefore opposed to it.
How to promote mobility of workers?
36. The labour relation of frontier workers
who are living in one country but working in a neighbouring state
are subject to the national law and collective agreements of the
country of employment. In the case of workers temporarily posted
to another Member State, the posting of workers directive defines
which matters are subject to the law or collectively agreed provisions
of the host country and which issues remain subject to the laws
of the country of Origin. BUSINESSEUROPE sees no need for a more
convergent definition of worker in EU directives and would strongly
oppose moves seeking to indirectly harmonise existing national
definitions.
How to improve enforcement of labour law and combat
undeclared work?
37. Effective enforcement of existing Community
labour law as transposed into national legislation lies up and
foremost in the hands of national authorities. However, the EU
can play a useful role by organising exchanges of experiences
between national labour inspectorates as is already done. Furthermore,
technical assistance and cooperation between Member States to
help new Member states efforts to enforce the EU legislative acquis
can also be useful. We welcome the fact that the ESF foresees
the possibility to grant financial support for activities of capacity
building with regard to the enforcement of legislation in convergence
regions.
38. Enforcement is not limited to sanctioning
non-compliance. It also involves prevention and awareness raising
of the legal rights and obligations of companies and workers.
Social partners can therefore also play a useful role. Initiatives
such as twinning programmes between national employers' federations
to assist in the development, in the new Member states, of strong
business organisations able to provide services to their members
and advise them on how to respect their legal obligations are
important in this respect. Similarly joint social partners initiatives
such as the joint integrated programme of the EU social dialogue
developed by BUSINESSEUROPE, UEAPME, CEEP and ETUC contribute
to reaching that objective.
39. With regard to prevention, the reasons
lying behind the development of undeclared work, which can vary
from country to country, have to be identified and addressed.
Removing unnecessarily restrictive or bureaucratic employment
related requirements is part of the answer.
40. Furthermore, in case of cross-border
posting of workers, improving administrative cooperation between
relevant national authorities is essential to ensure effective
implementation of the posting of workers directive.
41. In addition, steps should be taken to
improve information for companies wishing to post workers in another
Member State to help them complying with their legal obligations.
42. With regard to combating undeclared
work, real actions to do so can only be taken in the Member States.
The EU level can play a useful role by promoting exchanges of
national experiences and encouraging Member States to act. Here
also, social partners can make a useful contribution. A Seminar
to examine national social partners' initiatives to combat undeclared
work was held in 2005. Further discussions on how to prevent and
combat undeclared work is foreseen in the context of the EU social
dialogue work programme 2006-08. As explained earlier on, combating
undeclared work is essential in the context of a flexicurity approach.
UNICE and its member federations therefore attach the greatest
importance to contributing to making progress in this field.
How to revise the working time directive?
43. The working time directive is a perfect
example of what should not be regulated at EU level. Rules governing
working time should be defined in the Member States and not at
EU level for several reasons:
— Companies and workers needs vary
a lot across Europe and there are many ways to organise working
time to meet both the employer's and the worker's wishes.
— Opinions about what should be defined
by national legislation, what should be left to autonomous negotiations
between social partners at national, sector or company level and
what should be agreed directly between individual workers and
their employer also varies a lot from country to country.
— Negotiations on working time are
closely linked to pay considerations and interference from the
EU level into national pay negotiations must be avoided.
44. However, the fact is that the EU did
adopt a directive on working time in 1994 and ECJ jurisprudence
way beyond what the EU legislator intended has developed as a
consequence. Amending the working time directive to solve the
problems created by European jurisprudence on on-call time is
urgent. The EU institutions have a joint responsibility to do
so. BUSINESSEUROPE would like to make clear that any revision
of the working time directive to solve the problems caused by
the Simap and Jaeger judgements must retain the opt-out, which
is a vital labour market flexibility.
CONCLUSION
45. The 2006 annual progress report on growth
and jobs rightly underlines that "increasing the responsiveness
of European labour markets is crucial to promote economic activity
and high productivity". However, the competence to modernise
labour law lies first and foremost with the Member States. Most
of the measures will therefore need to be taken by national players.
The role of the EU should be to organise exchanges of experiences
between Member States and monitor national reforms using the instruments
of the European growth and jobs strategy. Taking a top-down legislative
approach at the EU level would be counterproductive for national
reforms.
46. EU initiatives to encourage the modemisation
of labour law through appropriate national actions must be part
of the broader flexicurity agenda. BUSINESSEUROPE counts on the
EU Cornmission to ensure that initiatives following on the green
paper are fully in line with this approach.
47. BUSINESSEUROPE and its member federations
for their part will continue to promote the necessary modernisation
of labor law throughout Europe, including through joint initiatives
such as the joint analysis of key labour market challenges foreseen
in the EU social dialogue work programme 2006-08.
6 March 2007
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