The Maastrict Treaty's, "social chapter" introduced a new procedure for making European Union labour law: by "social dialogue" between labour and management at EU level. This means direct talks between trade union and employers organisations at a European-wide level.

These talks can lead to agreements which can be turned into Directives binding on Member States. The first results were the agreements annexed to the directives on Parental Leave (June 1996) and Part-Time Work (December 1997).

Case T-135/96, Union Europèenne de l'Artisanat et des Petites et Moyennes Entreprises (UEAPME) v Council of the European Union [1998] IRLR 602 (UEAPME), decided 17 June 1998, was a challenge to the Parental Leave directive by a European organisation of employers (UEAPME), together with other national employers' organisations.

UEAPME is the european level small and medium sized employers' organisation. They claimed that, as they were not party to the talks, the agreement was not valid and neither was the directive.

The challenge was based on Article 173 of the EC Treaty, which allows for complaints to the European Court of First Instance (CFI) against acts of the Council which are "of direct and individual concern" to the challenger.

The move was rejected by the CFI. The appeal to the European Court has now been withdrawn. The CFI laid down conditions to apply to all future social dialogue agreements.

Unfortunately, the CFI's ruling had to be formulated in terms of Article 173, and, in particular, the words "of direct and individual concern". Out of these words the CFI formulated conditions for social dialogue as regards the parties (representativity), the procedures (autonomy) and the outcomes (democratic legitimacy).

Democratic legitimacy

The CFI declared that EU-level agreements, when embodied in directives, must be democratically legitimate. The CFI contrasted two possible legislative outcomes producing directives. The first follows the normal EU legislative process and its "democratic legitimacy... derives from the European Parliament's participation" (para. 88).

The second outcome results from social dialogue; the directive embodies the agreement reached by labour and management. Of this, the CFI says: (para. 89) 
"...the principle of democracy on which the Union is founded requires - in the absence of the participation of the European Parliament in the legislative process - that the participation of the people be otherwise assured, in this instance through the parties representative of management and labour who concluded the agreement...".


For an agreement to be democratically legitimate, the CFI says that it must be ascertained: (para. 90)

"whether, having regard to the content of the agreement in question, the signatories, taken together, are sufficiently representative".

The representativity of the parties is measured "in relation to the content of the agreement" (para. 90). The implication for trade unions is that, for the future, agreements may be democratically legitimate when signed by organisations which are only representative as regards the narrow scope of the agreement concerned.

The key phrase repeatedly used by the CFI to describe the parties to a valid agreement is "sufficient cumulative representativity" (in the official language of the case, French: "reprèsentativitè cumulèe suffisante"; the English translation of this phrase, "sufficient collective representativity" is imperfect).

This phrase was used by the CFI to decide whether UEAPME qualified as a complainant under Article 173 as "directly and individually concerned" by the directive: (para. 90) 
"...representatives of management and labour... which were not parties to the agreement, and whose particular representation - again in relation to the content of the agreement - is necessary in order to raise the collective representativity of the signatories to the required level, have the right to prevent the Commission and the Council from implementing the agreement at Community level by means of a legislative instrument... they must be regarded as directly and individually concerned by that measure".

The implication for trade unions is that, even after the difficult process of social dialogue has resulted in an agreement, EC law may allow non-signatories to challenge the validity of directives implementing social dialogue agreements. Organisations excluded from the social dialogue negotiations may seek to undermine these agreements.

It offers an opportunity, in that agreements negotiated at EU level by social partners who do not have sufficient cumulative representativity may be challenged by legitimate representatives.

The qualification that representativity need only be "cumulative" is important as it allows agreements to be signed by organisations which, taken individually, are far from representative in general. The qualification "sufficient" implies not an absolute standard, but one which is adequate.

While emphasising the importance of representativity, the CFI was reticent on the question of criteria. The CFI seemed to look for evidence of representativity in parties "having regard to their cross-industry character and the general nature of their mandate" (para. 96).

But it explicitly rejected the single criterion of numbers. This reinforces the implication of "sufficient", rather than absolute representativity being adequate. The CFI seemed to be satisfied if the interests of a category were taken into account (para. 105).


The CFI strongly asserted the voluntary nature of the social dialogue under the Maastricht Agreement: (paras. 78-79) 
"...the Agreement [does] not confer on any representative of management and labour, whatever the interests purportedly represented, a general right to take part in any negotiations... even though it is open to any representative... to initiate such negotiations... it is the representatives of management and labour concerned, and not the Commission, which have charge of the negotiation stage...".

This autonomy ceases when the parties wish their agreement to be transformed into an EC legal measure by a decision of the Council and turns to the Commission (para. 85) "which thereupon resumes control of the procedure and determines whether it is appropriate to submit a proposal to that effect to the Council".

Although apparently post-agreement, this control in effect reaches back to the conduct of negotiations. For example, exclusion of other parties from the negotiations may lead to the Commission and Council rejecting the agreement, through their assessment of the representativity of the parties to the agreement: (para. 88) 
"It is proper to stress the importance of the obligation incumbent on the Commission and the Council to verify the representativity of the signatories to an agreement...". 
The Commission and the Council can effectively force the participation of certain parties required for the "sufficient cumulative representativity" needed to achieve democratic legitimacy. In addition, the CFI seemed to approve the view that the Commission could also consider: (para. 86) 
"the representative status of the contracting parties, their mandate and the 'legality' of each clause in the collective agreement in relation to Community law, and the provisions regarding small and medium-sized undertakings...".

This amounts to major potential influence of the Commission, as the parties negotiate under its scrutiny.

These conditions are a stunning reminder of how the courts can shape the emerging EC labour law. If the EC social dialogue plays a role in future EC labour law, the issues of democratic legitimacy, representativity and autonomy cannot be avoided. The question is whether the European Court is the best place for these questions to be decided.

The European Parliament, in an Initiative Report of 20 March 1998 "calls on management and labour either themselves or as part of the social dialogue to draw up proposals for negotiating rules and principles" (para. 6). As the European Court weighs in, time is running out.