Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet and ors
The Posted Workers Directive provides minimum levels of protection for workers posted from one member state to another. In Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet and ors, the European Court of Justice (ECJ) confirmed the decision in Viking and added that industrial action by Swedish unions to protect terms and conditions under Swedish collective agreements amounted to discrimination against non-state employers.
Having won the contract to build a school at Vaxholm in Sweden, Laval (a Latvian company) posted Latvian construction workers to Sweden for that purpose.
The Swedish construction unions tried to get Laval to sign up to collective agreements in the construction sector covering pay, holidays, other terms and insurance arrangements, but the company refused. The Swedish construction unions “blockaded” Laval’s sites in Sweden, with further sympathy action being called by the Swedish electricians’ union. The Swedish arm of Laval was eventually declared bankrupt.
Laval brought proceedings in the Swedish Courts arguing that its freedom to provide services had been infringed and that it had been discriminated against because of the failure of Swedish national provisions to take into account collective agreements that it had entered into with unions in Latvia.
The ECJ ruled that:
- The right to take collective industrial action is a “fundamental” right
- The EC Treaty provisions protecting an employer’s freedom to provide services in other member states apply to industrial action and can be relied upon by non-state employers
- Industrial action represents a restriction on the freedom of provision of services where it makes the exercise of that right “less attractive”, but is acceptable if it is to pursue a legitimate aim and is justified by overriding reasons of public interest
- The industrial action must also be “suitable for securing the attainment of the objective which it pursues and [does] not go beyond what is necessary in order to attain it”
- The protection of workers is capable of amounting to a legitimate objective.
This mirrors the ECJ’s findings in the Viking case in relation to an employer’s right to freedom of association, but it then went on to rule that:
- Protection of workers from social dumping can amount to an overriding reason or public interest
- A “blockade” to ensure that workers in the context of transnational service provision have their terms and conditions fixed at a certain level falls within the objective of protecting workers
- But, in the context of posted workers, industrial action in support of a demand that an employer exceeds the level of protection guaranteed by the Posted Workers Directive when there are no clearly defined national law requirements cannot be justified
- Employers will be discriminated against where national rules do not take account of collective agreements in the employer’s state of origin.
This ruling, along with Viking, clearly shows that the ECJ is not prepared to give any superiority to a union’s so-called “fundamental” right to take industrial action. Instead, it is prepared to carry out a balancing exercise to see whether the restriction of the employer’s EC law rights is justified in the context of any industrial action taken.
Viking relied upon its right to freedom of establishment; Laval relied upon its freedom to provide services. It is all too easy to envisage employers manufacturing EC law rights of their own in order to argue that they have been restricted by industrial action.
The Laval case is particularly hostile to trade unions, given the ruling that the unions’ objective in taking industrial action was not legitimate because they demanded a collective agreement in excess of the minimum standards protected by the Posted Workers’ Directive.
And the ECJ ruling that an employer is discriminated against when national rules fail to take into account the collective agreements it has entered into in its state of origin has further profound implications. It seems that collective bargaining arrangements in a second member state will somehow have to take account of agreements in the state of origin. This can only increase the opportunities for social dumping and undermine national collective bargaining.
As with the Viking case, the immediate implications for industrial action in the UK may be limited. Of more profound concern is the ECJ’s willingness to scrutinise the reasons for, and proportionality of, industrial action and the effect that that willingness may have on industrial action legislation in the UK in the future.