The name may have an odd ring to it, but the Posted Workers Directive's aim is to protect the rights of workers sent abroad to work in another European Union country.
The Directive, adopted on 24 September 1996, comes into effect on 24 September 1999. Approved under the EC Treaty, it is binding on the UK. It has a number of remarkable features.
The Directive covers the growing number of workers sent to work temporarily in another Member State. Such arrangements are common in the construction industry, transport, telecommunications, entertainment, repairs, maintenance and servicing. There are, for example, around 60,000 British and Irish building workers in Germany alone.
What conditions of work apply to these workers: those of the enterprise's (and worker's) home country, or those of the host country? Foreign employers could undermine terms and conditions by applying the poorer conditions of the home country rather than the higher conditions of the host country.
The Rome Convention of 19 June 1980 says that, whichever law applies, the workers should have the protection of the laws of the host country. This ECJ reinforced this approach in its decision in Rush Portuguesa (1990) ECR I-1417. The ECJ held that "Community law does not preclude Member States from extending their legislation, or collective labour agreements entered into by both sides of industry, to any person who is employed, even temporarily, within their territory ..."
This allowed Member States to force enterprises sending workers abroad to respect local legislation and collective agreements. Austria, Germany (on 26 January 1996), Luxembourg and France passed laws requiring respect for local conditions.
The Posting Directive goes a step further by making this a requirement of EC law. Article 3 (1) says that "Member States shall ensure that...undertakings...guarantee workers posted to their territory" certain terms and conditions of employment.
Which workers are covered?
The only types of workers specifically excluded from coverage are merchant navy seafarers (Article 1(2)). It seems to include mobile workers employed in transport undertakings, though the Member States inserted a (non-binding) statement in the Council Minutes excluding such workers as well as workers in the press, broadcasting or entertainment business.
Article 2(2) provides that "the definition of a worker is that which applies in the law of the Member State to whose territory the worker is posted". Employment protection law in Britain excludes many workers, building and transport workers in particular, who are defined as "self-employed". The Directive does not let this exclusion follow them abroad.
Terms and conditions
The host country conditions which must be respected include (Article 3(1)):
- MAXIMUM WORK PERIODS AND MINIMUM REST PERIODS
A statement in the Council Minutes, probably with building workers in mind, claims that rest periods cover "periods of inactivity caused by inclement weather". This highlights the uncertainty about the legal position of rest periods, an important issue under the Working Time Directive.
- MINIMUM PAID ANNUAL HOLIDAYS
The Member States in the Council Minutes asserted that this covered "national social fund benefits, governed by collective agreements or legal provisions, provided that they do not come within the sphere of social security". This may have been provoked by a decision of the ECJ, Case 272/94: Climatec, 28 March 1996, which ruled that the EC Treaty allowed an undertaking to avoid paying employer's contributions to some benefit schemes in the host country where the undertaking was already liable for comparable contributions in its home country. The Court misunderstood contributions towards an employer's loyalty bonus scheme and a scheme covering bad-weather payments - both parts of pay packages - and classified them as comparable social security benefits. The Member States were anxious that paid holiday schemes be properly classified and remain mandatory entitlements for posted workers.
- MINIMUM RATES OF PAY, INCLUDING OVERTIME RATES (BUT NOT SUPPLEMENTARY OCCUPATIONAL RETIREMENT PENSION SCHEMES)
The Directive says minimum rates of pay are set by the law and/or practice of the host Member State.
- HEALTH, SAFETY AND HYGIENE AT WORK
The scope of this has been enormously expanded by the European Court of Justice decision of 12 November 1996 rejecting the UK challenge to the Working Time Directive.
Which labour standards apply?
Rush Portuguesa gave equal status to legislation and collective agreements. This led to a fierce political struggle as some Member States sought to exclude collective agreements as standards. The compromise reached was that:
- collective agreements would only be mandatory for activities listed in an Annex (mainly construction) (Article 3(1));
- but Member States could opt to apply collective agreements to other activities (Article 3(10)).
What is particularly interesting and potentially significant, however, was the types of collective agreements which were to be mandatory. These are agreements (Article 3(1)) "which have been declared universally applicable", which means they (Article 3(8)): "must be observed by all undertakings in the geographical area and in the profession or industry concerned".
Systems of extending collective agreements beyond the parties to them, to cover whole sectors or geographical areas, are used in many Member States to ensure that collectively agreed standards are not undermined. Similar provisions guaranteeing recognised terms and conditions existed in the UK (Schedule 11 to the Employment Protection Act 1975 and the Fair Wages Resolution 1946), until repealed by the Conservative Government.
The question is what happens where there are no such mandatory collective agreements. The Directive goes on to say (Article 3(8)):
"In the absence of a system for declaring collective agreements...to be of universal application...Member States may, if they so decide, base themselves on:
- collective agreements...which are generally applicable to all similar undertakings in the geographical area and in the profession or industry concerned, and/or
- collective agreements which have been concluded by the most representative employers' and labour organisations at national level and which are applied throughout the national territory".
They question is how to interpret the word "may" in the context of the Directive. There are at least two possibilities:
- collective agreements are optional in the absence of a system for declaring them of universal application - ie there may be no applicable standards apart from legislation;
- in the absence of a system of declaring collective agreements to be of universal application, Member States may choose either or both of the two options mentioned in article 3 (8) outlined above.But they must choose one.
It is arguable, in other words, that the Directive requires the application in certain activities (construction) of mandatory collective agreements; the Member States have only to choose which collective agreements to apply.
An EU requirement for the compulsory application of collective agreements is of great importance for future labour law and policy in the UK. It envisages a role for the type of centralised bargaining that has been the target of much of the labour policy and legislation of the Conservative government.
The potential importance of this Directive is highlighted in the Conservative Government's Memorandum to the Intergovernmental Conference on the revision of the Maastricht Treaty on European Union. The Government describes the Posted Workers Directive as an abuse of the Treaty by "granting rights to employees" and asks for the Treaty to be amended to prevent this in the future. Fortunately, few other Member States share this vision of the future labour law of the European Union.