What has the European Parliament done for workers?

European labour legislation

by Professor Brian Bercusson, Co-ordinator of the Research Group on Transnational Trade Union Rights at the ETUI, Professor of European Social and Labour Law at King’s College London, and Director of the European Law Unit at Thompsons

The European Parliament (EP), since 1979, is the only directly elected democratic institution of the EU.

Most EU legislation is adopted jointly (co-decided) by the European Parliament and the Council of Ministers representing the EU Member States. Effectively, the Parliament has a veto power. The co-decision procedure applies in many important areas of employment and industrial relations.

While UK employment rights can be reversed by any government, European employment rights are much harder to take away, as their repeal requires the consent of other EU Member States. Rights guarded by EU law are therefore safe against any future UK Conservative government. Although the current Labour government has been among the most active opponents of European employment rights, British Labour MEPs, influenced by their continental colleagues’ vision of a European social model, are largely committed to support European labour legislation.

The influence of MEPs on EU labour legislation has been important on a number of crucial occasions. Three examples: close cooperation between MEPs, and, in particular, British MEPs, and European and national trade unions led the Commission in 1996 to drop certain amendments to the Transfer of Undertakings Directive. Again, serious defects in the Council draft of what became Directive 2002 /14 establishing a framework for informing and consulting employees in the European Community were addressed by amendments proposed by the European Parliament. Finally, the EP supported labour standards to be included in the form of 'social clauses' in public procurement contracts. These cases illustrate how sympathetic MEPs can make the European Parliament an important ally in achieving EU labour laws which protect workers, establish fair labour standards and safeguard trade union rights.

A number of items are on the immediate labour law agenda of the EU which the European Parliament may influence. This pamphlet explores three of them.

First, the European Commission’s ongoing revision of the Working Time Directive of 1993, which focuses on the opt-out, used mainly by the UK, from the 48-hour maximum working week. The Employment and Social Affairs Committee of the European Parliament has issued an Opinion opposing extension of the opt-out and recommending its phasing out.

Second, the European Commission has produced a proposal for a Directive on the working conditions of temporary agency workers. A minority, including the UK, continues to block adoption of this Directive. Once again, the European Parliament will be a valuable ally in the coming struggle to achieve safeguards for temporary agency workers.

Finally, in the aftermath of the Spanish general election, progress is possible towards the adoption of the draft Constitutional Treaty incorporating the EU Charter of Fundamental Rights, including fundamental trade union rights. The European Parliament has been in the forefront of the efforts to secure and reinforce these rights, often against the wishes of some Member States to eliminate them, or render them legally unenforceable.

In conclusion, the European Parliament has in the past been an important ally of the European trade union movement. With a new European Parliament, that alliance will now need to be rebuilt.

The European Parliament (EP), since 1979, is the only directly elected democratic institution of the EU. The 626 Members of the European Parliament (MEPs) represent 370 million EU citizens. After enlargement to the 10 acceding countries on 1 May 2004, the Treaty of Nice limits the number of MEPs to a maximum of 732. This will mean reallocating seats among Member States, which lose 91 seats, and acceding countries.

The 626 current Members of the European Parliament (MEPs) are grouped together broadly in the Socialist Group, Christian Democrats, Liberal and Reformists, and the Greens. British Labour MEPs form part of the Socialist Group and Conservative MEPs are uneasy members of the Christian Democrats. The Socialist Group supports EU legislation setting basic employment standards and protecting trade union rights, aiming to strengthen the social democratic model of the EU.

The role of the Parliament in making EU law

Parliament’s legislative role depends upon the subject matter being proposed. Originally, the Parliament had only a consultative role. However, the Maastricht Treaty extended Parliament’s legislative powers under the 'co-decision procedure', now in Article 251 of the EC Treaty. Co-decision means legislation is adopted jointly by the European Parliament and the Council of Ministers representing the EU Member States.

Where the Council and Parliament cannot agree on proposed legislation, a compromise is sought through the establishment of a 'Conciliation Committee'. If agreement cannot be reached, the proposed legislation is deemed not to have been adopted. Effectively, the Parliament has a veto power. It is able, by absolute majority vote, to block a proposed legislative measure. In practice, Parliament exercises great influence over EU legislation through the process whereby it scrutinizes legislative proposals, is able to propose amendments, and may exercise a veto. However, though Parliament can veto, it cannot initiate or enact legislation by itself.

The outcome is that the EU institutional framework resembles a two-chamber (bicameral) legislative system. The Council reflects national interests of the Member States - the Parliament operates along party political lines. Decisions in the Council may require unanimity - in Parliament a majority will suffice.

Co-decision and qualified majority voting

The Maastricht Treaty (1991) and the Nice Treaty (2000) extended the co-decision procedure to legislative proposals in areas of employment and industrial relations. Article 137(1) of the EC Treaty now allows co-decision with the European Parliament and qualified majority voting in the Council of Ministers in the fields of:

• improvement in particular of the working environment to protect workers’ health and safety;

• working conditions;

• the information and consultation of workers;

• the integration of persons excluded from the labour market;

• equality between men and women with regard to labour market opportunities and treatment at work;

• the combating of social exclusion;

• the modernisation of social protection systems.

Further, by a unanimous decision, the Council may extend co-decision procedures to other areas listed in Article 137(1) of the EC Treaty:

• protection of workers where their employment contract is terminated;

• representation and collective defence of the interests of workers and employers, including co-determination;

• conditions of employment for third country nationals legally residing in Community territory.

Co-decision has applied to most directives adopted since the Maastricht Treaty. This means the European Parliament has a major role and influence in the formulation of EU legislation in the field of employment and industrial relations.

The co-decision procedure, when combined with qualified majority voting in the Council, is the formula most likely to produce EU legislative action in the field of employment and industrial relations.

Although the majority of its Working Group XI on Social Europe recommended extension of co-decision and qualified majority voting to all but one of the headings in Article 137(1) EC, the Convention on the Future of Europe did not accept this in its draft Constitutional Treaty. Insisting on a requirement of unanimity among 25 Member States effectively precludes legislative action in some areas of employment and industrial relations.

The Parliament’s committees

Much of the Parliament’s work is done through committees. The Parliament meets one week each month for plenary sessions in Strasbourg. Its committee sessions take place two weeks in every month in Brussels. A number of Parliament’s committees are concerned with employment and industrial relations. Initiatives, including legislative proposals, in the field of employment and industrial relations will normally be considered by the Employment and Social Affairs Committee of the European Parliament.

The Employment and Social Affairs Committee produces detailed reports on such initiatives, including proposals for amendments, and has played an important role in the legislative process. It also holds expert hearings on related matters; for example, on the Community Charter of the Fundamental Rights of Workers and labour standards in public procurement and international trade.

Members of this committee are influential when discussing the Commission’s initiatives on labour standards and negotiating with the Council of Ministers in 'Conciliation Committees' when there is disagreement between the Member States and the Parliament. The support of MEPs for certain clauses in European draft legislation, or resistance to others can be crucial. Sympathetic MEPs working with national trade union movements can be valuable allies in mobilising support to bring pressure on Member State governments voting in the Council. Trade unions can mobilise sympathetic MEPs to bring pressure on the Commission to undertake initiatives for EU legislation promoting employment standards.

In sum, MEPs are an important part of the EU legislative process. They can play a vital role in achieving EU legislation promoting employment standards and protecting trade union rights.

The Parliament and the European social dialogue

The social dialogue process in Articles 138-139 of the EC Treaty provides for the adoption of labour legislation based on collective agreements concluded between European organisations of trade unions and employers (the 'EU social partners') without the formal involvement of the Parliament. Although Parliament has been informally consulted over EC directives incorporating European collective agreements, the EU social partners insist on maintaining the autonomy of their social dialogue process.

The co-decision procedure involving the Council and Parliament also affects the EU social dialogue. A Parliament sympathetic to the goals of the social partners is a valuable ally in the legislative process. Coupled with qualified majority voting, legislation may be more easily promoted (or blocked). This potential promotion of EU labour legislation may provide an incentive to the EU social partners; for example, to encourage employers to conclude agreements in the social dialogue, or at least enter into genuine negotiations.

Most of the advances in employment protection law over the past 30 years since the UK joined the European Community (EC) in 1973 have been the result of European Union (EU) legislation. Without European law, would there be employment rights in the UK to equal pay, equal treatment in employment, consultation over collective dismissals, protection in transfers of undertakings, protection against a two-tier workforce in privatisation, European works councils, paid annual leave and working time restrictions, parental leave, equal treatment for part-timers and workers on fixed-term contracts?

UK-generated employment rights can be reversed by a future government. European employment rights are much harder to take away. Repeal requires the consent of other EU Member States. Once a Directive is adopted, it is almost impossible to remove or reduce the employment protection provided by European rights.

After the UK joined the EC in 1973, the Labour governments of 1974-1979 played a supportive role in achieving European rights (Directives on collective dismissals, transfer of undertakings, equal pay and equal treatment).

In 1997, the New Labour Government fulfilled the manifesto commitment to sign the 'Social Chapter' of the Maastricht Treaty, ending the 'opt-out' negotiated by the Conservative Government of John Major in 1991.

This allowed for the implementation into UK law of directives adopted by the other EU Member States during the 'opt-out' period: on European works councils, parental leave and equal treatment for part-time workers.

Since then, however, the UK government has been among the most active opponents of European employment rights. Operating through its vote in the Council of Ministers, it has successfully blocked European rights on equal treatment for agency workers, weakened European rights on information and consultation of employees’ representatives in the undertaking, failed to properly implement and enforce European rights on working time and health and safety, and exerted enormous pressure to try to prevent the inclusion of, or reduce, trade union rights, such as the rights to information and consultation, collective bargaining and collective action, including strike action, in the EU Charter of Fundamental Rights and the draft EU Constitution.

What is needed is for the government to support European initiatives which provide individual employment protection and collective trade union rights. In this way, the government can securely and permanently protect employment rights for British workers and trade unions, by ensuring that these rights are safeguarded by European law against any future government.

Many MEPs are committed to support European rights, to re-regulating labour markets to secure individual employment protection and collective trade union rights. They have been active in combating the government’s agenda of 'deregulation' which dismantles employment protection, promotes management’s flexibility and excludes collective labour representation.

The influence of MEPs on EU labour legislation has been important in a number of crucial occasions. Three examples:

i. Transfers of undertakings

For a brief period in the mid-1990s, some decisions of the European Court of Justice on the Transfers of Undertakings Directive 1977 were regarded by some circles as extending protection of workers too far.

The decision as to whether a transfer has taken place remains one for the national court. The difficulty of the British courts confronted with this possible identification of the enterprise with the labour of its employees was evident in the Dines case [1] . The Local Government Act 1988 required local authorities to put certain of their services out to competitive tendering. The health authorities for some years had been obliged to invite private contractors to tender to undertake certain ancillary work, including general cleaning of hospitals. These contracts were awarded on a periodical basis. In Dines, Initial Services had a 3-year contract for cleaning a hospital which expired on 30 April 1991. In January 1991 the authority invited tenders for cleaning the hospital from 1 May. Pall Mall services was awarded a 3-year contract from 1 May. All the applicant employees were declared redundant and their employment terminated on 30 April. Under the new contract, Pall Mall Services introduced its own management, equipment, stock and supplies, but offered the applicants new employment starting 1 May. The question was whether they were covered by the Transfer Regulations.

The Tribunal concluded that it was not: '...looking at all the circumstances in this case we are satisfied there was no transfer of equipment, materials or goodwill from (Initial) to (Pall Mall) and that there was not a transfer of an undertaking or... an ‘economic unit’ to which the Regulations apply'. The EAT delivered its decision on 31 August 1993 upholding the Tribunal’s decision.

But on 14 April 1994, the European Court delivered its judgment in Schmidt [2] . C hristel Schmidt was employed as the only cleaner in a branch of a German bank. The bank decided to contract out the cleaning and the contractor offered to employ Mrs. Schmidt on an hourly rate of pay which she claimed was inferior to her previous wage. The European Court emphasised: 'It should be noted that one of the objectives of the Directive, as clearly stated in the second recital in the preamble thereto, is to protect employees in the event of a change of employer, in particular to ensure that their rights are safeguarded. That protection extends to all staff and must therefore be guaranteed even where only one employee is affected by the transfer'.

Both the German and the UK Governments, intervening in the case, had argued that the absence of any transfer of tangible assets excluded the possibility of the transfer of a business. The Court rejected their arguments: '…the similarity in the cleaning work performed before and after the transfers - which is reflected, moreover, in the offer to re-engage the employee in question - is typical of an operation which comes within the scope of the Directive and which gives the employee whose activity has been transferred the protection afforded to him by that Directive'. One month after the European Court’s decision in Schmidt, on 19 May 1994, the Court of Appeal allowed the appeal against the decision of the EAT in Dines.

The Directive’s potential impact on employers’ labour cost-cutting meant the response of some Member States was fast and furious. It surfaced in documents of the Commission which emerged proposing amendments to the Directive. In a Background Report, the Commission explained its intention to 'update' the Directive with a replacement for the original Directive in its entirety. Among other proposals, the updated Directive was to 'clarify' the term 'undertaking', narrowing its scope.

In the months that following the Commission’s proposals, a systematic campaign was launched involving close cooperation between MEPs, and, in particular, British MEPs, and European and national trade unions. In particular, the European Parliament organised special hearings to examine the implications of the proposed amendments. Legal experts from the United Kingdom testified as to the damaging consequences that would follow for workers, the serious complexities that would result, and the technical deficiencies in the proposed amendments. The outcome was that the Commission agreed to drop the proposed amendments to the Directive.

ii. Information and consultation

Two of the most innovative aspects of the Commission’s initial draft proposals were the need for information and consultation prior to a decision being made, and the need for sanctions when management violates the requirement of information and consultation. These were potentially serious defects in the Council draft finally agreed on 11 June 2001. The negotiations in the Conciliation Committee between the Council of Ministers and the European Parliament were to determine the outcome.

a. Information and consultation before the decision is made

Attempts were made by the European Parliament to insert provisions in amendments presented on second reading on 10 October 2001, stipulating, for example, that information be 'before the decision is taken' (Amendment 4) and consultation be 'during the planning stage in order to ensure the effectiveness of the procedure and make it possible to exert influence' (Amendment 5). Neither of these amendments was included in the final text. Nonetheless, the Parliament insisted that the Preamble include a number of indications that the directive’s requirement of information and consultation is to be interpreted to preclude 'serious decisions affecting employees from being taken and made public without adequate procedures having been implemented beforehand to inform and consult them' (Recital 6), and criticises existing legal frameworks as tending 'to adopt an excessively a posteriori approach to the process of change' (Recital 13). The Preamble provides an interpretative framework for the directive. The ambiguity caused by the absence of the word 'prior' may be interpreted to promote the objectives of the directive: that information and consultation take place before the decision is made, avoiding an a posteriori approach to decision-making. This is a central question: are employees’ representatives to be informed and consulted prior to decisions being made, or only to react to decisions already made? The resolution of this issue in EU law could have fundamental consequences in the UK and Europe. There is every reason to hope that the European Court, in an appropriate case, would uphold an interpretation of the directive consistent with this clear indication in the Preamble.

b. Sanctions for breach of the obligation to inform and consult

The Council’s approved draft of 11 June 2001 proposed to delete the whole of a provision in the Commission’s original proposal for a directive imposing a special sanction for serious breach by employers of their obligation to inform and consult. The Commission refused at that stage to back down. Again, the European Parliament followed up with amendments proposed in a report by its Employment and Social Affairs Committee on second reading on 10 October 2001: an Amendment 12 imposing stringent sanctions and suspension of employer decisions in cases of serious breach. However, at a plenary session on 23 October 2001, while this amendment achieved a majority of those voting, it failed to reach the required absolute majority of 313 of the 625 MEPs. As a result, the Parliament’s representatives in the Conciliation Committee, supported by the Commission, agreed to a compromise whereby the Preamble of the final text of the directive includes the following Recital 28: 'Administrative or judicial procedures, as well as sanctions that are effective, dissuasive and proportionate in relation to the seriousness of the offence, should be applicable in cases of infringement of the obligations based on this Directive'. It is still open to the European Court to condemn a Member State, as it did the UK in Cases C-382/92 and C-383/92 of 8 June 1994, for failing to provide adequate penalties in cases of violation of the information and consultation requirements. But the blocking of the Commission and European Parliament’s attempts to provide an adequate remedy to employees who suffer as a result of being unlawfully denied access to information and consultation on matters vital to their future is a bitter disappointment.

iii. Public procurement and labour standards

For several years there was controversy concerning the Commission’s proposals for revision of the EC directives on procurement by public authorities through contracts for the supplies, services and works they need, and similarly on the procurement contracts of undertakings in a number of sectors (energy, water, transport).

Formally, the principal concern of the EC in regulating public procurement is only to secure the proper functioning of the single European market. However, one aspect of the revision process concerns whether labour standards, as well as social and environmental criteria, should be included in the form of 'social clauses' in such contracts.

Over the years, the issue of social clauses and public procurement has been the subject of endless documents and innumerable private meetings and public hearings involving the Commission, the European Parliament, national authorities, trade unions at national and EU level, in particular, the European Public Services Union, and many other activists and lobbyists. There have been proposals and Communications by the Commission, by the European Parliament and its various committees, as well as briefing papers from many of those engaged.

For example, proposals from the European Parliament’s Employment and Social Affairs Committee aimed to ensure that current legal provisions in the social and employment field are complied with by all the candidates, so as to prevent unfair competition what matters is to create a level playing field for all candidates. The process was to include four steps:

(i) potential tenderers must be given access to appropriate information about employment protection and working conditions, which must be defined;

(ii) compliance with these standards must be checked by the contracting authority during the pre-selection, and candidates who have breached social legislation may be excluded; official lists of approved economic operators will be used to assess suitability of candidates;

(iii) selection of candidates and award of contracts will be conditional on compliance with the legal provisions relating to employment protection and working conditions; and

(iv) there are to be review and enforcement procedures after award of the contract.

To promote its agenda, the MEPs organised hearings of experts to consider these and other proposals.

However, on the other side, there were advocates in some parts of the Commission, in some Member States and among some interest groups for contracts to be awarded purely on the basis of lowest tender price and economic advantage, to the exclusion of labour standards. On 28 May 2002, the Council of Ministers adopted a proposal as the Member States’ formal position. This text was the subject of tough negotiations with the European Parliament and Commission over a number of issues before it was finally adopted.

The final outcome in a Conciliation Committee of the Council of Ministers and the Parliament was not entirely satisfactory, but the European Parliament did succeed in both protecting the present position allowing Member States to stipulate labour standards where relevant, and even pushing the agenda further towards acknowledging the relevance of international labour standards. This would allow the UK once again to ratify ILO Convention No. 94 of 1949 on Labour Standards (Public Contracts), denounced by the Conservative Government under Margaret Thatcher, and to re-introduce the Fair Wages Resolution.

In sum, these cases illustrate how sympathetic MEPs can make the European Parliament an important ally in achieving EU labour laws which protect workers, establish fair labour standards and safeguard trade union rights.

Such allies are likely to become even more crucial in the battles which lie ahead.

A number of items are on the immediate labour law agenda of the EU which the European Parliament may influence. These include:

i. Revision of the Working Time Directive

The European Commission has published a Communication on revision of the Working Time Directive of 1993 (COM(2003) 843 final, Brussels, 30 December 2003). The consultation period has closed, but the revision is ongoing. The following months will witness important debates over any eventual revision of the directive.

The Communication focused on whether the opt-out, used mainly by the UK, from the 48-hour maximum working week prescribed by the Directive should be continued. Elimination of the 48-hour maximum opt-out provision is supported as long working hours are inconsistent with work/family life balance and contradict Article 31(2) of the EU Charter of Fundamental Rights, Nice 2000: 'Every worker has the right to limitation of maximum working hours…'. If any opt-out is to be allowed, stringent conditions would have to be imposed; for example, limited to specific sectors. If individual opt-out is to be continued allowed, restrictions should go beyond the minimum conditions stipulated by the Directive, which the Communication pointed out are not respected in the UK.

There are a number of other issues raised by the Communication. For example, health and safety protection is the sole criterion for revision; 'should not be subordinated to purely economic considerations' (Recital 4 of the Preamble, consolidated Directive 2003/88). Flexibility of working time is to be achieved only through the mechanism of collective agreements, as recognised in Article 18 of the Directive. And so on.

In the coming struggle over revision of the Working Time Directive, the European Parliament will play a major role. For example, the TUC and the European Trades Union Confederation have called for elimination of the opt-out. The Employment and Social Affairs Committee of the European Parliament has already issued an Opinion in which it too calls for the opt-out to be eliminated. In contrast, the UK government has demanded its continuation.

ii. Temporary agency work

Following the failure of the EU social partners to conclude an agreement on the regulation of temporary agency work, the European Commission produced a proposal for a Directive on the working conditions of temporary workers. Despite pressure from a majority of Member States, a minority consisting of the UK and Ireland, supported by Denmark and Germany, continues to block adoption of this Directive. The proposed Directive is concerned, among other things, with ensuring equal treatment of temporary agency workers and the extent to which such work should be encouraged. Once again, the European Parliament will be a valuable ally in the coming struggles to achieve safeguards for temporary agency workers.

iii. The Draft Constitutional Treaty

In the aftermath of the Spanish general election, it is being suggested that progress is possible towards the adoption of the draft Constitutional Treaty proposed by the Convention on the Future of Europe. The draft Constitution includes the EU Charter of Fundamental Rights, proclaimed at the summit at Nice on 7 December 2000. If adopted, the new EU Constitution will therefore include provisions on freedom of association (Article 12), rights of collective bargaining and collective action (Article 28), workers’ right to information and consultation within the undertaking (Article 27), freedom to choose an occupation and right to engage in work (Article 15), prohibition of child labour and protection of young people at work (Article 32), fair and just working conditions (Article 31), protection of personal data (Article 8), non-discrimination (Article 21), equality between men and women (Article 23), and protection in the event of unjustified dismissal (Article 30).

The inclusion of fundamental trade union rights in an EU Charter incorporated into the EU Treaty may well confer on them a constitutional status within national legal orders. The European Court of Justice may interpret the Charter’s trade union rights consistently with the law in most Member States, which often exceeds the protection of UK law, or consistently with international labour standards, where, again, the UK often falls short. The EU Charter thus opens a new chapter in the legal enforcement of trade union rights, both at transnational and national levels.

The European Parliament has been in the forefront of the efforts to secure and reinforce these rights, often against the wishes of some Member States to eliminate them, or render them legally unenforceable. Attempts to dilute the effects of the EU Charter will doubtless continue in the months ahead. Again, the role of the European Parliament will be crucial.

The European Parliament has in the past been an important ally of the trade union movement, providing support at important turning points in EU labour legislation. It has helped in struggles both with the European Commission and with some Member States blocking progress in the Council of Ministers. However, much depends on its political composition; a shift towards the conservative European People’s Party in the last elections has already had some negative consequences. With a new European Parliament, trade unions will need to rebuild alliances to make the most of the new composition.

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[1] ( Dines v. Initial Health Care Services Ltd. & Pall Mall Services Group Ltd . , (1993) IRLR 421 (EAT); (1994) IRLR 336 (CA))

[2] .( Schmidt v. Spar- und Leihkasse der Fruheren amter Bordesholm, Kiel und Cronshagen, Case C-392/92, (1994) IRLR 302)