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Laval un Partneri Ltd- Case [341/05]

August 5th, 2011 | Posted by DUCA LL.M in EU Law

Ruling of [of 18 December 2007] of the Court the Grand Chamber in Case [341/05], Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet, Svenska Byggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet [2007] ECR I-11767 

 

Referred by [Arbetsdomstolen – Sweden]

 

FACTS:

The Swedish Law on the posting of workers sets out the terms and conditions of employment falling within the matters listed in Directive 96/71, save for minimum rates of pay. The Law is silent on remuneration, the determination of which in Sweden is traditionally entrusted to labour and management by way of collective negotiations. Under Swedish law, trade unions are entitled to have recourse to collective action, under certain conditions, which is aimed at forcing any employer both to enter into negotiations on pay and to sign a collective agreement.

In May 2004, Laval un Partneri Ltd, a Latvian company, posted workers from Latvia to work on building sites in Sweden. The work was carried out by a subsidiary, L&P Baltic Bygg AB, and included the renovation and extension of school premises in the town of Vaxholm.

In June 2004, Laval and Baltic Bygg, on the one hand, and the Swedish building and public works trade union, Svenska Byggnadsarbetareförbundet, on the other, began negotiations with a view to determining the rates of pay for the posted workers and to Laval’s signing the collective agreement for the building sector. However, the parties were unable to reach an agreement. In September and October, Laval signed collective agreements with the Latvian building sector trade union, to which 65% of the posters workers were affiliated.

On 2 November 2004, Byggnadsarbetareförbundet began collective action in the form of a blockade (‘blockad’) of all Laval’s sites in Sweden. The Swedish electricians’ trade union joined in with a sympathy action, the effect of which was to prevent electricians from providing services to Laval. None of the members of those trade unions were employed by Laval. After work had stopped for a certain period, Baltic Bygg was declared bankrupt and the posted workers returned to Latvia.

 

ISSUES/QUESTIONS:

Interpretation of Articles 12 EC and 49 EC (now Articles 18 and 56 TFEU) and Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services/Is it compatible with rules of the EC Treaty on the freedom to provide services and the prohibition of any discrimination on the grounds of nationality and with the provisions of Directive 96/71/EC, for trade unions to attempt, by means of collective action in the form of a blockade, to force a foreign provider of services to sign a collective agreement in the host country in respect of terms and conditions of employment, such as the collective agreement for the building sector, if the situation in the host country is characterised by the fact that the legislation to implement that directive has no express provision concerning the application of terms and conditions of employment in collective agreements? Is it contrary to EU law the existence of a prohibition contained in national rules against trade unions undertaking collective action with the aim of having a collective agreement between other parties set aside or amended?

 

ANSWER of the COURT:

Article 56 TFEU and Article 3 of Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services are to be interpreted as precluding a trade union, in a Member State in which the terms and conditions of employment covering the matters referred to in Article 3(1), first subparagraph, (a) to (g) of that directive are contained in legislative provisions, save for minimum rates of pay, from attempting, by means of collective action in the form of a blockade (‘blockad’) of sites such as that at issue in the main proceedings, to force a provider of services established in another Member State to enter into negotiations with it on the rates of pay for posted workers and to sign a collective agreement the terms of which lay down, as regards some of those matters, more favourable conditions than those resulting from the relevant legislative provisions, while other terms relate to matters not referred to in Article 3 of the directive.

Where there is a prohibition in a Member State against trade unions undertaking collective action with the aim of having a collective agreement between other parties set aside or amended, Articles 49 EC and 50 EC preclude that prohibition from being subject to the condition that such action must relate to terms and conditions of employment to which the national law applies directly.

 

REASONING of the Court

 

The Court points out, first of all, that Directive 96/71 does not allow the host Member State to make the provision of services in its territory conditional on the observance of terms and conditions of employment which go beyond the mandatory rules for minimum protection. As regards the matters referred to in Directive 96/71, the latter expressly lays down the degree of protection which undertakings established in other Member States must guarantee, in the host Member State, to the workers posted to the territory of the latter.

 

The Court then accepts that the right to take collective action must be recognised as a fundamental right which forms an integral part of the general principles of Community law the observance of which the Court ensures, but states that the exercise of that right may be subject to certain restrictions. The fundamental nature of the right to take collective action is not such as to render Community law inapplicable to such action, taken against an undertaking established in another Member State which posts workers in the framework of the transnational provision of services.

 

In this case, the Court points out that the right of trade unions of a Member State to take collective action by which undertakings established in other Member States may be forced into negotiations with the trade unions of unspecified duration in order to ascertain minimum wage rates and to sign a collective agreement – the terms of which go beyond the minimum protection guaranteed by Directive 96/71 – is liable to make it less attractive, or more difficult, for such undertakings to carry out construction work in Sweden, and therefore constitutes a restriction on the freedom to provide services.

 

A restriction on the freedom to provide services may be justified only if it pursues a legitimate objective compatible with the Treaty and is justified by overriding reasons of public interest; if that is the case, it must be suitable for securing the attainment of the objective which it pursues and not go beyond what is necessary in order to attain it.

 

In that regard, the Court points out that the right to take collective action for the protection of the workers of the host State against possible social dumping may constitute an overriding reason of public interest[1]. In that context, the blockading of sites by a trade union of the host Member State which is aimed at ensuring that workers posted in the framework of a transnational provision of services have their terms and conditions of employment fixed at a certain level, falls within the objective of protecting workers.

 

However, as regards the specific obligations, linked to signature of the collective agreement for the building sector which the trade unions seek to impose on undertakings established in other Member States by way of collective action, the obstacle which that action forms cannot be justified with regard to such an objective. With regard to workers posted in the framework of a transnational provision of services, their employer is required, as a result of the coordination achieved by Directive 96/71, to observe a nucleus of mandatory rules for minimum protection in the host Member State.

 

As regards the negotiations on pay which the trade unions seek to impose, by way of collective action, on undertakings established in another Member State which post workers temporarily to their territory, the Court emphasises that Community law does not prohibit Member States from requiring such undertakings to comply with their rules on minimum pay by appropriate means.

 

However, collective action cannot be justified with regard to the public interest objective of protecting workers where the negotiations on pay which that action seeks to require an undertaking established in another Member State to enter into form part of a national context characterised by a lack of provisions, of any kind, which are sufficiently precise and accessible that they do not render it impossible or excessively difficult in practice for such an undertaking to determine the obligations with which it is required to comply as regards minimum pay.

 

Finally, the Court states that that national rules which fail to take into account, irrespective of their content, collective agreements to which undertakings that post workers to Sweden are already bound in the Member State in which they are established, give rise to discrimination against such undertakings, in so far as under those national rules they are treated in the same way as national undertakings which have not concluded a collective agreement.

 

It follows from the Treaty that such discriminatory rules may be justified only on grounds of public policy, public security or public health.

 

The application of those rules to foreign undertakings which are bound by collective agreements to which Swedish law does not directly apply is intended, first, to allow trade unions to take action to ensure that all employers active on the Swedish labour market pay wages and apply other terms and conditions of employment in line with those usual in Sweden, and secondly, to create a climate of fair competition, on an equal basis, between Swedish employers and entrepreneurs from other Member States.

 

Since none of the considerations constitute grounds of public policy, public security or public health, such discrimination cannot be justified[2].

 

Comments:

 

The Court finding regarding the discrimination issue raised by the applicant in the main proceedings is interesting from the standpoint of which it was made a difference between fundamental rights and fundamental freedoms.

Trade unions rely on the legitimate aim of the protection of workers with regard to the blockade to force Laval to sign the collective agreement containing terms and conditions not listed in Article 3(1) a to g and terms and conditions that are more favourable than the legislative minimum applicable in Sweden. The Court applies the principle of proportionality and states that in principle the action is suitable to achieve the aim of worker protection. However, in this case the terms and conditions go beyond the minimum required in Sweden. Clearly worker protection cannot serve as a justification ground when forcing the signing of a collective agreement which goes beyond the minimum level of protection.

 

Regarding the imposing of negotiations on wages through collective action the Court draws the same conclusion. Trade unions rely on the protection of workers and the protection of the fundamental right to collective action as justifying legitimate interests. However, these aims cannot justify collective action imposing wage negotiations when there is no national context which can determine the minimum rate of pay that needs to be observed. In other words, as the minimum wage is determined on a case by case basis it is not possible to determine the minimum which needs to be observed.

 

The Court assessed that the issue of discrimination shall be interpreted only in the light of Article 56 TFEU, ex Article 49 TEC, given the fact that Article 18 TFEU, ex Article 12 TEC contains no specific expression and effect of the principle of non-discrimination, while the latter does.

 

As the second question submitted in Laval revolves entirely on possible justification I will deal with it briefly here. As the national rules are a form of direct discrimination it can only be justified by relying on Article 46 EC, now Article 52 TFEU, the grounds of public policy, public security and public health. As the aims of the Swedish rules are to ensure that wages and other terms and conditions of employment are applied equally in Sweden and to create a climate of fair competition, it cannot be justified by Article 46 EC.

 

The Court reiterated that the principle of non-discrimination derives from the principle of equal treatment, which requires that comparable situations must be treated the same way and that different situations must not be treated in the same way[3]. As a consequence, given that the same national rules were applied to different situations, i.e. the Swedish nationals that did not conclude a collective agreement and foreigners that concluded such an agreement in the State in which they are established, the Court found this to be direct discrimination, that cannot be justified under Article 52 TFEU, ex Article 49 TEC.



[1]Case [341/05], Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet, Svenska Byggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet [2007] ECR I-11767 ,paragraph 103

[2] Case [341/05], Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet, SvenskaByggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet [2007] ECR I 11767,paragraph 108

 

[3] Case [341/05], Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet, SvenskaByggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet [2007] ECR I-11767 ,paragraph 115

 

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