Labour Law, Fundamental Rights and Social Europe: Swedish Studies in European Law Volume 4 9781472565686, 9781841132105

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Preface MIA RÖNNMAR

The Swedish Network for European Legal Studies is proud to present the fourth volume of the series Swedish Studies in European Law, Labour Law, Fundamental Rights and Social Europe. The objective of the series is to act as a vehicle for the publication of studies on European law by Swedish legal scholars in the English language. This volume focuses on labour law and social security law, and contains peerreviewed chapters aimed at spreading information about Swedish legal research on European law – including development, impact and reform of the law – to a broad international audience. The chapters provide knowledge about a range of highly topical and important legal developments, and their analysis uncovers new and interesting perspectives, thereby contributing to timely doctrinal debates. The chapters are written by distinguished legal researchers associated with Swedish universities. Some of the chapters are based on keynote speeches made at the international conference ‘Labour law and social security law in an enlarged Europe – a social dimension on the move?’, arranged by the Swedish Network for European Legal Studies in Stockholm on 3–4 November 2009. Sweden has been a member of the European Union since 1995, and EU law and European law perspectives have been well integrated into Swedish labour law and social security law research. The chapters in the book illustrate this far-reaching and multifaceted ‘Europeanisation’ of legal science. The book comprises three parts and ten chapters. As editor, I am naturally deeply indebted to the authors of the different chapters in this book, for all the efforts and the enthusiasm they have put into this project. I would also like to express my warmest thanks to Cecilia Cardner, coordinator of the Swedish Network for European Legal Studies, for her helpful assistance in the production of this book. I am also thankful for the possibility to include Jur. Dr Laura Carlson’s unofficial translation of the Swedish Labour Court judgment AD 2009 No 89 (the final decision in the Laval case) into English as an appendix. To enhance its usefulness, the book contains an overall index, as well as indexed tables of cases and legislation.

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Table of Cases Court of Justice of the European Union Abdoulaye v Régie Nationale des Usines Renault SA (Case C–218/98) [1999] ECR I–5723 .............................................................................................. 140 Abrahamsson (Case C–407/98) [2000] ECR I–5539 .............................................129–30 Albany International BV v Stichting Bedrijfspensioenfonds Textielindustrie (Case C–67/96) [1999] ECR I–5751 ...................................................................... 110 Allonby (Case C–256/01) [2004] ECR I–873 ......................................... 130, 135, 176–77 Alonso (Case C–81/05) [2006] ECR I–7569 .............................................................. 258 Alonso (Case C–307/05) [2007] ECR I–7109 ............................................................ 172 Badeck (Case C–158/97) [2000] ECR I–1875 ............................................................ 129 Barber (Case 262/88) [1990] ECR 1889..................................................................... 128 Baumbast (Case C–413/99) [2002] ECR I–7091 ........................................................ 185 BECTU (Case C–173/99) [2001] ECR I–4881 ........................................................... 124 Bergström (Case C–257/10), pending ...........................................................187–88, 192 Beune (Case C–7/93) [1994] ECR I–4471.................................................................. 128 Bilka-Kaufhaus (Case 170/84) [1986] ECR 1607 .........................................128, 142, 171 Bosman (Case C–415/93) [1995] ECR I–4921 ........................................................... 241 Brasserie du Pêcheur and Factortame (Joined Cases C–46/93 and C–48/93) [1996] ECR I–1029................................17, 243, 249, 254, 264, 266, 275 Briheche (Case C–319/03) [2004] ECR I–8807 .......................................................... 129 Brown v Rentokil Ltd (Case C–394/96) [1998] ECR I–4185................................139, 145 Bruno and Lotti (Joined Cases C–395/08 and C–396/08), not yet reported ................ 172 Cabanis-Issarte (Case C–308/93) [1996] ECR I–2097 ................................................ 186 Castelli (Case 261/83) [1984] ECR 3199 ................................................................... 185 Chakroun (Case C–578/08), not yet reported ........................................................... 124 CNAVTS v Thibault (Case C–196/95) [1998] ECR I–2011 ........................................ 140 Coleman (Case C–303/06) [2008] ECR I–5603 ..................................................... 9, 134 Commission v Austria (Case C–203/03) [2005] ECR I–935 ................................4, 52–53 Commission v Austria (Case C–320/03) [2005] ECR I–7929........................................68 Commission v France (Case C–265/95) [1997] ECR I–6959.........................................68 Commission v Germany (Case C–271/08), not yet reported ........................8, 40, 108–12 Commission v Luxembourg (Case C–111/91) [1993] ECR I–817 ............................... 189 Commission v Luxembourg (Case C–319/06) [2008] ECR I–4323 ................ 6, 77, 79, 83 Concordia Bus Finland (Case C–513/99) [2002] ECR I–7213 ......................................97 Courage v Crehan (Case C–453/99) [2001] ECR I–6297.......................................17, 241 D v Council (Joined Cases C–122/99 P and C–125/99 P) [2001] ECR I–4319 ................. 190 Defrenne v Sabena (Defrenne I) (Case 80/70) [1971] ECR 445 ................................... 126 Defrenne v Sabena (Defrenne II) (Case 43/75) [1976] ECR 455 .................................. 126 Defrenne v Sabena (Defrenne III) (Case C–149/77) [1978] ECR 1365....................39, 126 Dekker v Stichting Vormingscentrum voor Jong Volwassenen (VJV-Centrum) Plus (Case C–177/88) [1990] ECR I–3941..................127, 139, 141–42, 150

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Dodl and Oberhollenzer (Case C–543/03) [2005] ECR I–5049 .................................. 194 Dory (Case C–186/01) [2003] ECR I–2479 ............................................................... 124 Elsen (Case C–135/99) [2000] ECR I–10409 ......................................................189, 194 EVN AG and Wienstrom (Case C–448/01) [2003] ECR I–14527 ..................................97 Factortame (Case C–213/89) [1990] ECR I–2433 ...................................................... 258 Ferlini (Case C–411/98) [2000] ECR I–8081 .............................................................. 192 Fiorini (Case 32/75) [1975] ECR 1085 ...................................................................... 185 Firma Feryn (Case C–54/07) [2008] ECR I–5187.............................................. 9, 134–35 Gebhard (Case C–55/94) [1995] ECR I–04165 ................................................. 69, 78–79 German Pensions Case see Commission v Germany (Case C–271/08) Gillespie v Northern Health and Social Services Board (Case C–342/93) [1996] ECR I–475................................................................................................ 140 Gómez v Continental Industrias del Cauho SA (Case C–342/01) [2004] ECR I–2605 .......................................................................................140, 145 Grant (C–249/96) [1998] ECR I–621 ........................................................................ 190 Grzelczyk (Case C–184/99) [2001] ECR I–6193 ........................................................ 185 Habermann-Beltermann v Arbeitwohlfahrt (Case C–421/92) [1994] ECR I–1657 .............................................................................................. 139 Handels- og Kontorfunktionaerernes Forbund i Danmark v Fellesforeningen (Case C–66/96) [1998] ECR I–7327 ............................................................................... 141 Hendrix (Case C–287/05) [2007] ECR I–6909 .......................................................... 188 Herrero v Instituto Madrileño de la Salud (Imsalúd) (Case C–294/04) [2006] ECR I–1513 .............................................................................................. 140 Hertz (Case C–179/88) [1990] ECR I–3979............................................................... 127 Hoever och Zachow (Joined Cases C–245/94 and C–213/94) [1996] ECR I–4895 .........................................................................................188–90 Hughes (Case C–78/91) [1992] ECR I–4839 ............................................................. 188 Impact v Minister for Agriculture and Food (Case C–268/06) [2008] ECR I–2483 .........................................................................................171–72 International Transport Workers’ Federation and Finnish Seamen’s Union (Case C–438/05) see Viking Line (C–438/05) Jenkins (Case 96/80) [1981] ECR 911 ................................................................128, 171 Jouini (Case C–458/05) [2007] ECR I–7301 .............................................................. 102 Kalanke (Case C–450/94) [1995] ECR I–3051 ........................................................... 129 Kauer (Case C–28/00) [2002] ECR I–1343 .........................................................189, 194 Kuusijärvi (Case C–275/96) [1998] ECR I–3419 .................................13, 188–89, 193–94 Land Brandenburg v Sass (Case C–284/02) [2004] ECR I–11143 ............................... 145 Laval (Case C–341/05) [2007] ECR I–11767 ...... 4–7, 15–19, 27, 39, 61, 69–73, 77, 79–80, 82–83, 87, 132, 230–35, 237, 239, 241, 244–45, 247, 250, 257, 266–68, 274 Lawrence (Case C–320/00) [2002] ECR I–7325 ......................................................... 130 Lawrie-Blum v Land Baden Württemberg (Case 66/85) [1986] ECR 2121 .................. 176 Liikenne (Case C–172/99) [2001] ECR I–745 ..............................................101, 103, 105 Lommers (Case C–476/99) [2002] ECR I–2891 ......................................................... 129 Maaheimo (Case C–333/00) [2002] ECR I–10087 ..................................................... 188 Mahlburg v Land Mecklenburg-Vorpommern (Case C–207/98) [2000] ECR I–549................................................................... 127, 139, 145, 149, 151 Manfredi v Lloyd Adriatico Assicurazioni SpA (Joined Cases C–295/04 to C–298/04) [2006] ECR I–6619 ...................................... 17, 241, 254, 275

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Mangold v Helm (Case C–144/04) [2005] ECR I–9981 ............................................. 165 Marschall (Case C–409/95) [1997] ECR I–6363 ........................................................ 129 Marshall (Case C–271/91) [1993] ECR I–4367 ......................................................... 252 Mayer v Versorgungsanstalt des Bundes und der Länder (Case C–356/03) [2005] ECR I–295 ...................................................................... 127 Melgar v Ayuntamiento de Los Barrios (Case C–438/99) [2001] ECR I–6915 ................................................................................127, 139, 151 Michaeler (Joined Cases C–55/07 and C–56/07) [2008] ECR I–3135.......................... 172 Öberg (Case C–185/04) [2006] ECR I–1453 .............................................................. 192 Omega (Case C–36/02) [2004] ECR I–9609 ................................................... 70–71, 232 Österreichischer Gewerkschaftsbund v Wirtschaftskammer Österreich (Case C–220/02) [2004] ECR I–5907 .............................................................127, 140 P v S (Case C–13/94) [1996] ECR I–2143 .................................................................. 127 Paquay (Case C–460/06) [2007] ECR I–8511 ............................................................ 242 Petersen (Case C–228/07) [2008] ECR I–6989 ........................................................... 188 R v Secretary of State for Employment, ex parte Seymour-Smith and Perez (Case C–167/97) [1999] ECR I–623................................................128, 135 Raccanelli (Case C–94/07) [2008] ECR I–5939 ....................................... 17–18, 242, 249 Reed (Case 59/85) [1986] ECR 1283 ......................................................................... 190 Rinner-Kuhn (Case C–171/88) [1989] ECR I–2743.................................................... 142 Rockler (Case C–137/04) [2006] ECR I–1441............................................................ 192 Rüffert (Case C–346/06) [2008] ECR I–1989 ..............................................6, 77, 83, 132 Rush Portuguesa (Case C–113/89) [1990] ECR I–1417 ................................................78 Santos Palhota (Case C–515/08) not yet reported .......................................................85 Schmidtberger (Case C–112/00) [2003] ECR I–5659 .................................37, 70–71, 232 Schröder (Case C–50/96) [2000] ECR I–774 ............................................................. 132 Schultz-Hoff/Stringers (Joined Cases C–350/06 and C–520/06) [2009] ECR I–179..................................................................................................51 Sievers (Case C–270/97) [2000] ECR I–933 ............................................................... 132 Simmenthal (Case 106/77) [1978] ECR 629 .............................................................. 258 Soumen valtio and Tarmo Lehtinen (Case C-470/03) [2007] ECR I-02749 ................................................................................................250, 253 Spijkers (Case 24/85) [1986] ECR 1119..................................................................... 102 Süzen (Case C–13/95) [1997] ECR I–1259 ................................................................ 101 Tele Danmark (Case C–109/00) [2001] ECR I–6993.............................127, 139, 149, 151 Tirols v Land Tirol (Case C–486/08), not yet reported ........................................171–72 Trojani (Case C–456/02) [2004] ECR I–7573 ............................................................ 185 Unger (Case 75/63) [1964] ECR 177 ......................................................................... 186 Union syndicale Solidiaires Isère (Case C–428/09), not yet reported .....................176–77 van Heijningen (Case C–2/89) [1990] ECR I–1755 .................................................... 187 van der Woude (Case C–222/98) [2000] ECR I–7111 ............................................ …110 Viking Line (C–438/05) [2007] ECR I–10779 ..................... 4–7, 15–16, 18–19, 27, 39, 61, 70–71, 73, 77, 79–80, 82–83, 87–88, 132, 241–42, 247–48 von Colson and Kaumann (Case C–14/83) [1984] ECR 1891..................................... 242 Wachauf (Case 5/88) [1989] ECR 2609.......................................................................37 Walrave and Koch (Case 36/74) [1974] ECR 1405 ..................................................... 241 Webb v EMO Air Cargo (Case C–32/93) [1994] ECR I–3567 ......................127, 139, 141

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xii Table of Cases Wippel v Peek & Cloppenburg GmbH (Case C–313/02) [2004] ECR I–9483 .......................................................................... 120, 171–72, 179 Wouters (Case C–309/99) [2002] ECR I–1577........................................................... 241 European Court of Human Rights Danilenkov v Russia (App No 67336/01) not yet reported ..................................... 58, 81 Demir and Baykara v Turkey (App No 34503/97) (2009) 48 EHRR 54 ................................................................ 5, 16, 21, 38, 65–66, 81 Enerji Yapi-Yol Sen v Turkey (App No 68959/01) 21 April 2009, not yet reported ....................................................................................16, 66, 81–82 Schmidt and Dahlström v Sweden (App No 5589/72) (1979–80) 1 EHRR 632 ................................................................................................... 64–66 Sørensen and Rasmussen v Denmark (App Nos 52562/99 and 52620/99) (2008) 46 EHRR 29 ..............................................................................................65 Swedish Engine Drivers’ Union v Sweden (1979–80) 1 EHRR 617 ...............................65 Unison v United Kingdom (App No 53574/99) [2002] IRLR 497 .................................64 Wilson, National Union of Journalists v United Kingdom (App Nos 30668/96, 30671/96, 30678/96) (2002) 35 EHRR 20 .................................64 National Cases Sweden Gothenburg Administrative Ct of Appeal, Case No 8623–1994 ...........................191–92 Gothenburg Administrative Ct of Appeal, Case No 3696–1998, 28 August 1998 ................................................................................................... 103 Gothenburg County Administrative Ct, Case No 2044–98, 13 May 1998 .................. 103 Labour Ct judgment AD 1976 No 134 ..................................................................... 263 Labour Ct judgment AD 1977 No 150 ..................................................................... 266 Labour Ct judgment AD 1979 No 118 ..................................................................... 273 Labour Ct judgment AD 1979 No 149 ..................................................................... 273 Labour Ct judgment AD 1980 No 34 ....................................................................... 273 Labour Ct judgment AD 1980 No 72 ....................................................................... 273 Labour Ct judgment AD 1981 No 8 ......................................................................... 273 Labour Ct judgment AD 1981 No 46 ....................................................................... 270 Labour Ct judgment AD 1981 No 125 ..................................................................... 273 Labour Ct judgment AD 1982 No 35 ....................................................................... 238 Labour Ct judgment AD 1987 No 40 ....................................................................... 263 Labour Ct judgment AD 1989 No 120 (Britannia) ......................... 256, 258, 264–65, 274 Labour Ct judgment AD 1995 No 131 ..................................................................... 270 Labour Ct judgment AD 1996 No 74 ....................................................................... 238 Labour Ct judgment AD 2002 No 45 ....................................................................... 254 Labour Ct decision 2005 No 49 ...................................................................229–30, 257 Labour Ct judgment AD 2006 No 10 ....................................................................... 264 Labour Ct judgment AD 2008 No 5 ..................................................................264, 266 Labour Ct judgment AD 2009 No 13 ....................................................................... 147 Labour Ct judgment AD 2009 No 15 ....................................................................... 147 Labour Ct judgment AD 2009 No 45 ....................................................................... 147

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Labour Ct judgment AD 2009 No 76 ....................................................................... 263 Labour Ct judgment AD 2009 No 89, Case No A 268/04 (Laval).................... 17, 227–76 Labour Ct judgment AD 1998 No 163 ................................................................. 102–3 United States of America Griggs v Duke Power Co, 401 U.S. 424 (1971), United States Supreme Court ................ 128

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Table of Legislation EU Legislation Treaties Amsterdam Treaty 1997 ............................................................... 114, 118–22, 131, 155 Charter of Fundamental Social Rights of Workers of the EC 1989 ....................................................................... 4, 36–37, 40, 67–69, 117 Charter of Fundamental Rights of the European Union 2000 ........................................................... 4–5, 9, 37–40, 54–55, 58, 65, 67–68, 72–73, 85, 120, 122–25, 132–33, 135 Ch I ......................................................................................................................39 Ch III ................................................................................................................. 124 Ch IV ............................................................................................................. 39, 99 Art 5.....................................................................................................................39 Art 20 ..........................................................................................................124, 155 Art 21 ...............................................................................23, 122, 124, 131, 136, 155 Art 23 ...................................................................................................122, 124, 131 Art 25 ................................................................................................................. 124 Art 26 ................................................................................................................. 124 Art 27 ...................................................................................................................39 Art 28 ......................................................................8, 15, 38–40, 67, 69–70, 109, 232 Art 30 ............................................................................................................39, 164 Art 31 ...................................................................................................................39 Art 32 ............................................................................................................. 39, 54 Art 33(2)............................................................................................................. 124 Art 51 ...................................................................................................................40 (1) ........................................................................................................37, 125 Art 52 ............................................................................................................. 38, 69 (1) ......................................................................................................... 38, 67 (3) ...............................................................................................................68 (5) ............................................................................................................. 125 Art 53 ..................................................................................................................... 125 EC Treaty see also Treaty on the Functioning of the European Union Art 2............................................................................................... 118, 119, 121–22 Art 3(2) ................................................................................... 118, 119, 121–22, 129 Art 10 ..........................................................................................................239, 248 Art 12 ................................................................................................................. 230 Art 13 ............................................................................................. 118–21, 122, 131 Art 39 ............................................................................................................241–42 Art 43 ............................................................................................................241–42 Art 46 ................................................................................................................. 235 Art 49 ...........................229–31, 233, 236–37, 241, 243–49, 253, 255, 257, 268, 274–75

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Art 50 ...................................................................................................231, 237, 257 Art 55 ................................................................................................................. 235 Art 81 ................................................................................................................. 275 Art 117 .................................................................................................................67 Art 136 ........................................................................................................... 68–69 Art 137 .................................................................................................................68 Art 141 (ex Art 119) ................................................................. 113, 116–19, 121, 128 (3) .......................................................................................................... 121 (4) ...................................................................................................119, 129 Art 234 ............................................................................................................... 229 European Coal and Steel Treaty 1952.........................................................................31 Lisbon Treaty 2007......................................... 3, 5, 7, 9, 19, 58, 68–69, 75, 84–85, 98–99, 112, 115, 122–25, 130–32, 134–35, 155 Maastricht Treaty see Treaty on European Union Nice Treaty 2001 ..................................................................................................... 120 Rome Treaty 1957 see EC Treaty and Treaty on the Functioning of the European Union Single European Act 1986 ...................................................................................36, 117 Treaty on European Union 1992 (TEU) ...............................................................58, 117 Art 2................................................................................................. 35, 95, 123, 131 Art 3................................................................................................. 3–4, 53, 95, 123 (1) .............................................................................................................. 123 (3) .......................................................................... 19, 85, 99, 123, 131–32, 155 Art 4(2) ................................................................................................................99 (3) ................................................................................................................70 Art 6............................................................. 5, 15, 35, 37, 54, 68–69, 95, 121–23, 155 (1) .......................................................................................... 4, 53, 68, 72, 124 (2) .......................................................................................................... 68, 74 (3) ................................................................................................6, 69, 72, 125 Art 7.....................................................................................................................35 Art 19 ...................................................................................................................23 Art 49 ...................................................................................................................35 Art F(2) ................................................................................................................69 Social Policy Protocol and Agreement...........................................................117, 119 Treaty on the Functioning of the European Union 2008 (TFEU) Art 2................................................................................................................... 123 Art 4................................................................................................................... 123 (2)(b) .......................................................................................................... 123 Art 5................................................................................................................... 123 (2) .............................................................................................................. 123 (3) .............................................................................................................. 123 Art 7.......................................................................................................123, 131–32 Art 8...................................................................................................... 98, 123, 131 Art 9................................................................................................................... 123 Art 10 ...................................................................................................123, 131, 155 Art 11 ...................................................................................................................98 Art 14 ...................................................................................................................99 Art 18 ..........................................................................................................155, 187 Art 19 (ex Art 13 EC) ..............................................................................124, 155–56

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Art 21 ............................................................................................. 13, 185, 188, 196 Art 45 .................................................................................13, 18, 176, 185, 188, 196 Arts 45–48 .......................................................................................................... 202 Art 48 ............................................................................................... 13, 185–86, 188 Art 49 ........................................................................................................ 16, 79, 91 Art 53 ............................................................................................................. 86, 94 Art 56 (ex Art 49 EC) ...................................................................... 16–17, 78–79, 91 Art 62 ............................................................................................................. 86, 94 Art 114 .................................................................................................................94 Art 151 (ex Art 136 EC) ........................................................................................37 Arts 151–61 ..........................................................................................................45 Art 152 ........................................................................................................... 8, 109 Art 153 (ex Art 137 EC) .............................................................68, 86, 124, 131, 164 (5)...................................................................................................... 35, 70 Art 157 (ex Art 141 EC) ...................................................................................... 124 (4).......................................................................................................... 129 Art 257 .................................................................................................................88 Art 351 (ex Art 307 EC)…4, 52–53 Protocol No 26…99 Decisions Dec 2000/750 establishing a Community action programme to combat discrimination [2000] OJ L303/23 ................................................................................................. 119 Directives Dir 71/305 on award of public contracts [1971] OJ L185/5 .........................................48 Dir 75/117 on equal pay [1975] OJ L45/19..................................................117, 121, 139 Dir 76/207 on equal treatment [1976] OJ L39/40 ......................39, 52, 117, 121, 139, 141 Art 2.....................................................................................................................52 Art 3.....................................................................................................................52 Dir 79/7 on social security [1979] OJ L6/24 .........................................................117–18 Dir 86/378 on occupational schemes [1986] OJ L225/40 ....................................121, 140 Dir 86/613 on helping spouses [1986] OJ L359/56..................................................... 118 Dir 89/391 health and safety [1989] OJ L183/1 ..................................................... 41–43 Art 8(4) ................................................................................................................42 Art 16 ...................................................................................................................43 Dir 89/440 on public procurement procedures [1989] OJ L210/1 .................................48 Dir 89/654 on health and safety at workplace [1989] OJ L393/1 ..................................42 Dir 89/655 on work equipment [1989] OJ L393/13 .....................................................42 Dir 89/656 on personal protective equipment [1989] OJ L393/18.................................42 Dir 89/665 on public supply and works contracts [1989] OJ L395/33 ..........................90 Dir 90/531 on public procurement in water, energy, transport and telecommunications sectors [1990] OJ L297/1 .........................................................................................48 Dir 91/533 on contract of employment relationship conditions [1991] OJ L288/32 .... 177 Dir 92/13 on public procurement in water, energy, transport and telecommunications sectors [1992] OJ L76/14 .........................................................................................90 Dir 92/50 on public procurement [1992] OJ L209/1 ......................................105, 109–11 Dir 92/56 on collective redundancies [1992] OJ L245/3 ...............................................47

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xviii Table of Legislation Dir 92/57 on minimum safety and health requirements at construction sites [1992] OJ L245/6 ....................................................................................... 41, 43 Dir 92/85 on pregnant workers [1992] OJ L348/1 .....................................42–43, 49, 118 Art 8..............................................................................................................49, 139 Dir 93/104 on working time [1993] OJ L307/18 ..........................................................44 recital 3a...............................................................................................................45 recital 24...............................................................................................................44 Dir 94/33 on protection of young persons at work [1994] OJ L216/12 .........................44 Dir 96/34 on Framework Agreement on parental leave [1996] OJ L145/4 ............... 46, 118 Dir 96/71 on posting of workers [1996] OJ L18/1 .............................. 6–7, 78–80, 84–87, 108, 230, 243–48 Art 3........................................................................................ 231, 237, 244–46, 248 (1) .............................................................................................................. 231 (a)–g) ..........................................................................................230–33, 246 (7) .........................................................................................................78, 231 (8) .........................................................................................................80, 231 (10) ...............................................................................................................79 Art 5.....................................................................................................................87 Dir 96/97 on equal treatment in social security schemes [1996] OJ L46.20................. 118 Dir 97/80 on burden of proof [1997] OJ L14/6 ....................... 118, 121–22, 129, 140, 177 Dir 97/81 on framework agreement on part-time work [1998] OJ L14/9........................................................... 11, 54, 120, 156, 160, 168, 170–72, 179 preamble ............................................................................................................ 157 Dir 98/59 on collective redundancies [1998] OJ L225/16 ........................................... 165 Dir 99/70 on framework agreement on fixed-term work [1999] OJ L175/43 .................................. 11–12, 120, 156, 160, 164–66, 168–72, 179–80 preamble .....................................................................................................157, 163 Dir 2000/43 on race [2000] OJ L180/22 ......................................23, 120–22, 155–56, 170 Art 2(2) ...................................................................................................... 9, 134 Art 4 .............................................................................................................. 130 Dir 2000/78 on equal treatment [2000] OJ L306/16 ..................................................10, 120, 134, 138–39, 147–48, 151, 155–56 recital 4 ................................................................................................................39 Dir 2001/23 on transfers of undertakings [2001] OJ L82/16 ................ 101–3, 105, 164–65 Art 1(1)(b) .......................................................................................................... 101 Dir 2002/73 on equal treatment [2002] OJ L269/15............................... 121, 138–39, 170 Art 2(7) .............................................................................................................. 137 Dir 2003/88 on working time [2003] OJ L299/9 recital 6 ................................................................................................................51 Art 7.....................................................................................................................51 Dir 2004/17 on procurement in water, energy, transport and postal sectors [2004] OJ L134/1 .............................................................................................................. 89–91 Art 55 ...................................................................................................................91 Dir 2004/18 on public works, supply and service contracts (Classic Directive) [2004] OJ L134/114...................................................89–96, 109–11 preamble, pt 33 .....................................................................................................94 pt 46 .....................................................................................................93 Art 16(e) ............................................................................................................. 111

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Art 23 ...................................................................................................................92 Art 26 ...................................................................................................................94 Art 27 ...................................................................................................................92 Art 44 ...................................................................................................................93 Art 53 ............................................................................................................. 91, 93 Dir 2004/38 on right to free movement [2004] OJ L158/77 ............................185–86, 190 Art 7................................................................................................................... 185 Art 24(2)............................................................................................................. 185 Dir 2004/113 implementing equal treatment [2004] OJ L373/37 .........................122, 131 Dir 2006/54 on equal treatment (Recast Directive) [2006] OJ L204/23 ............................................................... 118, 121–22, 131, 140, 170 Art 2(1)(b) .......................................................................................................... 142 (2)(c)...............................................................................................137–38, 142 (4) .............................................................................................................. 129 Art 3................................................................................................................... 143 Art 14 ............................................................................................................137–38 (2) ......................................................................................................130, 143 Art 28(1)............................................................................................................. 143 Dir 2006/123 on services in the internal market [2006] OJ L376/36 Art 1(6) ................................................................................................................71 Dir 2007/66 on review procedures for awarding public contracts [2007] OJ L335/31 ...................................................................................................91 Dir 2008/104 on temporary agency work [2008] OJ L327/9 ....................................................... 11–12, 40, 47, 50, 156, 160, 168–72, 179 preamble ............................................................................................................ 157 Art 2................................................................................................................... 168 Art 3................................................................................................................... 169 (1)(a) .......................................................................................................... 157 (c) .......................................................................................................... 157 (f) ............................................................................................................50 Art 5..............................................................................................................50, 169 (1)(a)–(b) ......................................................................................................50 (2) .............................................................................................................. 169 (3) .............................................................................................................. 169 Dir 2009/81 on works, supply and service contracts [2009] OJ L216/76 .......................90 Dir 2010/18 implementing revised Framework Agreement on parental leave [2010] OJ L68/13 ........................................................... 46, 118, 138 Dir 2010/41 on helping spouses [2010] OJ L180/1..............................................118, 122 Regulations Reg 1612/68 on freedom of movement of workers [1968] OJ L257/2 ......................... 185 Reg 1408/71 on social security schemes [1971] OJ L149/2 ....13, 183, 186–89, 191–94, 196 Art 3................................................................................................................... 187 Art 4................................................................................................................... 187 Art 10 ................................................................................................................. 187 Art 13(1)............................................................................................................. 187 (2)(a) .................................................................................................187, 193 (f)......................................................................................................... 187

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Art 18 ................................................................................................................. 187 Art 22(1)(b) .................................................................................................189, 193 Art 23 ................................................................................................................. 189 Art 73 ................................................................................................................. 189 Reg 2679/98 on free movement of goods (Monti Regulation) [1998] OJ L337/8 .............................................................................................. 71, 84 Art 2.....................................................................................................................71 Art 4.....................................................................................................................71 Reg 883/2004 on coordination of social security systems [2004] OJ L166/1 .............................................................. 13–14, 183, 185–90, 192–96, 202–3 preamble ............................................................................................................ 189 chap 1.....................................................................................................202, 222–23 chap 4................................................................................................................. 203 Art 1 (i) ............................................................................................................... 195 (z) .............................................................................................................. 188 Art 2................................................................................................................... 186 Art 3................................................................................................................... 187 Art 4................................................................................................................... 187 Art 6................................................................................................................... 187 Art 7................................................................................................................... 187 Art 11(1)............................................................................................................. 187 (2) .....................................................................................................189, 193 (3)(a) ........................................................................................................ 187 (e)......................................................................................................... 187 Art 21 ................................................................................................................. 189 (2) ............................................................................................................ 189 Art 46(3)............................................................................................................. 203 Art 64 ................................................................................................................. 187 Art 67 ..........................................................................................................189, 195 Art 68 ................................................................................................................. 194 Annex VII........................................................................................................... 203 Annex XI................................................................................................192–93, 195 Reg 1922/2006 on a European Institute for Gender Equality [2006] OJ L403/9 .......... 122 Reg 800/2008 general block exemption [2008] OJ L214/1............................................98 Reg 987/2009 implementing Reg 883/2004 [2009] OJ L284/1 Art 12(2)............................................................................................................. 187 Art 27 ................................................................................................................. 202 (4) ............................................................................................................ 202 (6) ............................................................................................................ 202 International Legislation European Convention on Human Rights 1950 ... 5–6, 37–38, 57, 63–66, 122–23, 125, 133 Art 11 ..........................................................................................5, 16, 64–66, 81–82 (1) ........................................................................................................ 63–64 (2) ........................................................................................................ 63–65 Art 14 ................................................................................................................. 155

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European Social Charter 1961 ......................... 5, 16, 37, 41, 44, 57, 61–63, 67–69, 72, 74 Art 6(4) .......................................................................................................... 61–62 Art 31 ...................................................................................................................61 ILO Constitution 1919 Art 1(2) ................................................................................................................31 Art 2.....................................................................................................................28 Art 3................................................................................................................. …28 Art 7.....................................................................................................................28 Art 11 ...................................................................................................................58 Art 12 ...................................................................................................................31 Art 14 ...................................................................................................................58 Art 19 ...................................................................................................................28 (5)(d) ..........................................................................................................31 ILO Weekly Rest Convention 1921 (No 14) .......................................................... 36, 44 ILO Forced Labour Convention 1930 (No 29) ............................................................30 ILO Employment of Women in Underground Work in Mines Convention (No 45) ............................................................................................................. 52–53 ILO Medical Examination of Young Persons Convention 1946 (No 77) ......................45 ILO Medical Examination of Young Persons Convention 1946 (No 78) ......................45 ILO Night Work for Young Persons Convention (No 79) ............................................45 ILO Labour Inspection Convention 1947 (No 81) ................................................. 33, 36 ILO Freedom of Association and Protection of the Right to Organise Convention 1948 (No 87) .......................... 4–5, 16, 20, 27, 30, 34, 39, 55, 57–61, 69, 82 Art 2.....................................................................................................................58 Art 9.....................................................................................................................59 ILO Night Work for Women Convention (No 89) ......................................................44 ILO Night Work for Young Persons Convention (No 90) ............................................45 ILO Labour Clauses (Public Contracts) Convention 1949 (No 94) ............................................................................................. 20, 36, 48, 106–7 ILO Right to Organise and Collective Bargaining Convention 1949 (No 98) ...............................................................5, 16, 30, 57–59, 65 Art 1.....................................................................................................................58 ILO Equal Pay for Men and Women Convention 1951 (No 100) .................... 30, 55, 113 ILO Maternity Protection Convention 1952 (No 103) ...................................... 42–43, 49 ILO Forced Labour Convention 1957 (No 105)...........................................................30 ILO Weekly Rest Convention 1957 (No 106) ........................................................ 36, 44 ILO Discrimination (Employment and Occupation) Convention 1958 (No 111)..............................................................30, 39, 55, 113, 155 ILO Occupational Health and Safety Convention (No 115) ........................................36 ILO Occupational Health and Safety Convention (No 120) ........................................36 ILO Employment Policy Convention 1964 (No 122) ...................................................33 ILO Labour Inspection in Agriculture 1969 (No 129) ........................................... 33, 36 ILO Annual Holidays with Pay Convention (No 132) Art 5(4) ................................................................................................................51 ILO Minimum Wage Convention (No 138) .......................................................... 30, 45 ILO Occupational Health and Safety Convention (No 139) ........................................36 ILO Tripartite Constitution Convention 1976 (No 144) ........................................ 33, 47 ILO Occupational Health and Safety Convention (No 148) ........................................36

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xxii Table of Legislation ILO Occupational Health and Safety Convention 1981 (No 155) ................33, 36, 41–43 Art 13 ...................................................................................................................42 ILO Workers and Family Responsibilities Convention 1981 (No 156) ..........................45 ILO Termination of Employment Convention 1982 (No 158) .....................................47 ILO Occupational Health and Safety Convention 1985 (No 161) .......................... 33, 36 ILO Safety and Health in Construction Convention 1988 (No 167) ....................... 41–43 ILO Night Work Convention 1990 (No 171) ................................................... 43–44, 54 ILO Private Employment Agencies Convention 1997 (No 181)....................33, 46–47, 50 Art 11 ...................................................................................................................50 ILO Worst Forms of Child Labour Convention 1999 (No 182).............................. 30, 54 ILO Maternity Protection Convention 2000 (No 183) ........................... 33, 43, 49–50, 54 Arts 3(2)–(3) .........................................................................................................49 (4) ...............................................................................................................49 ILO Promotional Framework for Occupational Health and Safety 1985 (No 187) .................................................................................................................33 ILO Declaration on Fundamental Principles and Rights at Work 1998 ...................................................................................... 4, 30–32, 155, 178 ILO Declaration on Social Justice for a Fair Globalisation 2008..................... 31, 33, 178 UN Covenant on Economic, Social and Cultural Rights 1966 Art 8.1.4 ...............................................................................................................58 UN Declaration of Human Rights 1948 ................................................................... 113 National Legislation Germany Basic Law (Grundgesetz) .............................................................................................8 Art 9(3) .............................................................................................................. 109 Enhancement of Occupational Old-age Pension Law (BGBI).................................... 108 Netherlands Flexibility and Security Act 1999 ............................................................................. 157 Sweden Co-determination Act (1976:580) ................................ 17, 230, 251–53, 255–59, 262–65, 268–69, 273–75 s 25a ................................................................................................................... 256 s 28..................................................................................................................... 101 s 31a ................................................................................................................... 256 s 38..................................................................................................................... 173 s 39..................................................................................................................... 173 s 41..............................................................................................................256, 258 s 42................................................................................... 237, 243, 255–59, 264, 268 s 54............................................................................................ 251–52, 258, 263–65 s 55................................................................................................... 251–52, 263–65 s 57..................................................................................................................... 263 s 60.........................................................................................................252, 264–65 s 61..............................................................................................................236, 252

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Employment Protection Act (1974:150) ......................................................102, 162, 206 s 6b .................................................................................................................... 100 Employment Protection Act (1982:80) s 5 .................................................................................................................165–66 (2)................................................................................................................... 166 ss 15–17 .............................................................................................................. 166 s 25..................................................................................................................... 166 s 30a ................................................................................................................... 166 s 31..................................................................................................................... 166 Equal Opportunities Act (1991:433) .................................................................143, 156 s 25..................................................................................................................... 254 Interest Act (1975:635) s 6 ...............................................................................................................236, 272 Labour Disputes Act (1974:371) .........................................................................269–70 s 4:6.............................................................................................................236, 238 s 5:2.............................................................................................................269, 276 s 5:3.................................................................................................................... 269 National Insurance Act (1962:381) ...................................................................... 204–5 ch 7 s 3 ........................................................................................... 207, 210, 214–15 National Pension Insurance Act 1913....................................................................... 204 National Sickness Insurance Act (1947:1)................................................................. 205 Non-Discrimination Act (2008:567) ......................................................................... 156 Ch 2 s 2 .............................................................................................................. 146 Ordinance (1997:835) s 19a ................................................................................................................... 215 Ordinance (2008:937) .............................................................................................. 215 Parental Leave Act (1995:584) .............................................. 10, 137–38, 143–44, 146–51 s 16..................................................................................................................... 143 Posting of Workers Act (1999:678) ........................................................................... 107 Private Job Placement and Hiring-out of Labour Act (1993:440) .............................. 173 Prohibition of Discrimination of Employees Working Part-Time and Employees with Fixed-Term Employment Act (2002:293 ................................................................. 172 Prohibition of Discrimination Act (2003:307) .......................................................... 156 Public Procurement Act (2007:1091) ........................................................................ 102 Right to Leave for People who because of Sickness Need to Try other Work Act (2008:565) ............................................................................................. 215 Single Non-Discrimination Act 2008 (2008:567) .........................................................23 Social Insurance Act/Code (2010:110) ...............................................................190, 214 ch 2 s 2 ............................................................................................................... 202 ch 6 s 8 ............................................................................................................... 218 ch 25 s 3 pt 2 ....................................................................................................... 218 ch 26 s 9–31 ........................................................................................................ 218 ch 27 s 21 ............................................................................................................ 218 s 24 a ......................................................................................................... 217 s 49 ............................................................................................................ 214 ch 28 s 7.............................................................................................................. 216 ch 33 s 10 ............................................................................................................ 215

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Tort Liability Act (1972:207) s 2:2.................................................................................................................... 251 s 2:3.................................................................................................................... 251 United States of America Civil Rights Act 1964 .............................................................................................. 128

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1 Introduction MIA RÖNNMAR*

1. INTRODUCTION

This book is the fourth volume in this series of publications from the Swedish Network for European Legal Studies. This volume focuses on labour law and social security law, and contains peer-reviewed chapters aimed at spreading information about Swedish legal research on European law – including development, impact and reform of the law – to a broad international audience. The chapters provide knowledge about a range of highly topical and important legal developments, and their analysis uncovers new and interesting perspectives, thereby contributing to timely doctrinal debates. The chapters are written by distinguished legal researchers associated with Swedish universities. Some of the chapters are based on keynote speeches made at the international conference ‘Labour law and social security law in an enlarged Europe – a social dimension on the move?’, arranged by the Swedish Network for European Legal Studies in Stockholm on 3–4 November 2009. Sweden has been a member of the European Union since 1995, and EU law and European law perspectives have been well integrated into Swedish labour law and social security law research.1 The chapters in the book illustrate this far-reaching and multifaceted ‘Europeanisation’ of legal science. The book comprises three parts and ten chapters. The purpose of this introduction is to present the different chapters of the book, and to link them together. This introduction also contains the author’s personal reflections on these chapters.2 Within the European Social Model and the European Welfare State, Sweden (and to some degree the other Nordic countries as well) can be said to represent * Associate Professor in Civil Law, LLD, Law Faculty, Lund University. Member of the Norma Research Programme, the ReMarkLab Research Programme, and the European Labour Law Network (ELLN), a legal expert network of the European Commission. This research is performed within the research project ‘Flexicurity – A Study of Swedish Regulation in a Comparative Context’, financed by the Swedish Council for Working Life and Social Research (FAS). 1 See eg M Rönnmar, ‘Anställningsskydd och anställningsavtal – aktuell arbetsrättslig forskning med ett europeiskt perspektiv’ (2007) 3–4 Arbetsmarknad & Arbetsliv 73. 2 The author is of course entirely responsible for this introduction and the views and conclusions expressed here.

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a specific system, as regards both labour law and industrial relations and social security law. In terms of influential comparative typologies or models (naturally ‘flawed’ by a certain element of vagueness and simplification, but also very helpful in analytical and pedagogical respects), Sweden has been described as a representative of inter alia a Nordic legal family, a Nordic labour law model, a social-collectivist industrial relations system, a consensual industrial relations system, a social-democratic welfare state regime, a Scandinavian social security law system (a ‘sub-group’ of the Beveridge system), and a coordinated market economy.3 The Swedish labour law and industrial relations system builds on selfregulation, cooperation between the social partners and autonomous collective bargaining. The trade unionisation rate is about 70–75 per cent and the collective bargaining rate is about 90 per cent. Wages and other terms and conditions are generally set by collective bargaining, which in turn is accompanied by strong mechanisms for, and well-developed regulation of, information, consultation and co-determination. Since the 1970s, labour law legislation is also frequent, and inter alia provides for employment protection. The well-developed Swedish social security law system is characterised by universalism and individualism. Each person must fulfil the insurance conditions in his or her own right, and family members cannot derive rights from a working person. All persons are covered by a basic protection (such as health care, social assistance etc), while work and rules based on income replacement form another important part of the system.4 Labour law and social security law have close links. Social security has developed as part of the industrial society, and can be understood as a complementary and dependent system to wage work. At an aggregated societal level, social security supplements wage work and its distribution of resources. Social security provides protection and maintenance in situations (against ‘risks’) when a person is unable to earn a living through wage work, owing to sickness, old age, unemployment or childbirth.5 Against this background, interdisciplinary legal research – studying both labour law and social security law – is particularly valuable and enables a deeper understanding of the functioning of the labour market. At EU level, the concept of the social dimension also reflects this complementarity of labour law and social security law. The social dimension

3 See inter alia K Zweigert and H Kötz, Introduction to Comparative Law, 3rd rev edn (Oxford, Clarendon Press, 1998), GJ Bamber and RD Lansbury, ‘An Introduction to International and Comparative Employment Relations’ in GJ Bamber and RD Lansbury (eds), International and Comparative Employment Relations. A Study of Industrialised Market Economies, rev edn (London, Sage, 1998), G Esping-Andersen, The Three Worlds of Welfare Capitalism (Cambridge, Polity Press, 1990), and P Hall and D Soskice (eds), Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (New York, Oxford University Press, 2001). 4 See inter alia E Holm, Fri rörlighet för familjer. En normativ analys av föräldrapenningen och EU-rätten (Lund, Juristförlaget i Lund, 2010). 5 See A Christensen, ‘Normativa grundmönster i socialrätten’ (1997) 78 Retfaerd 69 and Holm, Fri rörlighet för familjer, above n 4.

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refers to the part of EU politics and legal regulations connected to the citizen’s social needs, social protection and social integration. The labour market, social security and families are central areas of regulation in the social dimension, forming the legal structures of ‘everyday life’.6 EU labour law and national labour law interact as a result of the principle of subsidiarity and the limited legislative competence of the EU. Today, EU labour law covers regulation in the areas of fundamental rights, free movement of workers, non-discrimination, health and safety of workers, working and employment conditions, restructuring of companies and information, consultation and worker participation, as well as decision-making and processes within the framework of the European social dialogue, the European Employment Strategy and the open method of coordination. In principle, social security law is a matter for the individual Member States and the national legislation. However, the coordination of social security in the European Union (Community) and between the Member States was implemented early on as a way to facilitate the free movement of workers. Through the open method of coordination, aspects of social security (for example, old age pensions), social inclusion and social protection have been further developed. Following the Lisbon Treaty, a social market economy is one of the main aims of the European Union (Article 3 TEU), and the newly adopted Europe 2020-strategy puts forward three mutually reinforcing priorities: smart growth, sustainable growth and inclusive growth. As regards inclusive growth – a high-employment economy delivering economic, social and territorial cohesion – the new flagship initiative an Agenda for New Skills and Jobs has been launched.7

2. LABOUR LAW, THE PROTECTION OF FUNDAMENTAL RIGHTS AND THE TENSION BETWEEN ECONOMIC AND SOCIAL INTEGRATION IN THE EU

In the first part of the book, four chapters approach the theme of labour law, the protection of fundamental rights, and the tension between economic and social integration in the EU. In her chapter, The ILO Acquis and EU Labour Law¸ Petra Herzfeld Olsson provides a general overview of the position of the ILO acquis in EU labour law.

6 The social dimension of the EU is at the centre of attention for the Norma Research Programme, coordinated by Professor Ann Numhauser-Henning and of which the author is a member. The Norma Research Programme started out fifteen years ago at the Law Faculty of Lund University, with funding from the Bank of Sweden Tercentenary Foundation. The purpose of the Programme is to create a research environment where basic normative patterns and their developments and relationship to the ongoing changes within the area of the social dimension in Europe can be studied in depth and from a long-term perspective. See inter alia A Numhauser-Henning and M Rönnmar (eds), Fifteen Years with the Norma Research Programme. Anniversary volume (Lund, the Norma Research Programme, Faculty of Law, Lund University, 2010), found at www.jur.lu.se/norma. 7 See Communication from the Commission, Europe 2020. A strategy for smart, sustainable and inclusive growth, COM(2010) 2020.

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She starts from the contradiction that recent ECJ case law8 is difficult to align with the freedom of association and the right to strike as protected by the ILO Core Labour Standards and Convention No 87, while at the same time other EU institutions, such as the European Commission and the European Parliament call on all EU Member States to ratify all up-to-date ILO Conventions. After an introduction to the ILO and its mandate – highlighting inter alia the emphasis of recent years on Core Labour Standards and their universal recognition and application (through the 1998 ILO Declaration on Fundamental Principles and Rights at Work), the Decent Work Agenda and Fair Globalisation – Herzfeld Olsson reviews general commitments made by the EU in order to safeguard the respect for ILO norms within the EU (inter alia policy statements, the Community Charter of the Fundamental Social Rights of Workers, requirements in the Social Chapter of the TFEU and the EU Charter of Fundamental Rights). She also analyses the way in which references to ILO Conventions are made when EU labour law is developed, whether EU labour law normally fulfils ILO requirements, the use of ILO Conventions as interpretative guidance by the ECJ, and what happens when the ECJ is confronted with an ILO norm that contradicts EU labour law. In this last respect, Herzfeld Olsson discusses Article 351 TFEU (formerly Article 307), which states: The rights and obligations arising from agreements before 1 January 1958, or for acceding States, before the date of their accession, between one or more Member States, on the one hand, and one or more third countries on the other, shall not be affected by the provisions of this Treaty. To the extent that such agreements are not compatible with this Treaty, the Member States or States concerned shall take all appropriate steps to eliminate the incompatibilities established, Member States shall, where necessary, assist each other to this end and shall, where appropriate, adopt a common attitude.

According to the ECJ (in Commission v Austria9), the contradiction between a requirement stemming from an ILO Convention and EU law imposed an obligation on the Member State to denounce the ILO Convention. In relation to this, Herzfeld Olsson asks the important question of whether any ILO Convention will risk being treated in the same way. ‘Would it matter if one of the Core Labour Standards would have been at the centre of the case? One reasonable assumption would be that at least Conventions giving inspiration to the rights included in the concept of fundamental rights according to Articles 6.1 and 3 of the EUT would be treated differently. The case law from the ECJ in Laval and Viking however indicates that that not necessarily would be the outcome.’10 Thus, the analysis of Herzfeld Olsson reveals a complex situation as regards the status and impact of the ILO acquis in EU labour law. By way of conclusion,

8 9

See Case C-341/05 Laval [2007] ECR I-11767, Case C-438/05 Viking [2007] ECR I-10779. Case C-203/03 Commission v Austria [2005] ECR I-935. Herzfeld Olsson’s chapter p 53.

10

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she emphasises that there is no legal requirement for the EU to respect the ILO acquis in its labour law-related internal activities. According to Herzfeld Olsson, the ‘situation would have been different if the ILO Conventions were to be part of the fundamental rights which form part of the fundamental principles of EU law (Article 6 TEU). In that case, it would have been necessary for the EU and the Member States to respect their content in the legislative process. Some of the ILO Conventions have been given this status by the ECJ.’11 The ILO acquis, especially Conventions Nos 87 and 98 and the legal reasoning of the supervisory bodies of the ILO, is also discussed by Örjan Edström in his chapter, The Right to Collective Action – in Particular the Right to Strike – as a Fundamental Right. The aim is to analyse, especially from an EU law perspective, some normative systems that have had an impact on the right to collective action, and in particular, on the right to strike. Three normative legal systems are discussed and analysed, namely the ILO Conventions Nos 87 and 98 (ILO), the European Social Charter and the European Convention on Human Rights and Fundamental Freedoms (the European Council), and the Charter of Fundamental Rights of the European Union and the Treaty on European Union following the Lisbon Treaty (the European Union). The chapter ends with an analysis of convergence and divergence trends in law with regard to the right to collective action and the right to strike. Edström describes how the fundamental right to collective action and the right to strike, are not explicitly dealt with in ILO Conventions Nos 87 and 98, but instead are considered as an integral component of the right to association. In his examination of the interpretations of the right to collective action and the right to strike made by the different Courts and supervisory bodies linked to the ILO, the European Council and the European Union, Edström highlights recent and much debated case law developments, such as the Laval- and Viking-cases, the BALPA-case and the Demir and Baykara-case.12 In relation to the Demir and Baykara case from the ECtHR, Edström emphasises the important conclusion drawn by the Court that the right to collective bargaining is an essential element of the right of association. He also points to the fact that ‘critics of the Court’s former standpoints have noted that in Demir and Baykara the Court sends a signal that it may be shifting its position away from what the critics have seen as an unwillingness to use Article 11 of the Convention for strengthening trade union rights’.13 As a main conclusion, Edström finds that the right to strike as a fundamental right has been clearly strengthened in recent years – a convergence trend – following inter alia the adoption of the Lisbon Treaty in the EU and the case law of the ECtHR in Demir and Baykara and other cases. This development has been facilitated and influenced by the interplay between the three different normative

11

Herzfeld Olsson’s chapter p 54. Demir and Baykara v Turkey, Judgment of 12 November 2008, ECtHR. 13 Edström’s chapter, p 66. 12

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legal systems. The different Courts and supervisory bodies often make references to each other, and in doing so, according to Edström, they ‘seek to legitimise the status of their respective decisions regarding the fundamental right to strike’.14 Another factor promoting convergence is the explicit recognition of the European Convention on Human Rights and Fundamental Freedoms in Article 6(3) of the Treaty of the European Union. Edström also finds evidence of a divergence trend in the fact that the fundamental right to strike will continue to be subject to restrictions in different ways in the three normative legal systems, inter alia due to differences at the national level between industrial relations systems and traditions. According to Edström, one crucial issue for the future will be how the ECJ and the ECtHR interact and in practice link their two normative systems together. In this respect, the ‘proportionality tool anchored in both legal traditions provides a useful instrument for balancing the different perspectives’.15 The starting points for Jonas Malmberg’s chapter Regulating Posted Work – Before and After the Laval Quartet are the overarching questions of ‘What wages and working conditions are to be applied to workers who, within the framework of the transnational provision of services are sent to work temporarily in the territory of another Member State?’ and ‘How shall the right to take collective action within the single market be balanced against economic freedoms?’.16 The aim of his chapter is to analyse the legal responses at international level to the case law of the ECJ, the Laval Quartet.17 Malmberg provides an initiated account and analysis of posting pre-Laval, the Laval Quartet, and posting postLaval – and there especially of the legal responses to the Laval Quartet by the European Court of Human Rights and the ILO Committee of Experts, and possible future amendments of EU law. He points to the fact that these legal responses at international (but also at national) level contain elements of both adjustment and resistance, and challenges to the doctrines established by the ECJ. In comparison with Edström (who emphasises the strengthening of the right to strike a fundamental right), Malmberg’s analysis is more focused on the problematic implications of the Laval Quartet as regards the right to strike, trade unions and national industrial relations systems. Malmberg emphasises that the ECJ’s interpretation of the Posting of Workers Directive in Laval comes rather close to an understanding of it as a ceiling. Within the EU, collective actions – at least in cross-border situations – may be considered as a restriction of the freedom of services and the right to

14

Edström’s chapter p 72. Edström’s chapter p 75. 16 Malmberg’s chapter p 77. 17 See Case C-341/05 Laval [2007] ECR I-11767, Case C-438/05 Viking [2007] ECR I-10779, Case C-346/06 Rüffert [2008] ECR I-1989 and Case C-319/06 Commission v Luxembourg [2008] ECR I-4323. Compare Malmberg’s analysis also of different national, especially Nordic, responses to this case law, see J Malmberg, Posting Post Laval – International and National Responses, Working Paper 2010:5 (Uppsala, Uppsala Center for Labor Studies, 2010). 15

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establishment. In this respect, Malmberg concludes that the ‘Viking and Laval cases concerned various types of collective action, and the judgments imply that the protection of the right to different kinds of collective actions is not uniform but depends on the nature and aim of the action in question’.18 In a discussion of future possible amendments of EU law, Malmberg points both to different initiatives taken by the European Commission to increase the effectiveness of the Posting of Workers Directive, and to the proposals contained in the so-called Monti Report ‘A New Strategy for the Single Market’.19 He also discusses the (un)likelihood of a revision of the Posting of Workers Directive. Finally, Malmberg points to three major issues brought to the fore by the conflict between economic freedoms and national industrial relations; namely, a new balance for competition and the level of protection of posted workers, closely linked to the ECJ’s understanding of the notion of unfair competition, supervision and enforcement of employment and working conditions, and the right to collective action. In this last respect, Malmberg concludes that the ‘restrictions on the right to collective action put up by the Viking and Laval cases have substantially limited the possibility for trade unions to protect the interests of their members in cross-border situations. The combination of making the lawfulness of collective actions dependent on a vague proportionality test, combined with a threat of action of damages, does have a manifest preventive effect on the possibility of exercising this fundamental right’.20 The chapter Public Procurement and Labour Law – Friends or Foes?, by Kerstin Ahlberg and Niklas Bruun, relates to the general theme of the tension between economic and social integration in the EU and the interrelation between public procurement law and labour law. The chapter addresses the question of how to reconcile implementation of the EU rules on public procurement with labour law provisions, and also discusses the scope for social policy considerations in public procurement law in general. To start with, Ahlberg and Bruun point to the purpose of the EU rules on public procurement ‘to improve the function of the single market and eliminate the risk of national authorities favouring domestic agents and discriminating, directly or indirectly, against foreign undertakings in the course of their procurement’.21 In their chapter, Ahlberg and Bruun discuss and analyse the EU rules on public procurement in general, procurement procedure and the rules of the Directives, the general EU legal framework (including limitations of the EU legislative competence and implications of the Lisbon Treaty), and parallel application of public procurement rules and rules of labour law – and here focus on transfers of undertakings, posting of workers and collective bargaining, and public procurement.

18

Malmberg’s chapter p 79. See M Monti, A New Strategy for the Single Market at the Service of Europe’s Economy and Society: Report to the President of the European Commission José Barroso (2010). 20 Malmberg’s chapter p 87. 21 Ahlberg’s and Bruun’s chapter p 90. 19

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In relation to transfers of undertakings – and through an analysis of case law from the ECJ and the Swedish Labour Court – they discuss the practically important and difficult situations and conditions in which the requirements and wishes for the transfer of personnel would be compatible with the rules on public procurement. In a detailed and initiated analysis of the recent German Pensions Case22 – dealing with the implementation of public procurement rules for pension services based on collective agreement – Ahlberg and Bruun conclude that the ‘Court recognises that the right to bargain collectively and to conclude collective agreements are afforded special protection in international legal instruments, in EU law (Article 28 of the Charter of Fundamental Rights of the European Union and Article 152 TFEU) and in German Basic Law. The Court also emphasises that the German collective agreement at issue has a clear social objective’.23 Despite this, the Court ruled that the management of collectively agreed pensions for public sector employees must be made subject to procurement. According to Ahlberg and Bruun, the ruling can be criticised for ‘having paid insufficient regard to specific considerations of labour law’. However, the ruling also ‘opens up possibilities of flexibly combining procurement with collective bargaining’.24 (Pessimists may argue that this case has turned the Laval Quartet into the Laval Quintet.) Finally, Ahlberg and Bruun emphasise that we have seen only the beginning of the legal development reconciling EU law on public procurement with labour law. In the future measures will be required from both Member States and EU institutions – and in that respect, they highlight the importance of respecting the distinctive characteristics of social policy solutions in the different national Member States.

3. EQUAL TREATMENT AND NON-DISCRIMINATION

In the second part of the book, three chapters discuss the theme of equal treatment and non-discrimination. In her chapter EU Equality Law – Comprehensive and Truly Transformative?, Ann Numhauser-Henning analyses the evolution of EU equality law, and discusses whether the current state of affairs of EU equality law holds a promise of comprehensive and truly transformative equality – implying the dismantling of systemic inequalities, the eradication of poverty and disadvantage, and equality of capabilities and opportunities (as claimed inter alia by Bob Hepple25).

22 See Case C-271/08 Commission v Germany [2010] not yet published in ECR, see OJC 233, 30.8.2008 p 27. 23 Ahlberg’s and Bruun’s chapter, p 109. 24 Ahlberg’s and Bruun’s chapter, p 111. 25 See B Hepple, ‘Equality at Work’ in B Hepple and B Veneziani (eds), The Transformation of Labour Law in Europe. A Comparative Study of 15 Countries 1945–2004 (Oxford, Hart Publishing, 2009) 129–63.

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Introduction

9

In a discussion on the origins of equality law, Numhauser-Henning starts from the important contradiction between formal and substantive equality – at the heart of all equality law – and describes the way in which bans on discrimination traditionally have been based on formal equality, the liberal tradition and the Aristotelian thesis of ‘what is alike shall be treated alike’. In addition, such bans are generally designed as individual rights and based on a complaint-led model. She emphasises that the goal of non-discrimination law is typically to change identified existing and discriminatory normative perceptions and to promote social justice and integration – at both individual and structural levels. Numhauser-Henning reviews developments of EU equality law both in the ‘outer’ dimension, ie primary and secondary law instruments, and in the ‘inner’ dimension, ie normative perceptions often manifested in case law. In the latter case, she highlights key legal concepts and normative answers ‘bridging the conflict’ between formal and substantial equality, and discusses inter alia direct effect, direct and indirect discrimination, the reversed burden of proof, and positive action. The chapter covers developments from the first adoption of the Treaty of Rome to the adoption of the Lisbon Treaty and beyond. In the case law of the ECJ, Numhauser-Henning finds some support for the proposition that EU equality law is already in a phase of transformative equality law. In Coleman,26 the ECJ created the concept of ‘transferred discrimination’ and found that Ms Coleman had suffered discrimination when she was treated differently and harassed because of her son’s disability. In Firma Feryn,27 there was no identified (and if so, only associated) victim, and the ‘Court found that a public statement made by an employer declaring that he will not recruit employees of a certain ethnic or racial origin constituted direct discrimination within the meaning of Article 2(2) of the Directive 2000/43/EC,28 despite the wording of the Article that “direct discrimination shall be taken to occur when one person is treated less favourable than another”’.29 In light, inter alia, of the Lisbon Treaty, the goal of social market economy, and the inclusion of the Charter of Fundamental Rights into primary EU law, Numhauser-Henning argues that the former market hegemony is no longer indisputable, and that there is ‘ground for certain expectations with regard to Union law, and within the realm of the current “liberal” equality regulation, for the further development of truly transformative, and thus substantive, equality’.30 In Jenny Julén Votinius’ chapter, Troublesome Transformation – EU Law on Pregnancy and Maternity Turned into Swedish Law on Parental Leave, the focus is not on general EU equality law developments but more specifically on

26

Case C-303/06 Coleman [2008] ECR I-5603. Case C-54/07 Firma Feryn [2008] ECR I-5187. 28 Dir 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespecitve of racial or ethnic origin, OJ L 180, pp 22–26. 29 Numhauser-Henning’s chapter p 134. 30 Numhauser-Henning’s chapter pp 135 ff. 27

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legal rules on discrimination of grounds of pregnancy, maternity and parental leave. It starts from the prohibition on less favourable treatment of workers on grounds of parental leave, introduced in the Swedish Act on Parental Leave in 2006. This prohibition was based on the EU rules against discrimination of pregnant workers and workers on maternity leave, and its explicit aim was to extend the period during which the worker is entitled to a high level of protection against deterioration of working conditions as a result of pregnancy, so that the same protection applies during the parental leave. However, in contrast with the EU rules, the Swedish national rules allow an employer to treat the worker less favourably because of his or her parental leave, when the less favourable treatment can be seen as a necessary consequence of the parental leave. The aim of the chapter is to present and critically discuss the problematic nature of the legislative method used for the Swedish rules on protection of workers on grounds of parental leave – ie the difficulty of using EU rules on one issue as a model and point of reference for national legislation on another issue. Julén Votinius provides an account of the EU law protection of pregnant workers, the Swedish law protection of workers on parental leave, and a discussion of the use of EU law as a point of reference for national law. Her analysis covers EU law aspects, such as the strict prohibition on pregnancy discrimination, the absence of a need for a comparator to determine pregnancy discrimination, and the fact that pregnancy discrimination cannot be justified. From a Swedish law perspective, she analyses the way in which the less favourable treatment of workers on parental leave can be justified. In this regard, she argues that the exemption clause in the Swedish Parental Leave Act not only lacks an equivalent in the Equal Treatment Directive, but also that it ‘simply makes no sense’ in the context of EU law. Julén Votinius illustrates how the categorisation of discrimination in connection with pregnancy and maternity leave as direct discrimination of women provides women with a strong legal protection, but also questions this emphasis of the biological fact, ie the sex of a person. When it comes to parental leave, Julén Votinius convincingly argues that ‘the right to take leave from work in connection with childbirth [is not] based on an unassailable law of nature, but on a social construction that, in contrast to natural law, can be changed. In a country, such as Sweden, where the national law on parental leave and parental benefit covers both parents, a male worker is as entitled as a female worker to take leave from paid work in order to care for a child. This means that it is equally possible for a man, and not only a woman, to suffer detrimental treatment due to absence from work when he has a child’.31 Finally, Julén Votinius concludes that the method of legislating used in the Swedish Act was not uncomplicated; that the introduction of the exemption clause changed the legal structure of the rules in a fundamental way, and thereby

31

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Introduction 11 failed to respect the integrity of the EU rules. This turned out to be not only to the detriment of the rule of law and the legal protection of workers on parental leave. It also risks weakening the protection provided under EU law for pregnant workers and workers on maternity leave. In the author’s own chapter, Flexicurity, Labour Law and the Notion of Equal Treatment, the notion of equality and equal treatment is also at the centre of attention, as is, at least partly, the interaction between EU law and Swedish law. The starting point is the EU law flexicurity discourse. Flexicurity is central to European employment policy and to the ‘modernisation’ of EU labour law and labour law in the different Member States of the EU. Common principles of flexicurity have been adopted and integrated into the European Employment Strategy, the Lisbon Strategy and the Europe 2020 Strategy, and different pathways to flexicurity have been outlined. The aim of the chapter is to explore and critically discuss the different notions of equal treatment inherent in the EU law flexicurity discourse, and to point to some conceptual and analytical points of departure. Swedish law serves as the main national example. Flexicurity is described at EU level as an integrated strategy to enhance, at the same time, flexibility and security in the labour market, and contains the following components: flexible and reliable contractual arrangements; comprehensive lifelong learning; effective active labour market policies; and modern social security systems. Flexible and reliable contractual arrangements aim at reduced labour market segmentation and equal treatment of permanent employees and fixedterm workers and other flexible workers. Such equal treatment can be achieved through inter alia deregulation of employment protection, creation of a ‘tenure track’ approach, and progressive employment protection. Employability and labour market transitions are also in focus, as is a shift from job security and traditional employment protection to security by way of employability in relation to the entire labour market. A common denominator for the different notions of equal treatment inherent in the EU law flexicurity discourse is the aim to reduce labour market segmentation. The author finds that the EU law flexicurity discourse and flexible and reliable contractual arrangements really entail different – partly conflicting, and also sometimes ‘elusive’ – notions of equal treatment, which are legally ‘materialised’ in a variety of ways. The different notions of equal treatment explored and discussed in the chapter are as follows: equal treatment, as in reduced labour market segmentation in general; equal treatment of permanent employees and fixed-term workers, as in increased protection for fixed-term workers and challenges to and reforms and deregulation of employment protection; equal treatment of permanent employees and flexible workers, ie part-time, fixed-term and temporary agency workers, as in principles of nondiscrimination and equal treatment proper;32 and, finally, equal treatment, as in

32 Compare Council Dir 97/81/EC of 15 December 1997 concerning the Framework Agreement on part-time work concluded by UNICE, CEEP and ETUC, OJ L 14, 20.1.1998, pp 9–14, Council

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redefining the boundaries and personal scope of labour law and developing core labour rights (and connected to the work of the ILO on Core Labour Standards, the Decent Work Agenda and Fair Globalisation). The EU law flexicurity discourse – and the flexicurity strategy in recent years – imply a shift of emphasis from employment law to employment policy. Equal treatment of permanent employees and flexible workers, as apostrophised in principles of non-discrimination and equal treatment proper, is most closely linked to general EU equality law developments and key concepts. However, equal treatment of permanent employees and flexible workers represents a somewhat different perspective on equality, mainly related to the flexicurity, employment policy and globalisation discourses, and not to the non-discrimination and human rights discourses. Equal treatment of flexible workers aims at increased protection of flexible workers and a move into stable contractual arrangements, but is also perceived as a way to promote employment and economic growth. Equal treatment of permanent employees and fixed-term workers implies both increased protection for fixed-term workers, and challenges, reforms and deregulation of employment protection. This notion of equal treatment is thus potentially ‘revolutionary’, and at the very heart of employment protection regulation and the protective principle of the permanent open-ended employment contract as the main rule. Here the recent vague proposals in the Agenda for New Skills and Jobs seem to imply a far-reaching ‘reformulation’ of the open-ended employment contract, which remains to be followed and further analysed. However, a ‘tenure track’ approach and progressive build-up of rights (for example, as in, measures to prevent abuse arising from the use of successive fixed-term employment contracts or relationships, regulated in the Fixed-Term Work Directive) can be seen as expressions both of deregulation and of solidarity and redistribution.

4. SOCIAL SECURITY LAW AND FREE MOVEMENT AND COORDINATION IN THE EU

In the third part of the book, two chapters relate to the theme of social security law and free movement and coordination in the EU. The general aim of Emma Holm’s chapter, The Swedish Parental Benefit in Relation to the EU Rules on Coordination of Social Security Benefits – Is Free Movement of Families Really Achieved?, is to examine the Swedish parental benefit in relation to the EU principles of free movement, ie the Treaty provisions on free movement for workers and Union citizens and the secondary legislation

Dir 99/70/EC of 28 June 1999 concerning the Framework Agreement on fixed-term work concluded by the ETUC, UNICE and CEEP, OJ L 175, 10.7.1999, pp 43–48 and Dir 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on temporary agency work, OJ L 327, 5.12.2008, pp 9–14.

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Introduction 13 on coordination of social security benefits. Regulation 1408/78 and its successor Regulation 883/200433 are in focus, as are Articles 21, 45 and 48 TFEU. The application of the EU rules in the Swedish context is examined in terms of the effects on the free movement of families. The theory of law as normative patterns in a normative field (originally developed by Anna Christensen34) serves as a theoretical starting point. According to this theory, legal solutions in the area of the social dimension, and social security, can be said to oscillate between three basic – contradictory – normative patterns in a normative field, namely the pattern of protection of established position, the market-functional pattern and the pattern of just distribution. Rules based on income replacement represent the pattern of protection of established position, while benefits based on need (or implying a solidaritybased redistribution of resources) represent the pattern of just distribution. By placing the Swedish provisions on parental benefits and the EU rules on free movement and coordination of social security in the normative field, tensions and conflicts between the legal solutions are made visible. In her chapter, Holm describes and analyses the rules (which in legal-technical and analytical terms are quite complicated) on the right to free movement in the EU, including the right to movement and social benefits in general, social security coordination and the main features of Regulations 1408/71 and 883/2004, and connections and tensions between the different EU norms, coordination of benefits relating to childbirth and family, the Swedish parental benefit, and the Swedish parental benefit in relation to the EU rules. Holm shows how, in its case law, the ECJ interpreted Articles 45 and 21 TFEU in a broad way, and introduced the notion of a proportionality assessment in situations where free movement is restricted. A division is made in the coordination regulation between family benefits and maternity/paternity benefits, and the classification of national benefits relating to childbirth and family and the interpretation of the notion of family benefit have turned out to be difficult, not least in the Swedish context (cf Kuusijärvi35). When it comes to the relationship between the Swedish parental benefit and the EU rules, and the free movement of families, Holm analyses important and existing problems in relation to families moving to Sweden, families moving from Sweden and families working and living in different Member States, and puts forward proposals de lege ferenda in order to better facilitate the coordination of the Swedish parental benefit. As for the overall normative development, Holm concludes that ‘the

33 Reg (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community, OJ L 149/2, 5.7.1971, pp 2–50 and Reg /EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems, OJ L 166/1, 30.4.2004, pp 1–123. 34 See A Christensen, ‘Normative Patterns and the Normative Field: A Post-Liberal View on Law’ in T Wilhelmsson and S Hurri (eds), From Dissonance to Sense. Welfare State Expectations, Privatisation and Private Law (Aldershot, Ashgate, 1999) 83–98. 35 Case C-275&96 Kuusijärvi [1998] ECR I-3419.

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rules on free movement have shifted from mainly expressing a normative pattern of protection of established position as a result of employment towards also representing a normative pattern of just distribution’.36 The same development can be seen in the area of coordination of social security. In his chapter, The Swedish Social Security Reforms of 2008 and their Impact on the National Sickness Insurance System: Some Reflections from an EU Law and Flexicurity Perspective, Per Norberg focuses on a recent, interesting, and much debated Swedish social security reform in the area of national sickness insurance. The aim is to provide a description and critical analysis of the historical development of the Swedish national sickness insurance system, and to make some reflections from the perspective of flexicurity and the EU coordination regulation of social security. The 2008 reform of the national sickness insurance included the introduction of two new rules. First, a requirement was established to seek new employment from day 180 of the sickness period. Otherwise, persons too sick to do their current work will then lose their sickness insurance benefit if they can perform any other normal work available in the national labour market. The person will receive unemployment insurance benefit while looking for a new job. Second, the reform established a temporary withdrawal of the sickness insurance benefit from day 915 in the sickness period. This cessation applies to people who are not permanently sick, but sick enough to be unable to perform any normal work available in the national labour market. The Public Employment Agency shall offer these people labour market activities for the 90 days they must subsist without sickness insurance benefit, before they can return to the sickness insurance system. After having provided a brief account of flexicurity and the concept of sickness and invalidity in EU law, Norberg describes and analyses the rules on early retirement in the 1970s and 80s, the sickness insurance after the 1970s and 80s, the ‘purification’ of the Swedish sickness insurance in the 1990s and onwards, and the reform of the sickness insurance in 2008. He depicts, inter alia, how the notion of ‘individual overuse’ becomes important in the Swedish discussion and reform of national sickness insurance. As regards the current Swedish concept of sickness, Norberg argues that Regulation 883/2004 is not designed to coordinate such a narrow concept. According to Norberg, in the future and if other countries choose to follow Sweden, the EU may need to adapt its social security coordination regulation to fit such a narrow concept of sickness/invalidity/incapacity to work. One feature of the new Swedish system is the goal to move people from sickness insurance and early retirement to unemployment insurance and labour market activities. Norberg agrees that moving somebody out of sickness insurance into unemployment insurance can be seen as a step in the direction of

36

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Introduction 15 future employment, and that creating a labour market flexible enough to allow sick persons to work will probably be good for the society as a whole. However, Norberg is also very critical of the implementation and effect of the 2008 reform. He argues that the ‘new system is extremely complex and contradictory. It will need further reforms, and only after these reforms are in place is it possible to assess the protection provided by the social security system … So far the best that can be said about the 2008 reform is that some potential disasters have been averted with legislative intervention in the last minute’.37

5. CONCLUDING REMARKS

The question of fundamental rights and their protection is of increasing importance in both labour law and social security law. Several of the chapters in this book reflect on the important legal implications of the Lisbon Treaty as regards fundamental rights in the EU. The legally binding character of the Charter of Fundamental Rights, now constituting primary EU law, and the future accession of the EU to the European Convention (Article 6 TEU) is discussed inter alia in relation to the status of the ILO acquis in EU labour law, the right to collective action, and the right to strike, EU equality law and the coordination of social security in the EU and aspects of Union citizenship. Here, for example, Herzfeld Olsson points to the remarkable fact that the ILO Core Labour Standards are not mentioned in Article 6 TEU or in the explanatory document related to the EU Charter of Fundamental Rights. One aspect of the future accession of the EU to the European Convention relates to the relationship between the ECJ and the ECtHR, and the way in which possible conflicts between case law from these courts (and between EU labour law and international labour law) have to be addressed and taken seriously. This aspect is discussed thoroughly by Edström and Malmberg (and touched upon also by Herzfeld Olsson) in relation to the Laval Quartet and the right to collective action and the right to strike.38,39 In Laval and Viking, the ECJ recognised the right to industrial action as a fundamental right, with explicit reference not only to the European Social Charter, ILO Conventions, and the Community Charter of the Fundamental Social Rights of Workers, but also to Article 28 of the Charter of Fundamental Rights of the European Union.40 However, the ECJ stated that the right to industrial action may be subject to certain restrictions, and went on to examine whether the industrial action at hand constituted a

37

Norberg’s chapter p 221. The Laval Quartet has been much debated and the literature in this area is voluminous. 39 See eg P Syrpis, ‘The Treaty of Lisbon: Much Ado … But About What?’ (2008) 37(3) Industrial Law Journal 2–50. Compare also G Harpaz, ‘The European Court of Justice and Its Relations with the European Court of Human Rights: The Quest for Enhanced Reliance, Coherence and Legitimacy, (2009) 46(1) Common Market Law Review 105. 40 Laval, paras 90-91, and Viking paras 43–44. 38

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restriction of the free movement of services (Article 56 TFEU) or the freedom of establishment (Article 49 TFEU), respectively, and if so, whether this could be justified. A restriction of the free movement of services (or freedom of establishment), constituting one of the fundamental principles of Community law, is warranted only if it pursues a legitimate objective compatible with the Treaty, and is justified by the existence of 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. Finally, the ECJ found that the industrial action in Laval constituted a restriction of the free movement of services which could not be justified in the light of the public interest of combating social dumping and protecting workers. Similarly, in Viking the ECJ found that the industrial action constituted a restriction of the freedom of establishment. When it came to justification and proportionality, the ECJ (in contrast to Laval) left the assessment and a wider ‘margin of appreciation’ to the national court. At the centre of attention now are the implications of the reorientation of the case law of the ECtHR – following the Viking and Laval cases from the ECJ – regarding freedom of association. In two landmark decisions from 2008 and 2009, respectively, the cases of Demir and Baykara and Enerji YapiYol Sen,41 the ECtHR has aligned its case law with inter alia ILO Conventions No 87 on freedom of association and protection of the right to organise and No 98 on right to organise and collective bargaining, and with the European Social Charter. The freedom of association, as protected by Article 11 of the ECHR, is now said to comprise also the right to bargain collectively and the right to collective action. In this respect, Malmberg critically remarks (and is, in principle, supported by Herzfeld Olsson and Edström) that ‘[t]he stance taken by the ECJ seems problematic for, if not directly clashing with, the position taken by the European Court of Human Rights and the ILO Committee of Experts. This puts a considerable pressure on the ECJ to reconsider its position on the balance between the economic freedoms and national social regulation’.42 The BALPA case in England – discussed by both Edström and Malmberg – relates to the question of trade union liability, damages and enforcement, and illustrates that the case law of the ECJ and the mere threat of trade union liability for damages will have a ‘chilling effect’ on industrial action and trade union activity.43 Likewise, the final judgment of the Swedish Labour Court in the Laval

41

See Enerji Yapi-Yol Sen v Turkey, Judgment of 21 April 2009, ECtHR. Malmberg’s chapter p 85. 43 Compare KD Ewing and J Hendy, ‘The Dramatic Implications of Demir and Baykara’ (2010) 39(1) Industrial Law Journal 2–50 and K Apps, ‘Damages claims against trade unions after Viking and Laval’ (2009) 34(1) European Law Review 141–54. In this regard Edström concludes that ‘[b]y turning to the ILO Committee of Experts, the British trade union has compelled the ILO to balance the freedoms founded on the Treaty of the European Union and their status against the right to strike as interpreted by the ECJ in Laval and Viking. However, while the statement from the Committee of Experts is critical, it is not binding for the EU’, Edström’s chapter p 73. 42

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Introduction 17 case44 – much debated and also criticised – concern the question of trade union liability for damages. From a more general EU law perspective, it also relates to important and controversial legal questions on horizontal application of Treaty provisions and Directives, and liability for damages for private parties. For these reasons an English translation of this judgment is enclosed as an appendix to this book. Laval made claims for financial damages (around 140 000 Euro) and punitive damages (around 135 000 Euro, plus interest) for the breach of EU law that the industrial action taken by the Swedish Building Workers’ Union and its local branch and the Swedish Electrician’s Trade Union constituted. The Labour Court assessed Laval’s claims for damages on two different legal grounds: first, whether the fact that the industrial action taken by the trade unions constituted a breach of the Treaty freedom to provide services, giving rise to liability for damages (violation of EU law), and second, whether the industrial action violated provisions in the (1976:580) Co-determination Act and gave rise to liability for damages (violation of Swedish law). The Labour Court found that Laval had not succeeded in providing evidence of financial loss, and therefore the claim for financial damages could not be approved. However, the Labour Court ordered the trade unions to pay punitive damages – both on grounds of a violation of EU law and Swedish law – of approximately 55 000 Euro (around 20 000 Euro for the Swedish Building Workers’ Union, 20 000 Euro for its local branch and 15 000 Euro for the Swedish Electrician’s Trade Union). The judgment was not unanimous, but decided by a majority of the judges of the Labour Court. Three (out of seven) judges presented dissenting opinions. Many critical questions can be raised since the Swedish Labour Court entered ‘uncharted territory’. There is no case law from the ECJ establishing liability for damages between private parties on grounds of a violation of Article 49 EC (now Article 56 TFEU).45 The Swedish Labour Court built heavily on established case law on Member State liability, but in the absence of guidance from the ECJ, is it necessarily the case that these criteria apply when deciding on liability for damages for private parties, including trade unions, and if so, in what way? What factors, for example, should be taken into account when establishing a ‘sufficiently serious breach’ (Brasserie du Pêcheur and Factortame)? The Labour Court referred to Courage and Manfredi (cases from the competition law area, where Treaty provisions are clearly directed towards companies and private parties), and relied heavily on the case of Raccanelli (decided by the

44 Labour Court judgment AD 2009 No 89. For a more extensive discussion on this judgment, see M Rönnmar, ‘Laval Returns to Sweden. The final judgment of the Swedish Labour Court and Swedish legislative reforms’ (2010) 39(3) Industrial Law Journal 280–87. 45 Compare S Prechal and S De Vries, ‘Seamless web of judicial protection in the internal market?’ (2009) 34(1) European Law Review 5–24, K Apps, ‘Damages claims against trade unions after Viking and Laval’, above n 43, and N Reich, ‘Horizontal liability in EC law: Hybridization of remedies for compensation in case of breaches of EC rights’ (2007) 44 Common Market Law Review 705–42.

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Fifth Chamber), whose authority must be questioned. Raccanelli relates to free movement of workers and Article 45 TFEU. As regards the relationship between the ECJ and the ECtHR, Holm points to the different interpretations of the notion of family (and the right to family and privacy) made by the ECJ and the ECtHR, and how this may influence the free movement of families and persons within the EU.46 Generally, EU membership and EU law has led, at least from a Swedish perspective, to an increased importance of courts and case law.47 European courts – national courts, the ECJ and the ECtHR – and their case law are essential for the development of the European social model and EU labour law and social security law. As regards the relationship between national courts and the ECJ, many have pointed both to a relationship characterised by dialogue, cooperation and discourse, and to the active and central role played by the national courts – particularly through the preliminary rulings procedure – in developing and enforcing EU law.48 The role of the ECJ in interpreting Treaty provisions and Directives and developing general principles of Union law is crucial. ECJ case law in substantive labour law areas (such as sex equality law, non-discrimination and transfers of undertakings) and as regards the free movement of workers and Union citizens and the coordination of social security in the EU, has in some ways strengthened the protection of individual employees and persons. The ECJ has also – frequently in labour law and social policy cases – developed general principles of law, ensuring the effective enforcement of Union law; ie the principle of primacy of Union law, the principle of direct effect, the principle of consistency of interpretation, and the principle of state liability for breaches of Union law.49 The Laval Quartet has resulted in a critical discussion of the role of the ECJ and a ‘democratic deficit’. Malmberg discusses the important political implications of the Laval Quartet by way of weakened support for the European integration project as such. Elements of resistance are discernible in national responses to the Laval Quartet, and Malmberg emphasises that resistance against the doctrines of the ECJ are often silent and not fully visible. In principle, all the chapters discuss the tension between economic and social integration in the European Union, and the implications in this respect

46

See also Julén Votinius’ chapter. See eg N Bruun and J Malmberg, ‘Arbetsrätten i Sverige och Finland efter EU-inträdet’ in K Ahlberg (ed), Tio år med EU – effekter på arbetsrätt, partsrelationer, arbetsmarknad och social trygghet, Arbetsliv i omvandling 2005:5 (Stockholm, Arbetslivsinstitutet, 2005) 7–45, X Groussot et al, Empowering National Courts in EU Law, SIEPS 2009:3 (Stockholm, SIEPS, 2009) and U Neergaard, R Nielsen and L Roseberry (eds), The Role of Courts in Developing a European Social Model. Theoretical and Methodological Perspectives (Copenhagen, DJØF, 2010). 48 See S Sciarra, ‘Integration through Courts: Article 177 as a Pre-Federal Device’ in S Sciarra (ed), Labour Law in the Courts. National Judges and the European Court of Justice (Oxford, Hart Publishing, 2001) p 1. Compare also C Kilpatrick, ‘Community or Communities of Courts in European Integration? Sex Equality Dialogues Between UK Courts and the ECJ’ (1998) 4(2) European Law Journal 121–47, and Groussot et al, Empowering National Courts, above n 48. 49 See C Barnard, EC Employment Law, 3rd edn (Oxford, Oxford University Press, 2006) pp 33 ff. 47

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Introduction 19 of the Lisbon Treaty and the new goal of the European Union to aim for a social market economy (cf Article 3.3 TEU). In both the Laval and Viking cases, the ECJ emphasised that the Community has not only an economic but also a social purpose, and that the rights under the EC Treaty on the free movement of goods, persons, services, and capital must be balanced against the objectives pursued by social policy, such as improved living and working conditions. However, despite these declarations by the ECJ, the Court appears to have put fundamental freedoms first, and fundamental rights, such as the right to collective action, second. Thus, the debate on the ‘decoupling’ of economic and social integration (with the latter relegated to the national level) linked to the European integration project is likely to continue.50 Here, Numhauser-Henning refers in her chapter to Article 119 and the gender-related pay clause in the Treaty of Rome, originally aiming at promoting economic rather than social integration, through a prevention of unfair competition with low wages paid to women. Thus, the rules on non-discrimination in the Treaty of Rome were basically ‘market rights’. In a prediction of future developments, NumhauserHenning is rather more optimistic, however, and points to different ways in which the ‘market hegemony’ in the field of equality law – inter alia against the background of the Lisbon Treaty – has and can be challenged. In relation to the right to collective action and the right to strike (and the Laval Quartet), both Edström and Malmberg emphasise the argument that the balance between fundamental Treaty freedoms and trade union rights may have to be struck differently today in light of the Lisbon Treaty and the goal of a social market economy.51 The analysis of the relationship between public procurement law and labour law by Ahlberg and Bruun highlights the increased focus on the intersection between labour law and different areas of economic law, and the challenges this poses to labour law. Many of the chapters also reflect today’s multi-level governance of labour law and social security law, closely linked to the ongoing globalisation of the economy and the internationalisation of law. Labour law and social security law are governed nowadays by a multitude of legal sources at different levels, such as the global, EU/European/regional and the national level. National regulatory hegemony is long gone, and for example, Malmberg has earlier argued that ‘[u]ltimately, it is to a large extent supranational courts … that decide what is feasible and permitted within national industrial relations systems’.52

50 Compare eg F Scharpf, ‘The European Social Model: Coping with the Challenges of Diversity’ (2002) 40 Journal of Common Market Studies 645 and D Schiek, ‘Transnational Collective Labour Agreements in Europe and at European Level – Further Readings of Article 139 EC’ in Mia Rönnmar (ed), EU Industrial Relations v. National Industrial Relations. Comparative and Interdisciplinary Perspectives (Alphen aan den Rijn, Kluwer Law International, 2008). 51 See eg Monti, A New Strategy for the Single Market, above n 21. 52 J Malmberg, ’Enforcement of Labour Law’ in B Hepple and B Veneziani (eds), The Transformation of Labour Law in Europe. A Comparative Study of 15 Countries 1945–2004 (Oxford, Hart Publishing, 2009) pp 286 ff.

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In earlier work, this author has analysed EU labour law developments and EU industrial relations, and their relationship to and interdependence with national industrial relations, in terms of an evolving EU multi-level industrial relations framework (employing also Dunlop’s classical theory on industrial relations systems).53 Alongside EU labour law, an EU industrial relations system is evolving. EU industrial relations constitute a new common European dimension of industrial relations, at ‘another’ level than national industrial relations in the Member States. The power relationship and interactions between the social partners within the framework of the European social dialogue, the European Employment Strategy, the open method of coordination, and information, consultation, and worker participation form part of these EU industrial relations. EU industrial relations are multifaceted and relate to both the interactions between the European social partners at cross-industry and sectoral European levels, and the interactions between the social partners in transnational European companies.54 EU industrial relations are fundamentally based on European integration and an emphasis on transnational and supranational levels of industrial relations. An EU multilevel industrial relations framework encompasses (at least) the workplace, the company, the multi-company, the sectoral, the national, and the EU. European integration introduces three specific supranational levels: the EU, the EU sector, and the Euro-company. EU industrial relations are thus simultaneously acting above, beside and within national industrial relations. One exponent of the multi-level governance of labour law is the increased focus in recent years on the ILO acquis. Herzfeld Olsson describes inter alia how ILO Conventions have been used as inspirational sources when developing EU fundamental rights and have served as interpretative guidance for the ECJ. According to Herzfeld Olsson, including a direct reference to ILO Conventions and Recommendations in a recital in the Preamble of a Directive could be an important step in promoting ILO influence on EU labour law.55,56 However, Herzfeld Olsson also critically points to the fact that ‘[t]he recognition of ILO Convention No 87 as an inspirational source for rendering the right to collective action fundamental right status has however in Laval and Viking not protected it from limitations going beyond the ILO requirement. The limited impact of ILO provisions in this regard is illuminated by the weak qualified formulation

53 See eg M Rönnmar (ed), EU Industrial Relations v. National Industrial Relations. Comparative and Interdisciplinary Perspectives (Alphen aan den Rijn, Kluwer Law International, 2008), compare JT Dunlop, Industrial Relations Systems, rev edn (Boston, Harvard Business School Press, 1993. 54 See eg P Marginson and K Sisson, European Integration and Industrial Relations. Multilevel Governance in the Making (Basingstoke, Palgrave MacMillan, 2004) and R Hyman, ‘The Europeanisation – or the Erosion – of Industrial Relations?’ (2001) 32 Industrial Relations Journal. 55 See also T van Peijpe, ‘If Vaxholm Were in Holland: Interest Conflicts and EU Labour Law in a Comparative Perspective’ in M Rönnmar (ed), EU Industrial Relations v. National Industrial Relations. Comparative and Interdisciplinary Perspectives (Alphen aan den Rijn, Kluwer Law International, 2008) 193–16. 56 Both Herzfeld Olsson and Ahlberg and Bruun, from partly different starting points, discuss ILO Convention No 94, the Labour Clauses (Public Contracts) Convention, and the interaction between the ILO acquis and EU law in the area of public procurement law and labour law.

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Introduction 21 of the right to collective action and collective bargaining in the EU Charter. An inclusion in the EU Charter is no guarantee for extensive protection’.57 Edström, Malmberg and Herzfeld Olsson all reflect on how, in the multilevel governance of labour law, different Courts and supervisory bodies often make references to each other. In Demir and Baykara the Court, in the words of Malmberg, ‘stresses that the interpretation of the ECHR can and must take into account elements of international law other than ECHR (such as ILO Conventions), the interpretation of such elements by competent organs, and the practice of European States reflecting their common values’. According to Edström, this interaction contributes to a convergence trend in law as regards the fundamental right to collective action and the right to strike. The theme of convergence and divergence has long been present in industrial relations research. In a comprehensive comparative project and classical book, ‘Industrialism and Industrial Man. The Problems of Labor and Management in Economic Growth’,58 Dunlop developed (together with inter alia Kerr) a well-known, but much debated, convergence thesis. Bamber, Lansbury and Wailes describe how their ‘core proposition is that there is a global tendency for technological and market forces associated with industrialisation to push national industrial relations systems towards uniformity or “convergence”. This conclusion is based on the view that there is a logic of industrialism, that as more societies adopted industrial forms of production and organisation, this logic would create “common characteristics and imperatives” across these societies’.59 The book gave rise to an intensive debate on convergence or divergence between different national industrial relations systems. The critics argued (and turned out to be right) that the divergence between different national industrial relations systems will continue, owing to inter alia institutional, political, social, cultural and ideological differences between the countries. The relationship between the national and international has been central also in more recent debates on the impact of globalisation on national patterns of employment relations. While emphasising the significance of the national level and the role of institutional arrangements, industrial relations researchers have put forward evidence not of convergence, but rather of continuing national diversity in employment relations. Similarly, the influential varieties of capitalism approach, developed by Hall and Soskice, rejects the notion of globalisation creating irresistible pressures for convergence of capitalist economies. Instead, it is possible to identify at least two institutional settings – liberal market economies and coordinated market economies – resolving the problems associated with a market economy.60

57

Herzfeld Olsson’s chapter p 55. See C Kerr et al, Industrialism and Industrial Man. The Problems of Labor and Management in Economic Growth (London, Heinemann, 1960). 59 See GJ Bamber, RD Lansbury and N Wailes (eds), International and Comparative Employment Relations: Globalisation and the Developed Market Economies, 4th edn (London, Sage, 2004) p 13. 60 See P Hall and D Soskice, ‘An Introduction to Varieties of Capitalism’ in P Hall and D Soskice (eds), Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (New 58

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The right not to be discriminated against is a fundamental human right, and as such is protected in different international documents. In an analysis of the evolution of equality law in Europe between 1945 and 2004, Hepple describes a development and process from legal assertion of the right to equality in international instruments, to formal equality, to substantive equality, to the dawn of comprehensive and transformative equality. This development is closely connected to the human rights discourse and the value of human dignity – but also to the influence and dynamics of EU law and the interventions by the ECJ. In particular, the chapter by Numhauser-Henning and the chapters by Julén Votinius and this author, relate to and analyse different notions of equal treatment and equality (as regards EU equality law in general, discrimination on grounds of pregnancy and maternity, and the EU law flexicurity discourse), and the fundamental tension between formal and substantive equality and the realisation of transformative equality. In this respect, Schiek has commented on the tension between formal and substantive equality, and has held that ‘EU non-discrimination law is multidimensional in its conceptual approaches, which continue to oscillate between form and substance, individual and group, and equality of treatment and result’.61 Hepple has discussed alternatives to the notions of equal treatment and equal opportunity that have been put forward in the debate, and has described how ‘Hugh Collins argues that “social inclusion” provides a more satisfactory intellectual basis for anti-discrimination legislation than approaches based on substantive equality. Catherine Barnard suggests that the law needs to be underpinned by the values of “solidarity” in order to achieve the objectives of integration and participation of disadvantaged groups’.62 The notion of social inclusion is linked to the very notion of the social market economy, the Europe 2020 Strategy and the EU law flexicurity discourse, discussed inter alia by Holm, Norberg and this author. The notion of solidarity is already used by the ECJ inter alia in case law on the integration of migrant workers and EU citizens.63 In relation to the EU law flexicurity discourse and equal treatment of flexible workers, it is interesting to note the fundamental differences as compared to ‘traditional’ equality and non-discrimination legislation. Equal treatment of part-time workers, fixed-term workers and temporary agency workers is not based on the employee’s personal characteristics, such as sex, race, or sexual orientation, and related to the human rights discourse, but is instead based on the employment contract and its form and content. There are also greater

York, Oxford University Press, 2001) 1–68 and M Rönnmar, ‘Det svenska arbetsmarknadssystemet i teori och praktik’ in K Ahlberg (ed), Vänbok till Ronnie Eklund (Uppsala, Iustus, 2010) 495–514. 61 D Schiek, ‘From European Union Non-discrimination Law towards Multidimensional Equality Law for Europe’ in D Schiek and V Chege (eds), European Union Non-Discrimination Law. Comparative Perspectives on Multidimensional Equality Law (London, Routledge/Cavendish, 2009) 3–27, p 3. 62 B Hepple, ‘Aims of Equality Law’ (2007), pp 19 ff. 63 See Hepple, ‘Aims of Equality Law’, above n 63.

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Introduction 23 possibilities for the employer to justify prima facie discriminatory, also direct, behaviour when it comes to these flexible workers. This begs important and critical questions: can this spread of the principle of equal treatment risk diluting the strength of the principle of equal treatment itself, and thereby counteract the battle for substantive and transformative equality in other areas? Similarly, Numhauser-Henning highlights the fact that within the EU, sex equality law is mainly argued in a (de facto) equality discourse, while the other non-discrimination grounds (covered by Article 19 TEU) are argued within a framework of non-discrimination. In relation to comprehensive equality, Single Non-Discrimination Acts draw attention to the importance of the intersection between labour law and other areas of law. In Sweden, the (2008:567) Single Non-Discrimination Act from 2008 not only gathers different discrimination grounds but it is also (like inter alia Council Directive 2000/43/EC) applicable outside the realm of working life; for example, in public employment services, education, health care, social services, and social security. For Swedish labour law, building on a special tripartite Labour Court and a special labour law dispute resolution system, this means expanding, in a novel way, equality law and the legal interpretation of fundamental legal principles, concepts and rules on the burden of proof beyond labour law and labour courts to general courts. Thus, this adds to the continuous legal dialogue between the ECJ and national courts, discussed above. It remains to be seen whether uniform and dynamic or incoherent and divergent jurisprudence will follow. In this regard, Numhauser Henning has warned that ‘legal intervention is focused on formal equality as the common minor denominator, instead of meeting the real needs of equality of different groups’.64 At the same time, Numhauser-Henning points to the ‘open’ ban against discrimination of protected groups in Article 21 of the EU Charter of Fundamental Rights, and how it may open up new possibilities in the area of multiple discrimination. The importance of legal developments in the area of pregnancy discrimination and the characterisation of pregnancy and maternity discrimination as direct discrimination lies at the heart of Julén Votinius’ chapter and argument. However, Numhauser-Henning clarifies that these developments are important also from a more general EU equality law perspective, when it comes to ‘bridging the gap’ between formal and substantive equality. Julén Votinius depicts the exceedingly vague Swedish legislation in this area, and describes how ‘the national legislation in no way reveals that the rules relating to direct discrimination on the basis of sex are applicable to pregnancy discrimination. Instead, protection against pregnancy discrimination is governed by reference to and interpretation of EU law’.65

64 65

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Numhauser-Henning’s chapter p 114. Julén Votinius’ chapter p 138.

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The importance of the notion of family in the area of free movement and coordination of social security in the EU is highlighted by Holm and has been discussed above. Likewise, the analysis of Julén Votinius illustrates how the notion of parenthood is closely linked to legal rules relating to pregnancy, maternity, paternity and parental leave.66 These notions differ between Member States in the EU, and depend on inter alia the continued impact of the male breadwinner model. In her analysis of free movement and the coordination of social security in the EU, Holm starts from the theory of law as normative patterns in a normative field, and analyses the different expressions of – and conflicts between – the normative patterns of protection of established position and just distribution. Likewise, in her discussion on the origins of equality law, Numhauser-Henning relates to normative developments, and emphasises that non-discrimination legislation is closely connected to processes of normative and material change. Both Holm and Numhauser-Henning point to the importance of belongingness. Numhauser-Henning emphasises that any ‘legal system implies perceptions of belonging and exclusion’,67 and Holm refers to the fact that ‘the national social security systems remain the province of the respective Member States. These systems are based on a territoriality principle, meaning that only people with a certain belonging, such as nationality or residence, are covered’.68 Basically belongingness is also at the centre of attention in the debate on equal treatment, the boundaries and the personal scope of labour law and the notion of an employee, linked both to the EU law flexicurity discourse and the ILO’s efforts in the area of Core Labour Standards, Decent Work and Fair Globalisation. The EU law flexicurity discourse has been approached and discussed both by Norberg and this author. While Norberg’s analysis of the development of the Swedish national sickness insurance emphasises social security, the importance of transitions, and active labour market policies, this author’s exploration of different notions of equal treatment instead highlights labour law and flexible and reliable contractual arrangements. The focus on employability and labour market transitions links employment protection and security for employees in crucial ways to the other flexicurity components, namely comprehensive lifelong learning, active labour market policies, and modern social security systems. The EU law flexicurity discourse could be said to entail an emphasis of labour law and social security law as complementary systems. Thus, a more comprehensive analysis – and understanding – of the EU law flexicurity discourse requires an interdisciplinary study of both labour law and social security law. Finally, in the broader context of EU labour law and its relationship with globalisation, De Vos interestingly argues that the evolution of EU labour

66 See also J Julén Votinius, Föräldrar i arbete. En könskritisk undersökning av småbarnsföräldrars arbetsrättsliga ställning (Göteborg/Stockholm, Makadam, 2007). 67 Numhauser-Henning’s chapter p 115. 68 Holm’s chapter p 187.

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Introduction 25 law can be described as a development from national labour law as market correcting (starting from the basic inequality of bargaining power inherent in the employment contract and the need to protect workers), to original EC labour law as market making (in (mainly) promoting free movement) and further to the EU law flexicurity discourse, strategy and labour law as market embracing. This has been an attempt to present the different chapters and to link them together – and to partake in the discussion on future developments and challenges in the fields of labour law and social security law.

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2 The ILO Acquis and EU Labour Law PETRA HERZFELD OLSSON*

1. INTRODUCTION

Since 2007 the European Court of Justice (ECJ) has adopted at least two judgments difficult to align with the obligations on freedom of association and the right to strike arising from the International Labour Organisation (ILO) Core Labour Standard, Convention No 87.1 During the same period, the European Commission and European Parliament adopted communications and resolutions encouraging the EU Member States to ratify all up-to-date ILO Conventions. The Commission expresses particular satisfaction with the fact that all Member States have ratified the eight fundamental rights Conventions. Thereby, these bodies indicate that the obligations arising from the ILO Conventions should set a floor regarding work related social protection within Europe. This is a puzzling indication, as the ECJ does not even seem to be willing to give Core Labour Standards such as freedom of association and the right to strike sufficient protection. It is not going too far to consider these messages to be a bit contradictory. In order to illuminate this apparent contradiction a general overview of the position of the ILO acquis in EU law will be carried out in this chapter. The author will start by giving a short presentation of the ILO and its mandate in order to clarify why it could be seen as appropriate for the EU to take ILO norms into consideration when developing EU labour law, and to respect those

* Doctor of laws and researcher at the Law Faculty, Uppsala University. From 1997 to 2004 she worked at the National Institute for Working Life in Sweden. Since 2004 until 2010 she has mainly been employed by the Swedish Ministry for Employment. 1 Case C-438/05 Viking Line [2007] ECR I-10779, C-341/05 Laval [2007] ECR I-1767. Report III(1A) Report of the Committee of Experts on the Application of Conventions and Recommendations, 24 February 2010. UK Freedom of Association and Protection of the Right to Organise Convention, 1948 (No 87): ‘The Committee thus considers that the doctrine that is being articulated in these ECJ judgments is likely to have a significant restrictive effect on the exercise of the rights to strike in practice in a manner contrary to the Convention’.

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norms when they risk being interfered with through inter alia the application of norms outside labour law. In the third section, the author searches general commitments, both of policy and legal character, the EU has made in order to safeguard the respect for ILO norms within the EU. In the fourth section the author looks for concrete footprints of ILO influences in the preparatory work of EU labour law adopted after 1989. In the fifth section the author discusses whether EU labour law normally fulfils ILO requirements. In the sixth and seventh sections the author turns to the case law from the ECJ and investigates which impact a reference to a ILO Convention in the preamble of a Directive can have for the interpretation of a EU norm and how the ECJ has dealt with situations where a national norm implementing a ILO norm is considered to be violating an EU norm. In Section 8 some conclusions are drawn.

2. WHY DOES THE ILO MATTER?

The International Labour Organisation, the ILO, is the UN’s special agency for issues of employment and working life. The ILO was founded in 1919, in the wake of the First World War, and is based on a vision that universal, lasting peace can be established only if it is based upon social justice. The main bodies of the ILO are the International Labour Conference, The Governing Body and the International Labour Office.2 The representation of each member to the ILO is tripartite. This means that governments, workers’ representatives and employers’ representatives participate in the work of the ILO on an equal basis.3 This is a unique construction which paves the way for decisions well equipped to fit the reality of the workplace and working life in general. The ILO mandate is defined mainly by its constitution, dating from 1919, and annexed in 1944 by the Philadelphia Declaration. Its mission is to promote social justice by improving conditions of labour. Through the adoption of Conventions and Recommendations the ILO defines international norms for working life.4 To date, 188 Conventions have been adopted. Their content has a broad material scope and includes provisions on freedom of association, minimum age, prohibition of forced labour, equal pay for equivalent work, working time, paid holiday, night work, maternity protection, social security, migrant workers, labour inspection, labour clauses, protection of wages, minimum wage, tripartite consultation, home work, termination of employment, workers with family responsibilities and a number of Conventions on general and technical provisions on health and safety and also several maritime related Conventions. Since the ILO began to adopt Conventions as early as 1919, many of them are

2

ILO Constitution, Art 2. ibid, Arts 3 and 7. 4 ibid, Art 19. 3

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The ILO Acquis and EU Labour Law 29 no longer relevant. In 2008 the Governing Body of the ILO identified around 75 Conventions that could be considered to be up-to-date.5 Some Conventions have achieved a broad recognition through a high number of ratifications, while others have gained more limited support in this respect. Today, the ILO has 183 members, including all EU Member States. The Organisation won the Nobel Peace Prize on its 50th anniversary in 1969 and during the Cold War era the organisation played a significant role in supporting the trade union movement in Poland and became a forum for debate between the West and the Eastern bloc.6 The importance of the ILO was, however, questioned during the 1990s.7 The ILO system was accused of being geared to a model of employment that is fast disappearing in most states.8 The ILO was also at this time criticised for being unfocused and it seemed that the organisation needed a strategy to adapt to the new globalised world with its new perspectives.9 In order to find ways to overcome these problems, the ILO Governing Body established, in 1994, the ILO Working Party on the Social Dimension of Globalisation. It was given the task of analysing a wide range of aspects of economic globalisation.10 Shortly thereafter, ILO labour standards gained important acknowledgement when the 1995 World Social Summit, in Copenhagen, addressed the need to promote basic workers rights through applying certain ILO Conventions. In the Programme of Action paragraph 54(b) the Governments committed themselves to safeguarding and promoting respect for basic workers’ rights, including the prohibition of forced labour and child labour, freedom of association and the right to organise and bargain collectively, equal remuneration for men and women for work of equal value, and non-discrimination in employment, fully implementing the conventions of the International Labour Organisation (ILO) in the case of States parties to those conventions, and taking into account the principles embodied in those conventions in the case of those countries that are not States parties to thus achieve truly sustained economic growth and sustainable development. 11

5

301st Session March 2008 (GB 301/11 rev). F Maupin, ‘Is the ILO Effective in Upholding Workers’ Rights? Reflections on the Myanmar Experience’ pp 90–91 and T Novitz ‘The European Union and International Labour Standards: The Dynamics of Dialogue between the EU and the ILO’ p 236 both in P Alston (ed), Labour Rights as Human Rights (Oxford, Oxford University Press, 2005). 7 ibid Novitz, ‘The European Union’ pp 236 ff, above n 6 and footnotes; S Sciarra, ‘From Strasbourg to Amsterdam: Prospects for the Convergence of European Social Rights Policy’ in P Alston (ed), EU and Human Rights (Oxford, Oxford University Press, 1999) p 479. 8 Alston, Labour Rights as Human Rights pp 22–23, above n 6 and corresponding footnote. 9 For an overview of this criticism see J Murray, ‘Taking Social Rights Seriously: Is there a Case for Institutional Reform of the ILO?’ in C Fenwick and T Novitz (eds), Human Rights at Work (Oxford, Hart, 2010) pp 363 ff. 10 See S Charnovitz, ‘The ILO in its Second Century’ in Max Planck Yearbook of United Nations Law (2000) pp 148–84, 150 ff. 11 See www.un.org/documents/ga/conf166/aconf166-9.htm. 6

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Slightly ironically, it was the Summit which identified the basic workers’ rights which then became the Core Labour Standards for the first time, and agreed on their universality by making them the responsibility of all governments, not just those that have ratified the relevant Conventions. Soon, the OECD and the WTO expressed similar support for the Core Labour Standards.12 The ILO responded promptly and in 1998 the Organisation adopted the 1998 ILO Declaration on Fundamental Principles and Rights at Work. The key objective of the Declaration is to ensure universal recognition and application of the Core Labour Standards (CLS). The 1998 Declaration confirmed the four Core Labour Standards as identified by the Copenhagen Summit: 1. Freedom of association and the effective recognition of the right to collective bargaining; 2. Elimination of all forms of forced or compulsory labour; 3. Effective abolition of child labour; 4. Elimination of discrimination in respect of employment and occupation. These principles are currently covered by eight ILO Conventions: Nos 87 and 98 on freedom of association and collective bargaining, Nos 29 and 105 on forced labour, Nos 138 and 182 on minimum age and the worst forms of child labour and Nos 100 and 111 on equal pay and elimination of discrimination. The Members of the ILO are however obliged to respect the principles in the Declaration regardless of whether they have ratified the corresponding Conventions. The CLS have continued to attract wide support. The high rate of ratification of these Conventions, as well as their recognition by other international actors, confirms their importance. The next important step in safeguarding ILO relevance was taken in 1999 when the new Director-General Juan Somavia launched the term ‘Decent Work’ and formulated four strategic objectives.13 The primary goal of the ILO today is to promote opportunities for women and men to obtain decent and productive work, in conditions of freedom, equity, security and human dignity. This is the main purpose of the Organisation today. Decent work is the converging focus of all its four strategic objectives: the promotion of rights at work; employment; social protection; and social dialogue. It must guide its policies and define its international role in the near future.

Through these two actions, the adoption of the 1998 Declaration and of the Decent Work Agenda, the ILO had strengthened its ability to play an important role in making a market-driven globalisation work for all.14

12 OECD Trade, Employment and Labour Standards: A Study of Core Workers’ Rights and International Trade 1996 and WTO Singapore Ministerial Declaration, www.wto.org/english/ thewto_e/minist_e/min96_e/wtodec_e.htm. 13 Director General Report – Decent Work, 87th International Labour Conference 1999. 14 But see Murray, ‘Taking Social Rights Seriously’ pp 370 ff, above n 9.

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The ILO Acquis and EU Labour Law 31 In 2001 the Working Party was upgraded by a World Commission on the Social Dimension of Globalisation, which was given the task of preparing a major authoritative report on the social dimension of globalisation, including the interaction between the global economy and the world of work.15 The World Commission presented its final report, A Fair Globalisation: Creating Opportunities for All, in 2004.16 The report contained a range of policy proposals, with the main objective being to strengthen and coordinate activities on national and international levels in order to adapt to the structural changes due to globalisation. The United Nations World Summit expressed its support for a fair globalisation and for productive employment and Decent Work for all in 2005.17 As a result of the work of the World Commission, the International Labour Conference in June 2008 adopted the ILO Declaration on Social Justice. Juan Somavia states in his preface to the Declaration that it expresses the contemporary vision of the ILO’s mandate in the era of globalisation and emphasises the key role of ILO in helping to achieve progress and social justice in the context of globalisation. The Declaration is considered to be a central ILO instrument on the same level as the 1998 Declaration and the Philadelphia Declaration. Even if there is always room for further improvements, it must be acknowledged that the ILO, not least through the concepts of Core Labour Standards and Decent Work, has formulated a framework for promoting social justice which is used worldwide. Within its tripartite structure representing governments, workers and employers from a large part of the world, it has developed an important normative base of labour standards, covering a broad range of issues, which play a central role within this framework.18 It is against this background that the EU commitments in this regard will be analysed.

3. THE EU VIEW ON ILO CONVENTIONS

Only states can be members of the ILO.19 International organisations, like the EU, can participate in the work of the ILO but does not have any right to vote nor ratify any Conventions.20 The EU and ILO have been discussing their relationship since the establishment of the European Coal and Steel Treaty in 1952. Some aspects have been dealt

15 ILO Governing Body documents: ‘Enhancing the Action of the Working Party on the Social Dimension of Globalisation: Next Steps’ (GB.282/WP/SDG/1), Geneva, November 2001; and ‘Report of the Working Party on the Social Dimension of Globalisation’ (GB.282/12), Geneva, November 2001. 16 ILO, Geneva 24 February 2004. 17 www.un.org/ga/59/hlpm_rev.2.pdf, United Nations World Summit, § 33. 18 Novitz, ‘The European Union’ pp 237 ff, above n 6. 19 ILO Constitution, Art 1.2. 20 ibid, Arts 12 and 19(5)(d).

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with in ‘letters of understanding’, the last one adopted in 2001.21 A major step in developing the cooperation was taken in 1989 when the European Community, through the representation of the Commission, obtained observer status in the International Labour Conference and in the Governing Body. 22 The focus of the cooperation has lately been on activities outside the EU. In the following, the role ILO Conventions has been given by the EU in an internal context will be explored.

3.1 Policy Statements After the renewed global interest in ILO in the second part of the 1990s, the Council adopted conclusions on trade and labour standards in 1999, where it underlined that the EU should strongly support the protection of Core Labour Rights.23 In the letter of understanding between the ILO and EU from 2001, a set of priority areas for the cooperation between the organisations were formulated against this background. The cooperation was focused on the promotion of labour standards, notably with regard to the principles and rights set out in the 1998 ILO Declaration on Fundamental principles and rights at work and social dialogue, not least with a view to the possible dissemination of the lessons from the European experience of social dialogue to other regions of the world. These thoughts were developed in a Commission communication, on Promoting Core Labour Standards and improving social governance in the context of globalisation and later in another communication on promoting the Decent Work Agenda.24 The Commission connects the external strategies presented in these documents to its internal work by explaining that the EU has a long-standing commitment to the promotion of Core Labour Standards and these fundamental principles and rights at work identified by the International Labour Organisation apply in their entirety to the countries of the EU.25

21 OJ C 56, 30 May 2001. For more about the early development of the relationship between EU and ILO see R Delarue, ‘ILO-EU Cooperation on Employment and Social Affairs’ in J Wouters, F Hoffmeister, T Ruys (eds), The United Nations and the European Union: An Ever Stronger Partnership, (the Hague, TMC Asser Press, 2006) pp 93–114, 98 ff and T Novitz, ‘The European Union’ pp 217 ff, above n 6. 22 For more about the early development of the relationship between EU and ILO see Delarue, ‘ILO-EU Cooperation’ pp 93–114, 98 ff, above n 21, and Novitz, ‘The European Union’ pp 217 ff, above n 6. The relationship to the ILO has also been discussed within the EU. The Member States and some of the EU bodies have during their common history had different views on how to act in relation to the ILO. The question has to a large extent been if, and in that case to what extent, the Member States have lost their competence to negotiate and ratify ILO Conventions; Opinion of the Court of 19 March 1993, Opinion 2/91 on the second subparagraph of Article 228 (1) of the EEC Treaty, [1993] ECR I-1061, Delarue, ‘ILO-EU Cooperation’ pp 107 ff, above n 21, L Blommé, Europarättens inverkan på arbetet i ILO, Uppsala university, 2008, to be found at: http://arbetsratt. juridicum.su.se/Publication/ArticlePresentation.aspx?ArtikelID=946. 23 Council conclusions in October 1999, Annex 1 in COM(2001)416. 24 COM (2001) 416 final. Brussels 18.7.2001 COM (2006)249 – Promoting Decent Work for All – the EU Contribution to the Implementation of the Decent Work Agenda in the World. 25 COM(2001) 416 final p 13.

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The ILO Acquis and EU Labour Law 33 The Commission points out that the Community acquis in the fields of employment, social policy and equal opportunities in many respects goes beyond the international standards and measures which underpin the concept of decent work and incorporates the major principles of that concept. According to the Commission the ILO standards form the background to a number of policies, laws and collective agreements in the Member States and at European level. The ILO standards are further considered to complement the acquis in areas which are not covered or only partly covered by legislation and Community policies, such as labour administration and inspection, trade union freedom, collective bargaining and minimum standards in terms of social security. The Commission points out that the EU Member States have ratified many ILO Conventions but also underlines that it is important that the Member States continue the process of ratification and application, in particular of Conventions which have been brought up-to -date. The Commission will encourage and facilitate this process, where required, while taking account of the relevant areas of responsibility and policies of the Community in this regard.26 In the renewed Social Agenda adopted in 2008, the Commission calls upon all Member States to set an example, in relation to its external activities, by ratifying and implementing the ILO Conventions classified by ILO as up-to-date.27 The need to interrelate the internal and external demands for decent work is highlighted and developed in a corresponding staff document. It is pointed out that decent work is an agenda which needs to also guide the policies within the EU. ‘The credibility of the EU’s role in this matter will depend on effective delivery of the Lisbon Strategy in terms of quality jobs’.28 In 2008 all EU Member States had ratified all eight fundamental ILO Conventions and a large number of other ILO Conventions. The 2001 Commission Communication is described as a catalyst in promoting these ratification processes. In the 2008 staff document some of the up-to-date ILO Conventions are given particular attention: the four priority Conventions, which have been reconfirmed by the new ILO Declaration on Social Justice for a Fair Globalisation of 10 June 2008,29 recent health and safety Conventions that have reviewed and updated, supplemented or consolidated existing Conventions30 and two new Conventions, the Private Employment Agencies Convention, 1997 (No 181) and the Maternity Protection Convention, 2000 (No 183). 26

COM(2006) 249 pp 4–5, SEC(2008)2184 pp 13 and 31. COM(2008)412 final pp 15–16, SEC(2008)2184 Report on the EU Contribution to the Promotion of Decent Work in the World p 32. 28 SEC(2008)2184 Report on the EU Contribution to the Promotion of Decent Work in the World. 29 The Convention on Labour Inspection, 1947 (No 81) and its 1995 Protocol, the Convention on Labour Inspection in Agriculture, 1969 (No 129), the Convention on Employment Policy, 1964 (No 122) and the Convention on Tripartite Consultations, 1976 (No 144). 30 The Promotional Framework for Occupational Health and Safety Convention, 2006 (No 187), the Convention on Occupational Safety and Health, 1981 (No 155) and its 2002 Protocol and the Convention on Occupational Health Services, 1985 (No 161). 27

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It is emphasised that ratification should be followed by effective application of ILO Conventions, taking into account the comments from the ILO supervisory system in relation to a number of cases in EU Member States.31 The Commission communications on CLS and Decent Work have been supported by the European Council, the Council and the European Parliament.32 The Commission recommendation to ratify all up-to-date Conventions has so far only gained support from the European Parliament. The Parliament further encourages the other EU institutions to adopt measures in order to facilitate ratification.33

3.2 Legal Obligations to Fulfil ILO Requirements The starting point for the Commission seems to be that the EU acquis either fulfils the requirements of the up-to-date ILO Conventions or at least does not contradict them. It is therefore unproblematic to encourage ratification of them. The staff document comments on effective application, however, indicate that adaption of existing law may be necessary. And it must be admitted that a recommendation to ratify all up-to-date Conventions is a bit confusing. It is clear that some Conventions or parts of Conventions are covered by the competence of the EU and some are not. The Parliament therefore calls on the Commission to spell out precisely to Parliament and to the Member States which Conventions fall within the competence of the European Union and which fall under the subsidiarity principle.34 This is a rather complicated task in itself. One issue is what to expect in those areas where the EU has competence. A recommendation of this kind indicates, at least, that the EU labour law covering the same topics as ILO Conventions fulfil the corresponding ILO requirements. Another issue is what to expect when the EU clearly lacks competence. It is rather challenging to oblige the Member States to ratify Conventions outside EU competence when EU entities such as the ECJ are not even ready to respect the rights in such Conventions, even when they are considered to be Core Labour Standards, such as Convention No 87 on freedom of association, which has been ratified by all Member States.35

31

ibid p 33. The case law from the supervisory bodies is found at: www.ilo.org/ilolex/. European Council Conclusions 14 December 2007, Council Conclusions on Decent work for all, 30 Nov-1 Dec 2006, Council 21 July 2003 (Doc 6286/05). The Council adopted detailed conclusion on the promotion of core labour standards in July 2003 and on the social dimension of Globalisation in March 2005, EPReports A05/0251/2002, A6/0308/2005. See more about this process in Delarue, ‘ILO-EU Cooperation’ pp 93 ff, above n 21. 33 European Parliament resolution of 26 November 2009 on the Conventions that have been classified by the ILO as up to date P7_TA(2009)0101. 34 ibid. 35 For a comprehensive discussion on EU and freedom of association see T Novitz, ‘In Search of a Coherent Social Policy EU Imports and Export of ILO Labour Standards’ in J Orbie and LTortell (eds), The European Union and the Social Dimension of Globalisation –How the EU influences the World (London, Routledge, 2009) pp 29 ff. 32

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The ILO Acquis and EU Labour Law 35 According to Article 153 (5) Treaty of the Functioning of the EU (TFEU) the EU lacks competence on the right to association and the right to strike. 3.2.1 A Prerequisite for EU Membership? The logic behind such a demand could be found if ILO Conventions are considered to form part of the human rights which the Union is predicated upon, according to Article 2 EU Treaty (TEU), and which a state must respect and promote in order to apply for membership to the European Union (Article 49 TEU). Accordingly, one of the Copenhagen criteria for accession is that the institutions in a candidate country guarantee democracy, the rule of law, human rights and respect for and protection of minorities.36 In the accession negotiations a general analysis of the fulfilment of the obligations is done.37 In the implementation reports on Turkey 2007 and 2009 there are, however, no indications that any other ILO Convention other than the Core Labour Standards, and in particular those on freedom of association and collective bargaining, are taken into consideration.38 It also appears that the Human Right provisions relied upon at the accession process is treated differently when the accession is completed and the state has become a Member State.39 The only demand that rests with the Member States is that they implement the EU acquis in accordance with Article 6 TEU and that they do not commit very serious violations of human rights according to Article 7 TEU. Novitz has, for example, pointed out that there are deficits in the implementation of the CLS on freedom of association and collective bargaining among the Member States, something which has not attracted much attention from the EU bodies.40 Respect for the up-to-date ILO acquis does not seem to be a prerequisite for accession to the Union from a human rights perspective. The Commission, however, indicates that the EU legislation, in areas which substantially overlap with ILO norms, in many respects goes beyond the international standards which underpin the concept of decent work and that the ILO standards form the background to a number of laws and collective agreements in the Member States at European level.41 If this is the case, there can of course, at least in some areas, be a kind of indirect implementation of ILO standards through the implementation of the EU acquis.

36

European Council in Copenhagen DOC/93/3 22/06/1993 p 7. Copenhagen criteria for accession ‘stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities’ European Council, Bull EC-6-1993 para 1.13. See also ACL Davies, ‘Should the EU Have the Power to Set Minimum Standards for Collective Labour Rights in the Member States?’ in Alston (ed), Labour Rights as Human Rights pp 204–205, above n 6. 38 Progress reports Turkey; 2007 SEC(2007) 1436, pp 20 and 53, 2009 SEC(2009)1334 pp 26, 55 and 63. 39 M Nowak, ‘Human Rights “conditionality” in Relation to, and Full Participation in, the EU’ in Alston (ed), EU and Human Rights pp 687–98, above n 7. 40 Novitz, ‘In search of a Coherent Social Policy’ pp 33–34, above n 35. 41 COM (2006)249 p 4. 37

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3.2.2 The Community Charter of the Fundamental Social Rights of Workers In order to pursue this idea legal requirements for taking the ILO acquis into account when developing the social dimension of the EU will be looked for in the following. When the Internal Market developed through the adoption of the Single European Act, the need to balance economic and social interests was highlighted. A discussion about adopting a basic framework for social rights, like a reference document, was initiated.42 The Economic and Social Committee argued for setting a guarantee of basic social rights as the completion of a Community-wide internal market must not undermine basic social rights. The ambition was wider than a pure respect-related approach. Basic social rights for all economic and social groups and all categories of workers throughout the Community should be secured.43 The Committee, however, did not see any point in establishing new rules. Account should be taken of existing ones. Therefore, each of the guaranteed rights or principles, as the Committee listed in its Opinion, was accompanied by corresponding references to existing international Conventions. References were made to 44 ILO Conventions. Beside those which today are considered to be CLS and adopted at that time, references were also made to up-to-date Conventions, such as the ones on weekly rest (Nos 14, 106), labour inspection (Nos 81 and 129), labour clauses (No 94), occupational health and safety (Nos 115, 120, 139, 148, 155, 161) among others. 44 The discussion finally resulted in the adoption of the 1989 Community Charter of the Fundamental Social Rights of Workers, a non-binding declaration, including a set of social rights in the concept of fundamental rights, which should be implemented within the EC in the way described in the connected Social Charter Action Programme.45 Evidence of the views from the EESC can be found in the preamble where a reference is made to ILO norms. It is stated here that one of the reasons for adopting the Charter was that the addressees should be inspired by the Conventions adopted by the International Labour Organisation. This indicated that the ILO Conventions would play a significant role when the EU further developed the social dimension of the EU. The importance of the Charter was heavily debated at the time of its adoption. Still, it can be concluded that its implementation at EU level resulted in a large number of EU labour law Directives and it is referred to in most of the EU legal acts adopted within its subject area.46

42 See J Kenner, EU Employment Law From Rome to Amsterdam, (Oxford, Hart, 2003) p 109 and B Bercusson, European Labour Law, 2nd edn (Cambridge University Press, 2009) pp 139 ff. 43 CES 270/89 22 February 1989, pp II.2 and 7. 44 ibid III:1 and App I. See Discussion in J Kenner, ‘Economic and Social Rights under the EU Charter of Fundamental Rights A legal perspective’ in T Hervey and J Kenner (eds), Economic and Social Rights under the EU Charter of Fundamental Rights (Oxford, Hart, 2003) p 8. 45 COM(89)568. 46 E Szyszczak, ‘Social rights as general principles of community law’ in NA Neuwahl and A Rosas (eds), The European Union and Human Rights (Martinus Nijhoff Publishers, 1995) pp 212– 13; C Barnard, EC Employment Law, 3rd edn (Oxford, Oxford University Press, 2006) pp 13 ff.

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The ILO Acquis and EU Labour Law 37 The implementation of the Charter is a common responsibility of the EU and the Member States. The activities of the Member States fulfilling their part of the obligations shall not be dealt with here. The focus will be on to what extent ILO Conventions have been used as inspirational sources when proposing and adopting EU labour law. In what way have ILO Conventions inspired the EU? Well, it is difficult to give a simple answer to this question, but the issue will be returned to in section 4. 3.2.3 Requirements in the Social Chapter of the TFEU In Article 151 TFEU (as in former Article 136 EC), which establishes a principal basis for developing EU labour law, no reference is made to ILO Conventions but reference is made to the Community Charter and the European Social Charter. 3.2.4 ILO Conventions and the General Principles of EU Law Fundamental rights form an integral part of the general principles of Union law (Article 6 TEU). This means that the institutions and bodies of the Union and the Member States when they are implementing Union law must respect the fundamental rights in accordance with their respective powers.47 The European Court of Justice interprets this requirement as an obligation for the Court to ensure these rights as being part of general principles of Union law.48 The ECJ initiated and developed the EU fundamental rights doctrine. In order to establish the content of these fundamental rights the Court has been drawing inspiration from the constitutional traditions common to the Member States and from the guidelines supplied by international treaties for the protection of human rights on which the Member States have collaborated or to which they are signatories. The ECHR has special significance in that respect. 49 Part of this doctrine is since the adoption of the Maastricht Treaty spelled out in Article 6 TEU. The reference to international instruments other than the European Convention is excluded in the Treaty. But Article 6 also, since the entering into force of the Lisbon Treaty, refers to the EU Charter of Fundamental Rights which now has the same legal status as the treaties themselves.50

47 The Member States’ obligations in this regard were formulated by the Court in Case 5/88 Wachauf [1989] ECR 2609 . See also Art 51.1 in the EU Charter of Fundamental Rights. 48 Case C-112/00 Schmidberger v. Austria [2003] ECR I-5659 p 71. 49 For the development of this doctrine see L Roseberry, ‘International Human Rights Treaties and Fundamental Rights in the Case Law of the European Court of Justice: Pointing towards a European Social Model?’ in U Neergard, R Nielsen and L Roseberry (eds), The Role of Courts in Developing a European Social Model – Theoretical and Methodological Perspectives ( DJØF Publishing, 2010) 195–228, 195 ff and B de Witte, ‘The Past and Future Role of the European Court of Justice in the Protection of Human Rights’, in Alston (ed), EU and Human Rights, pp 857–97, above n 7. 50 For an overview of the EU Charter in general and its labour implications in particular see B. Bercusson (ed), European Labour Law and the EU Charter of Fundamental Rights (Nomos, 2006) and T Hervey and J Kenner (eds), Economic and Social Rights under the EU Charter of Fundamental Rights (Oxford, Hart, 2003).

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It is not so far reaching to assume that the content of the EU Charter, which includes 54 Articles on fundamental rights, is an attempt to codify the ECJ doctrine of fundamental rights into substantial rights.51 It was, however, early observed that the Charter provides a less than comprehensive catalogue of economic and social rights and that several of the labour rights are so heavily qualified that it is questionable whether they can be described as rights at all.52 Article 28, which includes the right to collective bargaining and action, is, for example, guaranteeing these rights ‘in accordance with Union law and national laws and practices’. All provisions, irrespective of whether they are qualified like Article 28, are to be applied in accordance with Article 52 on the Scope and Interpretation of Rights and Principles. Article 52.1 opens the possibility of limitations of these rights in accordance with certain conditions. A limitation ‘… must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognized by the Union or the need to protect the rights and freedoms of others’ (emphasis added). In the EU Charter, ILO Conventions are however not mentioned by word, either in the Preamble of the Charter where other international instruments like the European Convention for the Protection of Human Rights and Fundamental Freedoms and the Social Charters adopted by the Community and by the Council of Europe are referred to as inspirational sources, nor in the explanations related to the text. References to other UN related treaties are in general extremely limited. The ‘Convention’ which formulated the content of the Charter chooses to refer mainly to regional European treaties and case law from ECJ and ECtHR.53 Still, at this point it was recognised by EU bodies at other occasions that the Core Labour Standards played an important role, not least in the EU external context.54 The content of rights such as freedom of association and prohibition of child labour has also been thoroughly explored through the supervisory bodies of the ILO. The specific importance of the ILO provisions in a labour right context has also been recently acknowledged by the ECtHR.55,56 The silence on ILO Conventions surrounding the EU Charter forms a somewhat ironic contrast to the following citation from the Commission: ‘EU’s aim to promote and fully integrate fundamental rights – including Core Labour

51

B Bercusson, ‘The Lisbon Treaty and Social Europe’ (2009) 10 ERA Forum 87–105, 95. Kenner, EU Employment Law, p 17, above n 42. See also Novitz, ‘In Search of a Coherent Social Policy’ p 31, above n 35. 53 The ‘Convention’ was composed of representatives of governments, the Commission, the European parliament and national parliaments. The decision to establish a Charter of Fundamental Rights was taken at the Cologne European Council of June 1999. 54 See above nn 22, 31–32. 55 European Court of Human Rights Judgments: Demir Baykara v Turkey [GC] No 3450379712 November 2008 and Enerji Yapi-Yol v Turkey, no 68959/01, 21 April 2009. 56 For a discussion about the implications of these judgments see KD Ewing and J Hendy, ‘The Dramatic Implications of Demir and Baykara’ (March 2010) 39:1 Industrial Law Journal. 52

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The ILO Acquis and EU Labour Law 39 Standards – in all its policies and actions is further confirmed by the adoption of the Charter of Fundamental Rights of the European Union and International Core Labour Standards’. 57 In the footnote connected to this citation the Commission refers to certain Articles in the Charter of Fundamental Rights of the European Union: ‘Of particular relevance in this context is Chapter IV on solidarity: Article 27 on workers’ rights to information and consultation within the undertaking, Article 28 on right of collective bargaining and action, Article 30 on the protection in the event of unjustified dismissal, Article 31 on fair and just working conditions and Article 32 on the prohibition of child labour and the protection of young people at work, as well as Article 5 of Chapter I on dignity, which prohibits slavery and forced labour’.58 But what role, if any, have ILO Conventions been playing in the development of fundamental rights by the ECJ? The first example is Defrenne III. In this judgment the ECJ concluded that discrimination based on sex forms part of the fundamental rights, while noting that this was also recognised by the European Social Charter and ILO Convention No 111 concerning discrimination in respect of employment and occupation.59 Lynn Roseberry has recently pointed out that at that time three out of nine Member States had not ratified ILO Convention No 111 but the principle had, through the adoption of Directive (76/207) on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions, already gained support by the Member States.60 The importance of ILO Convention No 111 as an inspirational source in this regard is also emphasised by the reference to it in recital 4 in Directive 2000/78/EC, establishing a general framework for equal treatment in employment and occupation where it is included in a list of instruments protecting fundamental rights and freedoms. ILO Convention No 87 was also referred to when the ECJ established that the right to collective action is a fundamental right within the EU in the Laval and Viking judgments.61 It however turned out that the ECJ gave the ILO Convention a very limited influence on the outcome.62 Such an outcome is not

57

COM(2001) 416 pp 10 and 13. COM(2001) 416 p 10. 59 C-149/77 Defrenne III [1978] ECR 1365, pp 27, 28. See discussion of this case in Roseberry, ‘International Human Rights Treaties’ p 212 f, above n 49. 60 Roseberry, ‘International Human Rights Treaties’ pp 214 ff, n above 49. 61 Laval–case paras 90–91, above n 1, and Viking-case paras 43–44, above n 1. 62 For analyses of these judgments see among others M Rönnmar, ‘Labour Law in the Courts. The Role of European Case Law of Fundamental Trade Union Rights in an Evolving EU Industrial Relations System’ in in U Neergard, R Nielsen and L Roseberry (eds), The Role of Courts in Developing a European Social Model – Theoretical and Methodological Perspectives (DJØF Publishing, 2010) 169–94.; J Malmberg and T Sigeman, ‘Industrial Action and EU Economic Freedoms – The Autonomous Collective Bargaining Model Curtailed by the European Court of Justice’ (2008) 45:4 CML Rev 1115–46. 58

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so surprising, taking into consideration the qualifications and possibilities to limit Article 28 in the EU Charter of Fundamental Rights. It can also be noted that in an ECJ judgment concerning the balance between the right to collective bargaining and freedom to provide services, adopted after the entering into force of the Lisbon Treaty, when the EU Charter was given a legally binding status, the ECJ refrained from referring to ILO Conventions when mentioning international treaties that recognize collective bargaining as a fundamental right.63 It is difficult to assess whether there were any specific intentions behind that exclusion. At this point it can be concluded by saying that ILO Conventions have not been given any prominent role in developing fundamental rights within the EU legal order. 3.2.5 The Relationship between the EU Charter and EC Charter It can of course be questioned whether the Community Charter still plays any role at all now when the EU Charter has been given a binding legal status. However, the two documents play different roles. The Community Charter was supposed to be implemented by the Member States and the Community (Article 28). The Charter of Fundamental Rights has a slightly different purpose. In its Article 51 it is clarified that the provisions of the Charter are addressed to the institutions, bodies, offices and agencies of the Union with due regard for the principle of subsidiarity and to the Member States only when they are implementing Union law. They shall therefore respect the rights, observe the principles and promote the application thereof, in accordance with their respective powers and respecting the limits of the powers of the Union as conferred on it in the Treaties. The Charter of Fundamental Rights has a more limited approach then the Community Charter. The Community Charter is a starting point for EU activities while the EU Charter aims, as its primary objective, to ensure that the EU does not, in its actions, violate fundamental rights.64 This is an aim which not even the text in the EU Charter lives up to. But this will be discussed later in this chapter. The Community Charter still also supplements the EU Charter when legislation is adopted covering social issues not mentioned in the EU Charter. The Community Charter is, for example, referred to in a recital in the Temporary Agency Work Directive (2008/104).65

63

C-271/08 COM v Germany [2010] not yet published in ECR, OJ C 246, p 2, para 37. Bercusson however anticipates that the Commission might come under similar pressure to make proposals implementing social rights guaranteed by the new EU Charter: Bercusson, European Labour Law pp 205 f, above n 42. 65 Dir 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on temporary agency work, OJ L 327 pp 9–14. 64

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The ILO Acquis and EU Labour Law 41 4. REFERENCES TO ILO CONVENTIONS WHEN DEVELOPING EU LABOUR LAW

According to the Commission staff document on Promoting Decent Work for All, ‘ILO conventions had a considerable impact on a number of EC legislations and framework agreements between social partners’.66 The Economic and Social Committee (EESC) has however expressed that the EESC and the European Parliament have, since 1989, repeatedly called upon the Commission to draw on existing ILO standards when formulating its social policy. The EESC has also expressed a lack of satisfaction regarding the response to these calls.67 In the following concrete EU labour legislation adopted after the adoption of the Community Charter will be explored, in order to look for explicit signs of ILO inspiration in the preparatory work of the acts or within them in order to find evidence about whether ILO Conventions have played any role in the development of EU labour law. 68 When looking at Directives adopted after 1989, which in substance at least partly overlap with ILO Conventions, it is striking how seldom any reference is made to the relevant ILO Convention in the final text. Taking into account the fact that many of these Directives were included in the action plan related to the Social Charter, which expressly says that the ILO Conventions should inspire further activities in the area, this seems even more surprising. There are a few exceptions, which will be discussed.

4.1 Occupational Health and Safety In the area of health and safety, an arena where the ILO has developed an impressive set of norms, and which earlier on was providing inspiration for the EU standards,69 there are no explicit signs of ILO influence in the Directive on the introduction of measures to encourage improvements in the safety and health of workers at work (89/391) (Framework Directive), or in the corresponding individual Directives where at least the Framework Directive and five individual Directives have links to ILO Conventions.70 When pushing for EU Member States

66

SEC(2006) 643 p 14. Own-initiative Opinion of the Economic and Social Committee on Relations between the EU and the International Organisation (ILO), SOC/266, Brussels 25 January 1995 p 11. 68 Issues related to the transport sector will not be dealt with. For an analysis of recent developments in the maritime sector, see L Tortell, R Delarue and J Kenner, ‘The EU and the ILO Maritime Labour Convention “In our common interest and in the interest of the world”’ in J Orbie and L Tortell (eds), The European Union and the Social Dimension of Globalisation. How the EU influences the world (Routledge, 2009) 113–30. 69 A Johnsson, ‘EU-ILO relations between regional and global governance’ in J Orbie and L Tortell (eds), The European Union and the Social Dimension of Globalisation. How the EU influences the world (Routledge, 2009) 81–97, 83 f and Kenner, EU Employment Law pp 55 ff, 42. 70 Framework Directive (89/391) / ILO Convention No 155; Directive on minimum safety and health requirements at temporary or mobile construction sites (92/57) / ILO Convention 167 on 67

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ratification of up-to-date ILO Conventions on occupational health and safety, Delarue argues that there is no indication whatsoever that these Conventions are incompatible with the EC Directives thanks to EC coordination at the ILC.71 This starting point also seems to be applicable in the EU Strategy on Health and Safety from 2007, where the Member States are encouraged to ratify ILO Conventions. This clause is found in the chapter on international activities.72 This could be explained by the assumption put forward by Delarue that the EU Member States already fulfil the obligations in the OSH ILO Conventions and that the ratification should be made only to encourage other, less developed countries, to do the same thing. And that is maybe correct. There are, however, differences in the contents of the instruments which the Member States must take into account when preparing ratification. In the original Commission’s proposals on the six Directives with clear ILO connection, there is no discussion about any ILO influence.73 The EESC and the European Parliament have, in some cases during the negotiation processes, proposed changes in order to align the provisions in the Directives with those in corresponding ILO Conventions. In the EESC Opinion on the Framework Directive it was proposed that the definition of workplace and worker should be changed in order to adapt them to ILO provisions in ILO Convention No 155 on Occupational Safety and Health and the Working Environment. The EESC and the European Parliament also proposed that a new paragraph should be included in what became Article 8, corresponding to Article 13 in the ILO Convention No 155, according to which ‘a worker who has removed himself from a work situation which he has reasonable justification to believe presents an imminent and serious danger to his life or health shall be protected from undue consequences in accordance with national conditions and practice’.74 A similar clause was finally included in the Directive Article 8.4. The definition of worker in the adopted Framework Directive (89/391) is closer to the corresponding ILO definition but specifies an exclusion of domestic workers, which is not explicitly part of the ILO definition of the term worker. The term workplace was not included in the final list of definitions.75

Safety and Health in Construction; Directives 89/654 on Health and safety at work sites, 89/656 on personal protective equipment, 89/655 on work equipment /ILO Convention No 155 and Directive 92/85 on maternity protection/ ILO Conventions No 103. 71

R Delarue, ‘ILO-EU Cooperation’, pp 93–114, 113, above n 21. COM(2007) 62 final p 15. 73 See eg COM (88)73 and COM(88)74, COM(88)75, COM(88)76, COM(90)275, COM(90)406. 74 OJ No C 326, 19.12.1988 p 102 and OJ No C 158, 26.6.1989 and OC No C 175, 4.7.1988 p 22. The cited text is from Art 13 in ILO Convention No 155. 75 The EESC also proposed to align crucial definitions as workplace and worker to ILO Conventions also in their Opinions on the commission proposals on what finally became 89/654/ EEC, 89/655/EEG, 89/656/EEC, OJ No C 318, 12.12.1988 p 26, OJ nr C 318, 12.12.1988 p 30, OJ C318, 12.12.1988 p 32. 72

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The ILO Acquis and EU Labour Law 43 The Framework Directive (89/391) includes detailed provisions regarding employers’ obligations and envisages further action at national level in Article 16, but has not included any provisions on national policies, which are included in the corresponding ILO Convention No 155 (part III ILO C 155). It is not clear from the preparatory work why this part was exempted. In the EESC opinion on the Commission’s proposal on a Directive on the implementation of minimum safety and health requirements at temporary or mobile construction sites, which finally became Directive 92/57, the Committee took the opportunity to draw attention to the ILO Convention No 167 on Safety and Health in Construction (1988). The Committee considered it important for all Member States to ratify the Convention as soon as possible, bearing in mind that the aim of the draft Directive is the gradual improvement of safety and health at worksites.76 Regarding the provisions in the Directive, the Committee proposed that the definitions must take due account of those given in ILO Convention No 167. The ILO Convention No 167 is a very comprehensive standard which goes beyond the provisions in the EU Directive. Parts of it are however dealt with in other individual health and safety Directives. To date, only eight EU Member States have ratified ILO Convention No 167. Regarding the individual health and safety Directives implementing Article 16 in the Framework Directive, there is one exception to this lack of explicit interest in ILO Conventions and that is Directive (92/58) on the introduction of measures to encourage improvements in the safe and health at work of pregnant workers and workers who have recently given birth or are breastfeeding (Maternity Protection Directive). In the Commission proposal it is clear that ILO Convention No 103 on Maternity Protection and the revised instruments on night work, ILO Convention No 171 on Night Work and the Protocol to the Night Work (Women) Convention, gave inspiration to the content of many Articles, for example the introduction of a maternity leave period of 14 weeks (12 weeks in ILO 103), including a period of compulsory leave and an alternative to night work before and after a certain period of childbirth.77 The EESC declared that international standards have been used and referred to by the Commission as a consensual basis for drawing up the proposal.78 In the adopted Directive there is, however, no reference to any ILO Convention. This Directive is currently being renegotiated. In the Commission’s proposal for a revised Directive on maternity protection, both Recommendation No 191 on Maternity Protection and the revised Convention on Maternity Protection No 183 (2000) are used as arguments for proposing longer periods for different aspects of maternity leave.79 It is also proposed that the ILO instruments shall be referred to in a recital. The outcome of these negotiations is still unclear.

76

OJ No C 120, 6.5.1991 p 25. In September 2010 8 EU Member States have ratified the Convention. COM(90)406 final. 78 OJ No C 41, 18.2.1991, p 29. 79 COM(2008)637 p 5. 77

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4.2 Other Labour Law When looking at other EU labour law Directives another picture appears. In the Commission proposal on certain aspects of the organisation of working time an analysis is made of the provisions on weekly rest in ILO Conventions Nos 14 and 106 and Recommendation No 103. The number of ratifications among the EU Member States of these Conventions is also mentioned, as well as an ILO analysis of the need to limit weekly working hours and rotate shifts.80 The issue of night work was discussed in light of ILO provisions. The, at that point, recently adopted revision of the old ILO Convention No 89 on night work for women was used as an argument for putting forward this Commission proposal.81 The Commission also chose to use the same definition of night work and night workers as was adopted by the International Labour Organisation in the new Convention No 171. A certain difference was however included in the proposal and argued for.82 The EESC was however very critical of the outcome, not least because the Commission had not taken sufficient account either of the Council of Europe’s Social Charter or of the ILO Standards in drafting the Directive and that ‘much greater attention must be paid to ILO standards for working conditions. EC laws must in no way fall short of these international standards which purport to be implemented on a world-wide basis’.83 The EESC argued for strengthening the proposed Articles 4 on weekly rest, 7 on night work and 9 on information and consulting workers’ representatives on night work, in line with ILO requirements. The text finally adopted, in Working Time Directive 93/104, included a much higher level of protection in many areas compared to the original proposal from the Commission. Not least in regard to the Articles on weekly rest and night work, a clearer account of the ILO provisions has been taken. A reference to the ILO was also included in a recital 24: ‘Whereas account should be taken of the principles of the International Labour Organisation with regard to the organisation of working time, including those relating to night work’.84 In the negotiations on Directive on Protection of Young Persons at Work (94/33) a thorough analysis of the original proposal’s fulfilment of ILO provisions was carried out. The EESC characterised the first proposal from the Commission, which intended to strike a fair balance between the definition of a basis of minimum provisions and the necessary flexibility required by the Member States to pursue their own national employment practices and traditions, an ‘excess of loopholes and derogations’. The EESC also pointed out that the ILO had drawn up standards which were sometimes stricter than the Commission’s proposal.85

80

COM(90) 317 final – SYN 295, Brussels 20 September 1990, pp 10 and 22. ibid p 26. 82 ibid p 29. 83 EESC; SOC/198 Brussels, 18 December 1990, 1.11 and 1.14. 84 The reference is in recital 6 in the Revised Working Time Directive (2003/88). 85 COM(91)543 final. SOC/240, Brussels 24 September 1992. For a comparison and discussion of ILO and EU standards in working time, see J Murray, Transnational Labour Regulation: the ILO and EU Compared (the Hague, Kluwer Law International, 2001). 81

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The ILO Acquis and EU Labour Law 45 There was no reference to ILO Conventions in the original proposal from the Commission. The EESC proposed that light work should be more clearly defined and that the minimum age to perform light work should be 14, not 13 as was proposed by the Commission. Further, the provisions on medical surveillance and hours of light work performed while still in compulsory education should be stricter. No reference to ILO Convention No 138 on Minimum Age was made in this regard and some of the EESC proposals are closer to the provisions of the Convention and some are stricter. The provisions on night work and rest periods were proposed to be strengthened in line with ILO Conventions Nos 79 and 90 on Night Work of Young Persons. The European Parliament went even further in their proposals which were basically accepted by the Council in their first Common Position.86 In the finally adopted Directive there is a clear reference to ILO in recital 3a: Whereas it would be appropriate to observe the principles of the International Labour Organisation with regard to protection of young people at work, including those relating to minimum age.

The whole text also went through a considerable change. The Commission’s starting point was remarkably weak, but the efforts of the Parliament, which on many points were not so controversial from the Council’s perspective, in the end led to a result which set a rather strict standard, higher in many instances than the ILO standard. The ILO Conventions on Night Work for Young Persons are not considered to be up-to-date and there are no ILO provisions for specific working times for young persons. The Directive covers a broader range of topics. However, in one regard the Directive deviates from the ILO provisions. The obligations regarding medical examination are in the EU Directive riskrelated whereas they are obligatory until 18, according to ILO Conventions Nos 77 and 78 on Medical Examination of Young Persons. These Conventions are considered to be up-to-date. The first proposal on a Parental Leave Directive was adopted by the Commission in 1983.87 At that time the ILO Convention No 156 on Workers with Family Responsibilities (1981) had recently been adopted. In arguing for the proposal the Commission maintained that the sharing of family responsibilities between parents is an essential part of strategies designed to increase equality on the labour market and that a series of international commitments to this effect had been reached at international level, including the ILO Convention No 156 and the corresponding Recommendation No 165. The proposed definitions of parental leave and leave for family reasons were inspired by the definitions in the ILO Recommendation No 165. The Commission proposal was however blocked until a new way forward was explored through the Protocol and Agreement on Social Policy annexed to the Maastricht Treaty (now Articles 151–61 TFEU)

86 87

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European Parliament 17 December 1992, Council Common Position 23 November 1993. COM(83)686 final.

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which introduced EU level collective bargaining.88 The social partners at EU level concluded the first EU Collective Agreement on Parental leave, which was implemented by Directive (96/34) on Framework Agreement on Parental Leave signed by Unice, Ceep and EFS. Neither in the Directive nor in the Agreement is there a reference to the ILO provisions. And there is no indication that the ILO provisions played any role during the negotiations. The content of the Agreement has a different perspective in some regards in relation to the ILO Convention and is granting the parents concrete rights on parental leave which the ILO Convention is not.89 The Directive on Parental Leave was recently revised by the social partners and the result was implemented in Directive 2010/18/EU implementing the revised Framework Agreement on Parental Leave concluded by Businesseurope, Ueapme, Ceep and ETUC and repealing Directive 96/34/EC. The revisions regard aspects not covered by the ILO Convention and there is no reference to it either in the Commission’s preparatory documents nor in the Agreement itself.90 Already in the Commission White Paper on the Future of European Social Policy it was emphasised that the measures adopted on part-time work would need to take account of the principles of the ILO Convention on Part-time Work adopted in June 1994.91 In the Commission background paper for first-stage consultations with the social partners on part-time and fixed-term employment, the ILO Convention and Recommendation on part-time work is mentioned.92 The ILO Convention has been said to have formed the basis for the Commission proposal.93 The ETUC further used the ILO Convention as a key reference document during the negotiations.94 The final Framework Agreement according to Kenner’s words ‘draws heavily’ on the Convention, although the Convention covers a broader range of topics in regard to the prohibition on discrimination.95 There is, however, no explicit reference to the ILO Convention in the Directive or Framework Agreement. In the Commission’s proposal on a Directive on temporary work, ILO Convention No 181 on Private Employment Agencies is mentioned, as well as its aim and the Member States which have ratified it. 96 EESC also mentions the ILO Convention and its ratification among the Member States, which at the time numbered five. They further explain that by lifting the ban on private

88 The development of the protocol and agreement is described in eg Kenner, EU Employment Law pp 219 ff, above n 42, and Bercusson, European Labour Law pp 141 ff, above n 42. 89 The process and content of the Directive is discussed in M Schmidt, ‘Parental Leave: Contested Procedure, Credible Results’ (1997) 13 International Journal of Comparative Labour Law and Industrial Relations 113–26. 90 SEC(2006)1245, 12/10/2006, KOLLA SEC(2007)571, COM(2009)410 final. 91 Mentioned in COM(97)392. 92 SEC(95)1540/3. 93 Kenner, EU Employment Law p 277 and corresponding references, above n 42. 94 Johnsson, ‘EU and ILO Relations’ p 86, above n 69, and ibid. 95 Kenner, EU Employment Law pp 279 ff, above n 42. 96 COM(2002)149.

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The ILO Acquis and EU Labour Law 47 employment agencies, the Convention aims to protect workers using services of private employment agencies and specifies the type of measures which States must take in order to guarantee adequate protection of temporary workers. The Committee encourages all the Member States to ratify Convention No 181. The Committee also points out that the fundamental ILO Conventions ratified by all Member States, as well as other fundamental instruments, guarantee trade union freedom and equality in work and employment for all workers.97 The EESC analyses some of the provisions in the proposal against fundamental rights principles. The European Parliament however proposed a strong alignment between the Directive and the ILO-Convention. In its first reading a reference in the preamble to the ILO Convention 181 and its corresponding Recommendation 188 was proposed. The Parliament also put forward amendments to Article 4 in order to align it to the Convention. For example an additional provision was proposed on restrictions to prevent temporary agency workers from being assigned to user undertakings or sectors where workers are engaged in collective action. The EP Rapporteur argued that the proposals would facilitate the consistent interpretation and implementation of the new Directive.98 The Commission did not accept the reference to ILO Convention No 181 and the provision on replacing workers on strike was proposed to be included in a recital where it finally ended.99 The Parliament did not push for the reference in their second reading and the adopted Directive (2008/104/) on temporary agency work does not contain any reference to ILO Convention No 181.100 There is no general ILO standard on information and consultation.101 These aspects are often included in various Conventions. The ILO Convention No 158 on Termination of Employment (1982) includes provisions on information and consultation when the employer contemplates terminations for reasons of an economic, technological, structural or similar nature. In the Commission proposal on amending Directive 75/129 on collective redundancies, the proposed clarifications in respect of the timing and objectives of consultations about projected redundancies and the nature of the information to be supplied to workers’ representatives and therefore to the public authorities, are inter alia motivated by the ILO Convention No 158. A reference to ILO Convention No 158 and its corresponding Recommendation No 168 is also included in a recital in the proposed preamble of the Directive. 102 The reference to the ILO Convention is however not included in the adopted Directive (92/56). The content of the

97 SOC/110, 19 September 2002. The background and process towards the adoption of the Directive as well as the impact of ILO Convention No 181 is described in K Ahlberg, ‘A Story of a Failure – But Also of Success’, Transnational Labour Regulation – A Case Study of Temporary Agency Work, by K Ahlberg, B Bercusson, N Bruun, H Kountouros, C Vigneau and L Zappalà (Brussels, PIE Lang, 2008) 193 ff. 98 P5-TA(2002)0562 and A5-035672002. 99 COM (2002)701. 100 P6_TA(2008) 507. 101 ILO Convention No 144 on Tripartite Consultation. 1976, deals with ILO related issues. 102 COM (91) 292.

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provisions in the Directive regarding the abovementioned issues is although very similar to the provisions in the ILO Convention. It is interesting to discover that a reference to ILO Convention No 94 concerning social clauses in public contracts was included in the original Commission proposal on a Directive on posting of workers.103 This reference was accompanied by references to Council Directives 71/305/EEC concerning the coordination of procedures for the award of public contracts and Directives 89/440/EEC and 90/531/EEC on public procurement procedures. In the adopted Directive all these references are, as is well known, gone. This non-exhaustive overview indicates that ILO Conventions have been taken into consideration in many legislative projects on EU labour law with substantive ILO connections. Sometimes these considerations have been taken by the Commission in their legislative proposals. In other cases, other actors in the legislative process have introduced the ILO perspective. This is, however, no rule and the ambition in most cases does not seem to be to use the ILO provisions as a minimum floor. They sometimes serve as a reference point but often the perspectives differ and in some cases not even the minimum level is upheld in corresponding provisions. Bercusson, while concluding that the ILO acquis is more comprehensive and systematic than EU labour law, explains the insignificant influence of ILO norms in EU labour law by the organisations’ different objectives.104 It has however also been argued that ‘ in specific areas, ILO conventions still have an important roll to play in setting a common standard’.105

5. DOES EU LABOUR LAW NORMALLY FULFIL ILO REQUIREMENTS?

Even if references in Directives and clearly articulated analysis of relevant ILO Conventions in preparatory documents can play a significant role in ensuring that EU labour law is in conformity with relevant ILO Conventions, it is of course no guarantee. And in those cases where no such explicit attempts have been made, the obligations in relevant ILO Conventions could still be respected. It is too big a task for this chapter to go through all the details in all Directives and Conventions covering the same topics. The overall impression is, however, that those EU Directives which overlap substantially with provisions in ILO Conventions and which have been looked at in the previous section in many cases fulfil the obligations in the corresponding ILO Conventions. Still, there are differences in approach and content. In the previous section some examples were mentioned; in the following section two examples will be presented in a bit more detail in order to illustrate the situation.

103 104 105

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COM (91)230 and COM(93)225. B Bercusson, European Labour Law, pp 26, 42. Johnsson, ‘EU-ILO Relations’ p 91, above n 69.

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The ILO Acquis and EU Labour Law 49 In section 4.2 it was established that there are references to ILO Convention No 103 on maternity protection in the preparatory documents to the Maternity Directive (92/85). One assumption could be that the EU provisions on this issue would be more far reaching than was established in a global instrument, not least because the EU Directive was adopted 40 years after the adoption of ILO Convention No 103 on Maternity Protection. This assumption appears to be correct on some points and wrong on others. The EU and ILO instruments both deal with maternity leave and they shall in the following be compared on that issue. The ILO Convention No 103 was however revised in 2000 and is no longer open for ratification. The Directive will although be compared with the older Convention No 103 as it was applicable at the time of the adoption of the Directive. The revision of the ILO Convention in 2000 aligned the ILO provisions with the EU Directive on those issues regarding leave where before they went below the EU standards. The content in the revised ILO Convention, called ILO Convention No 183 on Maternity Protection, if changed, is included in a parenthesis in the comparison below. According to Article 8 in the Maternity Directive, relevant workers are entitled to a continuous period of maternity leave of at least 14 weeks, allocated before and/or after confinement in accordance with national legislation and/or practice, including compulsory maternity leave of at least two weeks allocated before and/or after confinement in accordance with national legislation and/ or practice. According to Articles 3.2–3 in the ILO Convention the period of maternity leave shall be at least 12 weeks (14 weeks), including a period of compulsory leave after confinement of no less than six weeks. It seems that the EU Directive reaches the ILO level regarding the total length of maternity leave but that the compulsory leave related to confinement is longer. It can of course be debated whether compulsory leave itself is desirable or not. Still, the period of compulsory leave is proposed to be aligned with the ILO requirements in the Commission’s proposal for a revised Directive on maternity leave in order to generally improve the health and safety of women giving birth to a child. This increase is designed to allow women to recover from pregnancy and childbirth.106 In the ILO Convention, Article 3.4, the leave before the presumed date of confinement must be extended by any period elapsing between the presumed date of confinement and the actual date of confinement and the period of compulsory leave to be taken after confinement must not be reduced on that account. There is no similar provision in the Maternity Directive. The Commission has, however, proposed that where childbirth occurs after the due date, the prenatal portion of the leave is extended to the actual date of birth, without any reduction in the post-natal portion of the leave, in order to guarantee that women have sufficient time to recover from giving birth and to breastfeed.107 106 107

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COM(2008)637 p 4. ibid p 5.

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Another more recent example is the Directive on Temporary Agency Work (2008/104). The corresponding ILO Convention is No 181 on Private Employment Agencies (1997). Temporary agencies are included in the ILO concept ‘Private Employment Agency’. As mentioned earlier, the ILO Convention is briefly mentioned in the explanatory memorandum to the original Commission proposal and EESC recommends the EUMS to ratify Convention No 181 in order to safeguard the abolition of the prohibition of private employment agencies.108 No analysis of the content is explicitly done in the preparatory documents and when it comes to the protection of workers the starting point is slightly different in the two instruments. The Directive includes in its Article 5 a principle of equality regarding basic working and employment conditions. ‘Basic working and employment conditions’ means working and employment conditions laid down by legislation, regulations, administrative provisions, collective agreements and/or other binding general provisions in force in the user undertaking relating to the duration of working time, overtime, breaks, rest periods, night work, holidays and public holidays and pay (Article 3f). The equality principle should also apply to the protection of pregnant women and nursing mothers, as well as to the protection of children and young people and to equal treatment for men and women and any action to combat any discrimination based on sex, race or ethnic origin, religion, beliefs, disabilities, age or sexual orientation (5 (1) (a) and(b)). In the ILO Convention the starting point in Article 11 is to ensure adequate protection for the workers employed by private employment agencies in relation to freedom of association, collective bargaining, minimum wages, working time and other working conditions, statutory social security benefits, access to training, occupational safety and health, compensation in case of occupational accidents or diseases and compensation in case of insolvency and protection of workers claims. It seems that the level of protection of the conditions included in the EU Directive is higher. Still, the ILO Convention includes additional conditions, compared with the EU Directive, among those which should be adequately protected. A ratification of ILO Convention No 181 seems accordingly to demand something of the ratifying States which are not fulfilled in the EU Directive. These examples illustrate that not even in those areas where EU and ILO regulations materially overlap, is a ratification of an ILO Convention necessarily unproblematic for the EU Member States. ILO Convention Nos 181 and 183 respectively are ratified by 12 EU Member States. An ILO Convention can often have a broader perspective and deal with issues not dealt with in EU labour law. And still, Member States abstain from ratifying ILO Conventions by referring to the uncertainties regarding their compatibility with EU requirements.109 The

108

COM(2002)149. See inter alia Swedish arguments for not ratifying ILO 94 and ILO 181. See Swedish statement at the International Labour Conference 2008 during the discussion on the general survey on ILO 94 109

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The ILO Acquis and EU Labour Law 51 ECJ activities during recent years certainly give fuel to such precautions. This issue will be returned to.

6. THE USE OF ILO CONVENTIONS AS INTERPRETATIVE GUIDANCE BY THE ECJ

In section 3.2.4 the ECJ use of ILO Conventions as inspirational sources for the development of EU fundamental rights was discussed. ILO Conventions can also be used as interpretive guidance in other ways. There are explicit signs in some EU labour law Directives of ILO influence. In those cases, references to ILO Conventions and Recommendations have been included in a recital in the Preamble. The basis for choosing this route is not entirely clear. Case law from the ECJ, though, indicates that such reference can be of importance for ensuring that the interpretation of the Directive will be aligned with the referred ILO provision. This is illustrated by a reference for a preliminary ruling concerning the interpretation of Article 7 of the Working Time Directive (2003/88).110 The question with connection to ILO provisions regarded the right to paid annual leave in the event of sick leave which lasts for the whole or part of the leave year, where the incapacity for work persists beyond the end of that year and/or of a carry-over period laid down by national law. Article 7 in the Directive reads as follows: Annual leave 1. Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/ or practice. 2. the minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.

The ECJ started its argument about the applicable principles for the specific circumstances of the case in the following way: ‘as a preliminary point, it should be noted that, according to recital 6 in the preamble, Directive 2003/88 has taken account of the principles of the International Labour Organisation with regard to the organisation of working time. In that regard, under Article 5(4) of Convention No 132 of the International Labour Organisation concerning Annual Holidays with Pay (revised)’ absence from work for such reasons beyond the control of the employed person concerned as illness…shall be counted as part of the period of service.111 The Court finally ruled in line with the ILO related requirement.112

ILO Provisional Record 19 Part 1, 97th Session, Geneva, 2008 para 121 and Swedish report to the ILO in 2009 on the recurrent item Employment. 110 111 112

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The joined cases C-350/06 and C-520/06, Schultz-Hoff and other/Stringers [2009] ECR I-179. ibid pp 37–38. ibid p 49.

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A reference to ILO Conventions in a preamble can apparently be of importance for safeguarding an ILO-friendly interpretation of a Directive. The inclusion of such references in the legislative proposals from the Commission could therefore be one important step in promoting ILO influence on EU labour law.

7. WHAT HAPPENS WHEN THE ECJ IS CONFRONTED WITH AN ILO NORM WHICH CONTRADICTS EU LAW?

So far this chapter shows that the starting point for the Commission seems to be that ILO Conventions should set a legal floor for the social dimension of the EU, that ILO Conventions in many cases have played a role in developing EU labour law even though they have not been decisive for the outcome and that an EU reference in a recital could be an effective means of ensuring that the EU provision is continuously interpreted in line with ILO standards. Our next step will be to look at what happens when a national provision implementing an ILO norm contradicts EU law. In a case between Austria and the Commission the ECJ had to deal with an inconsistency between Directive (76/207) on equal treatment for men and women and a national provision implementing ILO Convention No 45 on employment of women in underground work in mines of all kinds.113 According to ILO Convention No 45 and the national provision implementing the ILO provision, no female, whatever her age, should be employed in underground work in any mine. According to the Directive on equal treatment it is not permissible to exclude women from a certain type of employment solely on the grounds that they ought to be given greater protection than men against risks which affect men and women in the same way and which are distinct from women’s specific need of protection in relation to maternity and pregnancy. Nor may women be excluded from a certain type of employment solely because they are on average smaller and less strong than average men, while men with similar physical features are accepted in that employment.114 The ECJ concluded that the obligations imposed on Austria by ILO Convention No 45 are incompatible with Articles 2 and 3 of Directive 76/207 on equal treatment for men and women.115 The incompatibility had to be solved in accordance with Article 307 (now 351 TFEU) in the Treaty. Article 307 reads: The rights and obligation arising from agreements concluded before 1 January 1958, or for acceding States, before the date of their accession, between one or more Member States on the one hand, and one or more third countries on the other, shall not be affected by the provisions of this treaty.

113

C-203/03 Commission v Austria [2005] ECR I-935. ibid pp 45–46. 115 ibid p 50. 114

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The ILO Acquis and EU Labour Law 53 To the extent that such agreements are not compatible with this Treaty, the Member States or States concerned shall take all appropriate steps to eliminate the incompatibilities established. Member States shall, where necessary, assist each other to this end and shall, where appropriate, adopt a common attitude. ...

The ECJ states that while it is true that Austria may, in principle, rely on the first paragraph of Article 307 EC to maintain in force the provisions of domestic law implementing the above mentioned obligations, the fact remains that the second paragraph of that Article states that, to the extent that earlier agreements within the meaning of the first paragraph of the Article are not compatible with the Treaty, the Member States concerned are to take all appropriate steps to eliminate the incompatibilities established.116 As a consequence, Austria was obliged to denounce ILO Convention No 45 the next time the Convention provided such a possibility, namely in 2007. Austria accordingly denounced the Convention in April 2008. Another 12 Member States of the European Union also denounced ILO Convention No 45 following the judgment. Four Member States remain parties to the Convention.117 The ILO Convention at stake can be regarded as an outdated Convention from a European perspective and it is not included in the up-to-date Conventions. But nothing in the judgment indicates that this could have altered the outcome. This judgment makes it clear that ILO Conventions in general are not treated any differently than any other Treaty. At this point it must be questioned whether any ILO Convention risks being treated in the same way. Would it matter if one of the Core Labour Standards would have been at the centre of the case? One reasonable assumption would be that at least Conventions giving inspiration to the rights included in the concept of fundamental rights according to Articles 6.1 and 3 of the TEU would be treated differently. The case law from the ECJ in Laval and Viking however indicates that that not necessarily would be the outcome.

8. CONCLUSIONS

So what kind of conclusions can be drawn from this survey? Has the EU legislator ensured that relevant ILO provisions are upheld when preparing EU legislation? No, that would not be an adequate description of the development. In the preparatory phase of an EU legal act, ILO Conventions have sometimes explicitly played a role, sometimes not. In some cases the Commission mentioned the ILO context in its original proposal. In others, the EESC and the European Parliament ensured that they used the ILO provisions as reference points. The result has sometimes been that the EU provisions have been aligned

116 117

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with corresponding ILO provisions and sometimes even a reference to ILO provisions has been included in the preamble. It is also clear that references to ILO provisions in the preamble can have an important impact in also ensuring that the EU and ILO provisions, when interpreted and applied by the ECJ, are kept aligned. It is also clear that some EU regulation which deals with matters covered by ILO provisions totally ignores ILO references and also chooses to solve matters in a different way. It is not a question of contradictory regulations but different perspectives. There are also a few examples of the EU provisions falling short of ILO provisions. From this perspective it is clear that even within those areas where the ILO and EU legislate in the same sphere it is far from certain that the EU provisions correspond materially to the ILO provisions. A ratification of all up-to-date ILO Conventions could therefore put a significant burden on the Member States. The situation is however not so surprising taking into account that there is no legal requirement for the EU to respect the ILO acquis in its labour law related internal activities. The situation would have been different if the ILO Conventions were to be part of the fundamental rights which form part of the fundamental principles of EU law (Article 6 TEU). In that case, it would have been necessary for the EU and the Member States to respect their content in the legislative process. Some of the ILO Conventions have been given this status by the ECJ. And maybe it would be to go too far to impose this status on a Convention like the ILO Convention on Part-time Work, which has only been ratified by 9 EU Member States and 13 states altogether.118 This despite the fact that this Convention played a very important role for deciding on the content of the EU Framework Agreement and Directive on Part-time Work (97/81). It is also striking that when looking at which ILO Conventions the EU institutions in different regards have rendered important it does not seem to have anything to do with whether they are up-to-date or widely ratified. ILO Convention No 132 on Holidays with Pay is, for example, not considered to be up-to-date,119 something which was referred to by the ECJ. The ILO Convention No 171 on Night Work has been ratified by 11 States altogether and ILO Convention No 183 on Maternity Protection has been ratified by 17. This can be compared with the ILO Convention No 182 on Worst Forms of Child Labour, which is ratified by 171 States and not referred to in the explanatory text to Article 32 on Child Labour in the EU Charter. Still, it is remarkable that the CLS are not mentioned, not even in the explanatory document, in relation to the EU Charter of Fundamental Rights, especially since the CLS have been given a strong support by the Commission, Parliament and Council.

118

Sep 2010. www.ilo.org/wcmsp5/groups/public/@ed_norm/@normes/documents/genericdocument/wcms _125121.pdf. 119

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The ILO Acquis and EU Labour Law 55 The ILO Conventions Nos 87, 100 and 111 have been acknowledged as fundamental rights by the ECJ and the EU legislator. But at the time when the ECJ gave Convention No 111 that recognition the perspectives behind those principles were already recognised by the EU. Freedom of association and the rights to collective bargaining also play important roles within Social Europe, not least with regard to the EU collective bargaining processes. The recognition of ILO Convention No 87 as an inspirational source for rendering the right to collective action fundamental right status has however in Laval and Viking not protected it from limitations going beyond the ILO requirement. The limited impact of ILO provisions in this regard is illuminated by the weak qualified formulation of the right to collective action and collective bargaining in the EU Charter. An inclusion in the EU Charter is no guarantee for extensive protection. It has also been illustrated that a contradiction between a requirement stemming from an ILO Convention and EU law will lead to an obligation for the Member State to denounce the ILO requirement. This overview has not really made it easier to align the Commission’s call for ratification of all up-to-date ILO Conventions and the ECJ’s reluctance to respect the right to strike in accordance with the requirements in ILO Convention No 87. Against this background the recommendation by the Commission to ratify all up-to-date ILO Conventions seem a bit premature. Maybe the emphasis rather would be to guarantee the CLS sufficient protection within the EU Human Rights context, then an analysis of which ILO Conventions that seem to fulfil the conditions for general EU recognition should be carried out.

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3 The Right to Collective Action – in Particular the Right to Strike – as a Fundamental Right ÖRJAN EDSTRÖM*

1. INTRODUCTION1

The freedom of association is closely interwoven with the right to collective bargaining and collective action. This was clear during the twentieth century and remains so. In fact, the existence of a right to collective action without a freedom of association is inconceivable. This chapter will focus on the development of the right to collective action and the right to strike as a fundamental right in the light of the freedom of association.2 Many different sources, institutions and charters have contributed to the development of the right to collective action. The aim of this chapter is to analyse certain normative systems, which have had an impact on the right to collective action and, in particular, on the right to strike, and to analyse convergence and divergence trends in law, especially from an EU legal point of view. As a starting point, three normative legal systems that contribute to and define the right to collective action are considered. These are: – the International Labour Organisation (ILO) Conventions Nos 87 and 98, – the European Social Charter and the European Convention on Human Rights and Fundamental Freedoms,

* Professor and PhD in labour law at the Department of Law, Umeå University. He is inter alia Swedish report to the European Commission through the European observatory on the free movement of workers. 1 The chapter is based on a presentation at the Conference Labour Law and Social Security Law in an Enlarged Europe – A Social Dimension on the Move? held in Stockholm 3–4 November 2009, organised by the Swedish Network for European Legal Studies. 2 Concerning terminology, in this chapter the term ‘strike’ is used, but the term ‘industrial action’ is often used in the literature. See N Bruun, ‘ILO och stridsåtgärder’ (2008) 2 Tidskrift utgiven av Juridiska Föreningen i Finland (JFT) pp 197, 200.

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– the Charter of Fundamental Rights of the European Union and the Treaty on European Union following the Lisbon Treaty. Following an examination of the normative basis and the development of the right to take collective action, the convergence and divergence trends with regard to the right to collective action and, in particular, the right to strike, are analysed. This chapter does not examine other international regulations protecting the freedom of association and the right to collective action, such as the closely related 1966 United Nations’ Convention on Economic, Social and Cultural rights, in which the requirement to protect, in particular, the right to strike, was set out in Article 8.1.4. of the Convention.

2. ILO CONVENTIONS AND FUNDAMENTAL RIGHTS TO COLLECTIVE ACTION

2.1 Conventions Nos 87 and 98 The right to collective action is not explicitly dealt with in the ILO Conventions usually referred to on this matter. Instead, the right to collective action is an offshoot from the freedom of association founded on ILO Convention No 87 on Freedom of Association and Protection of the Right to Organise (1948) and Convention No 98 on Right to Organise and Collective Bargaining (1949).3 According to Article 2 of Convention No 87: Workers and employers, without distinction whatsoever, shall have the right to establish and, subject only to the rules of the organisation concerned, to join organisations of their own choosing without previous authorisation.

Furthermore, Article 1 of the Convention No 98 protects workers who exercise the right to freedom of association from anti-union discrimination and from measures taken by the employer with regard to the use of this right.4 The right to strike is a collective right, to be exercised by organisations such as trade unions, even though the term ‘workers’ used in the Conventions also indicates that the right to strike might be an individual right.5 However, compared with, for instance, the European Committee of Social Rights (see below), the ILO has been more willing to accept that the right to

3 With regard to the ILO and collective bargaining in particular, see B Gernigon, A Odera, & H Guido, ‘ILO Principles Concerning Collective Bargaining’ 2000:1 International Labour Review p 139. 4 With regard to discrimination and freedom of association, the European Court of Human Rights, in 2009, considered the fear of potential discrimination, in a situation when the state failed to fulfill its positive obligation to provide protection against discrimination on the grounds of trade union membership, to be a violation of Art 14 taken together with Art 11 of the European Convention; see Case Danilenkov and others v Russia (2009, Application 67336/01, ECHR 2009– [extracts] – 30.7.09). 5 See also P Herzfeld Olsson, Facklig föreningsfrihet som mänsklig rättighet (Uppsala, Iustus Förlag, 2003) p 151.

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The Right to Collective Action as a Fundamental Right 59 collective action may be reserved for trade unions. Hence, prohibitions on socalled ‘wild cat strikes’ in law have been accepted by the ILO.6 In two ILO Resolutions concerning trade union rights, adopted in 1957 and 1970 respectively, ILO Member States called for legislation to secure, and fully respect, trade union rights, including the right to strike.7

2.2 The ILO Supervisory Bodies Interpretations and recommendations on the ILO Conventions are dealt with by the two ILO supervisory bodies: The Committee of Experts on the Application of Conventions and Recommendations; and the Committee on Freedom of Association, the latter working under the supervision of the ILO Board. These supervisory bodies have frequently referred to the right to strike as a fundamental right, which leads to the conclusion that the right to collective action, including the right to strike, is considered to be an integral component of the right to association.8 The ILO Committees have further developed the interpretations regarding different aspects of the freedom of association, including the specification of restrictions on the right to strike, the objectives of strikes and more. General prohibitions against collective actions are not accepted. However, the Freedom of Association Committee has stated that ‘in the event of an acute national emergency’, even a general prohibition on strike action could be justified for a limited period. That is, for instance, in genuine situations of national crisis such as serious conflicts, insurrections or natural disaster.9 In respect of public service employees, certain restrictions are able to be accepted, depending on the kind of public service functions the employees fulfill.10 In principle, the restrictions apply to public servants who exercise authority in the name of the state and, if restrictions are introduced, the employees should be afforded appropriate guarantees to protect their interests. It clearly follows from Article 9 of Convention No 87 that restrictions on the right to strike – determined by national law or regulations – should be accepted in the case of the armed forces and the police.

6

Bruun, ‘ILO och stridsåtgärder’ p 200, above n 2. The International Labour Conference, Resolution concerning the Abolition of Anti-Trade Union Legislation in the States Members of the International Labour Organisation (1957) and Resolution concerning Trade Union Rights and Their Relation to Civil Liberties (1970). See B Gernigon, A Odera & H Guido,‘ILO Principles Concerning the Right to Strike’ (1998, revised 2000) International Labour Review p 137 (4) 7. 8 Gernigon et al, ‘ILO principles’ p 8, above n 3, Herzfeld Olsson, Facklig föreningsfrihet, p 151, above n 5. Periodically this connection has been disputed, for instance, during the 1970s and 1980s when the conflict between the former Soviet Union and Western countries affected the ILO in this regard. See Bruun ‘ILO och stridsåtgärder’ p 199, above n 2. 9 Gernigon et al,‘ILO principles’ p 8, above n 3, Herzfeld Olsson, Facklig föreningsfrihet p 24, above n 5. 10 Gernigon et al,‘ILO principles’ pp 17 ff, 23 ff, above n 3. 7

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The aim of strike action, as considered to be defined in the ILO Conventions and implied by the right to collective action, should be to resolve conflicts of interests. Hence, restrictions on the right to collective action, including the right to strike, could in principle apply to legal disputes, at least if there is a competent Court to deal with legal disputes.11 Further, as regards the kind of action that can be accepted, sympathy actions ‘where workers come out in support of another strike’, are justified as conforming to the Conventions, provided that the primary conflict is legal.12 Collective actions of an obviously political nature are not protected by the Conventions, but the Freedom of Association Committee, speaking about ‘strikes of purely political nature’, has expressed a broader view in this regard. The Committee has declared that – beyond industrial disputes that might be resolved by signing a collective agreement – workers and trade unions should have the right to express their discontent regarding economic and social matters. Even general strikes and protests regarding minimum wages have been accepted.13 The restrictions on the right to strike have been further elaborated by the Committee of Experts. A key issue is the concept of ‘essential services’ in society. In circumstances where such services have been threatened in the strict sense, ie where the effect of the collective action has endangered the provision of those services, major restrictions or even prohibitions have been accepted.14 The Freedom of Association Committee has issued further recommendations on the matter, and advocates that, instead of a ban on collective actions (or compulsory arbitration) in situations where vital interests of society are threatened, restrictions may be imposed in order to maintain a minimum level of essential services, for instance, when a strike would endanger ‘the life, personal safety or health of the whole or part of the population’.15

2.3 The BALPA Case In 2010, the ILO Committee of Experts made a statement concerning EU law in connection with a dispute between British Airways and the British Airline Pilots’ Association (BALPA).16 The dispute concerned the employer’s reaction to the pilots’ call to strike in protest against the employer’s establishment of a daughter enterprise in France, ie in another EU Member State. 17

11

Bruun. ‘ILO och stridsåtgärder’ p 200, above n 2. Gernigon et al,‘ILO principles’ p 16, above n 3. 13 ibid p 14. 14 ibid p 20. 15 ibid pp 20, 23. 16 The ILO Committee of Experts (ILO, 2010), Report of the Committee of Experts on the Application of Conventions and Recommendations. 17 See Application by the British Air Line Pilots Association to the International Labour Organisation Committee of Experts on the Application of Conventions and Recommendations against the United Kingdom for breach of ILO Convention No 87. 12

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The Right to Collective Action as a Fundamental Right 61 The employer, British Airways, claimed that the action did not conform to EU law and the freedom of establishment. Hence, the airline stated – referring to the Laval and Viking cases18 (see below) – that extensive damages could result if the trade union fulfilled their intent to strike. BALPA withdrew the action and submitted an application to the ILO, claiming that the United Kingdom breached Convention No 87. The Committee of Experts declared that the risk of extensive damages, based on previous rulings of the EU Court, meant that the trade union’s rights were disregarded in relation to Convention No 87.

3. THE EUROPEAN SOCIAL CHARTER AND THE EUROPEAN CONVENTION

3.1 The European Social Charter The European Social Charter was adopted in Turin in 1961, 10 years after the European Convention, and was later subject to a revision in 1996. The European Committee of Social Rights (the Social Committee) is the supervisory body in respect of the Charter. Together with the opinions and elaborations developed by the Social Committee, the Charter provides the most detailed and explicit protection of the right to collective action. The Social Charter is a non-binding act, but the Social Committee’s activities and standpoints attract much attention and should be considered as important for the development of fundamental rights in working life. In accordance with Article 6(4) of the 1996 revised Social Charter, workers’ and employers’ rights to ‘collective action ..., including the right to strike,...’ should be protected as part of the right to collective bargaining. Restrictions or limitations of rights protected by the Charter should meet the criteria established in Article 31. Hence, restrictions should be prescribed by law and, further, they should be ‘necessary in a democratic society for the protection of the rights and freedoms of others or for the protection of public interest, national security, public health, or morals’. (As seen below, this is the same criterion as that stipulated in the European Convention.) Thus, both formal requirements and a principle of proportionality should apply when judging if there is a breach of the underpinning principles of the Charter. The right to collective action – including the right to strike – is restricted to being applicable only where there are conflicts of interest (Article 6[4] of the Charter). Consequently, restrictions on the right to collective action, including the right to strike, could apply to actions aiming for the revision of an agreement during its currency.19

18

Case C-341/05 Laval [2007] ECR I-11767 and Case C-438/05 Viking [2007] ECR I-10779. S Evju, ‘Sosialpakt og arbeidskamp. Arbeidskampretten efter Europarådets sosiale charter’ (2008) 2 Tidskrift utgiven av Juridiska Föreningen i Finland (JFT) pp 174, 179 ff. 19

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Further, disregarding the scope of the right to strike, the term ‘collective action’ in itself has certain implications. It follows from Article 6(4) that the right to collective action is a ‘collective’ right. However, the Social Committee has taken the view that the right to collective action is an individual right, even though the Committee, when referring to certain prerequisites, also has accepted that the right to collective action has been reserved for trade unions. Hence, issues have arisen in the interpretation of the wording ‘workers and employers’ in respect of their right to take collective action. Should, for instance, the use of the term ‘worker’ imply that a worker, as an individual, or as a member of a group of workers not organised in a trade union, has the right to take collective action? The answer seems to be that, in principle, the right to initiate a strike should be reserved to an organisation only, as long as there is a complete freedom to form trade unions without any excessive formalities, and that this reservation is not contrary to the provisions of the Charter.20 Furthermore, in 1969–70 the Social Committee emphasised that the right to collective action founded on the Charter is a mutual right, ie both employers and employees have this right, even if the Committee has not committed to fully equalising the right to strike with the right to impose a lock-out.21 A pertinent question here is whether a single employer can utilise the right to collective action, and this, it appears, is still a matter of debate.22 As concerns peace obligations regulated in a collective agreement, it is clear that a peace obligation resulting from an agreement stipulated by the parties themselves will be accepted by the Social Committee, at least during the agreement’s period of validity.23 With regard to peace obligations imposed by statute or by case law, the Social Committee, in 2002, at first categorically rejected these obligations. Later, the Committee revised its standpoint and formulated a compromise. Since then, a peace obligation imposed by law, and even case law, may be accepted, if it can be considered to reflect ‘the certain will of the social partners’.24 However, demonstrating this condition may be problematic, even if not in countries where there is a long tradition of dealing with these kinds of problems, such as in the Nordic countries.

20 ibid pp 189 ff. With regard to Swedish law and the reservation of the right to collective action for trade unions, the Committee for Social Rights has been wavering on the matter. In 2002 the Committee’s opinion was that since the Swedish regulation did not ensure unorganised workers this right, the Swedish regulation was not in conformity with the Charter. Earlier, in 2000 and later in 2004, the Social Committee drew the conclusion that since it is easy for workers to establish a trade union in Sweden, it could be accepted that the right to take the industrial action is reserved for associations. However, in 2004 the Committee made the interpretation that the Charter meant that workers should have the right to collective action. In principle, the Committee distinguishes between those who are entitled to take part in a collective action and those empowered to call a strike. 21 ibid p 177. 22 ibid p 178. 23 ibid p 182. 24 ibid pp 182 ff.

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The Right to Collective Action as a Fundamental Right 63 Furthermore, it has been considered to be contrary to the European Charter to extend a peace obligation beyond matters regulated in a collective agreement. An extended peace obligation following from a collective agreement should not be indirectly based on judicial practice or law. However, this position, adopted by the Social Committee, has been controversial and has been given different interpretations within the Committee.25

3.2 The European Convention The right to collective action and, in particular, the right to strike, does not explicitly follow from the European Convention on Human Rights and Fundamental Freedoms (1950). Essentially, the Convention protects, among other rights and freedoms, the freedom of association as a fundamental right, expressed in the following wording of Article 11(1): Everyone has the right to freedom of peaceful assembly and to freedom of association with others, including the right to form and to join trade unions for the protection of his interests.

In principle, no restrictions on the exercise of the freedom of association should be imposed other than those recognised within the scope of Article 11(2) and basically restrictions should follow from law. However, beyond this formal criterion, restrictions should be considered to be necessary in a democratic society in the interests of national security or public safety, for the prevention of disorder or crime, for the protection of health or morals or for the protection of the rights and freedoms of others.26

The right to freedom to form and to join a trade union is of fundamental importance for the establishment of trade unions, despite the fact that the right is not an independent right but, in principle, merely a sub-division of the freedom of association.27

3.3 The European Court and the Right to Collective Action The right to strike has been dependent on how the European Court of Human Rights (the European Court) has interpreted the extent of the freedom of association and the right to collective bargaining as a means for (primarily) the employees to protect their occupational interests.

25

Herzfeld Olsson, Facklig föreningsfrihet pp 275 ff, n. 5. Art 11(2). Further, the Article referred to opens the way for lawful restrictions in particular concerning the exercising of these fundamental rights by ‘members of the armed forces, of the police or of the administration of the State’. 27 D Harris, M O’Boyle & C Warbrick, Law of the European Convention on Human Rights, 2nd edn (Oxford, Oxford University Press, 2009) p 536. 26

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In the case law from the European Court the general wording of the European Convention has been further elaborated, both as regards the scope of the meaning of the freedom of association and as regards the restrictions which might be acceptable to that freedom.28 In principle, the examination of whether there is a breach of Article 11 of the Convention requires a two-step procedure. Firstly, the Court inquires whether a case is covered by Article 11(1), ie the freedom of association. Secondly, it asks whether the aim of the measure taken can be justified in accordance with Article 11(2). This means that it is of particular relevance if the restriction is founded in law and, further, if the restriction in question is considered to be ‘necessary in a democratic society’ referring to the legitimate interests listed in the Article. From this, it is obvious that a proportionality principle should apply to the examination, balancing the freedom of association with the rationale for imposing a measure which restricts that freedom. Even if the right to collective action – and, in particular, the right to strike – is not explicitly embraced by the European Convention, the step-wise elaboration of case law from the European Court shows that this right is clearly regarded as a integral part of the wider right of the freedom of association. In Schmidt and Dahlström v Sweden the question was whether a violation of the freedom of association occurred when non-striking members of a trade union that had carried out a strike action, failed to receive the same retroactive wage benefits as members of non-striking unions and non-organized workers.29 In the case, the European Court pointed out that the Convention provided protection for the conduct of trade union activities, but that strike action was not the only means that could be applied.30 Restrictions on the right to strike might be acceptable if the state provides other means of collective action to be legitimate, ie a right to collective action could embrace different kinds of action, and not all rights must be available in order to safeguard the freedom of association. Following this case law from the European Court, it was not necessary that a right to collective action needed to take the form of a right to strike, exclusively, even if the right to strike was considered to be unique.31 Further, as pointed out in Schmidt and Dahlström, the state had recognised the right to strike, and the European Court considered this right to be one of the most important means for the protection of the trade union members’ interests.32

28

See ibid for an overview. Schmidt and Dahlström v Sweden, Application 5589/72, 6.2.76. 30 The Court stated that ‘The grant of a right to strike represents without any doubt one of the most important of these means, but there are others’ and that Art 11(1) ‘leaves each State a free choice of the means to be used towards this end’ (para 36). 31 See also Wilson, National Union of Journalists and Others v the United Kingdom [Wilson & Palmer], Applications 30668/96, 30671/96 and 30678/96, ECHR 2002-V – 2.7.02, paras 45, 46. 32 Also in Unison v the United Kingdom, Application  53574/99, ECHR 2002-I – 10.1.02, the wording indicates a unique position for the right to strike. For instance, the Court stated that this right ‘represents one of the most important of the means by which the State may secure a trade 29

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The Right to Collective Action as a Fundamental Right 65 Given that the right to strike in general is recognised in the European states – and given the provisions of the European Social Charter – critics have argued, with reference to the ruling in Schmidt and Dahlström, that the right to strike should be protected under Article 11 as ‘indispensable’.33 In 2008 and 2009, the Court made important new statements regarding the right to collective bargaining and collective action, and the right to strike has been increasingly emphasised as a right in connection with Article 11 and the freedom of association. A notable case is that of Demir and Baykara v Turkey, which concerns Turkey and the right to collective bargaining for public service employees, including the right to conclude collective agreements.34 The trade union and the employer had concluded a collective agreement, but the employer did not comply with the arrangement. The case was brought before a district court which approved the trade unionists’ claims and the subsequent ruling recognised the right to collective bargaining. However, the Turkish Court of Cassation declared the collective agreement to be void, and thereby the District Court’s decision was overturned. Subsequently, a complaint was made to the European Court, which ruled in favour of the public service employees’ right to collective bargaining and to conclude collective agreements. The decision of the Court implied that the Court of Cassation’s ruling that the collective agreement was void was contrary to Article 11. In more general terms, the European Court claimed that the Convention is a ‘living instrument’ that ‘must be interpreted in the light of present-day conditions’. The Court made references to ILO Convention No 98 and the EU Charter of Fundamental Rights (see below) as well as to the developments in international and national labour law. The important conclusion drawn by the Court in Demir and Baykara was that the right to collective bargaining is an ‘essential’ element of the right of association, including the right to conclude collective agreements.35 Further,

union’s freedom to protect its members’ occupational interests’ (para 45). However, in the case, the Court also weighted the employer’s right to conclude agreements with others, referring to Art 11(2) and the formulation ‘protection of the rights and freedoms of others’. Further, in Sørensen and Rasmussen v Denmark, Applications 52562/99 and 52620/99, ECHR 2006-I – 11.1.06, the Court stated that the ‘Contracting States enjoy a wide margin of appreciation as to how the freedom of trade unions to protect the occupational interests of their members may be secured’ (para 58, s 2). (On this matter the Court referred to Swedish Engine Drivers’ Union v Sweden, 6.2.76 and other cases; see para 58, s 2.) 33 Further, an argument was that the freedom to strike in a democratic society is crucial for the balance of power between the labour market parties. See Harris et al, Law of the European Convention p 544, above n 27. 34 Demir and Baykara v Turkey [GC], Application 34503/97, ECHR 2008, 12.11.08. 35 See Demir and Baykara (para 154): ‘Consequently, the Court considers that, having regard to the developments in labour law, both international and national, and to the practice of Contracting States in such matters, the right to bargain collectively with the employer has, in principle, become

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critics of the Court’s former standpoints have noted that in Demir and Baykara the Court sends a signal that it may be shifting its position away from what the critics have seen as an unwillingness to use Article 11 of the Convention for strengthening trade union rights.36 Moreover, in Enerji Yapi-Yol Sen v Turkey, the European Court made further statements concerning the right to strike.37 In Turkey there had been an ongoing work to adapt Turkish law to meet international standards on trade union rights, and civil servants planned a oneday action for the recognition of their right to conclude collective agreements. However, prior to the day of the planned action, a Turkish Government circular imposed a ban on strike action which embraced all civil servants. Three trade union representatives who took part in the action were subject to disciplinary consequences. The case was later brought before the European Court, with reference to Article 11 of the European Convention. With respect to the ban to strike, the European Court found that the ban was directed against all employees in the state sector in order to prevent them from taking part in the strike action. This action on the part of the state was considered excessive and the restriction of the trade union’s rights under Article 11 of the Convention was said to be disproportionate; and nor did the measure meet the ‘pressing social need’ criterion. A significant point is that the Court dealt with the right to strike without considering other possibilities of collective action. Thus it can be concluded that the Court took the position that the right to strike is an independent right, regardless of whether there are other means for taking care of the trade union members’ interests (compare the Court’s more moderate position in Schmidt & Dahlström). Hence, a conclusion to be drawn from Enerji Yapi-Yol Sen is that the right to strike is not dependent on an explicit recognition of this right from the state, regardless of whether the state has recognised other alternative means for trade unions to defend their interests. Further, the developed judicial practice from the European Court shows that the right to collective action is protected as a part of the freedom of association regulated in Article 11 of the European Convention.

one of the essential elements of the “right to form and to join trade unions for the protection of [one’s] interests’ set forth in Article 11 of the Convention, it being understood that States remain free to organize their system so as, if appropriate, to grant special status to representative trade unions. Like other workers, civil servants, except in very specific cases, should enjoy such rights, but without prejudice to the effects of any ‘lawful restrictions” that may have to be imposed on “members of the administration of the State” within the meaning of Article 11 § 2 – ...’. 36 37

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Harris et al, Law of the European Convention p 548, above n 27. Enerji Yapi-Yol Sen v Turkey, Application 68959/01, 21.4.09.

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The Right to Collective Action as a Fundamental Right 67 4. COLLECTIVE ACTION AND THE RIGHT TO STRIKE IN THE EU CHARTER AND THE EU TREATY

4.1 The EU Charter of Fundamental Rights The 1989 Community Charter of the Fundamental Social Rights of Workers already protected the freedom of association and the right to collective bargaining, as well as the right to resort to collective action, including the right to strike, in situations of conflicts of interests (points 11–13 of the Charter). Compared with the European Social Charter and the European Convention, the free movement of workers was also explicitly noted as a ‘fundamental social right’ in the 1989 Community Charter, in agreement with the EC Treaty (point 1 of the Community Charter).38 Furthermore, the right to collective action – including the right to strike – was emphasised at the summit meeting held in Nice in 2000, when the Charter of Fundamental Rights of the European Union (2000/C 364/01) was proclaimed, and was later confirmed when the Charter was adopted by the Member States in 2007. It follows from Article 28 of the EU Charter of Fundamental Rights that: Workers and employers, or their respective organisations, have, in accordance with Community law and national laws and practices, the right to negotiate and conclude collective agreements at the appropriate levels and, in cases of conflicts of interest, to take collective action to defend their interests, including strike action.

Article 28 also makes a distinction between ‘workers’ and ‘organisations’, and refers to differences between Member States, where the right to collective action may be defined as either a collective or individual right (as, for instance, in Sweden and France respectively). Moreover, even the fundamental rights set out in the EU Charter of Fundamental Rights can be subject to restrictions. According to Article 52(1) of the Charter, the freedoms recognised by the Charter can be restricted by national law. However, it is important that any such restrictions ‘respect the essence of those rights and freedoms’ protected by the Charter. Restrictions are also explicitly subject to the principle of proportionality (Article 52[1]): Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others...

Beyond that, the exercising of the rights attached to the Charter must comply with Community Treaties and lie within the limits defined by the Treaties.

38 The Community Charter was taken by the Member States as referring to Art 117 of the then EC Treaty, considering the Resolutions of the European Parliament of 15 March 1989 and 14 September 1989 and to the Opinion of the Economic and Social Committee of 22 February 1989.

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With regard to the EU Charter on Fundamental Rights and the European Convention, the EU Charter states that the meaning and scope of the rights protected by the Charter should be the same as those laid down by the European Convention (Article 52[3] of the EU Charter on Fundamental Rights). However, this link to the European Convention should not prevent the EU from providing a more extensive protection.

4.2 The Reformed Treaty on the European Union – Following the Lisbon Treaty As concerns the right to collective action protected by the EU Charter of Fundamental Rights, it can be noted that already in the introduction of Article 136 of the former EC Treaty (now Article 153 of the Treaty of the Functioning of the European Union; hereafter the TFEU), there were references to both the 1961 European Social Charter and the 1989 Community Charter.39 Further, concerning the right to strike, measures taken for the development of a social dimension in accordance with Article 137(5) of the former Treaty – referring to the objectives of Article 136 – should not apply to ‘pay, the right of association, the right to strike or the right to impose lock-outs’ (now Article 153[5] of TFEU). Following the Lisbon Treaty, which came into force on 1 December 2009, further steps were taken concerning the European Union and the relationship to the European Convention and fundamental rights.40 The reformed Treaty on the European Union, regulating constitutional and fundamental issues of the Union, and the TFEU, regulating the ‘four freedoms’ and more, was established as fundamental EU law. The Treaty on the European Union, which followed the Lisbon Treaty, means an important reinforcement of fundamental rights (or freedoms), founded on three sub-articles under Article 6.41 The Treaty on the European Union specifically recognises ‘the rights, freedoms and principles set out in the Charter of Fundamental Rights of the European Union ..., which shall have the same legal value as the Treaties’ (Article 6[1]). It also states that ‘The Union shall accede to the European Convention on Human Rights and Fundamental Freedoms’ and, in the following sentence, notes that ‘Such accession shall not affect the Union’s competences as defined in the Treaties’ (Article 6[2]).

39 Art 136 emanated from the ‘social protocol’ signed in 1992 at the Maastricht summit, and the named references were made in connection with measures that could be made in order to develop the social dimension within the framework of Art 137 of the EC Treaty. 40 The Lisbon Treaty was drafted as a replacement for the Constitutional Treaty which was rejected by French and Dutch voters in 2005. 41 The distinction between ‘freedoms’ and ‘fundamental rights’ might be somewhat academic, and concerning EU law, the ECJ has declared the four freedoms (from 2009 regulated in the TFEU) to be fundamental rights. See for instance Case C-265/95 Commission v France [1997] ECR I-6959 and Case C-320/03 Commission v Austria [2005] ECR I-7929.

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The Right to Collective Action as a Fundamental Right 69 Furthermore, as regards the European Convention, it is emphasised that ‘Fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States,… shall constitute general principles of the Union’s law’ (Article 6[3]).42 Hence, from the reading of Article 6 of the Treaty on the European Union, Article 28 of the EU Charter of Fundamental Rights and the binding judicial practice from the European Court, it is clear that the right to collective action – including the right to strike – applies within the framework of Community law and thereby applies to national law and practice. However, as stated above in relation to Article 52 of the EU Charter of Fundamental Rights and, further, in considering the judicial practice from the Court of Justice of the European Union (ECJ), there are possibilities for the Member States to impose restrictions on the fundamental rights, provided that certain criteria are fulfilled.43

4.3 The ECJ and the Right to Collective Action Regardless of the new development following the Lisbon Treaty, the ECJ had already recognised the right to take collective action as a fundamental right. Referring to the International Conventions, including the EU Charter, taken at the Nice summit, the ECJ in Laval recognised the right to take collective action as a fundamental right forming ‘an integral part of the general principles of Community law …’.44 At the same time, the Court emphasised that ‘the exercise

42 This was already inherent in the Treaty on the European Union, signed in Maastricht, but was then expressed in the following wording of Art F(2) of that Treaty: ‘The Union shall respect fundamental rights, as guaranteed by the European Convention ... and as they result from the constitutional traditions common to the Member States, as general principles of Community law’. 43 Restrictions on the four freedoms should in general – in accordance with the TFEU (see for instance Art 45[3]) – refer to limitations justified on grounds of public policy, public, security or public health. Concerning the examination of national restrictions, see for instance Case C-55/94 Gebhard [1995] ECR I-04165; according to the ECJ there are four requirements for restrictions on the four freedoms protected by EU law: (1) restrictions must be applied in a non-discriminatory manner; (2) they must be justified by imperative requirements in the general interest; (3) they must be suitable for securing the attainment of the objective which they pursue; and (4) they must not go beyond what is necessary in order to attain it. 44 Case C-341/05 Laval [2007] ECR I-11767 (paras 90, 91). The ECJ pointed out that ‘it must be recalled that the right to take collective action is recognised both by various international instruments which the Member States have signed or cooperated in, such as the European Social Charter, signed at Turin on 18 October 1961 – to which, moreover, express reference is made in Article 136 EC – and Convention No 87 of the International Labour Organisation concerning Freedom of Association and Protection of the Right to Organise of 9 July 1948 – and by instruments developed by those Member States at Community level or in the context of the European Union, such as the Community Charter of the Fundamental Social Rights of Workers adopted at the meeting of the European Council held in Strasbourg on 9 December 1989, which is also referred to in Article 136 EC, and the Charter of Fundamental Rights of the European Union proclaimed in Nice on 7 December 2000 (OJ 2000 C 364, p 1)’. Even prior to this, the Charter of Fundamental Rights has been used for the ECJ’s reference to human rights; see C Barnard, The Substantive Law of the EU. The Four Freedoms, 2nd edn (Oxford, Oxford University Press, 2007) p 126.

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of that right may none the less be subject to certain restrictions. As is reaffirmed by Article  28 of the Charter of Fundamental Rights of the European Union, it is to be protected in accordance with Community law and national law and practices’.45 Furthermore, the Court declared that even if Article 137(5) (now Article 153[5] of TFEU) accepts the right to strike and to impose lock-outs, as mentioned above, this does not mean that collective actions such as those taken in the Laval case should be excluded from the domain of freedom to provide services.46 Even before Laval, the Court had recognised the right to collective action – including the right to strike – as a fundamental right in Viking.47 The case concerned the right to establishment vis-a-vis the right to collective action. The Finnish shipping company Viking Line wanted to register the vessel Rosella in another Member State under a flag of convenience. Since a Finnish collective agreement would apply if the vessel was registered in Finland, the shipping company, by registering the vessel in Estonia, aimed to conclude a new collective agreement in that state and thereby reduce wage costs. In Viking the ECJ stated that the right to establishment is a fundamental freedom, and the Court argued that collective action could be accepted in respect of this aim.48 The EU, according to the Court, ‘has thus not only an economic but also a social purpose, the rights under the provisions of the Treaty on the free movement of goods, persons, services and capital must be balanced against the objectives pursued by social policy,...’.49 Hence, a principle of proportionality should apply when judging the actions taken, balancing fundamental freedoms against fundamental rights. Further statements that are of relevance for the application of a principle of proportionality in connection with fundamental rights and freedoms, other than those discussed above, have been made by the ECJ. In Schmidtberger, the ECJ balanced the fundamental rights – freedom of expression and freedom of assembly – against the free movement of goods.50 A demonstration had resulted in the complete closure of a major transit route between two Member States. The Court balanced the protesters’ use of the fundamental rights against the fundamental freedom of movement of goods, in the light of the Member State’s obligation to take all appropriate measures in order to fulfill the commitments founded on Community law (compare Article 4[3] of the Treaty of the European Union). In Omega, the ECJ found that human rights and, in particular human dignity, were sufficient grounds to accept restrictions on the freedom to provide services

45

Laval (para 91). ibid (para 88). 47 Case C-438/05 Viking [2007] ECR I-10779 (para 43). 48 ibid (para 59). 49 ibid (para 79). 50 Case C-112/00 Schmidtberger [2003] ECR I-05659. 46

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The Right to Collective Action as a Fundamental Right 71 (the case dealt with the placing of gambling machines on a Member State’s territory).51 In both Schmidtberger and Omega, the Court held that the exercising of fundamental rights does not fall outside the scope of EU law, and that such exercising ‘must be reconciled with the requirements relating to rights protected under the Treaty and in accordance with the principle of proportionality’.52 In order to deal with situations such as in Schmidtberger, the Council adopted the ‘Monti-Regulation’ (Regulation 2679/98) in 1998, which concerned how to handle serious disruption of the free movement of goods.53 In accordance with Article 2 of the Regulation, the Regulation may not be interpreted as affecting in any way the exercise of fundamental rights as recognized in Member States, including the right or freedom to strike or any other freedom to take actions regulated in the Member States’ national industrial relations systems.

However, it follows from Article 4 of the Regulation that the measures to be taken when there is a ‘serious disruption’ should be proportionate. Thus, in the light of Schmidtberger, a principle of proportionality should also apply when fundamental rights of a more general character are balanced against measures taken in order to counteract disruptions concerning the four freedoms founded on EU law. Furthermore, in a report presented in the spring of 2010, a suggestion was made concerning the posting of workers and the right to industrial action on the single market.54 According to the proposal, a possible solution to the problems highlighted in Laval and Viking and other practice from the ECJ, could be based on the same strategy as Regulation 2679/98 serving as a model on the matter.55 This would mean that, according to Monti, a new EU regulation should be taken, meaning that the posting of workers should not interfere with the right to take collective action.

51 Case C-36/02 Omega [2004] ECR I-9609. In Omega the restriction on the free movement of services in relation to the public policy criteria was examined. A gambling undertaking wanted to install gambling machines which the Member State considered a violation of human dignity as a fundamental right, since certain games contained simulated killing of human beings. The ECJ stated that the protection of fundamental rights was a legitimate interest which could justify a restriction even with regard to a fundamental freedom protected by the Treaty (para 35). 52 See Schmidberger (para 77) and Omega (para 36). 53 Council Reg (EC) No 2679/98 on the functioning of the internal market in relation to the free movement of goods among the Member States. OJ L 337, 12.12.98, pp 8–9. 54 M Monti, A New Strategy for the Single Market at the Service of Europe’s Economy and Society. Report to the President of the European Commission José Manuel Barroso by Mario Monti, 9 May, 2010. [Internet]. Available from: www.ec.europa.eu/bepa/pdf/monti_report_final_10_05_2010_ en.pdf. 55 On the matter, Monti also pointed to Art 1(6) of Directive 2006/123/EC on services in the internal market (Official Journal L 376, 27.12.2006, pp 36–68), where a similar provision safeguarding labour law has been inserted. See Monti, A New Strategy for the Single Market p 71, above n 54.

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The ILO, the European Council and the EU are developing different normative legal systems and criteria on fundamental rights. Further, these systems operate partly on the same territory and cover, more or less, the same Member States, although the ILO as a worldwide organisation has a special position. At the same time, they have a different normative status – both in formal and informal respects – with regard to whether the decisions taken by the different bodies are binding or non-binding.

5.1 Convergence It is clear that these different bodies often make reference to each other and in doing so they seek to legitimise the status of their respective decisions regarding the fundamental right to strike. This striving for a kind of cross-legitimacy results in an observable inherent convergence trend. An important factor promoting convergence is the explicit recognition of the European Convention manifested in Article 6(3) of the Treaty on the European Union. This recognition means that the EU is committed to follow the Convention as well as the judicial practice from the European Court. Further, the enhanced status given to the Convention at the EU institutions, will indirectly have a new impact on the national laws of the EU Member States. This is a new beginning from an EU law point of view, even if the ECJ has repeatedly referred to both the European Social Charter and the developments under the European Convention. Further, as we have seen, the European Court has moved step by step towards a stronger and more independent position on the right to strike as a fundamental right. At the same time it should be noted that the EU Member States are already committed to the European Convention as members of the Council of Europe. The new scenario since 2009 means that the European Convention founded on the Treaty on the European Union will have a direct normative influence on decisions taken by the core EU institutions such as the ECJ. Furthermore, the recognition of the EU Charter of Fundamental Rights, including the right to strike, as binding in EU law by Article 6(1) of the new Treaty on the European Union should also be noted as important. Even here the ECJ has referred to the EU Charter as a foundation for decisions concerning the right to strike. With reference to this new status for the right to strike together with the notion of a ‘social market economy’ goal as set out in the Treaty on the European Union, it has been argued that the conclusions that were drawn by the ECJ in Laval (national regulations on strike action versus the free movement of services) would have been different today.

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The Right to Collective Action as a Fundamental Right 73 Further, the practice and standpoints developed by the ILO and the supervisory bodies have influenced European law decisions in general terms, as they have been referred to both by the European Social Committee, the European Court and the ECJ. The interplay between the ILO Conventions and EU law has been highlighted in the BALPA case. By turning to the ILO Committee of Experts, the British trade union has compelled the ILO to balance the freedoms founded on the Treaty on the European Union and their status against the right to strike as interpreted by the ECJ in Laval and Viking. However, while the statement from the Committee of Experts is critical, it is not binding for the EU, and the resulting normative function will probably not have a direct impact on European law.

5.2 Divergence Contradictory divergence tendencies previously relied on the fact that the different normative systems apply only partly to the same national territories. For instance, the EU has 27 Member States while the number of Member States of the Council of Europe is 47 (to a large extent the same States as EU Member States!), and the corresponding figure for the ILO is 183.56 However, even if the discussion is limited to EU law and the EU Member States, there are still grounds for divergence, given the different national laws and traditions, and considering the acceptance of national adaptations inherent in both EU law and the law following from the European Convention. If the discussion is widened to include the ILO as well, there are even more grounds for divergence in these regards. In EU law, the four fundamental freedoms enjoy a unique position founded on the EU Treaties. Furthermore, the four freedoms, and a breach of any of those freedoms, rely on a cross-border dimension, as shown in the practice from the ECJ. The free movement of goods, capital, people and services confers a right to move to another Member State, while the application of the right to collective action founded on the European Convention is normally a domestic matter. Even though a cross-border dimension is usually the trigger for activating EU law in regard to the freedoms, this situation can be changed since the EU Charter of Fundamental Rights and the explicit protection of the right to strike need not necessarily rely on a cross-border situation.

56 For a list of the Member Countries of the EU, see The European Union (2010), The Member Countries of the EU (2010) [Internet], available from: www.europa.eu/about-eu/member-countries/ index_en.htm. For a list of the Member States of the Council of Europe, see The Council of Europe (2010), The Member States of the Council of Europe [Internet], available from: www.conventions. coe.int/Treaty/Commun/ChercheSig.asp?NT=001&CM=8&DF=27/09/2010&CL=ENG. Finally, for a list of the Member Countries of the ILO, see The International Labour Organisation (2010) The Alphabetical List of ILO Member Countries [Internet], available from: www.ilo.org/public/ english/standards/relm/country.htm. With regard to ILO members, note that even if a country is a member of the ILO, this does not necessarily mean that the country has ratified the ILO Conventions.

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However, the question remains open as to how the European Court will handle such matters when a fundamental right founded on the European Convention is challenged. From ECJ case law there are, as we have seen, already examples where the proportionality tool has been used for arriving at a solution. Also, guidelines for handling the issue of proportionality are found in the European Convention and in the practice from the Social Committee dealing with the European Social Charter. Hence, both the ECJ and the European Court should apply a proportionality principle when judging if a restriction on a fundamental right can be legitimised. However, based on the different legal systems, the criteria used for examining the proportionality vary. For instance, the ECJ considers whether a restriction is suitable and necessary to achieve a legitimate objective, and whether the measure goes beyond what is necessary in order to attain it; while the European Court, beyond certain formal criteria, considers whether a restriction is ‘necessary in a democratic society’. There is a reservation in Article 6(2) of the Treaty on the European Union stating that the accession to the European Convention ‘shall not affect the Union’s competences as defined in the Treaties’. This regulation is still not fully understood, but it is likely that divergence is still a possibility. The right to strike as a fundamental right will most probably still be subject to restrictions in relation to the four fundamental freedoms. Further, the EU’s accession to the European Convention is a kind of onesided declaration which, for obvious reasons, does not imply that the EU is a Member of, or subordinate to, the Council of Europe. (For instance, the EU is not a sovereign national state and the EU Member States as sovereign national states are already members of the Council of Europe.)

5.3 Final Conclusions The main conclusion is that the right to strike as a fundamental right has clearly been strengthened following the establishment of the reformed Treaty on the European Union in 2009, the recently developed practice from the European Court, and, beyond that, the ILO practice, all of which have influenced the way in which the right to strike is regarded as a fundamental right. Further, there is reason to believe that this development has been facilitated and influenced by the interplay between the three normative legal systems around which this chapter has focused. At the same time it is, for different reasons, highly probable that the fundamental right to strike will still be subject to restrictions, partly as a consequence of the regulations and practice that emanate from the three normative systems and which stipulate different criteria for limitations; and partly as a result of differences at the national level between industrial relations systems and traditions.

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The Right to Collective Action as a Fundamental Right 75 In considering the different territorial coverage and the shifting normative status of the three systems discussed, as well as the differences between national legal systems, there is reason to believe that there is also room for divergence between the normative systems relating to fundamental rights. The crucial issue will be how the legal practice from, primarily, the ECJ and the European Court interacts and in practice links together these two normative systems. Normatively, the Lisbon Treaty has brought these two systems closer to each other, but that does not mean that either of the Courts involved will be a subordinate to the other, for instance, in situations when the right to strike founded on the European Convention is in conflict with any of the four freedoms founded on EU law. In such situations, the proportionality tool anchored in both legal traditions provides a useful instrument for balancing the different perspectives.

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4 Regulating Posted Work – Before and After the Laval Quartet JONAS MALMBERG*

1. INTRODUCTION

What wages and working conditions are to be applied to workers who, within the framework of the transnational provision of services, are sent to work temporarily in the territory of another Member State? Should the employment relationship of the posted workers be governed by the laws of the host state or the state of origin? Or should the employment conditions partly be regulated by both of the national laws? How shall the right to take collective action within the single market be balanced against economic freedoms? These issues were, in 2007 and 2008, addressed in a series of cases from the European Court of Justice (ECJ); the Laval case,1 the Rüffert case,2 the Commission v Luxembourg3 and the Viking case.4 The four cases – jointly referred to as the Laval quartet – have given rise to an intense political and judicial debate. 5 The aim of this chapter is to analyse the legal responses at international level on the case law of the ECJ. 6 * Professor of private law, particularly labour law, Uppsala University. Founding fellow of Uppsala Center for Labor Studies and ReMarkLab, Stockholm University. The text was completed in August 2010. 1 C-341/05 Laval un Partneri [2007] ECR I-11767. 2 C-346/06 Rüffert [2008] ECR I-1989. 3 C-319/06 Commission v Luxembourg [2008] ECR I-4323. 4 C-438/05 The International Transport Workers’ Federation and The Finnish Seamen’s Union [2007] ECR I-10779. 5 The literature is enormous. See eg www.etui.org/Headline-issues/Viking-Laval-RueffertLuxembourg (2010-10-07). 6 The national responses, especially in Sweden and Denmark, are dealt with in J Malmberg, ‘Posting Post Laval – Nordic Responses’ in M-A Moreau, Before and After the Economic Crisis: What Implications for the ‘European Social Model’ (Cheltenham, Edward Elgar Publishing, 2011, forthcoming). For a longer version, see J Malmberg, ‘Posting Post Laval – International and National Responses’, Uppsala Center for Labor Studies, Working Paper 2010:5 (available via http://ucls.nek. uu.se).

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The Posting of Workers Directive7 was adopted in 1996. The main question addressed by the Directive is which employment conditions shall apply to workers temporarily posted from one Member State to another. Even before the adoption of the Directive in 1996, it was clear, according to case law, that the Member State could, if they so decided, extend their national labour laws to posted workers.8 Extending national labour law to posted workers could be considered a restriction of the free movement of services (Article 56 TFEU, ex 49 EC), which could be justified in accordance with the so-called Gebhardformula:9 a restriction on the free movement of services can be accepted only if justified by overriding reasons of public interest and is proportional (that is, the measure is suitable for securing the attainment of the objective pursued and does not go beyond what is necessary in order to attain it). The main amendment achieved through the Posting of Workers Directive, compared with the previous case law concerning Article 56 TFEU, was that the Directive prescribed that host countries are not merely permitted, but have an obligation to ensure that posted workers have ‘a nucleus of mandatory rules for minimum protection’ in the host country. This so-called ‘hard nucleus’ is defined as rules (a) laid down by statutes or – for the building sector – by collective agreements that have been declared generally applicable and (b) concern certain specified terms and conditions (health and safety, maximum working hours, minimum wage etc). A crucial question concerning the Posting of Workers Directive has been whether the Directive should be interpreted as merely obliging the Member States to protect the posted workers, or does the Directive also limits the ability of a Member State to extend other parts of national labour law to the posted workers? That is, did the Posting of Workers Directive only provide a floor of protection that the host states must extend to posted workers? Or did it also establish a ceiling of employment conditions that host states are allowed to extend to posted workers? Another way of formulating the same question is to ask whether the Posting of Workers Directive is mainly to be understood as a minimum labour law directive (aimed at protecting the host state labour and/or the posted workers) or a free movement of services directive, facilitating crossborder service providers, by limiting the regulatory powers of the host state in relation to posted workers? Such questions will arise when interpreting the different aspects of the Directive, as illustrated by the following two examples. Article 3(7) of the Directive provides that the obligation to protect the hard nucleus of the host

7 Dir 96/71/EC concerning the posting of workers in the framework of the provision of services OJ L 18, 21.1.1997, pp 1–6. 8 See eg C-113/89 Rush Portuguesa [1990] ECR I-1417. 9 See eg C-55/94 Gebhard [1995] ECR I-4165.

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Regulating Posted Work – Before and After the Laval Quartet 79 state does not prevent application of terms and conditions of employment that are more favourable to workers. Does this mean that the host state may extend conditions which provide more favourable terms? Or does it only mean that the posted workers may rely on employment conditions in their state of origin if these are more favourable than the terms which apply in the host state? To turn to the second example: The host state may extend to posted workers employment conditions on matters other than the hard nucleus, in the case of public policy provisions (Article 3(10)). How is the concept of public policy provisions to be interpreted? Is it mainly to be defined by the Member State? Should it be considered to have more or less the same meaning as ‘overriding reasons of public interest’ in the Gebhard-formula (above)? Or should the concept be interpreted more narrowly?

3. THE LAVAL QUARTET

The Laval quartet has in many respects clarified the interpretation of the Posting of Workers Directive and Articles 49 and 56 TFEU. First, the Court of Justice interprets the Posting of Workers Directive as an almost exhaustive coordination of the national measures for protecting workers in posting situations. The Court’s interpretation thus comes rather close to an understanding of the Posting of Workers Directive as a ceiling: that is, an almost comprehensive description of the competence of the Member State in relation to posted workers. It should be noted that the Directive does not harmonise the material content of those mandatory rules for minimum protection. That content may accordingly be freely defined by the Member States, in compliance with the Treaty and the general principles of EU law. Further, the Member State may extend conditions of employment on matters other than the nucleus of mandatory rules if they concern public policy provisions (Article 3(10)). The concept of public policy provisions is interpreted strictly (Commission v Luxembourg). This possibility is not open to trade unions, since they are not bodies governed by public law (Laval p 84). Second, the ECJ has in several ways clarified the relationship between collective actions and the free movement of services and the right to establishment. According to the ECJ, collective actions initiated by a trade union against a private undertaking in order to induce that undertaking to enter into a collective agreement are not in principle excluded from Articles 49 and 56 TFEU. Further, collective actions may – at least in cross-border situations like the ones in Laval and Viking – be considered as a restriction on the freedom of services and the right to establishment. The restrictions may be justified according to the Gebhard-formula. The Viking and Laval cases concerned various types of collective actions, and the judgments imply that the protection of the right to different kinds of collective actions is not uniform but depends on the nature and aim of the action in question.

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The ECJ recognised the right to take collective action, including the right to strike, as a fundamental right which forms an integral part of the general principles of EU law, the observance of which the Court ensures. The Court does not give more substantial guidance about what the fundamental character of the right to collective action means. The Court seems anxious to stress that there are restrictions to the exercise of that right, both at national and EU level. It follows from Laval that the free movement of services may impose farreaching restrictions on the right to collective action, at least if the actions taken by a trade union do not aim directly at regulating the employment conditions of its own members.

4. POSTING POST LAVAL

4.1 Introduction The Laval quartet has triggered not only an intense debate but also concrete legal responses both at national and international level. These responses contain elements of adjustment to the new case law as well as elements of resistance or challenges of the doctrines established by the ECJ. In Denmark and Sweden it was, immediately after Laval and Viking, considered necessary to review the legislation in order to comply with the new case law. The amendments of the Danish and Swedish Posting of Workers Acts represent an attempt to reconcile the free movement of services with the national industrial relations systems. Both Denmark and Sweden has re-interpreted Article 3(8) of the Posting of Workers Directive in order to make sure that their national industrial relation system could essentially still apply, although on a level of minimum protection and not on an equal treatment basis. Further, both in Denmark and Sweden, considerable weight was put on improving transparency in relation to foreign service providers.10 The amendments in Denmark and Sweden illustrate that the actual effect of the doctrines of the ECJ depends upon their reception at national level. If the doctrines are not fully accepted at national level, the judgments of the Courts will not be effective. The resistance against the doctrines of the ECJ will typically be silent and not fully visible. As pointed out by Ruth Nielsen, the Member States and the national courts will usually try to create a symbiosis between national and EU law by reinterpreting EU law in the light of national law, or vice versa.11 In other Member States there has also been a huge debate concerning the Laval quartet. However, it seems as if this debate has not resulted in any new or 10

Malmberg, ‘Posting Post Laval – Nordic Responses’, above n 6. R Nielsen, ‘Scandinavian Legal Realism and EU law’ in U Neergaard et al (eds) The Role of the Courts in Developing a European Social Model Theoretical and Methodological Perspectives (DJØF Publishing, 2010) 245. 11

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Regulating Posted Work – Before and After the Laval Quartet 81 amended legislation in the laws on posting of workers or the laws on collective action.12 This is for instance the case in Belgium, Finland, Italy, Poland and the UK. In some Member States there have been industrial disputes related to crossborder situations. For instance, the Finnish Labour Court in 2009 gave judgment on a case concerning cabin crews posted to Finland in order to fly the HelsinkiPhuket-Helsinki route. In the UK there has been a dispute between the air pilots’ union BALPA and British Airways in relation to a planned set up of a subsidiary company in another EU state (see below). At the Lindsey Oil Refinery the workers organised an unauthorised collective action, aiming at ending the employment of a group of posted workers, so that British workers could have the opportunity to do the same work.13 I will in the following describe the developments at international level after the Laval quartet.

4.2 The European Court of Human Rights During 2008 and 2009 the European Court of Human Rights delivered a series of cases developing how trade union rights are protected under the freedom of association (Article 11 European Convention on Human Rights, ECHR).14 In earlier case law the Court has considered that Article 11 safeguards freedom to protect the occupational interests of trade union members by the union’s activities, but has left each state a free choice of the means to be used towards this end. The trade unions should be enabled to strive for the protection of their members’ interests. The right to collective bargaining or collective action was not considered indispensable for the effective enjoyment of trade union freedom. This might be one of the ways by which trade unions could be enabled to protect their members’ interests. But the trade unions could also, in other ways, be allowed to seek to persuade the employer to listen to what the union has to say on behalf of its members. In the grand chamber judgment Demir and Baykara,15 the Court stresses that the interpretation of the ECHR can and must take into account elements of international law other than ECHR (such as ILO conventions), the interpretation of such elements by competent organs, and the practice of European states reflecting their common values. With regard to the developments in labour law,

12 See A Bücker and W Warneck (eds) Viking – Laval – Rüffert: Consequences and Policy Perspectives (Brussels, ETUI, 2010). 13 See also C Barnard, ‘British Jobs for British Workers: The Lindsey Oil Refinery Dispute and the Future of Local Labour Clauses in an Integrated EU Market’ (2009) Industrial Law Journal, 245 ff. 14 Demir and Baykara v Turkey, Application No 34503/97, 12 November 2008, Enerji Yapi-Yol Sen v Turkey, Application No 68959/01, 21 April 2009 and Danilenkov and others v Russia, Application No 67336/01, 30 June 2009. See also eg KD Ewing and J Hendy ‘The Dramatic Implications of Demir and Baykara’ (2010) 39 Industrial Law Journal Vol 39 pp 2–51. 15 Demir and Baykara v Turkey, Application No 34503/97, 12 November 2008.

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both international and national, and to the practice of contracting states, the Court held that the right to bargain collectively, in principle, has become one of the essential elements of the ‘right to form and to join trade unions for the protection of [the members] interests’ set forth in Article 11. This indicates that collective bargaining is not merely one of the ways in which trade unions may protect the interests of their members (compare Viking p 86). The Court has also held that the right to strike constitutes an important aspect in the protection of trade union members’ interests.16 An interference with the freedom of association according to Article 11 ECHR may be justified if ‘prescribed by law’, pursued by one or more legitimate aims and is ‘necessary in a democratic society’ for the achievement of those aims. It should be noted that the justification according to Article 11 asks whether the interference with the trade union rights could be justified. In Laval and Viking the question is put the other way around: Could the restriction of the economic freedoms be justified?

4.3 The ILO Committee of Experts The Laval and Viking cases have been dealt with by the ILO Committee of Experts on the Application of Conventions and Recommendations.17 BALPA – a trade union for airline pilots – complained in 2009 against the United Kingdom to the Committee for breach of the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No 87). BALPA had decided to go on strike, following a decision by its employer, British Airways, to set up a subsidiary company in another EU state. The airline decided to request an injunction, based upon the argument that the action would be unlawful according to EU law, as interpreted in Viking and Laval. Further, the airline claimed that, should the strike take place, it would claim damages estimated at £100 million per day. Under these circumstances, BALPA did not follow through with the strike, stating that it would risk bankruptcy if it were required to pay the damages claimed by the airline. The Committee stressed that its task is not to judge the correctness of the case law of the ECJ, but rather to examine whether the impact of these decisions at national level are such as to deny workers freedom of association rights under Convention No 87. Nevertheless, the Committee considered that the doctrine that is being articulated in the Laval and Viking judgments is likely, in practice, to have a significant restrictive effect on the exercise of the right to strike, in a manner contrary to the Convention.

16

Enerji Yapi-Yol Sen v Turkey, Application No 68959/01, 21 April 2009. Report of the Committee of Experts on the Application of Conventions and Recommendations (2010), ilolex No 062010GBR087. 17

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Regulating Posted Work – Before and After the Laval Quartet 83 In its previous case law the Committee has permitted restrictions on the right to strike. However, they have never, in the permitted restrictions, included the need to assess the proportionality of interests, bearing in mind a notion of right to establishment or freedom to provide services. The Committee has earlier only suggested that, in certain cases, restrictions may be considered in order to avoid damages, which are irreversible or out of all proportion, to third parties. The Committee in the BALPA decision emphasised that there was no basis for revising its position in this respect. In the view of the Committee the omni-present threat of an action for damages that could bankrupt the union, now possible in the light of the Viking and Laval judgments, creates a situation where the rights under the Convention cannot be exercised. Further, the Committee argued that the restrictions on the right to strike following from the right to establishment and free movement of services are, in the current context of globalisation, likely to be ever more common. This is particularly apparent with respect to some sectors of employment, like the airline sector. For the workers in these sectors, restrictions on the right to strike following from the economic freedoms may be devastating to their ability to negotiate meaningfully with their employers.

4.4 Possible Amendments of EU Law The European Commission has during the last years adopted different strategies to increase the effectiveness of the Posting of Workers Directive, for instance by adopting measures to enhance administrative cooperation between the Member States in the context of the posting of workers.18 The European Commission and the French Presidency invited the European Social Partners to jointly develop an analysis of the consequences of the Laval quartet. The report of the social partners, presented on 19 March 2010, indicates a considerable distance between the parties.19 Further, in 2009 President Barroso announced before the European Parliament the intention to present a regulation to improve the way the Directive on posting of workers is interpreted and implemented. Presentation of an initiative is awaited within a year. However, the more precise direction of such an initiative has not yet been made public. One possible direction of such an instrument is indicated in the Monti Report ‘A new Strategy for the Single Market’, presented on 2 May 2010.20 The Report

18

Commission Recommendation of 31 March 2008 (2008/C 85/01). Report on joint work of the European Social Partners on the ECJ rulings in the Viking, Laval, Rüffert and Luxembourg cases. See www.etuc.org/IMG/pdf_Joint_report_ECJ_rulings_FINAL_ logos_19.03.10.pdf (2010-05-15). 20 M Monti (2010) ‘A New Strategy for the Single Market at the Service of Europe’s Economy and Society: Report to the President of the European Commission José Manuel Barroso’ (201005-09), available at: http://ec.europa.eu/internal_market/strategy/docs/monti_report_final_10_05_ 2010_en.pdf. 19

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indicates two possible legislative initiatives. First, the Report questions whether the Posting of Workers Directive still provides an adequate basis to manage the increasing flow of cross-border temporary secondment of workers, while protecting workers’ rights. The Report suggests action at the European level to dispel the ambiguities that still affect the interpretation of the Directive by facilitating access to information, strengthening the cooperation between national administrations and better sanctioning abuses. In this context, the Report stresses the importance of intensifying the fight against ‘letter box companies’ and strengthening posted workers’ access to legal remedies against abuses of their rights suffered in the host country. Second, the Report is concerned about workers’ right to take collective action within the single market and its status vis-a-vis economic freedoms. The Report mentions the possibility that the Lisbon Treaty could supply a legal impetus which would provide a legal base for an adequate response to the concern about the right to take collective action (see below). If this is not the case, the scope for further policy action should be explored. These questions should not, according to the report, be left to future occasional litigation before the ECJ or national courts. Instead political forces have to engage in a search for a solution, in line with the Treaty objective of a ‘social market economy’. The Report rejects both the idea of amending the Treaty with a so called ‘social progress clause’ and the idea of regulating the right to strike at EU level. Instead, the Report recommends a third strategy, a solution modelled after Regulation (EC) No 2679/98 (the so-called Monti Regulation). The Regulation would introduce a provision ensuring that the posting of workers in the context of the cross-border provision of services does not affect the right to take collective action, without touching upon the Posting of Workers Directive. Such a provision could be complemented by a system, involving both the Member States and the Commission, for the informal solution of disputes concerning the application of the Posted of Workers Directive when they risk causing a significant impediment to the functioning of the single market.

5. CONCLUSION

The Laval quartet has both political and labour market implications. The political implications concern the support for the integration project. As pointed out in the Monti Report, the Laval quartet has revived the divide between advocates of greater market integration and those who feel that the call for economic freedoms and for breaking up regulatory barriers is code for dismantling social rights protected at national level. ‘The revival of this divide has the potential to alienate from the Single Market and the EU a segment of public opinion, workers’ movements and trade unions, which has been over time a key supporter of economic integration.’21 The labour market implications concern the actual 21

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Regulating Posted Work – Before and After the Laval Quartet 85 effects of the judgment on national labour markets and national industrial relations. The stance taken by the ECJ seems problematic for, if not directly clashing with, the position taken by the European Court of Human Rights and the ILO Committee of Experts. This puts a considerable pressure on the ECJ to reconsider its position on the balance between the economic freedoms and national social regulation. It has been argued that the Lisbon Treaty, which entered into force on 1 December 2009, provides a new legal context for another balance between the internal market and national social regulation.22 The Lisbon Treaty explicitly states that the Union shall work for social market economy (Article 3(3) TEU). Further, the European Charter of Fundamental Rights has been made legally binding at Treaty level. With this background, General Advocate Villón has recently argued that working conditions which constitute overriding requirements of public interest should, after the entering into force of the Lisbon Treaty, no longer be interpreted restrictively.23 It remains to be seen if this line of argument will be accepted by the Court. There seem to be three major issues which the conflict between the economic freedoms and national industrial relations might bring into focus.

5.1 A New Balance for Competition and the Level of Protection of Posted Worker In practical terms the most important novelty of the Laval quartet is perhaps the interpretation of the Posting of Workers Directive as an almost exhaustive coordination of the national measures for protecting workers in posting situations. Through this interpretation the ECJ actually defines the notion of unfair competition. It is not a situation of unacceptable social dumping so long as the hard nucleus of the host state is applied. Other differences in labour standards between the host state and the state of origin are not regarded as unfair competition, according to this interpretation of the Directive. A consequence is that the idea of equal treatment of domestic and foreign service providers, as regards wages and employment conditions, has been rejected in favour of a principle of minimum protection. The aim of establishing such a narrow definition of unfair competition is obviously to promote free movement of services. The understanding of the notion of unfair competition as a principle of minimum protection is highly controversial. On the one hand, many would argue that different treatment of domestic and posted workers would seriously undermine the possibility of maintaining good working and living conditions

22

See eg Monti A New Strategy for the Single Market, above n 20. C-515/08 Santos Palhota, opinion of Advocate General Pedro Cruz Villón from 2010-05-05 (to be published in ECR). 23

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in the host states, at least in some sectors and for some categories of workers. Further, it could be argued that considerable differences in conditions between different groups of workers performing similar jobs are a possible cause of social unrest. On the other hand, others would argue that the principle of minimum protection promotes economic integration of the new Member States, by making it possible to utilise the comparative advantage of lower wage costs. It could also be argued that the risk of negative effects on the host state labour markets is exaggerated and the differences in wages will be reduced over time, as a consequence of economic integration. In order to substitute the principle of minimum protection with a principle of equal treatment of domestic and foreign service providers with regard to employment conditions, an amendment of the Posting of Workers Directive would be required. Technically such an amendment would not necessarily be very complicated. The institutional debate leading to the Directive clearly indicates that the Directive was thought – at least by many – as being more about establishing a minimum labour law directive, rather than exhaustively coordinating measures that the host state was allowed to adopt in relation to posted workers. Nevertheless, the Posting of Workers Directive was adopted with reference to EU competence in the field of free movement of services (now Articles 53 and 62 TFEU). The reason for the choice of the legal base was, at the time, to circumvent the lack of competence for the EU (including the UK) in the social field. By using the competence for the free movement of services the Directive could be adopted through qualified majority voting, instead of demanding unanimous agreement in the Council. The latter alternative was not available since the UK and Portugal were opposing the Directive.24 An amended Posting of Workers Directive could now be adopted in accordance with the social policy competence using the ordinary legislative procedure (Article 153 TFEU). The amendment could, for instance, prescribe that the Member State may extend national labour law both beside and above the hard nucleus, if the measures are based on equal treatment and the obligations put on the foreign service provider are sufficiently precise and accessible. However, it is doubtful whether there is sufficient support amongst the Member States for amending the Posting of Workers Directive in that direction. Such an amendment would require a qualified majority in the Council. Even though there was in 1996, with an EU15, a qualified majority for a ‘minimum labour law’-version of the Posting of Workers Directive, this is probably not the case today in the EU-27.

24 M Biagi, ‘Fortune Smiles on the Italian EU Presidency: Talking Half-seriously about the Posted Workers and Parental Leave Directives’ (1996) 12 The International Journal of Comparative Labour Law and Industrial Relations, Vol 12, 97–109 and M Biagi, ‘The Posted Workers EU Directive: From Social Dumping to Social Protectionism’ in R Blanpain (ed), Labour Law and Industrial Relations in the European Union, Bulletin of Comparative Labour Relations, 32 (The Hague: Kluwer, 1997) 173 ff and P Davies, ‘Posted Workers: Single Market or Protection of National Labour Law Systems’(1997) 34 Common Market Law Review, Vol 34, 571–602.

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Regulating Posted Work – Before and After the Laval Quartet 87 5.2 Enforcement The supervision and enforcement of employment and working conditions is a crucial issue. As indicated above, the Posting of Workers Directive does not provide for equal treatment of domestic and foreign service providers, but is based on a principle of minimum protection. Since the posted workers will not be fully integrated into the industrial relations of the host state, they will not in practice be covered by the normal mechanisms for supervision and control of working condition in the host state. Neither will they, in practice, be under any close scrutiny by the control mechanisms in the state of origin. In this way there is a risk of creating a free zone for irregular or undeclared work where neither the labour laws of the host state nor the labour laws of the state of origin are, in practice, enforced. It is – as stressed in the Monti Report – of key importance that posted workers’ access to legal remedies against abuses in the host country is strengthened.25 Member States must, according to the Directive, take appropriate measures in the event of failure to comply with it. They must in particular ensure that adequate procedures are available to workers and/or their representatives for the enforcement (Article 5). The Article indicates that enforcement is not coordinated by the Directive, but is primarily a matter for the Member State. It is common knowledge that the enforcement of labour law could not be left to the workers themselves, but needs institutional support. An effective enforcement must also be organised close to the workplace. In the Member States different models for enforcement are applied, involving both public authorities and workers’ representatives.26 In the Nordic countries supervision of minimum standard of labour conditions is to a large extent effective and exercised by the trade unions or the social partners in cooperation. With this background, the need to use national institutions, such as labour inspectorates and trade unions, in the enforcement of the minimum protection provided for by the Directive must be stressed.

5.3 The Right to Collective Action The restrictions on the right to collective action put up by the Viking and Laval cases have substantially limited the possibility for trade unions to protect the interests of their members in cross-border situations. The combination of making the lawfulness of collective actions dependent on a vague proportionality test, combined with a threat of action for damages, does have manifest preventive effect on the possibility of exercising this fundamental right.

25

Monti, A New Strategy for the Single Market, p 70, above n 20. B Hepple and B Veneziani, (eds), The Transformation of Labour Law in Europe: A Comparative Study of 15 Countries 1945–2004 (Oxford, Hart Publishing, 2009) Ch 9. 26

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The Monti Report has highlighted some problems with adopting the so called ‘social progress clause’ and regulating the right to collective action at EU level. The third strategy proposed in the Monti Report could provide a practical solution, although it must be born in mind that the problem does not only apply in relation to free movement of services. As is illustrated by the Viking and BALPA cases the same conflict could also arise in relation to the right to establishment. By proposing a system for informal dispute solution, the Monti Report indicates a certain distrust of the ECJ’s ability to handle these kinds of cases. Another method of dealing with this problem would be to establish a specialised court to hear and determine at first instance certain classes of action or proceeding (Article 257 TFEU). Specialised social or labour courts are common in many Member States.

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5 Public Procurement and Labour Law – Friends or Foes? KERSTIN AHLBERG AND NIKLAS BRUUN*

1. INTRODUCTION

Social policy and public procurement are both very much concerned with the use made of taxation revenue in the public sector, but the relationship between the two is not easy to pin down in a brief description. Among other things, the extent to which it is permissible for public authorities so desiring to promote various social objectives through their procurement, has been a moot point for many years now. When the EU Procurement Directives came up for revision at the beginning of the millennium, union voices were heard calling for them to directly enjoin the integration by national authorities of social considerations in their procurement activities. Neither the governments of the Member States nor the European Parliament were prepared to go that far. Member States were to decide for themselves whether or not to use their procurement in this way. Even so, the new Procurement Directives in 20041 were only adopted following conciliation procedures between the Council and the Parliament, the major stumbling block being the question of how much scope the Member States should be allowed in the application of societal and environmental criteria. As a result, much remained unclear in the Directives now in force, even though parts of the preambles confirm the existence of some scope for considerations prompted by social policy. The fact that the Directives do

* Kerstin Ahlberg is Juris Doctor honoris causa and a Research Editor at the Institute for Social Private Law, Faculty of Law, Stockholm University. She is a member of the research programme ReMarkLab. Niklas Bruun is Professor of Private Law at the University of Helsinki. He is leader of the research programme ReMarkLab, Stockholm University, and member of the research team of the Centre of Excellence in the Foundations of European Law and Policy, University of Helsinki. 1 Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors, OJ L 134, 30.4.2004, pp 1–113; Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, OJ L 134, 30.4.2004, pp 114–240.

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not expressly permit a certain type of stipulation, however, need not imply that those stipulations are prohibited. In order to understand the rules which apply, one has to start with the Treaty law framework within which the specific rules on public procurement are inserted. Recently the question of how to reconcile implementation of the EU rules on public procurement with labour law provisions has become more and more of an issue. In the present chapter we shall, above all, be addressing this question, while at the same time, by way of background, presenting a general picture of the scope for societal considerations in public procurement, a subject which we have dealt with in detail in a recently published report in Swedish.2 There are also a couple of recent works on the subject in English.3

2. THE EU RULES ON PUBLIC PROCUREMENT – AN OVERVIEW

Much – but by no means all – public procurement in the Member States is governed by EU regulation, the purpose of which is to improve the function of the single market and eliminate the risk of national authorities favouring domestic agents and discriminating, directly or indirectly, against foreign undertakings in the course of their procurement. The main provisions are contained in two Directives, namely, 2004/17 on procurement of water, energy, transport and postal services (known as the Utilities Directive) and 2004/18 on the award of public works contracts, public supply contracts and public service contracts (the ‘Classic’ Directive). In July 2009 the Council of Ministers and the Parliament adopted a further Directive specifically concerning public procurement in the fields of defence and security.4 These three Directives are supplemented by two more which are aimed at ensuring that the Member States have effective procedures in place for examining the propriety of a procurement.5 In addition there are a couple of legal instruments of a more ‘technical’ nature, aimed at simplifying public procurement procedure.

2

K Ahlberg & N Bruun, Upphandling och arbete i EU (Stockholm, Sieps 2010:3). S Arrowsmith & P Kunzlik (eds), Social and Environmental Policies in EC Procurement Law. New Directives and New Directions (Cambridge, Cambridge University Press 2009) and R Caranta & M Trybus (eds), The Law of Green and Social Procurement in Europe (Copenhagen, DJØF Publishing, 2010). 4 Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of procedures for the award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence and security, and amending Directives 2004/17/EC and 2004/18/EC, OJ L 216, 20.8.2009, pp 76–136. The Directive is to be implemented by the Member States not later than 21 August 2011. 5 Council Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts, OJ L 395, 30.12.1989, pp 33–35; Council Directive 92/13/EEC of 25 February 1992 coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors, OJ L 76, 23.3.1992, pp 14–20. Both Directives 3

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One thing which all these legal instruments have in common is that they only apply to procurements exceeding certain threshold values. But the threshold values are not the only things deciding whether the Directives are applicable. Procurement of certain types of service is only partly subject to the Directives, even if the contract is worth more than the threshold values, while certain other services are exempted altogether. Services only partly subject to the Directives (for example, health and social services, education and vocational education and hotel and restaurant services) do not come under Articles 55 and 53 on award criteria, which has a particularly interesting bearing on the subject of this chapter. These are services which are considered ‘non-priority’, an expression sometimes occurring, for example, in ECJ decisions. This is not to say that the Member States can do as they please in procurements not coming under the Directives. The ECJ has laid down that the rules of the Treaty and the principles of the single market apply to those procurements as well. The provisions on free movement of goods (Article 34 TFEU), freedom of establishment (Article 49 TFEU) and freedom to provide service (Article 56 TFEU) and the principles of non-discrimination and equal treatment, transparency, proportionality and mutual recognition which these entail, must then be respected, provided that the procurement is of transnational interest in the first place, because this ECJ precedent only applies to contracts of importance for the single market. In the case of procurements not coming under the Directives, then, it is for the procuring authorities themselves to judge whether the procurements can be of any interest to economic players in other Member States. If not, then Community law will not be at all applicable. The Directives, needless to say, are based on the same Treaty Articles and principles as ECJ case law, but on at least one point of particular importance for our purposes they include a rule which has no counterpart in ECJ case law. The Directives (Articles 55 and 53 respectively) require the contract to be awarded either to the economic operator offering the lowest price or to the one submitting ‘the most economically advantageous tender’ from the viewpoint of the procuring authority. But the case law on procurements not coming under the Directives has nothing to say concerning the criteria for the award of contracts, so long as the award criteria are transparent, non-discriminatory and verifiable. The same applies, as has already been noted, to procurements which are only partly subject to the Directives.

3. PROCUREMENT PROCEDURE AND THE RULES OF THE DIRECTIVES

The Directives contain rules for all phases of procurement, to guarantee that economic operators everywhere in the EU/EEA will be given genuine and

have been amended through Directive 2007/66 on improving the effectiveness of review procedures concerning the award of public contracts, OJ L 335, 20.12.2007, pp 31–46, which was to have been implemented by the Member States not later than 20 December 2009.

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equal opportunities of taking part, and to prevent the inclusion of irrelevant considerations in the selection process. Various kinds of societal consideration may come into question in each of these phases, but the scope for taking them into account varies from one phase to another, and so one must be careful to distinguish between them.

3.1 Determining the Subject of the Procurement The EU provisions are concerned with procurement procedure. They have nothing to do with what happens beforehand. In principle, then, an authority having identified a need is at liberty to decide how that need will be provided for, if indeed the need occasions any purchase at all, or whether the need should be met through activities under the authority’s own aegis. The only restriction applying if the authority decides to resolve the problem by procurement is that the subject of the procurement, the subject matter of the contract, may not be defined in such a way that tenderers from other Member States are disfavoured.

3.2 The Description of the Subject Matter of the Procurement and Conditions for Tendering The description of the subject matter of the contract in the invitation to tender, however, can in itself decide whether or not a certain operator will be able to participate in the procurement, and so the Directives include rules on this point. Among other things it is stipulated (Article 23)6 that technical specifications ‘shall afford equal access for tenderers and not have the effect of creating unjustified obstacles to the opening up of public procurement to competition’. Accordingly, the specifications are to be stated either as references to standards of different kinds or in terms of performance or functional requirements or as a combination of these things. In the contract documents the contracting authority may also state where the tenderer can obtain information concerning the obligations with regard to taxes, environmental protection, employment protection and working conditions which are in force where the service is to be provided (Article 27). When providing such information, the contracting authority should also request the tenderers to confirm that they have taken account of these obligations when drawing up their tender.

6 Failing indication to the contrary, references to Directive Articles concern the classic Directive (2004/18), above n 1. In the respects of interest for present purposes, the Utilities Directive is basically identical.

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3.3 Delimitation of those Eligible to Submit Tenders The question of which undertakings can join in competing for the contract is then decided partly by the requirements laid down by the contracting authority concerning the economic and financial position of prospective tenderers and their professional and technical capacity, and partly by whether they meet the stipulations concerning the personal standing of tenderers – qualification or selection criteria, as they are termed. Thus the contracting authority may require candidates and tenderers to meet a minimum level of economic and financial standing, of professional and technical knowledge or ability, but those stipulations ‘must be related and proportionate to the subject matter of the contract’ (Article 44). Another type of qualification criterion, directly defined in the Directive, lays down that candidates may, or indeed must, be excluded from participation on grounds of personal unsuitability. An economic operator who has been convicted of certain criminal offences must always be excluded. In some other cases of misconduct an operator may (but need not necessarily) be excluded, for example if he has been guilty of grave professional misconduct or has neglected to pay social security contributions. Breaches of professional ethics or grave professional misconduct may consist in failure to comply sufficiently with certain provisions of labour law.

3.4 Award of the Contract When the tenders have been opened and tenderers who fail to meet the qualification criteria have been eliminated, the tenders remaining have to be compared. As we have seen, there now remain only two possibilities if the procurement is of a kind to which the Directive is fully applicable. The contract must be awarded either to the tenderer quoting the lowest price or to the tenderer submitting the tender that is most economically advantageous from the viewpoint of the contracting authority (Article 53). In the latter case, in other words, various qualitative factors can be balanced against the price. If the contract is to be awarded to the tenderer quoting the lowest price, the matter is fairly straightforward. Judging what is most economically advantageous can be more difficult, added to which, opinions differ as to the type of criteria to be included in the assessment of what is the most economically advantageous tender. The criteria must, however, be ‘linked to the subject-matter of the public contract in question’, and Article 55 gives examples, environmental characteristics being one of them. It is clear from point 46 of the Directive’s preamble that criteria aimed at meeting social requirements may also be included, but this has not been given expression in the Article.7

7

Part of point 46 reads: Under the same conditions, a contracting authority may use criteria aiming to meet social

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Regardless of whether one is to choose the tender with the lowest price or the tender that is most economically advantageous, there is a possibility of rejecting tenders which are abnormally low. First, however, the contracting authority must give the tenderer an opportunity to clarify the conditions on which the tender is based. The clarifications may, for example, concern the compatibility of the tender with the rules of employment protection and working conditions in the place where the service is to be provided.

3.5 Drawing up the Contract Once the authority has decided which tenderer is to be awarded the contract, it remains for the contract to be drawn up. At this stage it is permissible, under Article 26, to ‘lay down special conditions relating to the performance of a contract’; the literature on procurement sometimes refers to these as ‘additional contract conditions’ or else as ‘special contract conditions’ or ‘performance conditions’. The Article specifically provides that the requirements may include social and environmental considerations. These are instanced in point 33 of the Directive’s preamble.8 At the same time it is stipulated that these contract conditions must be compatible with Community law. Another prerequisite for the contract including conditions of this kind is that they must have been indicated in the contract notice or in the specifications.

4. THE EU LEGAL FRAMEWORK – PROCUREMENT REGULATIONS IN PERSPECTIVE

The Directives on public procurement were adopted by the authority of three provisions in the former EC Treaty, namely Articles 47(2), 55 and 95.9 These make general provision on the right of establishment within the EU and on the

requirements, in response in particular [emphasis added] to the needs — defined in the specifications of the contract — of particularly disadvantaged groups of people to which those receiving/using the works, supplies or services which are the object of the contract belong. 8

Point 33: Contract performance conditions are compatible with this Directive provided that they are not directly or indirectly discriminatory and are indicated in the contract notice or in the contract documents. They may, in particular, be intended to favour on-site vocational training, the employment of people experiencing particular difficulty in achieving integration, the fight against unemployment or the protection of the environment. For instance, mention may be made, amongst other things, of the requirements — applicable during performance of the contract — to recruit long-term job-seekers or to implement training measures for the unemployed or young persons, to comply in substance with the provisions of the basic International Labour Organisation (ILO) Conventions, assuming that such provisions have not been implemented in national law, and to recruit more handicapped persons than are required under national legislation. 9 The corresponding TFEU Articles are numbered 53, 62 and 114.

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EU’s competence to legislate with a view to harmonising the single market. Thus the procurement Directives are not founded on rules concerning the free provision of services or competition. At the same time the Treaty is clearly aimed at guaranteeing realisation of these principles, not only in general terms but also in concrete policy fields, eg in connection with public procurement. These principles have the effect of an obligation to avoid ‘negative procedures’ in the procurement situation, ie to refrain from measures favouring national tenderers. Generally speaking, then, indirect or direct discrimination against tenderers on grounds of nationality must be avoided and no restrictions may be imposed on the free movement of goods or services in this connection. But the Treaty now also includes several articles allotting the European Union a significant role in the promotion of environmental, gender-equality, employment, consumer and social policy objectives.10 When discussing the relationship between EU policy in these fields on the one hand and regulation of public procurement on the other, there is reason to emphasise that the EU has to promote certain objectives in these policy fields, just as much as it must promote the single market and facilitate access to the market for public contracts. As we have already seen, the question of scope for using social clauses in connection with public procurement remained unresolved in many respects when the new EU Directives were adopted in 2004. This has led to divisions of opinion concerning the rules applicable, and to varying interpretations being recommended. In short, there is a twilight zone in which nobody can advise with absolute certainty. One of the most thorough and knowledgeable accounts of the matter has been written by Arrowsmith and Kunzlik, and much of what now follows will rest on their analysis.11

4.1 Limitations of EU Legislative Competence Arrowsmith and Kunzlik assert the importance of carefully delimiting the aim of this regulation.12 Starting with the legal basis of the procurement Directives, they stress that the regulations are intended to guarantee transparency, nondiscrimination and market access across national boundaries within the EU. On the other hand, they maintain, no direct requirement of Member States getting ‘more value for money’ can be inferred from the Directives. While not denying that many Member States themselves can define such a purpose for their legislation or that the practical consequence of the legislation may be more effective use of public money, they stress that the EU is in no way competent to decide how Member States are to manage their taxation revenue or how they are to spend it.

10

See Arts 2, 3 and 6 TEU. Arrowsmith & Kunzlik, Social and Environmental Policies, above n 3. 12 ibid pp 95 ff, above n 3. 11

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Kerstin Ahlberg and Niklas Bruun Ensuring the wise expenditure of public money and improving the quality of public services are not per se objectives that the EC is, in general, competent to pursue, and general power to implement policies to this effect cannot be found in the powers to adopt secondary legislation derived from Article 47(2) EC, Article 55 EC and Article 95 EC, on which the procurement directives are based. Saving public expenditure and improving the quality of services simply do not in and of themselves contribute to the creation of an internal market.

Arrowsmith and Kunzlik also discuss the oft-quoted argument for the Directives having economic efficiency as their objective, namely the fact of the most economically advantageous tender having been introduced as an express award criterion for procurement contracts. They point out that the Directives govern the process leading up to a public contract in the Member States, and that they also define the way in which a contractor is to be chosen in order to meet the requirements of transparency. This, they argue, cannot be taken to imply that economic efficiency constitutes the whole purpose of the Directives as such.13 This, according to Arrowsmith and Kunzlik, has several important implications for the way in which rules on public procurement are to be balanced against rules in other policy fields:14 Firstly, then, the EU rules are not concerned with guaranteeing the efficient use of national resources, nor, secondly, is it the EU’s business to decide how the best balance can be struck between economic efficiency and other policy interests. These, in principle, are issues on which the national legislature should define a standpoint after balancing the order of priorities which the Member State wishes to adopt and deciding on the best means of achieving them (award criteria, contract conditions etc). The Member States can have many reasons for wanting to emphasise efficiency and price in connection with procurement, because they may believe, for example, that strict environmental requirements can limit the number of potential tenderers and raise project costs. But this in any case, Arrowsmith and Kunzlik emphasise, is a choice which should be made at national level.15 The EU should not regulate these matters for the purpose of promoting the single market, and indeed, as has already been made clear, does not even have the power to do so. On the other hand, the Member States’ scope for manoeuvre hinges on whether the expression ‘measures needed for completion of the single market’ is restrictively or widely interpreted. If it is widely interpreted, an effective instrument can easily be created for limiting the Member States’ own internal powers of adjudication.16 A strict attitude to the transparency requirement, for example, can result in the scope for giving consideration to the kind of policy

13

ibid pp 34 ff, above n 3. ibid pp 35 ff, above n 3. 15 ibid p 35, above n 3. 16 ibid p 36, above n 3. 14

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deliberations mentioned above becoming extremely limited, not because they lead to additional expense, reduced competition and awkward procedures but because they can offer increased opportunities of abuse in the sense of favouring national undertakings.

4.2 Role of the EU: To Assess Proportionality But one can also imagine the EU institutions making their own assessments of the importance of the objectives which policy in the other fields must accommodate, compared with viewpoints concerning the single market, when they come to balance the latter against the interests of the Member States. Arrowsmith and Kunzlik emphasise, however, that it is not for the EU legislature or the ECJ to judge how the objectives represented by policy in these fields are to be valued. It is for the Member States to decide whether they wish to promote, for example, social or environmental policy objectives.17 The most the European Union can do is to make a proportionality assessment and assert that the policy conducted at national level entails an unreasonable impairment of the workings of the single market. A clear recognition of the EU having a limited role to play in terms of general principle can ensure that relevant deliberations are taken into account and that the EU is not accorded greater importance than the Treaty allows. In this way the EU can be prevented from trying to strike its own balances between policy for the single market and other policy fields which have nothing to do with the single market.18 This, according to Arrowsmith and Kunzlik, would probably lead to the Member States being conceded greater flexibility than if the EU itself were to be responsible for all the policy-balancing issues which can arise. Within the framework of the equal treatment principle, the Member States can choose to ascribe equal or additional weight to criteria connected to various policy fields than to economic criteria when deciding whether tenderers have submitted equivalent tenders. The idea of the Member States having extensive scope for adjudication also appears, the authors maintain, in the ECJ decisions in Concordia Bus Finland19 and EVN-Wienstrom.20 In the first mentioned case, an environmental criterion was approved which extremely few of the tenderers were able to meet, while in the second an environmental award criterion was approved with 45 per cent weighting and the court underlined that it was incumbent on the Member State to strike the balance.

17 There was support for this premise at the time of the Directive being drafted; see B Bercusson & N Bruun, ‘Labour Law Aspects of Public Procurement in the EU’ in Nielsen & Treumer (ed), The New EU Public Procurement Directives (Copenhagen, DJØF Publishing 2005) 97–116, and S Arrowsmith, ‘An assessment of the new legislative package on public procurement’ (2004) 41 Common Market Law Review 1277–325. 18 Arrowsmith & Kunzlik, Social and Environmental Policies p 36, above n 3. 19 Case C-513/99 Concordia Bus Finland [2002] ECR I-7213. 20 Case C-448/01 EVN AG and Wienstrom [2003] ECR I-14527.

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Thus, Arrowsmith and Kunzlik indicate a number of arguments in favour of the EU taking a liberal line on various policy deliberations connected with public procurement and for Member States being allowed extensive scope for national assessment. The arguments presuppose that the integration of, say, social policy considerations in public procurements is just as legitimate as in other fields. They further emphasise that the Treaty presupposes that environmental protection requirements must be integrated into the definition and implementation of the Union’s policies and activities, in particular with a view to promoting sustainable development.21 In all its activities, moreover, the Union must ‘aim to eliminate inequalities, and to promote equality, between men and women’.22 Even at EU level, then, it is hard to categorically deny that policy considerations concerning other fields have to be integrated in the objective of the public procurement. Here again, then, one cannot onesidedly overemphasise viewpoints to do with the single market. Arrowsmith and Kunzlik find further arguments for their view of the important role of the Member States in this connection in the principle of subsidiarity, which also argues in favour of such deliberations taking place primarily at national level.23 Support for the proposition that social considerations can also be incorporated in EU competition law is to be found in the new General Block Exemption Regulation of 2008.24 This lays down that government support can be given to undertakings in order to employ persons who have difficulty in obtaining employment in the private employment sector – ‘disabled or disadvantaged workers’ in the words of the Regulation. The Regulation presumes that public authorities have cause to take measures to encourage undertakings to hire such workers.25 Thus the authorities have a special responsibility for promoting the hiring of disadvantaged workers, and so clearly this responsibility can also be discharged in connection with public procurement, on condition that the principles of non-discrimination and transparency are complied with.

4.3 Implications of the Lisbon Treaty Arrowsmith and Kunzlik wrote their analysis before the Lisbon Treaty entered into force, and they do not comment on its implications for the regulation

21

Art 11 TFEU. Art 8 TFEU. Arrowsmith & Kunzlik, Social and Environmental Policies p 49, above n 3. 24 Commission Regulation (EC) No 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market in application of Arts 87 and 88 of the Treaty (General Block Exemption Regulation) OJ L 214, 9.8.2008, pp 1–47. 25 ibid point 64. 22 23

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of public procurement. The Lisbon Treaty entailed several new provisions calculated to strengthen the line of interpretation which they represent.26 In the first place, the EU Treaty now defines the EU as a ‘social market economy’ in which ‘full employment and social progress’ are aimed for (Article 3.3 TEU). Previously the treaties only referred to a ‘common market’, a concept with less emphasis on the social aspect. Secondly, it is laid down that the EU Charter of Fundamental Rights is binding and has the same legal status as the treaties. Chapter IV of the Charter, headed Solidarity, sets forth a multiplicity of social rights. Thirdly, through the Lisbon Treaty the EU Treaty acquired a special provision requiring the Union to respect local and regional autonomy (Article 4.2 TEU), at the same time as the subsidiarity principle is highlighted. Fourthly, a revaluation of public services of different kinds is discernible in the new Treaty: services of general economic interest are addressed in Article 14 of the TFEU, at the same time as a special Protocol (No 26) has been adopted concerning services of general economic interest which are not of an economic nature and come outside the scope of the Treaty. Arrowsmith and Kunzlik’s argument is especially weighty on the subject of procurement below the threshold values stated in the Directives and procurements relating to non-priority services. The threshold values are pitched at different levels for different types of procurement contract. If, then, the Member States choose to apply simpler procedures to procurements below the threshold values, it is perfectly possible for them to do so. There is extensive scope here, within the framework of the EU Treaty, for discretionary assessments at national level. But procurements governed in detail by the two Directives also present a number of openings for the factoring in of social considerations.

5. PARALLEL APPLICATION OF PROCUREMENT RULES AND RULES OF LABOUR LAW

Thus, the heaviest constraint on the ability of Member States to stipulate socially justified conditions in connection with their procurement is the general EU law requirement of transparent procedure and competition on equal terms, plus whatever may come to be read into those requirements by the ECJ. The more concrete implications of this are often unclear, however. This, coupled with the knowledge that the issue is controversial, often seems to make Member States and contracting authorities afraid of making mistakes, which in turn leads them to apply an extreme precautionary principle rather than trying to explore the scope available. This also makes it easy to cloak with legal arguments a

26 A Rosenkötter & T Würsig The Impact of the Lisbon Treaty in the Field of Public Procurement, (Brussels, European Parliament report PE 429.988, Policy Department Economic and Scientific Policy A, 2010, pp 4 ff).

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lack of political determination to use procurement as a means of furthering social objectives. Sweden, for example, was among the Member States most eagerly calling for the possibility of including societal considerations in public procurement to be clearly expressed in the Directives when they were being negotiated. But now that they have been transposed to Swedish law, the legislature has not even utilised the scope expressly provided. Sweden has in fact been extremely cautious compared with five other Member States we have studied.27 There is, of course, no disagreement about the operator awarded a public contract being bound to comply with unambiguous, peremptory rules of labour law, such as legislation on working hours or health and safety in the workplace, but it is less obvious what means the contracting authority can employ to ensure that the operator will be reliable. Still more disputed is the extent to which the contracting authority can confer an advantage on contractors who are prepared to take positive measures, such as promoting an even balance of the sexes in the workplace or providing employment for the long-term unemployed. There are also situations where it is undoubtedly permissible, perhaps even mandatory, for the EU rules on procurement to be applied concurrently with rules of labour law, but then it is not altogether easy to tell what applies. We will now turn to consider three of these situations: procurements which may lead to a business changing hands (‘transfer of an undertaking’), procurement of services which may come to be provided by posted manpower and collective bargaining on supplementary pensions and other forms of insurance for public sector employees, where the rules on procurement may prove to be applicable.

5.1 Procurement and Transfers of Undertakings According to a study made by the Swedish Competition Authority, it happens that Swedish authorities in their procurement of services require the operator who is awarded the contract to take over personnel from the authority itself or from a previous contractor. There are also situations in which the tenderer who is prepared to take over personnel – without this being an absolute stipulation on the authority’s part – receives extra points for this when the tenders are evaluated. One problem with such requirements, from the viewpoint of procurement law, may be that they limit the possibilities for prospective tenderers to utilise the competence already present in their own organisation. At the same time there is no doubt that this can sometimes be permissible. In certain cases it is even obligatory, due to the provisions on the transfer of undertakings or parts of undertakings in Section 6b of the Employment Protection Act (LAS), which in turn is based on the EU Directive on the rights

27 Ahlberg & Bruun, Upphandling och arbete, pp 46–108, above n 2. See also Caranta & Trybus, The Law of Green and Social Procurement, above n 3.

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of employees in the event of transfers.28 Accordingly, if an undertaking or part of an undertaking passes from one employer to another, then the employment contracts of the undertaking’s employees automatically pass to the new employer, and the transfer of the undertaking is not in itself an objective ground for dismissing the employees. This applies, not only to a direct transaction between a previous employer and a new one but also when an undertaking or an authority makes a new procurement leading to a change of contractor.29 Normally the new employer will then be obliged to apply for one year the employment conditions applying to the employees he has taken over under their collective agreement with the former employer. This rule, laid down in Section 28 of the Co-determination Act, is also based on the Transfers Directive, but is conditional on there having been a real ‘transfer of undertaking’ in the sense of the Act/Directive. In order, then, to decide whether requirements or preferences concerning the take-over of personnel in a concrete procurement is compatible with the rules of procurement, we need, firstly, to know whether the contract can possibly entail a transfer of undertaking in the sense of the Act/Directive. Should this be so, the contracting authority must require the supplier to take on the personnel; this is not left to the discretion of the parties. The problem is that ‘transfer of undertaking’ is no easy term to define. It is not uncommon for the authority itself to have arrived at the conclusion that the procurement will mean the transfer of an undertaking and to indicate as much in the tendering invitation, but a transfer may still occur even if it has not been mentioned there, partly because some of the questions deciding this may not have been settled at the time of tenders being invited. At worst, the prospect only becomes clear in subsequent litigation, with the employees affected demanding their rights under LAS in view of a transfer of undertaking having occurred. There is a large volume of ECJ case law in which attempts are made to pin down what is and is not a transfer of undertaking. A full analysis of that case law would be beyond the scope of the present chapter, and we will content ourselves with a general description in order to convey some idea of the issues which may be involved when deciding this matter. Article 1.1.b of the Directive states that the reference is to ‘an economic entity which retains its identity, meaning an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary’. In ECJ case law the term ‘entity’ has been defined as ‘an organized grouping of persons and assets facilitating the exercise of an economic activity which pursues a specific objective’.30 As Article 1.1.b makes clear, the

28 Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses, OJ L 82, 22.3.2001, pp 16–20. 29 C-172/99 Liikenne [2001] ECR I-745. 30 C-13/95 Süzen [1997] ECR I-1259.

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entity must also ‘retain its identity’ in order for a transfer of undertaking to occur in the sense of the Directive. When judging the existence or otherwise of such an identity, all circumstances attending the transfer must be taken into account, but the ECJ has particularly highlighted seven criteria of importance:31 1. the type of undertaking or business involved, 2. whether or not tangible assets, e.g. buildings and chattels, have been transferred, 3. the value of any intangible assets transferred, such as goodwill and trademarks, 4. whether the new employer has taken over the greater part of the workforce, 5. whether customers have been transferred, 6. the degree of similarity between the activities carried on before and after the transfer, and 7. the period, if any, for which those activities were suspended. The list, then, is not exhaustive, and different factors carry different weight in different cases. The weight to be ascribed to a particular factor in the assessment depends above all on the type of activity involved in the transaction. If it is an activity where tangible assets such as real estate and production materials are of great importance, the second criterion in the above list may carry more weight than if the activity is above all dependent on manpower and the transfer or nontransfer of tangible assets is of minor importance, to quote one example.32 A desire on the part of the new employer to take over a large part of the workforce – which may be in his own interest and occur on his own initiative – can thus constitute an argument for him even being obliged to take over the (whole of the) workforce concerned. The ECJ case law clearly shows that the question of whether or not an undertaking has been transferred must be assessed on the merits of each individual case. When the issue is addressed in Sweden by lawyers whose main expertise lies in the field of procurement law, the assessment seems, on the contrary, to show a stereotyped tendency. Thus in one appeal case under the Public Procurement Act, the Göteborg (Gothenburg) County Administrative Court found that the public transport mandator had no authority under the Employment Protection Act to require the new transport operator to take over the former operator’s employees. The only reason given by the Court for its conclusion was that in the Swebus case33 – concerning a change of contractor for regular bus services in another county four years previously – the Labour Court had found no transfer of operation to have taken place, and that this view ‘has been confirmed’ in two subsequent cases concerning, respectively, a change of contractor for the running of a transport assistance order processing centre and a change of contractor for property maintenance. As far as can be seen from this judgment, which was later

31

Judgment of the European Court of Justice in case 24/85 Spijkers [1986] ECR I-1119. C-458/05 Jouini and others [2007] ECR I-7301. 33 AD 1998 no 163. 32

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upheld by the Administrative Court of Appeal, both courts ruled that there was no transfer of undertaking, without a single argument having been put forward or rebutted which, in ECJ case law, is germane to an assessment of whether there is a transfer of undertaking in the case concerned. The only arguments presented in the judgment refer to procurement law.34 Procurement experts have clearly taken the Swebus decision to mean that, by definition, a change of contractor for regular bus services can never imply a transfer of undertaking.35 This may possibly be due to an overly extensive interpretation of the ECJ judgment in the Liikenne case, which came later than the Swebus decision and, in its way, confirms the Labour Court’s standpoint – in that particular case. There, the Labour Court attached critical importance to the fact of no buses having been taken over from the former contractor by the new one, and in the Liikenne case the ECJ ruled: However, in a sector such as scheduled public transport by bus, where the tangible assets contribute significantly to the performance of the activity, the absence of a transfer to a significant extent from the old to the new contractor of such assets, which are necessary for the proper functioning of the entity, must lead to the conclusion that the entity does not retain its identity.36

This can sound categorical, but at the same time the ECJ emphasises, as usual, that all the characteristics of the individual transaction have to be taken into account, and the reply to the Finnish Supreme Court’s questions applies ‘in a situation such as that in the main proceedings’. On this point Blekemo stresses that the factual circumstances connected with the procurement of regular bus services in Sweden often differ from those prevailing in the Swebus and Liikenne cases.37 The contractors seldom own the buses: they rent them. What is more, the buses are often rented for the duration of the transport contract, so that there is no rental agreement which the new contractor can take over. On the contrary, it is common for the new contractor to drive the same buses as the previous contractor did, but rented in his own name. This ought reasonably to affect the assessment of whether the change of contractor implies a transfer of undertaking, but as far as is known the matter has never been adjudicated. When, then, can requirements/wishes for the transfer of personnel be compatible with the rules on procurement? This depends partly on the purpose for which the requirements/wishes are stated. The purpose of the LAS enactment and the Transfers Directive is to protect the employees, and this has guided the ECJ in its interpretation of the Directive. In the literature on procurement, such purposes are termed ‘foreign elements’. But requirements/wishes for the transfer

34 Gothenburg County Administrative Court (Länsrätten i Göteborg), case No 2044-98, judgment 13 May 1998; Gothenburg Administrative Court of Appeal (Kammarrätten i Göteborg ), case No 3696-1998, judgment 28 August 1998. 35 See A Blekemo,’En verksamhet är en verksamhet är en verksamhet’ in K Ahlberg (ed), Vänbok till Ronnie Eklund (Iustus, 2010). 36 Pt 42. 37 Blekemo, ‘En verksamhet är en verksamhet’, p 55, above n 35.

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of personnel can also be justified on grounds fully in keeping with the purposes of the rules on procurement. One such ground may be that the transfer has a bearing on the quality of the service to be procured. In the Swedish Competition Authority’s analysis of 300 tendering documents, there were 17 requiring the party awarded the contract to take over personnel. All but four of these concerned procurement of homehelp services/serviced housing. Almost without exception, the reason given for the personnel being transferred to the new employer was the importance of staffing continuity to the users/patients. Few are likely to dispute that this can be an important qualitative aspect, eg in dementia care or home-help services for seniors, and so a requirement of this kind ought to be fully in keeping with the spirit of the rules on procurement. After all, the quality of the service offered by the tenderers is one of the criteria which contributes to the decision about what is most economically advantageous. When the state-owned company for motor vehicle inspection, Svensk Bilprovning, was procuring calibration of testing equipment, reasons of quality were again invoked for the contractor taking over personnel, though not as a requirement but as a desideratum. The tendering documentation read: ‘All 17 of the service technicians named above have Swedac-approved training and competence for accredited calibration assignments. To ensure that the quality of calibration and servicing of test equipment meet the exacting requirements for an accredited activity, the Company would like to see the service technicians concerned offered employment by the tenderer with whom a service agreement is concluded’. The Competition Authority’s study does not show how much importance was attached to this desideratum when deciding which tender was most economically advantageous. Was it used as an award criterion, so that the tenderer willing to take over the service technicians scored higher points than a tenderer not wishing to do so, or were the tenders evaluated without this point being taken into consideration? We do not rule out the possibility of using it as an award criterion, though one prerequisite would probably be for this competence to be truly so unique that it is very hard to find. It might have been more viable from a procurement viewpoint if the Company had worded its desideratum differently, this being an operation which they had hitherto run with their own employees but were now in the process of putting out to contract. If the operator awarded the contract does not hire the service technicians, the Company itself will probably incur the expense and trouble of trying to find them new jobs or getting rid of them if they are made redundant. It must then be perfectly arguable that a tender from a contractor who is prepared to take over employees is economically more advantageous to the contracting authority than a tender from an operator who is not prepared to do so. As we see it, then, Community law does not place any obstacle in the way of points in the award of the contract being given to tenderers who agree to take over personnel when an operation hitherto conducted by the authority under its own aegis is being outsourced.

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Assessment becomes more difficult when the authority is procuring an operation which has already been put out to contract, with the result that a new contractor will now be taking over. If the change of contractor unquestionably implies a transfer of undertaking in the LAS sense, then the contracting authority not only may, but must, require the employees to be allowed to change from the former employer to the new one. But, as we have now described, it is not always easy to tell whether this is the case, even if circumstances incline in one or the other direction. Suppose an authority is putting the operation of its staff canteen up for new procurement. The canteen will be on the same premises as before, the contractor will be able to use the same kitchen equipment and the clientele will be the same as before. There is much to suggest that any change of contractor will be a transfer of undertaking. But what if the new contractor has a wholly new restaurant concept for the old premises, requiring substantial investment in new equipment, and, for this reason, the restaurant has to be kept closed for a transitional period? Here we can only say that two instruments with EU backgrounds collide with each other, one requiring documentation, predictability and transparency, and the other presupposing an assessment of all circumstances in the individual case in order to see whether it is at all applicable. There is reason here to quote what the ECJ had to say in the Liikenne case concerning the relationship between the Transfers Directive (at that time No 77/187) and the rules on public procurement (the then Directive 92/50), which is interesting, not least in view of what point 24 says, indirectly, concerning the degree of predictability and transparency which can be reasonably required: Directive 92/50 is not intended to exempt contracting authorities and service providers who offer their services for the contracts in question from all the laws and regulations applicable to the activities concerned, in particular in the social sphere or that of safety, so that offers can be made without any constraints. The aim of Directive 92/50 is that, in compliance with those laws and regulations and under the conditions it lays down, economic operators may have equal opportunities, in particular for putting into practice their rights of freedom of establishment and freedom to provide services. 23. In such a context, operators retain their room to manoeuvre and compete with one another and submit different bids. In the field of passenger transport by scheduled bus services they may, for instance, adjust the standard of facilities of the vehicles and their performance in terms of energy and ecology, the efficiency of the organisation and methods of contact with the public, and, as with any undertaking, the profit margin desired. An operator who makes a bid must also be able to assess whether, if his bid is accepted, it will be in his interests to acquire significant assets from the present contractor and take over some or all of his staff, or whether he will be obliged to do so, and, if so, whether he will be in a situation of a transfer of an undertaking within the meaning of Directive 77/187. 24. That assessment, and that of the costs involved in the various possible solutions, are also part of the workings of competition and, contrary to Liikenne’s submissions, cannot be regarded as disclosing an infringement of the principle of legal certainty. Any action in the field of competition will be subject to some uncertainty in relation to a number of factors, and it is the responsibility of operators to make realistic analyses.

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Admittedly, unlike its competitors, the undertaking which formerly had the contract knows precisely the costs it incurs in order to provide the service which is the subject of the contract; but this is inherent in the system and cannot justify not applying the social legislation, and that advantage is probably offset in most cases by the greater difficulty for that undertaking of changing its operating conditions in order to adapt them to the new conditions of the call for tenders, compared with competitors who make a bid from scratch.

Those responsible for procurements, then, must bear both these perspectives in mind. Point 23 in the above quotation is an excellent illustration of the fact that several of the questions of consequence for whether or not a transfer of undertaking is deemed to have taken place (eg if the contractor is to take over substantial tangible assets) may not even have been settled at the time of tenders being invited. How is the contracting authority to deal with this uncertainty in purely practical terms? After all, the tenderer must also be able to judge ‘whether, if his bid is accepted …he will be in a situation of a transfer of an undertaking within the meaning of Directive 77/187’. If the authority judges that the procurement may possibly entail transfer of an undertaking, with the labour-law consequences which this involves, then to our way of understanding it should be obliged to indicate as much in the tendering documentation, so that the tenderers can take it into account.

5.2 Procurement and Posting of Employees In the procurements which are subject to Union law, ie procurements of crossborder interest, the question may also arise of applying the Posted Workers Directive conjointly with the rules on procurement. The crux then is the extent to which the authority can prescribe what rates of pay are to apply within the scope of the contract and what the employment conditions are to be. This may concern conditions both for employees of the tenderer who wins the contract and employees of any subcontractors who may come to be engaged. The starting point, of course, is the possibility of indicating in the contract notice or the specifications the requirements applying with regard to working conditions – this is made expressly clear both by the EU procurement Directives and by Swedish procurement legislation. Generally speaking, this is found to be informative and appropriate. It is usually non-contentious, especially with regard to requirements laid down by law or in statutory instruments (or international agreements) and binding on all. Sweden has chosen not to ratify ILO Convention No 94, the Labour Clauses (Public Contracts) Convention.38 Originally there was a consensus between the

38 See K Krüger, R Nielsen, & N Bruun, European Public Contracts in a Labour Law Perspective (Copenhagen, DJØF Publishing, 1998) and C McCrudden, Buying Social Justice Equality, Government Procurement & Legal Change (Oxford University Press, 2007).

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social partners to the effect that this was unnecessary, the interests which the Convention is designed to protect being already safeguarded by the Swedish collective bargaining system.39 The decision against ratification, which was taken in 1950, was of course founded on purely national deliberations. In more recent years, the unions have changed their mind and the issue has been raised, not least in Government Commission remits and reports on public procurement. Although Sweden, then, has not pledged itself to give effect to the Convention, it has been a widespread practice among Swedish authorities to stipulate that contractors pay wages in accordance with current collective agreements. But in the case of contracts performed by foreign undertakings with posted workers, Sweden is bound by ECJ case law, and particular problems have in that quarter been caused by the Laval and Rüffert cases, because normal Swedish collective agreements do not meet the requirements which the Court defined in those cases for terms in collective agreements to be extendable to posted workers. Nor does Sweden have any statutory minimum wage or any system of declaring collective agreements universally applicable. Sweden’s Posting of Workers Act has therefore been revised with effect from 15 April 2010. Under the new rules the unions, if they intend resorting to industrial action, can only demand that these foreign providers of services pay minimum wages which are clearly defined in nationwide collective agreements. If the foreign operator is prepared to sign a Swedish collective agreement without pressurisation in the form of industrial action, then of course no such limits exist, and in fact this often happens. Similarly, a foreign undertaking choosing to hire Swedish manpower in Sweden is compelled as a rule to pay wages at the going rates as per collective agreement, but in this case the wages are fixed outside the procurement procedure. What implications, then, does this hold for procurement by public authorities? Firstly, it should be perfectly feasible to indicate in the tendering documentation which collective agreements apply in the industry concerned. If the authority chooses to indicate a concrete wage amount, it will presumably be hard to indicate anything but the minimum wage in the tendering documentation, because the unions cannot make such far-reaching demands concerning collective agreements and wage levels on foreign suppliers as on Swedish ones. The paradoxical outcome seems to be that to most tenderers the tendering documentation is made less transparent than it would be if one could indicate the current level of wages in the place where the work is to be performed. Secondly, as we see it, there is nothing to prevent the authority making performance of the contract conditional on the operator and any subcontractors paying at least a minimum wage clearly defined in national collective agreements, ie collective agreements meeting the requirements of the revised Posting of Workers Act. One problem in this connection is that the majority of collective 39 See K Ahlberg, ’Danmark och Norge försvarar arbetsklausuler i offentliga kontrakt’ EU & arbetsrätt no 2/2008 p 1.

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agreements in the industries where posting of workers is most prevalent do not use the minimum wage concept. On the other hand they generally contain clearly stated lowest rates of pay. It is a moot point whether this is the same as minimum wage in the sense of the Posted Workers Directive or whether the latter includes more than the lowest wage. At all events, there are at least collectively negotiated lowest rates of pay which can already be used as conditions of contract for most industries in connection with procurement, whatever ‘minimum rates of pay’ may be in the sense of the Posted Workers Directive. Within Sweden’s LO (Trade Union Confederation), work is in progress with a view to adapting collective agreements in industries exposed to foreign competition to the new conditions. When procuring services in industries where there is no collective agreement meeting these requirements, the contracting authority cannot make any stipulations regarding the wages the operator is to pay its employees. Nor is it possible, in connection with public procurement, to stipulate that the operator will be bound by the applicable collective agreement. 5.3 Collective Bargaining and Procurement 5.3.1 Introduction One issue much discussed recently concerns implementation of the rules on public procurement to pension services based on collective agreements. Attention was drawn to this issue by the European Commission filing an action against Germany in case C-271/08.40 The point at issue in the case was whether the management of collectively agreed pensions for public sector employees must be made a subject of procurement. 5.3.2 The German Pension Case C-271/08 The background to the action was the right, according to German law,41 of an employee to demand from the employer that part of the future earnings to which he or she is entitled, to be paid into an occupational old-age pension scheme (conversion of earnings). The provisions of this law stipulate that to the extent that entitlement to earnings is based on a collective agreement, conversion of earnings may be affected in respect of that entitlement only to the extent regulated in a collective agreement. Under the collective agreement TV-EUmw/VKA for conversion of earnings for local authority employees in the public sector, the local authorities or local authority undertakings are responsible for implementing such conversion.42

40

C-271/08 Commission v Germany [2010] not yet published in ECR, see OJ C 223, 30.8.2008

p 27. 41 Gesetz zur Verbesserung der betrieblichen Altersversorgung (BGBI) (Law on the enhancement of occupational old-age pension) as amended by the law of 2008 (the BetrAVG). 42 There was a similar collective agreement between the employers’ federation and another trade union.

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According to Paragraph 6 of the collective agreement, the conversion must be entrusted to external public social insurance institutions or to an undertaking in the Sparkassen-Finanzgruppe (savings bank group) or a local authority insurance body. Normally, all employees of local authorities or local authority undertakings are insured under a group insurance contract, which involves agreements on conversion of earnings between the employers and the abovementioned establishments. Employees covered by the collective agreement are granted the right to demand from their employer the partial conversion of their future entitlement to earnings into pension savings. EU legislation on public procurement: Services in respect of occupational old-age pensions are covered by the EU procurement Directives (92/50 and 2004/18) and an invitation to tender for such services must therefore be launched throughout the EU. The European Commission’s action in this case was based on the fact that German local authorities or local authority undertakings had awarded service contracts in respect of occupational old-age pensions directly to such bodies or undertakings referred to in Paragraph 6 of the collective agreement, without a call for tenders at European Union level. Thereby, the Federal Republic of Germany had failed to fulfil its obligation to ensure compliance with the requirements regarding the procurement process as prescribed in the Directives. Germany’s argumentation: The German state opposed the action, and submitted three different arguments, which in brief involved the following:43 – The pension insurance contracts at issue fall within the employment relationships and do not therefore constitute public contracts. The nature and subject-matter of the contracts mean that they fall outside the field of application of Directives 92/50 and 2004/18. – Local authorities and local authority undertakings do not act as ‘contracting authorities’ within the meaning of the Directives in this context, but as employers and payments offices for the purposes of insurance contributions. – Application of public procurement law to the award of the contracts at issue would be contrary to the autonomy of management and labour protected in Article 9 (3) of the German Basic Law (Grundgesetz). The Court’s answer: The Court recognises that the right to bargain collectively and to conclude collective agreements are afforded special protection in international legal instruments, in EU law (Article 28 of the Charter of Fundamental Rights of the European Union and Article 152 TFEU) and in German Basic Law. The Court also emphasises that the German collective agreement at issue has a clear social objective. However, these factors ‘...cannot, in themselves, mean that local authority employers are automatically excluded from the obligation to comply with the

43 Both Denmark and Sweden intervened on Germany’s behalf in the case, supporting these arguments.

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requirements stemming from Directives 92/50 and 2004/18, which implement freedom of establishment and the freedom to provide services in the field of public procurement’ (pt 41). Furthermore, the Court asserts that exercise of the fundamental right to bargain collectively must be reconciled with the requirements stemming from the freedoms protected by the FEU Treaty and the fact that an agreement or an activity is excluded from the scope of the Treaty provisions on competition (the Court refers here to Case C-67/96 Albany and Case C222/98 van der Woude invoked by Germany) does not automatically mean that that agreement or activity is also excluded from the obligation to comply with the requirements stemming from the provisions of Directives 92/50 and 2004/18, since those two sets of provisions are to be applied in different circumstances. Finally, unlike the objective of enhancing the level of the pensions of local authority employees, the designation of bodies and undertakings which provide pensions does not affect ‘the essence of the right to bargain collectively’ (pt 49). In light of the foregoing, the fact that the contract awards at issue follow from the application of a collective agreement does not, in itself, result in the present instance being excluded from the scope of Directives 92/50 and 2004/18 (pt 50). The question then arises of reconciliation of the requirements related to attainment of the social objective pursued here by the parties to the collective bargaining with the requirements stemming from Directives 92/50 and 2004/18. According to the Court, it must be stated that Paragraph 6 of the TV-EUmw/ VKA effectively disapplies the rules stemming from Directives 92/50 and 2004/18 completely, and for an indefinite period, in the field of local authority employees’ pension saving. The Court also states that it is possible to ‘reconcile application of the procurement procedures with the application of mechanisms, stemming, in particular, from German social law, which ensure that workers or their representatives participate, in the local authority or the local authority undertaking concerned, in the taking of the decision concerning selection of the body or bodies to which implementation of the salary conversion measure will be entrusted’ (pt 55). The Court goes on to state the following: – application of the procurement procedures cannot preclude the call for tenders from imposing upon interested tenderers conditions reflecting the interests of the workers concerned; – the procurement procedures cannot preclude elements of solidarity. A call for tenders can specify the conditions to be complied with by tenderers in order to prevent, or place limits on, workers interested in salary conversion being selected on the basis of medical grounds; – the Directives on public procurement contain rules enabling contracting authorities to satisfy themselves as to the professional ability and financial standing of tenderers.

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Therefore, it is to be concluded that compliance with the Directives concerning public service contracts does not prove irreconcilable with attainment of the social objective pursued by the signatories of the TV-EUmw/VKA. The Court then examines in detail whether the contract awards at issue fall within the conditions for application of Directives 92/50 and 2004/18. The Court notes that the employers exerted influence, at least indirectly, on the content of the relevant collective agreement. The agreement is of direct economic benefit to the local authority employer, who ‘shall be responsible for ensuring the provision of the benefits he has guaranteed even where he does not implement the scheme directly’ (pt 77) and who pays the premium to the engaged insurer. The Court also notes that the exception laid down for employment contracts in Article 16(e) of Directive 2004/18, which as a derogation from application of the Directives concerning public service contracts must be interpreted strictly, cannot extend to a provision of services which, as in the present case, is founded on a contract between an employer and an undertaking providing pensions. Finally, in examining whether the application thresholds for Directives 92/50 and 2004/18 have been exceeded, the Court concludes that this has been the case.44 Consequently, Germany loses the case, having failed to fulfil its obligations under the procurement Directives by not ensuring that pension services provided to employees in the local authority sector were contracted in accordance with the EU procurement Directives. 5.3.3 Consequences The ruling can be criticised for having paid insufficient regard to specific considerations of labour law. The ultimate issue concerns the way in which workers utilise their earnings, and the fact of their having opted, in collective negotiations through their union, to appoint an insurance provider is perhaps not necessarily an issue which must be made a subject of public procurement. The Court also appears to have paid extremely little attention to the fact that its ruling implies different treatment of public sector employees: private sector employees will still be at liberty to agree with their employers on insurance arrangements whereby they nominate insurance providers without any procurement procedure. It is perhaps not wholly consistent of the Court to treat public sector employees differently in this matter. The ruling does, however, open up possibilities of flexibly combining procurement with collective bargaining. The Court notes that employees can be given a right of co-determination in the process, and there is nothing in the ruling to suggest that the parties in collective negotiations cannot choose freely between building up a central or a local procurement system. The fact that the German system is based on a choice of insurance provider at local level does not

44

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in any way imply any standpoint favouring a local system. From the extensive discussion in the case concerning the way in which the value of the agreement was to be calculated, we may perhaps infer that an agreement structure aimed at evading the duty of procurement, by splitting up the agreements so as not to exceed the threshold values, may come to be challenged by the Court. Otherwise, the direct references to a procurement not needing to jeopardise the social objectives of collective agreements and to the possibility of preserving a solidarity aspect, even when an insurance company is chosen following an invitation of tenders at Union level (p 58), clearly suggest that it is permissible to construct conditions at central level whereby the use of medical criteria for excluding workers is prevented. In the light of the Court’s general reasoning on pp 55–62, central procurement must be possible, especially as regards group life insurance, which can equalise risks of illness and death between different groups of employees. Thus the ruling makes public procurement a part of collective bargaining in the public sector, though it is too early to say just how the two can be integrated in practice.

6. CONCLUSION

So far we have only witnessed the beginnings of a legal development laying down the principles whereby the rules of Union law on public procurement can be reconciled with labour law. It is, at all events, clear that peaceful coexistence between these two areas will require measures to be taken both at national level by the Member States and by the various EU institutions. The Member States are faced with the challenge of trying to adapt collective bargaining and rules on the posting of workers to the guidelines laid down by the ECJ. When, sooner or later, those solutions come up for adjudication in the ECJ, there will be every reason to allow for the distinctive characteristics of social policy solutions in different countries. This is compatible, not only with the principles of the Lisbon Treaty but also with the fact that public procurement was never intended to undermine national instruments and solutions of social policy.

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6 EU Equality Law – Comprehensive and Truly Transformative? ANN NUMHAUSER-HENNING*

1. INTRODUCTION

Discrimination law is a significant area of current labour law. Yet it is quite a late development. In the book ‘The Making of Labour Law in Europe’1 which describes the development of labour law in the first half of the twentieth century, there is no chapter on equality issues. In the follow-up, ‘The Transformation of Labour Law in Europe’,2 Bob Hepple depicts ‘equality at work’ during the last fifty years in the European perspective as a development in four stages: Human rights in the new world order (1948–58); formal equality (1957–75); substantive equality (1976–99); and comprehensive and transformative equality (2000–04). During the first period, the development of equality law was seen as a function of the adoption of international instruments such as the UN Declaration of Human Rights in 1948, and the ILO Conventions No 100 on Equal pay for Men and Women in 1951 and No 111 on Discrimination in Employment in 1958, which, followed up by national constitutions, defined equality as a fundamental human right. The second stage centred around the implementation of the principle of formal equality introduced in EU law by Article 119 in the Treaty of Rome in 1957. The third stage, born out of the realisation of the shortcomings of formal equality, was characterised by a new focus on substantive equality or equality in practice. During the fourth period, equality legislation broadened in scope to cover a growing number of grounds of unfair discrimination –

* LLD, Professor of Civil Law at Lund University. She is head of the Norma Research Programme at the Law Faculty, Lund University and inter alia member of the European Commission’s Network of Legal Experts on Equal Treatment between Men and Women and Network of Legal Experts for Training and Reporting on European Social Security. 1 Bob Hepple (ed), The Making of Labour Law in Europe, A Comparative Study of Nine Countries up to 1945 (London and New York, Mansell Publishing Ltd, 1986, reprinted Oxford, Hart Publishing, 2010). 2 Bob Hepple and Bruno Veneziani (eds), The Transformation of Labour Law in Europe, A Comparative Study of 15 Countries 1945–2004 (Oxford, Hart Publishing, 2009).

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not only confined to working life – and took a proactive approach stressing ‘public measures to remove defined systemic inequalities and to achieve social and economic equality’.3 Hepple sees this as ‘a response to the growing social and economic inequalities between and within states under the impact of global capitalism’.4 These stages are, according to Hepple, not to be seen as precise periods but rather ‘a progression or general trend of policies and laws’.5 However, from an overall perspective, he depicts a development from formal to comprehensive and truly transformative equality. At the heart of equality law, there has always been the contradiction between formal and substantive, or material, equality.6 Bans on discrimination have traditionally been designed in the liberal tradition, built upon the Aristotelian thesis that ‘what is alike shall be treated alike’ and thus formal equality. They are also designed as individual rights ‘in the negative’ and based on a complaintsled model.7 Behind any non-discrimination legislation is, however, the fact that unacceptable detrimental treatment of a certain group has been identified at a societal level. Formal equality has, generally speaking, proven inadequate to make a significant change at the macro-level for the group to be protected and to create substantive equality. The author has, on several previous occasions, questioned the ‘liberal straitjacket’ of equality law and the limitations that this implies for substantive equality.8 She has also warned against the trend of ‘Single-Non-Discrimination Acts’ that have followed the Amsterdam Treaty, extending discrimination protection to new groups in society. There is, in the author’s view, a risk that legal intervention is focusing on formal equality as the common minor denominator, instead of meeting the real needs of equality of the different groups.9 However, any consideration of the future requires an understanding of the past. Thus, following a section on the origins of equality law, this chapter reviews, briefly, previous developments in the ‘outer’ dimension of equality law, in terms of Treaty developments pre- and post-Amsterdam, culminating with the Lisbon Treaty. This description is followed by a more detailed description of the evolution of the ‘inner’ dimension of non-discrimination law highlighting

3

ibid pp 129 ff. ibid p 130. 5 ibid. 6 Compare to Sandra Fredman, Discrimination Law, Clarendon Law Series (Oxford, Oxford University Press, 2002, reprinted 2009) Ch 1. 7 The complaints-led model implies that the ban on discrimination is activated ex-post by individuals claiming an act of discrimination. Compare to Sandra Fredman, Making Equality Effective, The Role of Proactive Measures, Report from the European Network of Legal Experts in the Field of Gender Equality (European Commission, 2009) p 10. 8 See eg Ann Numhauser-Henning, ‘On Equal Treatment, Positive Action and the Significance of a Person’s Sex’ in Ann Numhauser-Henning (ed), Legal Perspectives on Equal Treatment and NonDiscrimination (The Hague, Kluwer Law International, 2001). 9 See also Ann Numhauser-Henning, ‘EU Sex Equality Law Post-Amsterdam’ in Helen Meenan (ed), Equality Law in an Enlarged European Union, Understanding the Article 13 Directives (Cambridge, Cambridge University Press, 2007). 4

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crucial concepts and normative answers in an attempt to resolve the conflict between formal and substantially effective non-discrimination regulation.10 Finally, the implications of the current state of affairs is discussed, as regards EU equality law following the Lisbon Treaty – does it, as Hepple indicates, really hold a promise of comprehensive and truly transformative equality?

2. ON THE ORIGINS OF EQUALITY LAW

Generally speaking, the reason for the legislator to consider anti-discrimination legislation for the protection of a certain group is that unacceptable differential treatment – social injustice – has been identified in the real world and at a structural level. Not only an individual but a group has been identified as being worse off than others. This means that anti-discriminatory legislation is connected with processes of normative change. Processes of normative change are, in turn, connected with processes of material change. As a consequence of these changes, differential treatment, previously regarded as perfectly legitimate, is transformed into impermissible discrimination. This is what happened with the traditional perceptions in preindustrial societies, which rested on complementarity between women and men in society, and also with the compromise between this view and the indifference of early industrial society articulated in the male breadwinnermodel. With social change and women’s integration in the labour market, the formerly dominant view became unacceptable, and bans on sex discrimination were introduced to change it.11 Another significant basis for differential treatment is the degree of closeness within or belongingness to a certain group. Any legal order can – especially following the French revolution – be said to be built on the principle according to which ‘like shall be treated alike’, or formal equality. However, the normative structure of society does not amount to a presumption that everybody should treat everybody else in just the same way. Society is made up of different normative circles. The relevant criterion for belongingness may be kinship, citizenship, ethnic origin, or residence in a certain geographical area. The principle only applies to one’s own group, and differential treatment of those who do not belong to it is regarded as perfectly legitimate – they are not similarly situated. Any legal system implies perceptions of belonging and exclusion. Earlier systems were thus frequently founded upon natural loyalty. More complex structures of a more administrative character developed later as a result of political and societal

10 Evolution in the ‘outer’ dimension refers to adopted primary or secondary law instruments whereas the ‘inner’ dimension refers to normative perceptions, often manifested in case law and which only later is made explicit as part of a legal instrument. 11 See eg Anna Christensen, ‘Structural Aspects of Anti-Discriminatory Legislation and Processes of Normative Change’ in Ann Numhauser-Henning (ed), Legal Perspectives on Equal Treatment and Non-Discrimination (The Hague, Kluwer Law International, 2001).

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developments – such as the Nation State and now the EU! These structures are built on more abstract perceptions of justice and belonging. Any legislated or other community creates thus not only belonging, but also exclusion. Bans on discrimination are endeavours aimed to overcome such barriers, and this is done by introducing other normative values such as solidarity, integration, inclusion and pluralism – here again, the EU is an excellent example.12 Discriminatory behaviour can be said to be based on categorical perceptions or prejudice as well as statistical evidence, which victimise the individual for generalised differences. The origin of these perceptions and/or statistical differences are in principle directly or indirectly related to societal and normative perceptions associated with a certain group, as well as to societal practices that emerge from these. The goal of non-discrimination law is thus, typically, to change hitherto normative perceptions and to promote social justice and integration – at both an individual and societal level. Such perceptions, however, have a considerable normative impact – legitimacy – and to intervene in the form of bans on discrimination is generally a difficult task. In relation to the European Community (now EU) the origin of equal treatment law may appear somewhat different to what has been described thus far. The Community or Union is a political and administrative entity of limited competences and at a superficial level the reason for there being an Article 119 and a gender-related equal pay clause in the original 1957 Treaty of Rome is of a more instrumental character. The historical background to the principle of equal pay in the Treaty of Rome is found in the fact that France, by the time of the introduction of the Treaty, had already introduced the equal pay principle into its national legislation. The reason for its incorporation in the Treaty was that France was anxious to protect its textile industry from being threatened by competition as a result of the low wages of women in the Benelux countries. As Anna Christensen puts it: The principle of equal pay in the original Treaty of Rome was thus not intended to create equality between the sexes in any general sense. Working life and social insurance in the original Member States were constructed around the family and the complementary division of labour between the sexes. The principle of equal pay was not really intended to do away with this order of things. It had a much more limited purpose, namely that of preventing unfair competition with low women’s wages.13

The prohibition of nationality discrimination was also there from the beginning. It is, of course, closely connected to the constitutive idea of a European Community with an internal market. It also reflects the typical function of equality law to promote new perceptions on belonging, as described above. However, it can be said that the rules on non-discrimination in the original Treaty were basically ‘market rights’. Later, the social dimension of a legal

12 13

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requirement of equal treatment between men and women became more overt. Gradually, the principle of equal treatment between men and women has gained a more general standing, as has the social dimension in Union law from an overall perspective. This evolution can be followed through Treaty amendments, and is charted, albeit briefly, in the next section.

3. EQUALITY LAW EVOLUTION – THE ‘OUTER’ DIMENSION

3.1. Pre-Amsterdam The history of EU equality law begins with the original Treaty of Rome. Apart from the ban on nationality discrimination – ‘the keystone of integration’14 – the right to equal pay between men and women thus appeared in Article 119. The next steps in Treaty developments are related to the Single European Act of 1986, followed by the Community Charter on fundamental social rights for workers of 1989, and later on by the Maastricht Treaty on the European Union of 1992. Although the changes in relation to social policy in the Single European Act can be said to have been quite minimal and the Charter was non-binding, this was a period of optimism, following earlier periods of social action (1972–1980) and stagnation (1980–86).15 (According to Hepple’s periodisation, this period was characterised by first, formal, and then, substantive equality.) Taking the Maastricht Treaty into consideration as well, this is not hard to understand. Apart from creating the European Union, the Maastricht Treaty contained various important innovations as regards the Union’s social dimension. One was, of course, the new concept of Union Citizenship, while another was the annexed Social Policy Protocol and Agreement (excluding the UK), which made way for majority voting rules and a new regulating role for the social partners. With regard to the developments in secondary legislation, the Treaty ban on discriminatory pay was to become clarified by Directive 75/117/EEC on Equal Pay,16 complemented later by more exhaustive bans on sex discrimination in Directives 76/207/EEC on Equal Treatment17 and 79/7/EEC on Social Security,18 all in the early period of ‘social action’. Subsequent Directives included the

14 Takis Tridimas, The General Principles of EU Law, 2nd edn (Oxford, Oxford University Press, 2006) p 76. 15 Ruth Nielsen and Erika Szyszczak, The Social Dimension of the European Union, 3rd edn (Copenhagen, Copenhagen Business School Press, 1997) p 17. 16 Dir 75/117/EEC of 10 February 1975 on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women, OJ L 45, pp 19–20. 17 Dir 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions, OJ L 39, pp 40–42. 18 Dir 79/7/EEC of 19 December 1978 on the progressive implementation of the principle of equal treatment for men and women in matters of social security, OJ L 6, 24, pp 24–25.

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86/378/EEC on Occupational Schemes19 and 86/613/EEC on Helping Spouses.20 All but Directive 79/7/EEC have now been replaced by new Directives: The Equal Pay, the Equal Treatment and the Occupational Schemes Directives by the 2006/54/EC Recast Directive;21 and the Directive on Helping Spouses by the recent Directive 2010/41/EU.22 Following the Maastricht Treaty, another set of Directives was introduced: The 92/85/EEC Directive on Pregnant Workers;23 the 96/34/EC Directive on Parental Leave;24 and the Directive 97/80/EC on the Burden of Proof.25 The Parental Leave Directive is based on the first Framework Agreement by the Social Partners, which has now been renegotiated and transformed into the new Directive 2010/18/EU.26 The other two Directives have now also been replaced or are pending amendment.27

3.2 The Amsterdam Treaty and Post-Amsterdam Evolution The next step relates to the Amsterdam Treaty and the evolution, postAmsterdam, leading up to the Lisbon Treaty. The most important feature of the Amsterdam Treaty from the perspective of this discussion is Article 13, which provides a legal basis for Community institutions to take action to combat discrimination on a wide range of new grounds and within any area of Community activities – thus creating a floor for comprehensive equality. Also, of special interest are Articles 2 (as amended), 3(2) and 141. These Articles all refer to sex equality. The new Title on Employment

19 Dir 96/97/EC of 20 December 1996 amending Directive 86/378/EEC on the implementation of the principle of equal treatment for men and women in occupational social security schemes, OJ L 46, pp 20–24. 20 Dir 86/613/EEC of 11 December 1986 on the application of the principle of equal treatment between men and women engaged in activity, including agriculture, in a self-employed capacity, and on the protection of self-employed women during pregnancy and motherhood, OJ L 359, pp 56–58. 21 Dir 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast), OJ L 204, pp 23–36. 22 Dir 2010/41/EU of the European Parliament and of the Council of 7 July 2010 on the application of the principle of equal treatment between men and women engaged in an activity in a self-employed capacity and repealing Council Directive 86/613/EEC, OJ L 180, pp 1–6. 23 Dir 92/85/EEC of 19 October 1992 on the introduction of measures to encourge improvements in the safety and health at work of pregnant workers ad workers who have recently given birth or are breastfeeding OJ L 348, pp 1–8. 24 Dir 96/34/EC of 3 June 1996 on the framework agreement on parental leave concluded by UNICE, CEEP and the ETUC, OJ L 145, pp 4–9. 25 Dir 97/80/EC of 15 December 1997 on the burden of proof in cases of discrimination based on sex, OJ L 14, pp 6–8. 26 Dir 2010/18/EU of 8 March 2010 implementing the revised Framework Agreement on parental leave concluded by BUSINESSEUROPE, UEAPME, CEEP and ETUC and repealing Directive 96/34/ EC, OJ L 68 p 13.20. 27 Dir 97/80/EC is thus now covered by the Recast Directive whereas the Pregnant Workers Dir is in the process of being changed – see the Commission’s proposal COM(2008) 637 final. On the evolution in general, see also Nielsen and Szyszczak, The Social Dimension, above n 15, and Hepple in Hepple and Veneziani, The Transformation of Labour Law, above n 2.

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is worth mentioning as well, as it introduces the ‘open method of coordination’ for employment guidelines, now extended to other areas of social cohesion. Finally, the Treaty includes the Maastricht Social Protocol and the new rules on the Social Dialogue. Despite Hepple’s periodisation, the author’s opinion is that it was only after Amsterdam that Community law can be said, Treaty-wise, to have significantly shifted from formal to substantive gender equality.28 In the Amsterdam Treaty there is thus a Treaty-based mainstreaming approach as regards sex equality, reflected in Article 3(2) TEC. Ever since 1996 the Commission’s strategic approach to the question of equal opportunities between men and women has been that of ‘mainstreaming’, ie incorporating equal opportunities into all Community policies and activities.29 The mainstreaming approach has subsequently spread to the new areas of non-discrimination and its expression in the Lisbon Treaty will be discussed later.30 The new Treaty provisions also proclaimed equality between men and women as a ‘task’ and an ‘aim’ of the Community and imposed a positive obligation to ‘promote’ it in all its activities.31 In particular, the wording of Article 3(2) TEC has been interpreted as requiring a proactive approach in gender equality issues on behalf of the European Union institutions (‘In all activities the Community shall aim to eliminate inequalities and to promote equality between men and women.’). Furthermore, Article 141 TEC (formerly Article 119) now provides the specific legal basis for equality of treatment between men and women, not only with regard to remuneration but in a broader and more general sense. Article 141(4) also provides scope for positive action measures. These characteristics are reflected in the fact that sex equality law is mainly argued in a (de facto) equality discourse, in contrast to the other Article 13 grounds that are argued within a framework of non-discrimination. The special importance given to sex discrimination in working life is also reflected in the legal basis for the adoption of such instruments. With regard to work related issues, sex discrimination legislation follows the qualified majority voting rules, whereas Article 13 measures require unanimity. Article 13 is thus also constructed in ‘softer terms’, such as to ‘combat’ discrimination. These differences may illustrate precisely the double aim of sex equality law – market and fundamental rights interests – whereas Article 13 still sits more clearly within the area of human rights and social policies. 28 Compare Sophia Koukoulis-Spiliotopoulos, From Formal to Substantive Gender Equality, The Proposed Amendment of Directive 76/207, Comments and Suggestions (Athens, Marangopoulos Foundation for Human Rights, 2001). See also AG Christine Stix-Hackl, Opinion in Case C-186/01 Dory [2003] ECR I-2479, paras 102–05. 29 The European Commission’s Communication Incorporating equal opportunities for women and men into all Community policies and activities, COM(96) 67 final. 30 See eg the 2000/750/EC Council Decision of 27 November 2000 establishing a Community action programme to combat discrimination, [2000] OJ No L 303/23. See also the Commission’s Communications regarding the EQUAL Programme, COM(2000) 853 and COM(2003) 840 final. 31 Arts 2 and 3(2) TEC.

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Post-Amsterdam, there were also important developments at the constitutional level, such as the adoption of the EU Charter of Fundamental Rights in 2000 and its later integration within a new constitution for the EU. This was followed in 2001 by the Nice Treaty. This marks the end of Hepple’s period of substantive equality and the start of the period of comprehensive and transformative equality. In relation to the outer evolution of secondary law non-discrimination instruments in Community law during this period, a distinctive element is the development of legal instruments outside the area of equality between men and women, ie its comprehensiveness. First, there are the two Directives based on framework agreements banning discrimination of ‘workers’ – part-time workers and fixed-term workers.32 Both Directives adhere to the principle of equal treatment or non-discrimination as a central means to improve the quality of part-time and fixed-term work, respectively. The application of the principle of non-discrimination to part-time and fixedterm work poses special problems as compared to other, more traditional, fields of application. One problem concerns the fact that what is forbidden by the non-discrimination provision – differential treatment as regards employment conditions – is, at the same time, part of what constitutes the groups that are to be protected, a problem reflected in the Wippel case.33 Moreover, Clause 4 prohibits differential treatment of part-time/fixed-term workers solely because of this contract condition – that is, it forbids direct discrimination but not indirect. Furthermore, direct discrimination may also be accepted if justified on objective grounds.34 Another important feature is, of course, the action taken on the basis of Article 13 and which concerns grounds for discrimination other than sex or gender. The Ethnicity Directive 2000/43/EC35 went considerably beyond hitherto gender discrimination instruments in this regard by including areas of society other than working life, such as education and goods and services. The Framework Agreement on Equal Treatment and Directive 2000/78/EC,36 furthermore, included a wide range of new groups, mentioned in Article 13, protecting them from discrimination in working life and related areas. Another interesting development was the Commission’s proposal37 of a new Article 13 Directive concerning all grounds but ethnicity and sex/gender (ie religion or belief, disability, age and sexual orientation) and expanding

32 Dir 97/81/EC (15 December 1997) concerning the framework agreement on part-time work concluded by UNICE, CEEP and the ETUC, OJ L 14/9, and Dir 99/70/EC (28 June 1999) concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP, OJ L 175. 33 See the judgment in case C-313/02 Wippel [2004] ECR I-09483. 34 This is usually not the case in other areas of discrimination law, with the exception of age discrimination. 35 Dir 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin, OJ L180, pp 22–26. 36 Dir 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation, OJ L 303, pp 16–22. 37 COM(2008) 426 final.

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their protection in accordance with the Race Directive – thus leaving gender discrimination behind! There was also an amendment of the Equal Treatment Directive, Directive 2002/73/EC38 – now replaced by the Recast Directive. It was adopted in view of Article 6 of the Treaty on the European Union, which addresses the fundamental rights as guaranteed by the European Convention and recognised by the Union Charter of Fundamental Rights, the new provisions under Articles 2, 3(2) and 141 TEC, the ECJ’s case law on discrimination on the grounds of sex, the new Article 13 Directives and the Directive 97/80/EC on the burden of proof in cases of discrimination based on sex. The amended Directive in Article 2(7) provides an opportunity for the Member States to grant working men an individual right to paternity leave while maintaining their rights relating to employment, thus recognising distinct rights of paternity. To sum up, the amended Equal Treatment Directive implies an adaptation of the concepts of direct and indirect discrimination, as well as of harassment and instructions to discriminate found in the Article 13 Directives, which is especially significant with regard to indirect discrimination. Also the occupational qualifications defence rule is copied from the Article 13 Directives, as are the rules on remedies and enforcement. The Directive extends the ban on discrimination to new situations (such as union membership etc.) and expressly defines harassment, instructions to discriminate and less favourable treatment related to pregnancy or maternity leave as discrimination. This action in the area of non-discrimination is built upon the EU’s considerable experience in dealing with sex discrimination. However, developments show that it also works in reverse – Article 13 developments influence sex equality law. The current definitions of central concepts such as direct discrimination, indirect discrimination and harassment – introduced to sex equality law by the Directive 2002/73 and amending the Equal Treatment Directive – were articulated by the first two Article 13 Directives. Then there was the Recast Directive 2006/54/EC concerning sex equality law. Its objective was to simplify, modernise and improve Community law in the area of equal treatment between men and women by putting together, in a single text, provisions of four former Directives, linked by their subject in order to make Community legislation clearer and more effective.39 Its legal basis rests in Article 141(3) TEC and in the bases of the Directives amalgamated therein: The Equal Pay Directive 75/117/EEC, Directive 86/378/EEC on occupational schemes as amended by Directive 96/97/EEC; the Equal Treatment Directive 76/207/ EEC as amended by Directive 2002/73/EC; and the Burden of Proof Directive

38 Dir 2002/73/EC of 23 September 2002 amending Council Directive 76/207/EEC on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions, OJ L 269, pp 15–20. 39 Compare the Commission’s Communication Updating and simplifying the Community acquis COM(2003) 71 final.

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97/80/EC as amended by Directive 98/52/EC. The Recast Directive can be said to signify only very moderate changes designed to bring the acquis in line with new equality law instruments and case-law developments. In December 2004, the Council adopted Directive 2004/113/EC implementing the principle of equal treatment between men and women in the access to and supply of goods and services.40 The Directive is based on Article 13 TEC and, in the preamble, reference is made to, among others, Article 6 of the TEU, Articles 21 and 23 of the Charter of Fundamental Rights and Articles 2 and 3(2) TEC. Generally speaking, the Directive is the first to bring the principle of sex equality beyond the workplace and as such, it undoubtedly represents significant progress. However, drawing upon the former Article 13 Directives and in particular the Race Directive 2000/43/EC, it is obvious that its coverage is significantly less extensive, something which is regarded as reinforcing the idea of a hierarchy of equalities where gender appears to be losing ground. The limited scope of the Directive has also been questioned from a human rights point of view, given that it fails to cover important issues such as equal treatment in the areas of media and education. Other innovations were the proposal for an amended Helping Spouses Directive, recently turned into Directive 2010/41/EU, and the proposal for amendments to the Pregnancy Directive. This was also the period when the EU Gender Equality Institute was created.41 The Institute is situated in Vilnius, Lithuania, and has the task of supporting the Member States and the European institutions in their efforts to promote gender equality and to raise awareness of gender issues. It is also charged with collecting and analysing data on gender issues and developing tools to further mainstreaming policies.

3.3 The Lisbon Treaty and the EU Charter On 1 December 2009 the Lisbon Treaty finally entered into force. Its main innovations are related to the ‘infra-structure’ of the Union but it is clear that there are also changes of great importance from our point of view. Giving the EU Charter of Fundamental Rights Treaty status is one of these changes. Up until this time, the protection of fundamental freedoms and rights had mainly been guaranteed by the European Court of Justice’s development of general principles, in line with the constitutional traditions of the Member States as well as by international instruments such as the European Convention for the Protection of Human Rights and Fundamental Freedoms. The principle of nondiscrimination had long since been such a general principle.42 There are, however,

40 Dir 2004/113/EC of 13 December 2004 implementing the principle of equal treatment between men and women in the access to and supply of goods and services, OJ L 373 pp 37–43. 41 See Reg (EC) No 1922/2006 of the European Parliament and of the Council of 20 December 2006 on establishing a European Institute for Gender Equality, OJ L 403, pp 9–17. 42 Compare Erika Szyszczak, ‘Antidiscrimination Law in the European Community’ (2009) Fordham International Law Journal 32:201, 203.

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also important differences when it comes to the formulation of the Union’s values and goals, as well as between the very provisions on non-discrimination themselves, which deserve attention since they reflect the way in which market interests are balanced against social goals and values. Firstly, there is the Treaty of the European Union (TEU) and Articles 2, 3 and 6. According to Article 2, the Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail (emphasis added).

One of the aims of the Union is to ‘promote peace, its values and the well-being of its peoples’ (Article 3.1): The union shall establish an internal market. It shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment. … It shall combat social exclusion and discrimination, and shall promote social justice and protection, equality between women and men … (emphasis added) (Article 3.3).

Article 6 refers to fundamental rights in three categories: The Charter as adapted in Strasbourg in 2007 and now a part of primary law; the European Convention for the Protection of Human Rights and Fundamental Freedoms and the Union’s accession; and fundamental rights as general principles of Union law. Non-discrimination and equality between women and men thus hold a central position in these Treaty provisions. Secondly, the Treaty on the Functioning of the European Union (TFEU) contains a number of important Articles. First, we have the principles set out in part one and Articles 2, 4, 5, 7, 8, 9 and 10. Articles 2, 4 and 5 concern the competences of the Union and the Member States – a shared competence as social policy is concerned (Articles 4.2.b) – but also concerns their respective responsibility to coordinate economic and employment policies as well as social policies (Articles 5.2 and 3). Article 7 articulates the importance of consistency between all of the Union’s policies and activities and Article 9 links these policies and activities to the general aim of promoting high levels of employment and social well-being. Articles 8 and 10 articulate the Union’s mainstreaming ambitions, with Article 8 containing somewhat stronger wording as regards sex: In all its activities, the Union shall aim to eliminate inequalities and to promote equality, between men and women (emphasis added).

According to Article 10: In defining and implementing its policies and activities, the Union shall aim to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation (emphasis added).

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In Part Two, Article 19, we find the former Article 13: [T]he Council, acting unanimously … may take appropriate action to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation.

According to Article 153 under title X on Social Policy, the Council may still, however, adopt Directives and other minimum requirements regarding equality between men and women with regard to labour market opportunities and treatment at work in accordance with the ordinary legislative procedure, ie qualified majority. Article 157 is the new equivalent to the former Article 141, and concerns equal pay, and equal treatment between men and women in matters of employment and occupation generally, as well as defining the scope for positive action. Thirdly, there is the Charter of Fundamental Rights itself. It was first adopted in 200043 but has until now had a non-legally binding character. 44 Nevertheless it has been referred to on a number of occasions in the acquis communautaire.45 As of the Lisbon Treaty, however, the Charter is part of primary Union law (Article 6.1 TEU). The Charter consists of a preamble and six chapters. Chapter III of the Charter entitled ‘Equality’ addresses the issues of non-discrimination and equality. Whereas Article 20 provides that ‘everyone is equal before the law’, Article 21 includes a general ban on discrimination: Any discrimination on any grounds such as sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation shall be prohibited.

The wording of the Article is especially interesting since it contains an ‘open’ – ie non-exhaustive list – of prohibited grounds and also mentions a number of grounds not covered by other explicit Treaty provisions. Article 23 explicitly addresses equality between men and women. According to its first paragraph such equality ‘must be ensured in all areas, including employment, work and pay.’ The second paragraph makes room for positive action: The principle of equality shall not prevent the maintenance or adoption of measures providing for specific advantages in favour of the under-represented sex.

Articles 25 and 26 address special rights of the elderly and persons with disabilities, respectively, whereas Article 33, paragraph 2 – found under Title IV, Solidarity – concerns family and work reconciliation and states that everyone has the right to protection from dismissal for any reason connected with maternity

43

The Charter was adopted in Strasbourg on 12 December 2007, OJ C 83, pp 389–403. See also Brian Bercusson, European Labour Law, 2nd edn (Cambridge, Cambridge University Press, 2009). 45 Especially so by Advocates General, see eg cases C-173/99 BECTU [2001] ECR I-4881 and C-186/01 Dory [2003] ECR I-2479. Also, the Court itself has occasionally referred to the Charter – see C-578/08 Chakroun [2010] not yet published in ECR, OJ C113, p 13. 44

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and the right to paid maternity leave and to parental leave following the birth or adoption of a child. Non-discrimination has thus long since been a general principle of Union law and so a part of Union primary law. The Charter, however, goes somewhat further than hitherto Union law and competence and has been referred to as ‘lofty and ambitious’.46 The more exact meaning and scope of the Charter’s provisions is far from transparent. Whereas traditional civil rights are worded precisely as rights, social and economic rights are often given another wording; as a recognized freedom ‘in accordance with Union law and national laws and practices’ or are even referred to indirectly so that the Union ‘recognises and respects’ a certain right. A distinction is also made between rights and principles. Principles ‘may be implemented by legislative and executive acts taken by institutions’ and are judicially cognisable only as regards the interpretation of such acts (Article 52.5). The distinction is however far from clear-cut. A further and more general limitation as regards the Charter is, of course, that it applies only when Union institutions and Member States are implementing Union law (Article 51.1). Added to this is the fact that the European Convention for the Protection of Human Rights and Fundamental Freedoms is a part of Union law within the realm of general principles (Article 6.3 TEU) and that the Charter may not be interpreted so as to restrict or adversely affect such fundamental freedoms (Article 53). (When acceding to the Convention the Union is, of course, itself immediately bound by its provisions.) The Charter may, however, go one step further than the Convention.

4. EQUALITY LAW EVOLUTION – THE ‘INNER’ DIMENSION

4.1 Introductory Remarks The raison d’etre of discrimination legislation is, as noted in the preceding discussion, to change outdated, obsolete and unacceptable perceptions and to accomplish justice and integration for a de facto marginalised group, ie substantive equality. Interventions have traditionally taken the form of piecemeal social engineering although so-called Single Discrimination Acts have become increasingly frequent of late and even open lists on the grounds of discrimination. EU bans on discrimination are designed in the liberal tradition – in other words, discrimination legislation is built on the Aristotelian concept of justice, that what is alike shall be treated alike. There is, however, also a normative element to it. The bans are really about changing the concept of that which is to be regarded

46 Sandra Fredman, ‘Transformation or Dilution: Fundamental Rights in the EU Social Space’ (2006) 12 European Law Journal 41, 56.

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alike. Thus the law in this area is, for instance, built on the stipulation that sex/ gender is of no importance in working life, ie a stipulation of what is alike! Equality law is therefore – as was mentioned in the introduction – typically built on a contradiction: the rationale for the law is identified, and unacceptable, differential treatment or substantive inequalities at the macro-level; and the solution is stipulated or formal equality at the individual level. The legislative intervention is thus typically made at the individual level and basically reflects what is generally called ‘formal’ equality and ‘the complaints-led model’. This ‘liberal strait-jacket’, as the author has termed it,47 leads to difficulties in coming to terms with the material inequalities at a societal and aggregated level which were the reason for intervention in the first place. In accordance with the concept of formal equality, any individual must be treated on his/her own merits – this is a good thing. However, structural injustice cannot always be detected at the individual level and in a single case. Formal equality thus does not necessarily solve the problem equality legislation has set out to solve. The difference between formal and substantive equality therefore always lies at the heart of discrimination legislation. This creates a conflict between the design of anti-discrimination legislation and the overarching goal of such legislation – a real change in substantive equality for covered groups.

4.2 Normative Answers Bridging the Conflict The conflict between the liberal fundamental design of discrimination legislation, in terms of taking the form of bans on discrimination at the individual level based on stipulated and formal equality and ‘the complaints-led model’, and the more far-reaching ambitions to promote integration and substantive equality has led to a variety of normative answers over the years. The following discussion considers some of these normative answers and the ways in which these have made equality regulation more effective. 4.2.1 Direct Effect Of great importance has been the relatively early development in the European Court of Justice’s case law giving both primary and secondary Community law direct effect provided the provision is ‘unconditional and sufficiently precise’. At first, both Member States and private employers assumed that the Treaty could not be applied directly to even the most obvious cases of direct discrimination, such as differential rates of pay for men and women doing the same work. It took almost 20 years for the first case to come up. The judgment in the well-known Defrenne case from 197648 meant that the principle of equal pay in the Treaty be-

47

Numhauser-Henning, ‘On Equal Treatment’, above n 8. Case 43/75 Defrenne v Sabena [1976] ECR 455. See also the other two Defrenne cases 80/70 [1971] ECR 445 and 149/77 [1978] ECR 1365. 48

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came directly applicable not only to Member States but also to private employers. Only following this did the principle of equal pay in the EC Treaty really begin to evolve into a more general principle of equality between the sexes which encompasses all aspects of working life and the social insurance as well. 4.2.2 Concept Evolution Other normative developments centre around the coverage of Union law and the interpretation of crucial concepts such as the concept of direct sex discrimination. Nowadays, there is a comprehensive case law relating to pregnancy and maternity discrimination being characterised as direct discrimination. Differential treatment on the grounds of pregnancy and maternity has, since Dekker49 in 1990, been regarded as intrinsically related to the female sex and thus as constituting direct discrimination. There was no need for a male comparator. These developments work against not only the rights of men generally, but also of non-pregnant women as well as fathers and require a line to be drawn in relation to parental rights.50 In Dekker the ECJ ruled that pregnancy and maternity is inseparable from the female sex as such and that any inferior treatment on these grounds amounts to direct discrimination and is protected by the equal treatment rule itself. This can, in fact, be regarded as the strongest protection of pregnant women and recent mothers. The European Union Court of Justice has confirmed its ‘fundamentalist’ approach in subsequent important cases such as Mahlburg and Tele Danmark among others.51 A case worth mentioning is Mayer52 which concerned a woman who had been absent from work for a few days in connection with the process of IVF treatment. The European Union Court found that even though Ms Mayr was not pregnant yet, she was, however, protected under the Equal Treatment Directive – given that only women undergo IVF treatment, the dismissal of a woman on the grounds that she is undergoing such treatment constitutes direct discrimination on the grounds of sex. Another line of development in case law concerns the expansion of the concept of sex to include transsexuality (but not sexual orientation) made by the European Union Court in P v S.53 49

Case C-177/88 Dekker [1990] ECR I-3941. In this respect, of particular interest is the Austrian case C-220/02 Österreichischer Gewerkschaftsbund [2004] ECR I-5907, in which it was found that not taking parental leave (following the expiry of maternity leave) into account when calculating a termination payment, amounted to indirect discrimination of women. A comparison was made to workers performing military service (mostly men) whose leave was indeed taken into account. The Court, however, found women (and men) taking parental leave not to be in a comparable situation to workers doing national service and indirect discrimination thus not to be at stake. The Court’s backward declaration that the interests of the worker and family in the case of parental leave and ‘the collective interests of the nation in the case of national service … are or a different nature’ is worthy of note. 51 C-207/98 Mahlburg [2000] ECR I-549 and C-109/00 Tele Denmark [2001] ECR I-6993. See also cases C-179/88 Hertz [1990] ECR I-3979, C-421/92 Webb [1994] ECR I-3567 and C-438/99 Melgar [2001] ECR I-6915. 52 C-356/03 Mayer [2005] ECR I-000. 53 C-13/94, P v S [1996] ECR I-2143. 50

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Also of interest here is the inclusive or expansive interpretation of the concept of pay in relation to sex discrimination, including employer and occupational pension schemes.54 At one time Article 119 was the only rule upon which to build. 4.2.3 Indirect Discrimination Turning now to the concept of ‘indirect’ discrimination, this was developed in case law by the European Union Court of Justice and later regulated in secondary legislation – inspired by the concept of ‘disparate impact’ as elaborated in the US Supreme Court case of Griggs v Duke Power Co under the 1964 Civil Rights Act. Duke Power had adopted a practice whereby individuals could only be transferred out of its labour department to operations, maintenance and laboratory if the individual concerned had a high-school education. This placed black individuals at a disadvantage. In considering the facts of the case the Supreme Court found that educational requirement was not a good measure of performance in this particular job and that the policy could not be justified as being necessary. It was thus deemed to be ‘unacceptable disparate impact’ or indirect discrimination. In the case of indirect discrimination, the requirements for non-discrimination are ‘objectified’ in such a way as to permit the scrutiny of general and underlying norms in working life, the so-called ‘reference norms’, from the points of view of an exposed group. It is not sufficient to show that a certain differential treatment is not directly related to the protected ground, if it can be shown that the consequences are detrimental to a protected group, the treatment must be objectively justified and proportionate. The prohibition against indirect discrimination has been used primarily to improve conditions for part-time workers, usually women, such as in the early cases Jenkins and Bilka-Kaufhaus.55 Another line of application of the concept of indirect discrimination was seen in Regina v Secretary of State for Employment ex parte Seymour-Smith.56 English employment protection did not cover the short-term employed, which comprised mostly women. Did this amount to indirect discrimination? This question was for national courts to decide, according to the Court, but merely generalised assumptions regarding the positive employment effects of allowing short-term employments with no employment protection whatsoever are not enough. The concept of indirect discrimination constitutes a qualitative leap in antidiscriminatory legislation. As soon as it is possible to establish that a certain norm results in a worse outcome for the protected group, a court may review the actual content of the applied reference norm. In these cases the individual does

54

Compare cases C-262/88 Barber [1990] ECR 1889 and C-7/93 Beune [1994] ECR I-4471. C-96/80 Jenkins [1981] ECR 911 and C-170/84 Bilka-Kaufhaus [1986] ECR 1607. 56 C-167/97 Regina v Secretary of State for Employment, ex parte Nicole Seymour-Smith and Laura Perez [1999] ECR I-623. 55

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not appear as an individual, but as a typical representative of the group to which the individual belongs. In fact, these cases amount to a form of class action. 4.2.4 The Reversed Burden of Proof There is also the principle of the reversed burden of proof, developed in case law and later regulated in secondary legislation, the Burden of Proof Directive of 1997. Post-Amsterdam, the Directive was extended to include discrimination on grounds other than sex. This principle is of course crucial to the ‘efficiency’ of anti-discrimination legislation, given that it is based on an individual complaints-led model. 4.2.5 Positive Action The requirement for a proactive approach and the scope for positive action can be said to be at the heart of the conflict between the basic liberal design of equality legislation and the intention behind such legislation in terms of substantive equality. The Treaty rules on equality between men and women post-Amsterdam require a proactive approach. According to the wording of Article 3(2) TEC: In all activities the Community shall aim to eliminate inequalities and to promote equality between men and women.

There is also a Treaty-based scope for positive action proper in Article 141.4. The scope for positive action in terms of real preferential treatment was of concern in the cases Kalanke, Marschall, Badeck, Abrahamsson, Lommers and Briheche.57 Initially, it was the permissive rule in Article 2.4 of the ETD that was at stake, later regulated by Article 144.4 TEC and now by Article 157.4 in the TFEU. The scope has mainly been argued in terms of an exception to the equal treatment principle and, in Badeck, the ECJ summarises positive action as being compatible with Community law if it does not automatically and unconditionally give priority to women when women and men are equally qualified, and the candidatures are the subject of an objective assessment which takes account of the specific personal situation of all candidates.58

In the positive action cases, the conflict between the liberal legal tradition and formal equality in relation to substantive equality really comes to the fore. According to Badeck, the Court accepts systemic preferential treatment for the underrepresented sex when equally qualified only if there is an ‘exception rule’ admitting to take into account the specific personal situation of all candidates,

57 C-450/94 Kalanke [1995] ECR I-3051, C-409/95 Marschall [1997] ECR I-6363, C-158/97 Badeck [2000] ECR I-1875, C-407/98 Abrahamsson [2000] ECR I-5539, C-476/99 Lommers [2002] ECR I-2891 and C-319/03 Briheche [2004] ECR I-0000. 58 The judgment in Badeck, above n 57, para 23.

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including men. In Abrahamsson, the Court ruled out preferential treatment for the underrepresented sex when there was a difference in qualifications which was ‘on any view … disproportionate to the aim pursued’, whereas it could be accepted ‘provided that the candidates possess equivalent or substantially equivalent merits, where the candidatures are subjected to an objective assessment which takes account of the specific personal situations of all the candidates’.59 Additionally, there have always been some exceptions to the equal treatment principle such as the provisions concerning the protection of women, particularly as regards pregnancy and maternity; and the exception for employment of a person of a protected group ‘by reason of the nature of the particular occupational activities concerned or of the context in which they are carried out’ – so-called Bfoq (Bona fide occupational qualities) or GOR (Genuine Occupational Requirements) defences.60 The conclusion is that positive action, in reality, remains limited in scope. 4.2.6 A Non-instrumental Character Finally, this section focuses on a more restrictive practice reflected in case law, as illustrated in the cases of Lawrence and Allonby.61 In the latter case, Debra Allonby was not entitled to use a male lecturer employed by her former employer as a comparator for equal pay purposes once she herself was hired by her former employer through a temporary work agency. Despite the fact that the discrimination concepts being considered here do not require intent, they do require personalised responsibility – both the ‘differential treatment’ and the comparable treatment must be attributable to a single source. This differs from the wider acquis communautaire as regards nationality discrimination in competition law. Here the effects of a certain behaviour are of central interest and it is sufficient to show risk. The explanation for these differences is, in the author’s view, mainly twofold. One concerns the traditional individualised, negative and fault-based form of discriminatory bans focussing on an individual having been wronged and the perpetrator’s guilt for this. Another explanation is related to market hegemony and the limited competence nature of the EU, characterised by its more instrumental goals and tasks in relation to the realisation of the internal market and the hitherto more limited – or less instrumental – ambitions as regards fundamental rights such as sex equality. Perhaps this can also now change with the Lisbon Treaty?

59

See also Numhauser-Henning, ‘On Equal Treatment’, above n 8. See eg Art 14.2 in the Recast Dir and Art 4 in the Race Dir. 61 C-320/00 Lawrence [2002] ECR I-7325 and C-256/01 Allonby [2004] ECR I-873. 60

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5. THE FUTURE OF EQUALITY LAW – CAN IT BE TRULY TRANSFORMATIVE AND COMPREHENSIVE?

5.1 Prior Achievements and the Lisbon Treaty Reflecting on what has been said about the ‘inner dimension’ – what are the prior achievements in the endeavour to overcome the conflict between formal and substantive equality and has the Lisbon Treaty brought significant change? With regard to the comprehensiveness of EU equality law, there is no doubt that an important basis was laid down by Article 13 of the Amsterdam Treaty, soon followed by the Union Charter of Fundamental Rights and its Article 21. Since post-Amsterdam, a Treaty-based mainstreaming approach has been taken in relation to sex equality. Now this mainstreaming approach has been reinforced and covers all grounds for discrimination, as set out in Articles 3.3 TEU and 8 and 10 TFEU. Even the Amsterdam Treaty required a proactive approach, as does the Lisbon Treaty. Articles 8 and 10 TFEU regulate this approach and not only with regard to gender equality. However, there is still a difference in the wording pro gender equality. Even so, it can be said that the ‘constitutional support’ for sex equality is significantly more developed than for the other grounds, bearing in mind Articles 2 and 3.3 TEU, 8 TFEU and 23 of the Charter of Fundamental Rights. Moreover, initiatives regarding gender equality in working life follow the qualified majority voting rules according to Article 153 TFEU, whereas for initiatives concerning other grounds, and with regard to gender outside working life, the general rule is unanimity. However, as regards secondary legislation, the new Article 13 Directive 2004/113/EC, despite the provisions broadening the scope of sex equality law beyond the area of work and employment, is considerably more limited in scope than is the Race Directive and has been viewed as creating a hierarchy in discrimination to the detriment of sex equality law. This is further underscored by the Commission’s proposal for a new Article 13 Directive extending the scope of protection for all grounds but sex to that comparable with the Race Directive! (It is said that an extension regarding sex equality law may be considered when the Recast Directive is assessed in the future …) The non-instrumental character and other restraints of equality rights arising from their traditional liberal design, constitutional ‘market hegemony’ and limited competence will be further discussed in the following two sections. In these regards, the Lisbon Treaty implies some important changes. The Union is a competitive social market economy and, according to Article 7 TFEU, the Union shall ensure consistency between all its policies and activities, both economic and social.

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5.2 Market Hegemony As previously indicated in Section 2 above, there is a dual aim inherent in EU equality law, one linked with (internal) market arguments and one with the discourse of fundamental social rights. The Court in its case law has stated that ‘the economic aim is secondary to the social aim’.62 In reality, case-law appears more ambiguous – for example, in the judgments in Viking, Laval and Rüffert!63 Market hegemony and the conferred-competence character of the EU have inconvenienced the field of equality law as well. Does this change in the light of the Lisbon Treaty and the Charter of Fundamental Rights? Fredman has elaborated on how the origin of the idea of an internal – free – market implies a permanent threat in terms of prioritising economic freedoms above social rights.64 The fundamental freedoms of the original Treaty of Rome were all ‘market rights’ – in other words and according to Anna Christensen, expressions of the Market Functional Normative Pattern:65 Free movement of capital, goods, services and workers. This did not necessarily mean that social rights were totally absent – the internal market was composed of Member States with relatively developed social welfare rights. The complication arose from the fact that the Union is one of conferred competences. Community/Union institutions had the competence to effectuate the efficiency of the internal market whereas distributive welfare mechanisms were largely the responsibility of the Member States themselves – resulting in what has been labelled the ‘decoupling’ of economic and social integration.66 This ‘imbalance’ was strengthened by the expansive case law of the European Union Court of Justice as regards primary law and the constituting freedoms. What changes does the Lisbon Treaty imply in this regard? According to Article 3.3 TEU the Union is ‘a highly competitive social market economy’, and, according to Article 7 TFEU ‘the Union shall ensure consistency between its policies and activities, taking all of its objectives into account and in accordance with the principle of conferral powers’ – both economic and social. There is thus a requirement that all aims – both economic and social – be taken into account, always. Underlying these Treaty provisions is a change in the perception of social rights from an internal market perspective which, according to Sandra Fredman, are being reconceptualised ‘not as burdens on business, but as essential contributors to efficiency’.67

62 See eg cases C-270/97 Sievers [2000] ECR I-933, para 57, and C-50/96 Schröder [2000] ECR I-774, para 57. 63 C-438/05 Viking [2007] ECR I-10779, C-341/05 Laval [2007] ECR I-11767 and C-346/06 Rüffert [2008] ECR I-1989. 64 Fredman, ‘Transformation or Dilution’, above n 46. 65 Anna Christensen, ‘Normative Patterns and The Normative Field: A Post-Liberal View on Law’ in Wilhelmsson and Hurri (eds), From Dissonance to Sense: Welfare State Expectations, Privatisation and Private Law (Dartmouth, Ashgate, 1999). 66 See F Scharpf, ‘The European Social Model: Coping with the Challenges of Diversity’ (2002) 40 Journal of Common Market Studies 645. 67 Fredman, ‘Transformation or Dilution’ p 41, above n 46. Compare Szyszczak, ‘Antidiscrimination Law’ p 201, above n 42.

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Sandra Fredman has elaborated this reconceptualisation in terms of the ‘Third Way’, a kind of compromise in the struggle between neo-liberalism and social democracy.68 Fredman argues that the policies of the Union are ‘Third Way’ policies and pinpoints four characteristics: first, the perception of the state as a facilitator with the task to guarantee and promote the free choice of the individual, second, the idea of the social responsibility of the individual himor herself (freedom obliges), third, the concept of participative democracy and social inclusion and, finally, the idea of equality – primarily in the form of equal opportunities. This ideology has changed focus, from obstacles on the demandside to the provision of adequate resources to effect a genuinely free choice by the individual. From this perspective, equality and social rights are regarded as economic assets or in other words, according to Fredman, ‘as Sen has shown, the market works best when supported by a proper framework of social entitlements … which ensure productive and skilled workers’.69 The EU Social Market Economy is a model which synthesises both economic and social policy, the market and the state and it is this synthesis which characterises the Lisbon Treaty as well as many policy documents such as the Integrated Economic and Employment Guidelines. Furthermore, the inclusion of the Charter of Fundamental Rights into primary Union Law articulated a number of fundamental freedoms and rights not related to market interests. There is thus, in the author’s opinion, a new basis for claiming that the former market hegemony is no longer indisputable. According to Schiek, there is no longer any basis in the Treaty for the ‘decoupling’ of the social and the economic.70 Fredman, too, despite her conclusion that ‘the power of the market will always subordinate social rights where there is a conflict with efficiency’, is of the opinion that the Charter has given the Court ‘a sound basis on which to counter market freedoms. Instead of being a derogation, to be interpreted narrowly, the Charter makes it clear that social rights are on an equal footing’.71 Syrpis also states the opinion that ‘the new provisions dealing with values, aims and objectives, and the new commitment to accede to the ECHR, serve to encourage the Court to reassess the nature of the relationship between the economic and the social’.72

68 Compare Anthony Giddens, The Third Way, The Renewal of Social Democracy (Oxford, Polity Press in association with Blackwell, 1998). 69 Fredman, ‘Transformation or Dilution’ p 44, above n 46. 70 Dagmar Schiek, ‘Transnational Collective Labour Agreements in Europe’ in Mia Rönnmar (ed), EU Industrial Relations v. National Industrial Relations, Comparative and Interdisciplinary Perspectives (The Netherlands, Wolters Kluwer, 2008) p 92. 71 Fredman, ‘Transformation or Dilution’ pp 46 and 57, above n 46. 72 Phil Syrpis, ‘The Treaty of Lisbon: Much Ado … But About What?’ (2008) 37 Industrial Law Journal 235.

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5.3 Truly Transformative? This seems to have consequences both for the liberal ‘strait-jacket’ and the complaints-led model of traditional equality law. Or, as Fredman states: ‘Instead of creating rights in their traditional individualised, negative, judicially enforceable, and fault-based form a new proactive model is emerging’ of mainstreaming, positive duties and other proactive initiatives, making ‘positive duties’ a responsibility for the state and for employers who are in a position to bring about institutional change.73 There are already some clear signs, in the European Union Court of Justice’s case law, of possibilities for truly transformative equality law based on this new model. Even before the Lisbon Treaty, the Court ‘used’ the Equal Treatment Framework Directive in a transformative and ‘collective’ way in the case of Coleman.74 When finding that Ms Coleman had suffered discrimination when she was treated differently and harassed because of her son’s disability, the Court referred to the overall purposes of Directive 2000/78/EC and created the concept of ‘transferred discrimination’. The applicability is not dependent on ‘a particular category of persons but by reference to the grounds mentioned’ in the Directive.75 According to Szyzczak, the Court has ‘opened the door for moving the discrimination concept forward, firstly by extending the ambit to protect a person who is (but) associated with one of the suspect categories, … and secondly, by linking the purpose of discrimination law to realizing person autonomy, and an empowering principle, rather than seeing discrimination in a passive sense of providing protection from victimization’.76 In the case of Firma Feryn77 there was not even an identified (if so only associated) victim. The Court found that a public statement made by an employer declaring that he will not recruit employees of a certain ethnic or racial origin constituted direct discrimination within the meaning of Article 2(2) of the Directive 2000/43/EC, despite the wording of the Article that ‘direct discrimination shall be taken to occur where one person is treated less favourably than another…’ (emphasis added). A.G. Maduro also argued in terms of direct discrimination. The question of to which forms of discrimination the Directive applies must be answered from its wording and purpose, he says, and to ignore a situation as the one at stake ‘as an act of discrimination would be to ignore the social reality that such statements are bound to have a humiliating and demoralising impact on persons of that origin who want to participate in the labour market.’ He continues:

73

Fredman, ‘Transformation or Dilution’ pp 41 and 49, above n 46. C-303/06 Coleman [2008] ECR I-5603. 75 ibid para 50. 76 Erica Szyzczak, ‘Antidiscrimination Law’ p 230, above n 42. 77 C-54/07 Firma Feryn [2008] ECR I-5187. 74

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EU Equality Law – Comprehensive and Truly Transformative?

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Yet, in cases such as these it may be very difficult to identify individual victims … given … the low incentive for them to come forward. By publicly stating his intention not to hire persons of a certain racial or ethnic origin, the employer is, in fact, excluding those persons from the application processes and from his work-floor. He is not merely talking about discriminating, he is discriminating. He is not simply uttering words, he is performing a ‘speech act’. 78

The judgment in Firma Feryn very much supports the conclusion that today’s equality law is already in a phase of transformative equality. There is no doubt that it opens up new possibilities for non-discrimination bans, possibilities that seems to reach beyond the liberal straitjacket in the sense that discrimination can be fought even when no victim is identified. Here, too, this judgment places responsibility with those who, by means of their position, have the power to effect change, but it is also a forward-looking approach with the potential to have an effect on substantial equality. For the Court to consider discriminatory ‘speech acts’ to be direct discrimination under Union law despite there being no identified victim, as in Firma Feryn, and therefore as actions requiring effective sanctions means that the Court is taking into account the potential, rather than the actual, effects of an action. This is not so far removed from case law regarding nationality discrimination and free movement. The Lisbon Treaty and its many proactive provisions, in combination with the Charter of Fundamental Rights, provides a firmer basis for further evolution in this direction. In Allonby, the Court also showed a willingness to scrutinize and condemn an indirectly discriminatory legislated pension scheme, again impacting employers directly. The case of Regina v Secretary of State representing Seymor-Smith and Laura Perez is a parallel, challenging indirectly discriminatory legal employment protection. These judgments support the conclusion that the concept of indirect discrimination contains a tremendous potential as a truly pro-active and transformative approach, within the individual complaints-led model. These developments give great hope for the future and a case law that ‘casts the responsibility on the state or employers to remedy deficiencies, not because of proof of breach of an individual right, but because the state (or the employer, author’s comment) has the appropriate power to do so … action is proactive and collective rather than retrospective and individualised’.79 This refers to case law – then there are policies and action plans … .

5.4 Concluding Remarks There are thus, in the author’s opinion, grounds for certain expectations with regard to Union law, and within the realm of the current ‘liberal’ equality 78 79

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regulation,80 for the further development of truly transformative, and thus substantive, equality. This is a conclusion far from any concerns about a development centred on formal equality as the common minor denominator of current comprehensive equality law.81 Moreover, the ‘open’ ban against discrimination of the protected groups as set out in Article 21 of the Charter of Fundamental Rights may open up new possibilities as regards the thus far often neglected situations involving different forms of multiple discrimination. Legal design and negative experiences have fuelled worries about the prospects of success for complaints based on multiple grounds discrimination, especially socalled intersectional discrimination.82 Making the Charter primary law with an open-ended discriminatory ban in Article 21 may lead to change in this respect, and encourage the European Union Court of Justice to create new subgroups or to combine different grounds in order to achieve the overall aim of Union law and at the same time make it increasingly comprehensive. Not everything is ‘bright and shiny’ though. Fredman warns that, despite the obvious advantages with the shift from a traditional negative and fault-based discrimination protection to a more proactive and transformative one, there is a weakness in its dependence on political will for the overall development described in this chapter.83 She stresses the importance that proactive strategies be ‘firmly centred on fundamental rights rather than political discretion’.84 However, there are possibilities, even within the prevailing legal model, that, referring not only to the overall aims of the different non-discrimination Directives but also to the more complexly mixed aims of the Union and multilevel fundamental rights, future equality law can develop a more active approach built not only on guilt but making use of the ‘dominance approach’ – creating legal responsibilities for key actors such as employers because they have the power to institutionalise change. The influence of coordinated political actions built on the new perceptions of Social Market Economy must also not be underestimated.

80 Compare Szyzczak, who states that despite the fight against discrimination ‘urgently needs a new generation of ideas given the complexity of modern life, there are some hints that this new generation of ideas can emerge through the traditional case law approach’, Szyzczak, ‘Antidiscrimination Law’ p 230, above n 42. 81 Compare Fredman and Szyzczak, already frequently cited in this chapter. Compare also Erica Howard, ‘The European Year of Equal Opportunities for All – 2007: Is EU Moving Away From a Formal Idea of Equality?’ (2008) 14, 2 European Law Journal 168. 82 ‘Intersectionality’ is a sub-concept of multiple discrimination and refers to situations when several grounds not only add to each other (additional or cumulative multiple discrimination) but interact concurrently. The classic example is the US General Motors’ case where black women were discriminated against as opposed to white women and black men. See further Kimberlé Crenshaw, ‘Demarginalizing the Intersection of Race and Sex: A Black Feminist Critique of Antidiscrimination Doctrine, Feminist Theory and Antiracist Policies’ in D Kelly Weisberg (ed), Feminist Legal Theory, Foundations (Philadelphia, Temple University Press, 1993). 83 Fredman, ‘Transformation or Dilution’ p 41, above n 46. 84 ibid p 42.

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7 Troublesome Transformation – EU Law on Pregnancy and Maternity Turned into Swedish Law on Parental Leave JENNY JULÉN VOTINIUS*

1. INTRODUCTION

In 2006, a prohibition on less favourable treatment of workers related to parental leave was introduced in the Swedish Act on Parental Leave. The prohibition was based on the rules on discrimination of pregnant workers and workers on maternity leave, which have developed within European Union law.1 The explicit aim of the prohibition is to extend the period during which the worker is entitled to a high level of protection against deterioration of working conditions due to pregnancy, so that, in principle, the same protection applies during the subsequent parental leave. However, the Swedish national rules on protection against less favourable treatment due to parental leave diverge from the EU rules on protection against discrimination on the grounds of pregnancy and maternity leave in one crucial respect. While there is virtually no exception from the prohibition of discrimination on the grounds of pregnancy and maternity leave in EU law, the Swedish Parental Leave Act, in some cases, does allow an employer to treat a worker less favourably because of his or her parental leave. This is the case when the less favourable treatment can be seen as a necessary

* Associate senior lecturer at the Law Faculty, University of Lund and member of the Norma Research Programme. 1 Arts 2.2c and 14 in Dir 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast), OJ L 204, 26/07/2006, p 23, formerly Art 2.7 in Dir 2002/73/EC of the European Parliament and of the Council of 23 September 2002 amending Council Dir 76/207/EEC on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions, OJ L 269, 05/10/2002, p 15.

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consequence of the parental leave. The overall aim of this chapter is to highlight the problematic nature of the method of legislating used for the Swedish rules on protection of workers related to parental leave – ie the difficulty of using EU rules on one issue as a model and point of reference for national legislation on another issue. Today, European Union law contains provisions that protect workers against less favourable treatment in connection with parental leave. These provisions are found in the recently adopted new version of the Parental Leave Directive.2 As stated earlier, it was however not the EU rules on parental leave that formed the basis for the prohibition against less favourable treatment in the Swedish Act on Parental Leave that was introduced in 2006. Instead, the more extensive EU rules on protection against pregnancy discrimination were the point of departure for the Swedish legislator when setting out to meet the worker’s need for legal protection during parental leave. Paradoxically, the Swedish national legislation is exceedingly vague when it comes to the protection against discrimination of pregnant workers. As the European Commission have noted, the extensive and strong protection against discrimination of these workers, which has been developed within European Union law on the basis of the prohibition of sex discrimination, is not explicitly implemented in Swedish law.3 The national legislation in no way reveals that the rules relating to direct discrimination on the basis of sex are applicable to pregnancy discrimination. Instead, protection against pregnancy discrimination is governed by reference to and interpretation of EU law.

2. HOW EU LAW PROTECTS PREGNANT WORKERS

2.1 A Strict Prohibition on Pregnancy Discrimination in European Union Law Through a vast number of cases concerning the Equal Treatment Directive and the Maternity Directive, the Court of Justice of the European Union (ECJ) has developed jurisprudence on a very high level of protection against pregnancy discrimination. Since 2002 this case law has, in part, been codified in the Equal Treatment Directive, which states that any less favourable treatment of a woman related to pregnancy is categorised as discrimination within the meaning of the Directive.4 The fact that the case law has, to a certain extent, been integrated in the Directive does not mean that the rulings are of less judicial importance than previously. The judgments from the Court form a very important part of the binding EU law, the acquis communitaire. The current provisions on pregnancy

2 Dir 2010/18/EU implementing the revised Framework Agreement on parental leave concluded by Businesseurope, UEAPME, CEEP and ETUC and repealing Dir 96/34/EC, OJ L 68, 10/03/2010, p 68. 3 Letter of Formal Notice, 2006/2537. 4 Arts 2.2c and 14 in Dir 2006/54/EC, above n 1.

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Pregnancy and Maternity in the EU and Swedish Law on Parental Leave 139 discrimination are understood and interpreted in the light of their history in the Court’s case law. Furthermore, many aspects of the case law are still not included in the Equal Treatment Directive. With respect to these aspects it is still the case law and not the Directive which is the primary source of law. The legislative development of the pregnancy discrimination field began with the Dekker case ruling in 1990.5 In Dekker, the Court stated that since only women can be refused employment on grounds of pregnancy, such a refusal constitutes direct discrimination on grounds of sex. Furthermore the Court found that a refusal to employ a pregnant woman cannot be justified on grounds relating to the potential financial loss which an employer would suffer for the duration of her maternity leave, since the financial consequences of absence due to pregnancy must be regarded as essentially based on the fact of pregnancy. The prohibition against pregnancy discrimination goes beyond the protection of the female worker during her pregnancy. The Habermann-Beltermann and Brown cases made clear that the prohibition is equally applicable during the period of maternity leave which follows pregnancy and childbirth.6 The principle laid down in Dekker, that a refusal to employ a woman on grounds of pregnancy constitutes direct discrimination on grounds of sex, was further developed in later cases concerning employment. It is thus inadmissible to refuse to hire a woman on grounds of pregnancy or maternity leave, even if she, as a result of the pregnancy or the maternity leave, cannot enter the post immediately and, in cases of temporary employment, even if the woman is unable to work for much of the intended employment period.7 Neither is it permitted to neglect to renew a temporary employment on the grounds of pregnancy or maternity leave.8 The prohibition against pregnancy- and maternity leave-related discrimination also gives a high degree of protection for the terms of employment, other than those conditions relating to pay. While other terms of employment have been assessed according to the Equal Treatment Directive, the case law on pay has been developed on the basis of the Equal Pay Directive.9 In these cases the Court

5 Case C-177/88 Elisabeth Johanna Pacifica Dekker v Stichting Vormingscentrum voor Jong Volwassenen (VJV-Centrum) Plus [1990] ECR 1-3941. 6 Cases C-421/92 Gabrielle Habermann-Beltermann v Arbeiterwohlfart, Bezirksverband Ndb/ Opf eV [1994] ECR I-1657 and C-394/96 Mary Brown v Rentokil Ltd [1998] ECR I-4185.Today the maternity leave covers a continuous period of at least 14 weeks allocated before and/or after confinement, see Art 8 in Dir 92/85 on the introduction of measures to encourage improvements in the safety and health at work of pregnant workers and workers who have recently given birth or are breastfeeding, OJ L 348, 28/12/1992, p 1. The Directive is currently under revision and the period of maternity leave is expected to be extended. 7 Cases C-32/93 Carole Louise Webb v EMO Air Cargo (UK) Ltd [1995] ECR I-3567. C-207/98 Silke-Karin Mahlburg v Land Mecklenburg-Vorpommern [2000] ECR I-549, and C-109/00 Tele Danmark v Handels- og Kontorfunktionærernes Forbund acting on behalf of Marianne BrandtNielsen [2001] ECR I-6993. 8 Case C-438/99, Maria Luisa Jiménez Melgar v Ayuntamiento de Los Barrios [2001] ECR I-6915. 9 Dir 76/207/EEC on equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions, OJ L 039, 14/02/1976, p 40, respectively Dir 75/117/EEC on the equal pay for men and women, OJ L 045, 19/02/1975, p 19. These Directives

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has taken the firm position that a woman on maternity leave is in a situation so unique that she cannot and should not be compared with anyone else; neither with an employee who is in service nor with an employee who is on leave for another reason, for example to perform military service.10 This set a legal precedent which implies that a worker on maternity leave can, in principle, never have any success in claiming that she has been subject to wage discrimination, since comparison is a necessary prerequisite in determining such discrimination. As stated, this limitation only applies, however, to conditions of pay. In respect of other employment conditions the Court has consequently adhered to the principle that detrimental treatment on the grounds of pregnancy or maternity leave constitutes direct discrimination on the grounds of sex. Among the terms of employment that have been examined by the Court are the worker’s right to an annual assessment of her performance, the right to take vacation during a period other than the period of her maternity leave, and the right to start accruing seniority in a post from the date of appointment, even though the worker, due to maternity leave, had not actually assumed the post.11 In all of these cases the Court found that the denial of such rights to the pregnant worker or worker on maternity leave constitutes direct discrimination on grounds of sex, if the denial is grounded on the pregnancy or the maternity leave itself.

2.2 No Need for a Comparator to Determine Pregnancy Discrimination Normally a person who claims discrimination has to make a comparison with another person in the same or similar circumstances and prove that the other person has enjoyed more favourable treatment. However, with the exception of wage discrimination, noted above, this is not the case with regard to discrimination on the grounds of pregnancy or maternity leave. According to the case law of the ECJ, such discrimination is automatically regarded as discrimination on grounds of sex.

are now – along with Dir 86/378/EEC on equal treatment for men and women in occupational social security schemes, OJ L 225, 12.08.1986, p 40 and Dir 97/80/EC on the burden of proof in cases of discrimination based on sex, OJ L 14, 20.1.1998, p 6 – replaced by the Equal Treatment Dir 2006/54/ EC, above n 1. 10 Cases C-342/93 Gillespie and Others v Northern Health and Social Services Board and Others [1996] ECR I-475, C-218/98 Oumar Dabo Abdoulaye and others v Régie Nationale des Usines Renault SA [1999] ECR I-5723, and C-220/02 Osterreichischer Gewerkschaftsbund, Gewerkschaft der Privatangestellten v Wirtschaftskammer Osterreich [2004] ECR 1-5907. See also Petra Foubert, The Legal Protection of the Pregnant Worker in the European Community. Sex Equality, Thoughts of Social and Economic Policy and Comparative Leaps to the United States of America (The Hague, Kluwer Law International, 2002). 11 Case 196/95 Caisse nationale d’assurance vieillesse des travailleurs salariés (CNAVTS) v Evelyne Thibault [1998] ECR I-2011, C-342/01 María Paz Merino Gómez v Continental Industrias del Cauho SA [2004] ECR I-2605, C-294/04 Carmen Sarkatzis Herrero v Instituto Madrileño de la Salud (Imsalúd) [2006] ECR I-1513.

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Pregnancy and Maternity in the EU and Swedish Law on Parental Leave 141 Even the very first case on pregnancy discrimination, the Dekker12 case, raised questions regarding the need for a comparator for a pregnant woman when applying the Equal Treatment Directive. In this case, a female job seeker had been refused employment on the grounds that she was pregnant. No men had applied for the post, and the question was whether it could be determined that Dekker had been subject to sex discrimination even though there was no male comparator. The Court of Justice found that, as only women can be refused employment on the grounds of pregnancy, the absence of male candidates was irrelevant. This approach has then been emphasised in subsequent cases referred to the Court. In Webb the Court stated that there can be no question of comparing the situation of a pregnant woman with that of a man similarly incapable for medical or other reasons, since pregnancy is not in any way comparable with a pathological condition, and even less so with unavailability for work on nonmedical grounds.13 Furthermore, in Handels-og Kontorfunktionerernes Forbund i Danmark v Fellesforeningen, the ECJ held that although pregnancy is not in any way comparable to a pathological condition, the fact remains that it is a period during which disorders and complications may arise, compelling a woman to undergo strict medical supervision and, in some cases, to take absolute rest for all or part of her pregnancy, and which are thus specific features of that condition.14

2.3 Pregnancy Discrimination Cannot be Justified The position that discrimination in connection with pregnancy and maternity leave is categorised as direct discrimination gives women a strong legal protection with regard to childbearing, but this position is not unobjectionable. The categorisation of less favourable treatment as ‘direct’ discrimination implies that the sex of a person, a biological fact, constitutes the very reason for the detrimental treatment. The categorisation of less favourable treatment as ‘indirect’ discrimination means, on the contrary, that the person is subjected to detrimental treatment as a result of a social construction associated with that person’s sex. For example, the fact that most people who perform military service are men, whereas most part time workers are women, is not a direct consequence of the biology of men and women, but of a social order that prescribes that men should perform military service and that women, by and large, should shorten their working time in order to care for the family. Detrimental treatment in working life on the grounds of military service or part time work is not based on a biological fact, that of belonging to a specific sex, but on a social practice where certain roles have been assigned to a given sex. Such detrimental treatment

12

Case C-177/88 Dekker [1990] ECR 1-3941. Case C-32/93 Webb [1995] ECR I-3567. 14 Case C-66/96 Handels- og Kontorfunktionærernes Forbund i Danmark, acting on behalf of Berit Høj Pedersen v Fællesforeningen for Danmarks Brugsforeninger [1998] ECR I-7327. 13

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does thus not constitute direct discrimination, but indirect discrimination. Nor is the right to take leave from work in connection with childbirth based on an unassailable law of nature, but on a social construction that, in contrast to natural laws, can be changed. In a country, such as Sweden, where the national law on parental leave and parental benefit cover both parents, a male worker is as entitled as a female worker to take leave from paid work in order to care for a child. This means that it is equally possible for a man, and not only a woman, to suffer detrimental treatment due to absence from work when he has a child. It is therefore incorrect to categorise detrimental treatment due to such absence from work as direct discrimination, ie discrimination on the grounds of a biological fact, that of belonging to the female sex. Such detrimental treatment should instead be categorised as indirect discrimination. However, by classifying discrimination on the grounds of maternity leave as direct discrimination, the Court deems that it is an immutable fact that women must shoulder the main burden of responsibility of care for the family’s children. It is the appreciation of the fact that an imprudent use of concepts may have such consequences that lies behind the critique of the Court’s reasoning in the Dekker case put forward by, among others, Ruth Nielsen and Robert Wintemute.15 Nevertheless, discrimination on the grounds of pregnancy and maternity leave has, ever since the Dekker ruling, been regarded as direct discrimination. This principle is now codified in the Equal Treatment Directive, Article 2.2.c.16 Whereas indirect discrimination can be justified as a means of achieving a legitimate aim providing that those means are appropriate and necessary, direct discrimination is generally prohibited, unless a specific written exception in national law applies.17 Such exceptions are allowed only in a very limited number

15 Ruth Nielsen, ‘Case C-177/88, Dekker; Case C-179/88 Hertz’,(1992) Common Market Law Review Vol 29, 160–69. Robert Wintemute, ‘ExpaWhen is Pregnancy Discrimination Indirect Sex Discrimination?’ (1998) Industrial Law Journal Vol 27, Iss 1, pp 23–36. 16 Equal Treatment Dir 2006/54/EC, above n 1. 17 Art 2.1 b) Equal Treatment Dir 2006/54/EC, above n 1. The principles on justification of indirect discrimination have developed in the case law of the ECJ, beginning with case 170/84 Bilka-Kaufhaus [1986] ECR I-1607 and case 171/88 Rinner-Kuhn [1989] ECR I-2743. Analysed by Karin Lundström, ‘Indirect Sex Discrimination in the European Court of Justice’s Version’ and Lynn Roseberry, ‘Indirect Sex Discrimination in the European Court of Justice’s Version. Comments on Karin Lundström’s Article’ in A Numhauser-Henning (ed) Legal Perspectives on Equal Treatment and Non-Discrimination, (The Hague, Kluwer, 2001) pp 143–60 and pp 161–67; Tamara K Hervey, ‘EC Law on Justifications for Sex Discrimination in Working Life’, Reports, VII European Regional Congress, International Society for Labor Law and Social Security, Labour Law Congress 2002, Stockholm, pp 99–147; Marie-Ange Moreau, ‘Justifications of Discrimination’, Reports, VII European Regional Congress, International Society for Labor Law and Social Security, Labour Law Congress 2002, pp 149–71. Some scholars have argued that the ECJ in a few cases has opened up the possibility of justifying direct discrimination on objective grounds. This argument is discussed in, among others, Sacha Prechal, ‘Equality of Treatment, Non-discrimination and Social policy: Achievements in Three Themes’ (2004) Common Market Law Review Vol 41, pp 533–51, esp 545; Lynn M Roseberry, The Limits of Employment Discrimination Law in the United States and European Community (Copenhagen, DJOF Publishing, 1999) p 78; Evelyn Ellis, ‘Recent Developments in European Community Sex Equality Law’ (1998) 35 Common Market Law Review, 379, esp 392–93, and Foubert, The Legal Protection of the Pregnant Worker, p 39.

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Pregnancy and Maternity in the EU and Swedish Law on Parental Leave 143 of cases.18 The categorisation of pregnancy and maternity discrimination as direct discrimination thus gives pregnant workers and workers on maternity leave a high level of protection against detrimental treatment. It is this protection that the Swedish legislator wishes to emulate in the national rules concerning workers on parental leave. The preparatory works state that it is not acceptable that the strong legal protection that applies during pregnancy should cease just because the child is born.19 According to the Swedish legislator, detrimental treatment due to pregnancy does not diverge from detrimental treatment due to parental leave in a way that justifies a different kind of legal protection. It is not even always possible to make a clear distinction between these two situations, and it is therefore often simply a coincidence whether the employer chooses to act on the pregnancy or on the parental leave. Against the background of these arguments the legislator stated in the preparatory works that the aim of the Swedish Parental Leave Act is to ensure a protection for workers on parental leave that is in function and scope principally equivalent to the protection already ensured for pregnant workers.20 The reservation implied by the word principally is important, as the legislator nonetheless found that the rules on protection against pregnancy discrimination, in order to better adapt to the situation of parental leave, needed to be adjusted in one regard – there must be a possibility of justifying the detrimental treatment in some cases.

3. HOW SWEDISH LAW PROTECTS WORKERS ON PARENTAL LEAVE

3.1 A Prohibition on Less Favourable Treatment Modelled on the Prohibition of Discrimination The prohibition on less favourable treatment in the Swedish Parental Leave Act protects both employees and job seekers, and it covers virtually all situations in which a person might experience less favourable treatment in working life.21 The prohibition is applicable as soon as the less favourable treatment has a connection with the worker’s parental leave. The wording of the rule in the Parental Leave Act is exactly the same as the wording used in the prohibition against sex discrimination in the former Sex Equality Act, which was the rule that protected pregnant women against discrimination at the time of the introduction of the Parental Leave Act. The only difference between these two prohibitions is that the word ‘discrimination’ in the former Sex Equality Act has

18 Equal Treatment Dir 2006/54/EC, above n 1. National provisions may permit exceptions in rules on positive action (Art 3); on the protection of women, particularly as regards pregnancy and maternity (Art 28.1); and, as regards access to employment, in rules concerning cases where there is a genuine occupational requirement that the job holder must be of a particular sex (Art 14.2). 19 Government bill 2005/06:185 p 76. 20 ibid. 21 Parental Leave Act (1995:584) s 16.

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been replaced by the expression ‘less favourable treatment’ in the Parental Leave Act. According to the preparatory works of the Act on parental leave, the word discrimination should be reserved for issues of protection that are covered by the special regulation on discrimination. Thus, when parental leave is the employer’s justification for detrimental treatment, the term ‘less favourable treatment’ was considered more appropriate.22 This consideration was motivated by several factors, such as the fact that the prohibition on discrimination is mainly used to protect human rights, and the fact that parental leave does not constitute grounds for discrimination in EU law. The strongest argument for avoiding the term ‘discrimination’ was, however, that the legal construction of the prohibition on discrimination is not well suited to a rule aimed at protecting workers on parental leave. The legal construction of the prohibition on discrimination was considered to be problematic in two regards. Firstly, the legislator saw difficulties in meeting the discrimination rule’s demand for a comparator. Secondly, and more importantly, there are only very limited possibilities for granting exceptions from a prohibition on discrimination.

3.2 No Need for a Comparator to Determine Less Favourable Treatment In order to determine the existence of direct discrimination, the person who claims discrimination must show that he or she has been treated less favourably than another person is treated, has been treated or would have been treated in a comparable situation. In working life, this comparison is mainly focussed on whether the people involved are performing working tasks that are equal or of equal value.23 Thus, the term ‘comparable situation’ implies that the persons being compared actually perform work tasks for the employer. For this reason the term ‘comparable situation’ is ill-suited to a person on parental leave, given that he or she does normally not perform any work tasks for the employer during this period.24 However, given that the Parental Leave Act relies on the concept of ‘less favourable treatment’ rather than ‘discrimination’, the Swedish prohibition does not require a comparison between the worker on parental leave and another person. Instead, a comparison is to be made as to how the worker hypothetically would have been treated had he or she not been on parental leave, ie the worker is to be compared with him- or herself rather than with another person.25 This solution – to let the worker on parental leave be his or her own comparator – is, according to the Swedish legislator, inconsistent with the prohibition on discrimination as it currently stands. Therefore, the protection

22

Government bill 2005/06:185 p 77. ibid p 78. Compare to Government bill 1999/2000:143 p 32. The working tasks are only of importance in an ongoing employment relationship. In cases concerning job-seekers the comparison is instead focussed on the merits of the applicants. 24 ibid p 77. 25 ibid p 82. 23

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Pregnancy and Maternity in the EU and Swedish Law on Parental Leave 145 against detrimental treatment due to parental leave is called a prohibition against less favourable treatment rather than a prohibition against discrimination. The notion that the employer should treat an employee on parental leave as if he or she is actually working, and thus disregard the parental leave, is rather revolutionary in the labour law context. Certainly the anti-discrimination regulation demands that the employer should disregard certain personal attributes, such as the employee’s sex, sexual orientation, ethnicity and occurring disabilities. But an important feature of the rules concerning discrimination is that these only protect qualities that are irrelevant to the worker’s ability to perform his or her working tasks. With regard to qualities such as sex, sexual orientation and ethnicity, this is obvious, since these features have no relevance in terms of the worker’s ability to work. In respect of disabilities the situation is different, as a person’s disability may well have a negative impact on that person’s working capacity. However, the prohibition against disability discrimination is applicable only in cases where the disability does not affect the person’s ability to perform work. The disabled worker is thus not protected by the discrimination legislation in cases where the disability has a negative impact on the ability to perform working tasks, and where this negative impact cannot be remedied by support and adaptation measures. In such cases, the disabled worker is not considered to be in a situation comparable to those without such a disability, and the prohibition against discrimination is therefore not applicable.26 Thus, traditionally, the employee’s actual performance has formed the basis of the demand for equal treatment in the labour law context. Against this background, the Swedish legislator is taking a progressive stance in demanding that an employee on parental leave shall be treated as if he or she were performing as usual, even though no work is performed at all. Despite what is written in the preparatory works, this approach is not incompatible with the discrimination discourse. On the contrary, as we have seen, this approach is consistent with the way in which the Court has handled the question of a comparator in cases of discrimination due to pregnancy or maternity leave. From these cases we learn that the prohibition against direct sex discrimination protects not only employees who are pregnant, but also employees who are absent from work due to pregnancy related illness, due to prohibitions on employment for pregnant women, or due to maternity leave.27 Given that a discriminating act related to pregnancy or maternity leave excludes the need for a comparator, the actual implication of the prohibition on discriminating against a worker who is absent from work in connection with pregnancy or maternity leave is that such a worker should be treated as if she was performing as usual, even though no work is performed. Thus, it can be argued that a prohibition against discrimination may equally be applied to guarantee a protection against detrimental treatment

26

Government bill 1997/98:179 p 41. Compare to Government bill 2005/06:185 p 78. See cases C-394/96 Brown [1998] ECR I-4185, C-207/98 Mahlburg [2000] ECR I-549, C-342/01 Gómez [2004] ECR I-2605, and C-284/02 Land Brandenburg v Ursula Sass [2004] ECR I-11143. 27

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due to absence from work. As stated earlier, the Swedish legislator took a different approach, and it was partly for this reason that the protection against detrimental treatment due to parental leave in Swedish law was designed as a prohibition against less favourable treatment, instead of a prohibition against discrimination. But there was also another far more practical rationale for rejecting the term discrimination in connection with parental leave: The fact that there are only very limited possibilities to make exemptions from a prohibition against discrimination.

3.3 Less Favourable Treatment Can be Justified A central principle in the discrimination law is that direct discrimination cannot be justified. Exemptions from the prohibition on direct discrimination can only be made in a very small number of situations specifically regulated by the law.28 The preparatory works of the Swedish Parental Leave Act state that a protection rule designed for workers on parental leave needs to be provided with more extensive possibilities for exemptions, and that such a protection rule thus cannot be termed a prohibition against discrimination.29 In other words, the Swedish legislator wanted to sanction detrimental treatment due to parental leave to a larger extent than that is allowed under the discrimination rules. The protection against less favourable treatment due to parental leave is thus limited by an exemption rule, according to which detrimental treatment of workers on parental leave can be justified in certain cases. The exemption rule is applicable if the employer can show that the less favourable treatment is a ‘necessary consequence’ of the parental leave. The starting assumption in the preparatory works is that the exemption rule is to be interpreted in a restrictive way.30 However, the examples set out in the preparatory works, and which are discussed later in this chapter, show that there are, in fact, many circumstances where less favourable treatment may be justified by reverting to the fact that such treatment is a necessary consequence of the parental leave. This becomes even more obvious in the definition, given in the preparatory works, of when less favourable treatment is to be regarded as a ‘necessary consequence’ of the parental leave.31 According to this definition, less favourable treatment is permitted as a necessary consequence in cases where the employee on parental leave would otherwise be ‘particularly favoured in relation to other employees in a way that could be perceived as unfair towards these employees, or otherwise appear as

28

Above n 18. Compare to The Swedish Discrimination Act (2008:567) Ch 2 s 2. Government bill 2005/06:185 p 79. 30 ibid p 87. 31 For a more detailed discussion on this theme, see Jenny Julén Votinius, Föräldrar i arbete. En könskritisk undersökning av småbarnsföräldrars arbetsrättsliga ställning (Parents at work. A gender-critical study on the position of parents of young children in labour law) (Stockholm & Göteborg, Makadam, 2007) 274. 29

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Pregnancy and Maternity in the EU and Swedish Law on Parental Leave 147 unreasonable or obviously unjustified’.32 There are thus two circumstances in which the employer may treat an employee less favourably in regard to his or her parental leave. The first concerns a situation where it could be perceived as unfair towards another employee to treat the employee on parental leave as if he or she had been working. The second concerns a situation where it appears to be generally unreasonable or obviously unjustified to treat the employee on parental leave as if he or she had been working. In contrast to the strict prohibition against discrimination due to pregnancy and maternity leave in EU law, the Swedish rules on prohibition against less favourable treatment due to parental leave in an individual case can be set aside by referring to perceptions of fairness, and to what demands can be regarded as reasonable and justified in terms of the employee in question.33

4. THE USE OF EU LAW AS A POINT OF REFERENCE FOR NATIONAL LAW

4.1 A Special Sort of Interaction between EU Law and National Law As we have seen, in Sweden the legal protection against less favourable treatment during parental leave is established by means of two different sets of rules; the first being the national rules on parental leave as stipulated in the Parental Leave Act, and the second being the EU rules on discrimination due to pregnancy and maternity leave as set out in the Equal Treatment Directive. The explicit aim of the Swedish Parental Leave Act is to ensure for workers on parental leave, in principle, the same high level of protection against deterioration of working conditions as the protection that is ensured during pregnancy and maternity leave.34 The rules on protection against discrimination on the grounds of pregnancy and maternity are consequently important for the understanding of the rules that protect workers in connection with parental leave. In the preparatory works of the Swedish Parental Leave Act, all references concerning the protection of pregnant workers are made to the prohibition of sex discrimination in national law. Nevertheless, as we have seen above, it is actually

32

Government bill 2005/06:185 p 87. So far, the exemption rule has been referred to in three cases from the Swedish Labour Court; AD 2009 no 13, AD 2009 no 15 and AD 2009 no 45. The first two cases concerned the employee’s right to certain financial benefits (cumshaw and pension contribution, respectively) during periods of parental leave. The Labour Court found that the exemption rule was applicable in these cases, and that consequently the employer was allowed to withdraw the benefits in question from the employees on parental leave. The third case concerned a non-financial benefit; the right to participate in an intermediate course shortly before the beginning of the parental leave. In this case, the Labour Court found that the exemption rule was not applicable. 34 This ambition is not only clearly expressed in the preparatory works, it is also reflected in the fact that the prohibition against less favourable treatment due to parental leave was designed with exactly the same wording as the prohibition on sex discrimination in national law, which was the earlier rule that protected pregnant workers and workers on maternity leave against discrimination. 33

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the provisions in EU law – the Equal Treatment Directive and the case law from the Court – that provide the link between sex discrimination and pregnancy discrimination in Swedish law. The provisions in EU law are thus of crucial importance for the interpretation of national law on pregnancy discrimination, and consequently also for the interpretation of the Swedish Parental Leave Act. The method of legislating used in the Swedish Act on Parental Leave can be described as one that uses EU rules on one issue as a model and point of reference for national legislation on another issue, with an adjustment of those rules in order to better suit the new issue.35 In this case, the EU rules on workers’ protection in connection with pregnancy and maternity leave have been used as model for national legislation on workers’ protection in connection with parental leave, with a subsequent adjustment in the form of an exemption clause. This method of legislating creates an interaction between European Union law and national law that is of great interest from the perspective of European integration, since it implies a dissemination of principles of European Union law into the national legal system that goes beyond explicitly harmonising measures.36 But it is also a method that has the potential to give rise to judicial problems that are difficult to fully anticipate, especially as it is unclear as to what extent guidance on interpretation of the national law can be found in European Union law. This problem will be discussed here in relation to the Swedish Parental Leave Act.

4.2 The Swedish Parental Leave Act – Outcome of the Legislative Method Chosen The characteristic feature of the protection in European Union law against work related deteriorations during pregnancy and maternity leave is that it is based upon a categorisation of pregnancy and maternity discrimination as direct discrimination, which can never be justified. The very fact that the legal protection is maintained by means of a prohibition that cannot be overridden by reference to a superior interest has been pivotal to the efficiency of the rules on pregnancy

35 Note that this is a different issue than the phenomenon traditionally known as ‘overimplementation’ or ‘gold-plating’. These terms refer to the situation where the transposition of EU legislation goes beyond what is required by that legislation, while staying within legality. Even though EU legislation on pregnancy discrimination is an important point of reference for the Swedish rules protecting employees on parental leave, the Swedish Parental Leave Act does not in a strict sense extend the scope of EU law. On ‘over-implementation’ and ‘gold-plating’, see further the Commission communication ‘Smart Regulation in the European Union’ COM(2010)543, Wim Voermans et al, ‘Codification and Consolidation in the European Union: A Means to Untie Red Tape’ (2008) 29, 2 Statute Law Review 65–81 and Hans-Wolfgang Micklitz, The Politics of Judicial Co-operation in the EU: Sunday Trading, Equal Treatment and Good Faith, (Cambridge, Cambridge University Press, 2005). 36 Ben Rosamond, Theories of European Integration (Basingstoke, Palgrave Macmillan, 2000), Monica Threlfall, ‘European Social Integration: Harmonization, Convergence and Single Social Areas’ (2003) 13, 2 Journal of European Social Policy 121,139.

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Pregnancy and Maternity in the EU and Swedish Law on Parental Leave 149 and maternity in EU labour law. The legal and social principles that organise working life traditionally support the employer’s market-oriented interest rather than the workers’ parental interest. The Court’s firm adherence to the stance that pregnancy discrimination constitutes direct discrimination on grounds of sex has placed these traditional principles in question. This is perhaps most obvious in the cases that concern recruitment and termination of employment contracts. It follows from the Mahlburg case that a refusal to hire a woman on the grounds that she is pregnant cannot be justified by the fact that the woman will not assume the post in question until after the pregnancy (and the following period of leave).37 In such cases the employer must accept the delay even if it causes financial loss or practical problems within the organisation. Furthermore, the Tele-Danmark case shows that the non-discrimination principle is equally applicable to temporary employments. An employer can neither refuse to hire a woman nor terminate her contract on the grounds of pregnancy even if it is clear that the woman, as a result of her pregnancy, will be absent from work for most of the anticipated period of temporary employment.38 The Court’s uncompromising insistence that there is no justification for detrimental treatment on the grounds of pregnancy or maternity leave has led to a significant strengthening of the legal position of pregnant workers and workers on maternity leave. This development has not only had practical implications. It has also implied a shift in the way of thinking, in as much as it has destabilised one of the fundamental presumptions of working life and of labour law; the presumption that an employee’s parenthood-related commitments should not cause the employer financial loss or in any other way encroach upon the job.39 It is within this legal context that the Swedish Parental Leave Act is to be interpreted. The law is intended to provide a protection against deterioration of working conditions due to parental leave that is, in principle, fully equivalent to the protection that applies during pregnancy and maternity leave. Since Swedish law does not contain any explicit rules on discrimination on the grounds of pregnancy and maternity leave, guidance on the interpretation of the Parental Leave Act needs to be found in EU law. This interpretation is, however, complicated by the fact that the Swedish Parental Leave Act, as we have seen, contains an important exemption clause, according to which less favourable treatment can be justified as a necessary consequence of the parental leave. This clause introduces an element that is extraneous to the legal discourse on pregnancy discrimination – the possibility to argue that the claim for protection against detrimental treatment is unreasonable or unfair to the co-workers.

37

Case C-207/98 Mahlburg [2000] ECR I-7243. Case C-109/00 Tele Danmark [2001] ECR I-6993. 39 Compare Manners: ‘Perhaps even more important to the promotion of women in the workforce is the unequivocal acceptance of the Europeans that pregnant employees cost employers more money than non pregnant employees…’, Jessica Carvey Manners, ‘The Search for Mr. Troupe: The Need to Eliminate Comparison Groups in Pregnancy Discrimination Act Cases’ (2005) 66, 209 Ohio State Law Journal 230. 38

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The Swedish Parental Leave Act is a legislation that is designed for two different and incompatible objectives. On the one hand, the legislator has strived to obtain a protection for workers on parental leave that is, in essence, equivalent to the protection for pregnant workers. But on the other hand, the legislative documents emphasise the need for a possibility to justify less favourable treatment of workers on parental leave, with reference to traditional preconceptions of reasonableness and fairness. The shift in thinking about parenthood-related commitments that distinguishes the EU rules on pregnancy is thus not a stance that the Swedish legislator is prepared to fully adopt in the national rules on protection during parental leave. This becomes even more obvious in some of the examples given in the preparatory works of the Parental Leave Act, circumstances where less favourable treatment can be seen as a necessary consequence of the parental leave. Three of these examples deal with situations concerning recruitment or promotion: A situation where the employer has difficulties to find a stand-in for the employee on parental leave; a situation concerning shorter temporary employment; and a situation where the post needs to be assumed immediately. The preparatory works thus state that an employer may not on a whim refuse to recruit or employ the best qualified person for a post on the grounds that it would be difficult to employ a stand-in during the best qualified person’s parental leave. However, a refusal on these grounds may be justified, depending on the duration of the employment and on the employer’s ability to adapt to the situation and to handle changes in the work force.40 An employer may also refuse to recruit or promote a person on the grounds of parental leave in cases of temporary employments. A refusal to hire or promote may thus be seen as a necessary consequence of the parental leave in cases where the employment is intended to be of a short duration, and where the worker’s intention is to be on parental leave for a large part of this time.41 The third situation where an employer may refuse to hire or promote a person on the grounds of parental leave, discussed in the preparatory works, concerns posts that need to be assumed immediately. A requirement that an employer should hire or promote a person and then have to wait until that person is able to assume the position could, according to the preparatory works, be considered unreasonable. These three examples from the preparatory works show clearly that the Swedish legislator, despite explicit statements to the contrary, is not prepared to give workers on parental leave the same high level of protection as pregnant workers. A refusal to hire or promote a pregnant worker may never be justified by difficulties to hire a stand-in during her absence.42 Furthermore, as we have seen, the protection against discrimination is equally strong irrespective of whether the woman has opted for a temporary employment or for a permanent

40

Government bill 2005/06:185 p 87, Ministry publication series 2005:15, p 108. ibid. 42 Case C-177/88 Dekker [1990] ECR I-3941. 41

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Pregnancy and Maternity in the EU and Swedish Law on Parental Leave 151 employment.43 A refusal to hire a woman may never be based on the fact of her pregnancy, and this is also the case if the woman, due to her pregnancy, is not able to assume the post immediately.44 The exemption clause in the Swedish Parental Leave Act may appear to be a marginal adjustment of the prohibition against pregnancy discrimination, upon which the prohibition against less favourable treatment due to parental leave is modelled, given that the preparatory works state the intention that possibilities to justify detrimental treatment of a worker on parental leave are to be highly restricted. This is, however, not the case. The fact that the potential scope of the exemption rule, according to the wording of preparatory works and the examples that are advanced therein, is not as narrow as it first appears is, in this respect, incidental. The most important factor is the very existence of the exemption rule. The mere possibility of justifying less favourable treatment on grounds of parental leave makes the prohibition in the Swedish Parental Leave Act fundamentally different in quality than the protection against pregnancy discrimination as it has developed within EU law. Not only does the exemption clause in the Swedish Parental Leave Act lack an equivalent in the Equal Treatment Directive, but it, in fact, simply makes no sense in the context of European Union law on pregnancy discrimination. In this context, the principle of unjustifiability is the raison d’etre of the legal rules.

4.3 Concluding Remarks The method of legislating used in the Swedish Act on Parental Leave, where EU rules on one issue have been used as model and point of reference for national legislation on another issue, is not uncomplicated. The original rules are designed to suit one specific situation and that situation constitutes the context within which the rules are understood. Within a different context the understanding of the rules may change and assume a new meaning. In addition, the new context may require that the original rules be adjusted somewhat in order to better fit the situation in which they are to be applied. This was the case when the EU rules on pregnancy and maternity discrimination were used as model for the Swedish rules on less favourable treatment due to parental leave. The adjustment introduced, the exemption rule, changed the legal structure of the rules in a fundamental way. It is clear that the integrity of the EU rules with regard to pregnancy discrimination have not been respected in this case.45 As the national rules in the Swedish Parental Leave Act are only partly coherent with the Union law they are intended to emulate, the legal argumentation

43 Case C-109/00 Tele Danmark [2001] ECR I-6993, para 28, and case C-438/99, Melgar [2001] ECR I-6915, para 46. 44 Case C-207/98 Mahlburg [2000] ECR I-549. 45 Compare to Dworkin on law as integrity, Ronald Dworkin, Law’s Empire (London, Fontana, 1986).

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concerning these rules can only partly refer to principles of European Union law and to jurisprudence from the Court of Justice of the European Union. As a result of this, the legal argumentation becomes confused. This situation is not only to the detriment of the rule of law and to the legal protection for workers on parental leave in national law. In the national context it also carries a risk of weakening the protection provided under EU law for pregnant workers and workers on maternity leave. The ambiguity regarding the protection of workers on parental leave may thus have wider implications for the legal field to which the provisions for protecting workers in connection with pregnancy and childbirth belong.

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8 Flexicurity, Labour Law and the Notion of Equal Treatment MIA RÖNNMAR*

1. INTRODUCTION

Flexicurity – the successful balance between flexibility and security – is central to European employment policy and to the ‘modernisation’ of EU labour law and labour law in the different Member States of the EU. Common principles of flexicurity have been adopted and integrated into the European Employment Strategy, the Lisbon Strategy, and the Europe 2020 Strategy, and different pathways to flexicurity have been outlined. The aim of this chapter is to explore and critically discuss the different notions of equal treatment inherent in the EU law flexicurity discourse, and to point to some conceptual and analytical points of departure. Swedish labour law will serve as the main national example when discussing the interaction between EU and Member State levels. After a brief overview of general EU labour law developments in the area of equal treatment and non-discrimination, and some key concepts, the outline of the chapter is as follows. Section 2 provides an account of the EU law flexicurity discourse. Section 3 discusses flexicurity, flexible and reliable contractual arrangements, and employment protection. Section 4 presents an account of flexicurity, equal treatment and part-time, fixed-term and temporary agency workers. Section 5 discusses flexicurity, equal treatment, and the boundaries of labour law. Lastly, Section 6 contains some concluding remarks. In the multifaceted book ‘The Transformation of Labour Law in Europe’, which covers comparative labour law developments in 15 European countries during 1945–2004, Hepple illustrates the explosive and dynamic development

* Associate Professor in Civil Law, LLD, Law Faculty, Lund University. Member of the Norma Research Programme, the ReMarkLab Research Programme and the European Labour Law Network (ELLN), a legal expert network of the European Commission. This research is performed within the research project ‘Flexicurity – a study of Swedish employment regulation in a comparative context’, financed by FAS.

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in the field of equality and non-discrimination law during the last sixty years.1 In a previous book, ‘The Making of Labour Law in Europe’, in which Hepple and others covered comparative labour law developments in Europe up to 1945, there was no chapter on equality – save for some provisions in some national constitutions, by 1945, there was no equality or non-discrimination legislation in place.2 Hepple describes and analyses a development and process from legal assertion of the right to equality in international instruments, to formal equality, to substantive equality, to the dawn of comprehensive and transformative equality – implying the dismantling of systemic inequalities, the eradication of poverty and disadvantage, and equality of capabilities and opportunities. This development (discussed by Hepple in terms of four different periods: 1948–58, 1957–75, 1976–99 and 2000–04) is closely connected to the human rights discourse and the value of human dignity – but also to the influence and dynamics of EU law and the interventions by the European Union Court of Justice – intertwined with social, political and economic developments, such as increased labour market participation for women, increased migration, a shift from standard to flexible employment, an ageing population and restructuring and globalisation.3 Traditionally bans on discrimination were based on formal equality, and linked to the liberal tradition and the Aristotelian thesis of ‘what is alike shall be treated alike’. These bans were generally designed as individual rights and founded on a complaint-led model. The tension between formal and substantive equality (and in time transformative equality) has long been central to equality law.4 In this regard, Schiek has held that ‘EU non-discrimination law is multidimensional in its conceptual approach, which continues to oscillate between form and substance, individual and group and equality of treatment and result’.5 Numhauser-Henning emphasises that the goal of equality law generally is to change identified existing and discriminatory normative perceptions and to promote social justice and integration.6 Substantive equality has been promoted inter alia by bans on indirect discrimination, rules on the burden of proof, and provisions on positive action and preferential treatment. Hepple has discussed alternatives to the notion of equal treatment and equal opportunity that have been put forward in the debate, and has described how ‘Hugh Collins

1 See B Hepple, ‘Equality at Work’ in B Hepple and B Veneziani (eds), The Transformation of Labour Law in Europe. A Comparative Study of 15 Countries 1945–2004 (Oxford, Hart Publishing, 2009) 129–63. 2 See B Hepple (ed), The Making of Labour Law in Europe. A Comparative Study of Nine Countries up to 1945 (London, Mansell Publishing Limited, 1986). 3 See Hepple, ‘Equality at Work’, above n 1. 4 See Hepple, ‘Equality at Work’, above n 1, and Numhauser-Henning’s chapter (with references to Fredman). 5 See D Schiek, ‘From European Union Non-discrimination Law Towards Multidimensional Equality Law for Europe’ in D Schiek and V Chege (eds), European Union Non-Discrimination Law. Comparative Perspectives on Multidimensional Equality Law (London, Routledge/Cavendish, 2009) 3–27, p 3. 6 See Numhauser-Henning’ chapter.

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argues that ‘social inclusion’ provides a more satisfactory intellectual basis for anti-discrimination legislation than approaches based on substantive equality. Catherine Barnard suggests that the law needs to be underpinned by the values of ‘solidarity’ in order to achieve the objective of integration and participation of disadvantaged groups’.7 The principle of non-discrimination on the basis of nationality is essential to European integration, and the European Union and its social market economy (see the Lisbon Treaty, Article 3.3 TEU and Article 18 TFEU). EU regulation in the area of sex discrimination is both comprehensive and able to build on tradition. Through the Amsterdam Treaty, the sex equality aspect was highlighted even more by the introduction of a mainstreaming strategy concerning equality between women and men. Furthermore, an important new basis for legal action in the area of non-discrimination was established by the creation of the new Article 13 of the EC Treaty after Amsterdam (now Article 19 TFEU), expanding the Council’s powers to take appropriate action in order to combat discrimination. Consequently, two Directives, one establishing a general framework for equal treatment in employment and occupation and the other implementing the principle of equal treatment between persons irrespective of racial or ethnic origin, were soon adopted.8 According to Article 10 TFEU, the Union shall aim to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation in defining and implementing its policies and activities.9 Also, the EU Charter of Fundamental Rights, which since the Lisbon Treaty is legally binding and part of primary Union law (see Article 6 TEU), contains provisions on equality and non-discrimination. According to Article 20, everyone is equal before the law and Article 21 contains an ‘open’ ban on discrimination and states that any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation shall be prohibited. In Sweden, EU law and its clear emphasis on equality and non-discrimination issues have served as an important background for developments in this area of law. Hepple points to future challenges in this field of law, such as the need to develop coherent and comprehensive equality laws coupled with positive duties and effective enforcement mechanisms – all given the still limited success in achieving substantive and transformative equality.10

7

See B Hepple, ‘Aims of equality law’ (2007), pp 19 ff. Compare Council Dir 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation, OJ L 303, 2.12.2000, pp 16–22 and Council Dir 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin, OJ L 180, pp 22–26. 9 Compare also non-discrimination regulation at the national constitutional level and the international level, such as c 2 s 15 of the Instrument of Government, Art 14 of the European Convention on Human Rights, ILO Convention No 111 Discrimination (Employment and Occupation) Convention and the 1998 ILO Declaration of Fundamental Principles and Rights at Work. 10 See Hepple, ‘Equality at Work’, above n 1. 8

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Comprehensive equality (reflected inter alia in Article 19 TFEU and Directives 2000/43/EC and 2000/78) implies more and broader protected discrimination grounds, such as sex, race, belief, sexual orientation, disability and age, and no hierarchy of grounds. In some countries, this has manifested itself in the creation of Single Non-Discrimination Acts. The Swedish (2008:567) NonDiscrimination Act not only gathers different discrimination grounds but it is also applicable (like inter alia Directive 2000/43/EC) outside the realm of working life; for example, in public employment services, education, health care, social services, and social security.11 The former legislation, including the (1991:433) Equal Opportunities Act, the (2003:307) Prohibition of Discrimination Act, and five other Acts, were replaced by this Single Act against discrimination. Apart from sex, ethnicity, religion and other belief, sexual orientation and disability, protection against discrimination on grounds of age and transsexual identity/expression has now also been introduced. The Non-Discrimination Act (as the EU Directives) inter alia contains prohibitions on direct and indirect discrimination, harassment and instruction to discriminate, and provisions on positive action and active measures. However, the example of Sweden shows that such an Act does not necessarily eliminate the hierarchy of grounds, or create the same chances of achieving substantive and transformative equality. Thus, in Sweden there are still important differences between different discrimination grounds as regards not only the areas of society covered, but also active measures and mainstreaming, and as regards possibilities for exceptions and possibilities for employers to justify prima facie discriminatory behaviour. The notion of comprehensive equality also implies – in the wake of postfordism, flexibilisation of working life, and a shift from the male breadwinner model – spreading the principle of non-discrimination and equal treatment to new groups of flexible workers, which lies at the heart of the discussion in this chapter. The Part-Time Work, Fixed-Term Work and Temporary Agency Work Directives12 provide for equality of treatment as a way of protecting employees and improving the quality of flexible work (section 4).

2. THE EU LAW FLEXICURITY DISCOURSE

The 1997 Green Paper on a new organisation of work,13 the 1998 Employment Guidelines, and the Part-Time Work and the Fixed-Term Work Directives can be said to constitute the early developments of the EU law flexicurity discourse.

11

See Governmental Bill prop 2007/08:95 and Governmental Inquiry Report SOU 2006:22. Council Dir 97/81/EC of 15 December 1997 concerning the Framework Agreement on part-time work concluded by UNICE, CEEP and ETUC, OJ L 14, 20.1.1998, pp 9–14, Council Dir 99/70/EC of 28 June 1999 concerning the Framework Agreement on fixed-term work concluded by the ETUC, UNICE and CEEP, OJ L 175, 10.7.1999, pp 43–48 and Dir 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on temporary agency work, OJ L 327, 5.12.2008, pp 9–14. 13 See COM(1997) 128 final. 12

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Prominent national examples of successful flexicurity strategies and policies (often put forward by the OECD and the European Commission) include the 1999 Dutch Flexibility and Security Act and the Danish ‘Golden Triangle of Flexicurity’.14 The Dutch system represents a flexible regulation of temporary agency work and fixed-term work, combined with legal protection for these groups (also in social security terms), limiting the consecutive use of fixed-term contracts, eliminating administrative obstacles for temporary agency work, and providing a regulatory framework for flexible work. The Danish system builds on a rather weak employment protection (provided for not by statute, but by collective agreements), active labour market policies, and a generous unemployment benefit system. The flexibilisation of work is described as an increase in adaptability and allocative flexibility, and has often been discussed in terms of labour market segmentation and the legal ‘tension’ between on the one hand, permanent employment, linked to employment protection, and on the other hand, more precarious atypical employment. Frequently mentioned background reasons for this flexibilisation process include the increasing globalisation of economy and commerce, new technology, and improved communications. Today we find relative consensus as regards this flexibilisation, and empirical evidence supports an increase in atypical employment. As for terminology, the notions of atypical or non-standard work have often been replaced, in concert with the general increase and acceptance of this kind of work, by the notion of flexible work.15 The EU law development can be understood as a shift from opposition to acceptance of flexible work. Flexicurity relates to Atkinson’s model of the flexible firm, often referred to in labour market flexibility research. The flexible firm is made up of three different labour force segments: the core group of workers with firm-specific skills, typically offered high-quality working conditions and employment protection; the peripheral group of workers with a looser connection to the firm, often employed on fixed-term or part-time employment contracts; and the external group of workers, workers who are utilised, but not employed, by the 14 See eg European Commission, Employment in Europe 2006 (2006) pp 77 ff, OECD, OECD Employment Outlook 2004 (2004) pp 97 ff and European Expert Group on Flexicurity, T. Wilthagen (rapporteur), Flexicurity Pathways. Turning hurdles into stepping stones (Bryssel 2007). 15 In the Preambles to the Part-Time Work Directive, Fixed-Term Work Directive and Temporary Agency Work Directive, the notions of flexible work and flexible working arrangements are discussed. As for the scope of the Directives, the Part-Time Work Directive applies to ‘part-time workers who have an employment contract or employment relationship as defined by the law, collective agreements or practice in force in each Member State’ (Clause 2.1), the Fixed-Term Work Directive applies to ‘fixed-term workers who have an employment contract or employment relationship as defined in law, collective agreements or practice in each Member State’ (Clause 2.1), and the Temporary Agency Work Directive states that for the purposes of this Directive, ‘“worker” means any person who, in the Member State concerned, is protected as a worker under national employment law’ (Art 3.1.a) and that ‘“temporary agency worker” means a worker with a contract of employment or an employment relationship with a temporary-work agency with a view to being assigned to a user undertaking to work temporarily under its supervision and direction’ (Art 3.1.c).

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firm, such as self-employed persons or temporary agency workers. The employer typically makes use of different flexibility strategies with regard to these labour force segments. Numerical flexibility relates both to the form and duration of the employment contract and to working-time arrangements, and primarily serves the purpose of achieving greater flexibility in the number of workers employed. Functional flexibility is a matter of adaptability and versatility within permanent employment relationships, and it primarily affects the so-called core group of workers. The aim of functional flexibility is to vary the content of work in relation to the changing demands of production. Finally, financial flexibility is concerned with making wages more adaptable to circumstances, such as the profits of the business or the employee’s knowledge and efficiency.16 The influential flexicurity research by Wilthagen starts from theories on a flexibility-security nexus and transitional labour markets. Wilthagen discusses flexibility, following Atkinson’s model, in terms of external numerical flexibility, internal numerical flexibility, functional flexibility and flexible pay, and security in terms of job security, employment security/employability security, income security and combination security.17 A starting point for the theory on transitional labour markets is that ‘the borders between the labour market and other social systems – private households, unemployment, training and education and retirement – have to become and are indeed more open to transitory states between gainful employment and productive non-market activities’.18 Thus, transitional labour markets aim at creating conditions for successful and gainful transitions between different jobs, but also between jobs, unemployment, training and retirement. The much-debated 2006 Green Paper on the modernisation of labour law discussed the role labour law could play in promoting growth and jobs, and advancing flexicurity. Following a report by the European Expert Group on Flexicurity (led by Wilthagen), the Council in 2007 adopted Common Principles of Flexicurity to be integrated into the European Employment Strategy and the Lisbon Strategy for Growth and Jobs, and now the Europe 2020 Strategy.19

16 See J Atkinson, ‘Manpower Strategies for Flexible Organisations’ (1984) Personnel Management 28. The model of the ‘flexible firm’ and its related concepts can be used as ‘ideal types’ to discuss different functions from a flexibility perspective, see eg M Rönnmar, ‘The Managerial Prerogative and the Employee’s Obligation to Work: Comparative Perspectives on Functional Flexibility’ (2006) 35(1) Industrial Law Journal 56–74. 17 See T Wilthagen, The Flexibility-Security Nexus: New approaches to regulating employment and labour markets, Flexicurity research paper FXP 2003-2 (Tilburg, OSA/Institute for Labour Studies, Tilburg University, 2002) and European Commission, Employment in Europe 2006, above n 14. 18 Wilthagen, The Flexibility-Security Nexus, above n 14, p 6. Compare also G Schmid, ‘Transitional labour markets and the European social model: towards a new employment compact’ in G Schmid and B Gazier (eds), The Dynamics of Full Employment: Social Integration Through Transitional Labour Markets (Cheltenham, Edward Elgar, 2002) 393–435. 19 See European Commission, Green Paper. Modernising labour law to meet the challenges of the 21st century, COM(2006) 708 final, European Expert Group on Flexicurity, Flexicurity Pathways, above n 14 and European Commission, Communication from the Commission to the European

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Flexicurity is described at EU level as an integrated strategy to enhance, at the same time, flexibility and security in the labour market, and contains the following components: flexible and reliable contractual arrangements; comprehensive life-long learning; effective active labour market policies; and modern social security systems. Member States are to utilise different pathways to flexicurity dependent on their respective labour law, industrial relations, and social security systems.20 Furthermore, the importance of the involvement of the social partners – for example through collective bargaining and information and consultation – is highlighted.21 The aim of flexicurity is to reduce labour market segmentation, but also to increase economic growth and Europe’s competitiveness in a global perspective. According to Wilthagen, ‘The European social model needs further development and strengthening in order to form a true complement and counterpart to the European monetary and economic model. This in our opinion forms a sufficient justification for devoting a research agenda to promising concepts such as flexicurity and transitional labour markets’.22 Flexible and reliable contractual arrangements (through modern labour laws, collective agreements and work organisation) – at the heart of labour law and this chapter – aim at reduced labour market segmentation and equal treatment of permanent employees and fixed-term workers and other flexible workers. Such equal treatment can be achieved through principles of non-discrimination, a new balance between numerical and functional flexibility, deregulation of employment protection and the creation of a ‘tenure track’ approach, and progressive employment protection. Employability and labour market transitions are also in focus, and thus a shift of emphasis from job security and traditional employment protection to security by way of employability in relation to the entire labour market.23 In this context, the notions of internal flexicurity, transitions, and adjustments within an enterprise, and external flexicurity, transitions from job to job between enterprises and between employment and self-employment, are also discussed.24

Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. Towards Common Principles of Flexicurity: More and better jobs through flexibility and security, COM(2007) 359 final. 20 Compare COM(2007) 359 final, above n 19. The pathways are: pathway 1, tackling contractual segmentation; pathway 2, developing flexicurity within the enterprise and offering transition security; pathway 3, tackling skills and opportunity gaps among the workforce; and pathway 4, improving opportunities for benefit recipients and informally employed workers. 21 Compare COM(2007) 359 final, above n 19, and European social partners, Key Challenges Facing European Labour Markets: A Joint Analysis of European Social Partners (2007). 22 Wilthagen, The Flexibility-Security Nexus, above n 14, p 29. 23 Compare COM(2007) 359 final, above n 19. 24 Compare also the European Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, An Agenda for new skills and jobs: A European contribution towards full employment, COM(2010) 682 final, commenting on the extent of internal and external flexicurity, inter alia in light of the economic crisis in 2008 and onwards.

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The EU law flexicurity discourse (particularly as expressed in the Green Paper on the modernisation of labour law) has been criticised, most clearly by the trade union movement, but also by academics, for focusing merely or predominately on labour market flexibility and deregulation.25 Until now, probably the most articulated legal expressions of the EU law flexicurity discourse are the Part-Time, Fixed-Term and Temporary Agency Work Directives.26 The Green Paper on the modernisation of labour law (focusing inter alia on the employee notion, temporary agency work, working time and undeclared work) has not yet resulted in any other explicit legal proposals from the European Commission, linked to the flexicurity discourse. The integration of the Common Principles of Flexicurity into European employment policy and the European Employment Strategy, the Lisbon Strategy for Growth and Jobs, and now the Europe 2020 Strategy, by way of soft law and the open method of coordination, is the recent and clearest (though still rather vague) expression of the EU law flexicurity discourse. The Employment Guidelines formed part of the Integrated Guidelines for 2008–2010. Achieving full employment and reducing unemployment and inactivity was said to be vital to sustain economic growth and reinforce social cohesion. An integrated flexicurity approach was said to be essential to achieve these goals. More specifically, Guideline 21 (of the Integrated Guidelines) aimed to promote ‘flexibility combined with employment security and reduce labour market segmentation, having due regard to the role of the social partners’ through inter alia ‘the adaptation of employment legislation, reviewing where necessary the different contractual and working time arrangements’. In the Joint Employment Report 2008/2009 the Council concludes that ‘[f]lexicurity is now acknowledged as a key approach to making labour markets more responsive to the changes resulting from globalisation’ and that the ‘analysis of the recent National Reform Programmes shows that several Member States are putting in place flexicurity strategies, but also that the overall efforts are still insufficient and must be strengthened, particularly in view of the economic downturn’.27 The new Europe 2020 Strategy puts forward three mutually reinforcing priorities: smart growth, sustainable growth and inclusive growth. As regards inclusive growth – a high-employment economy delivering economic, social and territorial cohesion – a new flagship initiative ‘An agenda for new skills and jobs’ is introduced. Here, the Commission will work to define and implement the 25 See European Foundation for the Improvement of Living and Working Conditions, Flexicurity and industrial relations (Dublin, European Foundation for the Improvement of Living and Working Conditions, 2009) pp 10 ff. 26 Compare also the autonomous Telework Agreement from 2002, resulting from the European Social Dialogue. 27 See the Joint Employment Report 2008/2009, p 7. Compare also M De Vos, ‘European Flexicurity and Globalisation: A Critical Perspective’ (2009) 25(3) International Journal of Comparative Labour Law and Industrial Relations 209–35 and S Sciarra, Is Flexicurity a European Policy?, URGE Working Paper 4/2008 (Turin, URGE, 2008) on the European Globalisation Adjustment Fund, and its possibilities to promote flexicurity.

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second phase of the flexicurity agenda and to reinforce the four components of flexicurity together with the European social partners. At national level, Member States will proceed to implement their national pathways for flexicurity to reduce labour market segmentation and facilitate transitions.28 One expression of this Europe 2020 Strategy is more focused Integrated Guidelines. Here, flexicurity is more implicitly addressed in Guidelines 7 to 10, relating to inter alia increasing labour market participation and reducing structural unemployment and developing a skilled workforce responding to labour market needs, promoting job quality and life-long learning. Member States should integrate the flexicurity principles into their labour market policies and apply them with a view to increasing labour market participation and combating segmentation.29

3. Flexicurity, Flexible and Reliable Contractual Arrangements and Employment Protection The EU law flexicurity discourse and the component flexible and reliable contractual arrangements aim at reduced labour market segmentation and diminished differences – between insiders and outsiders, well-protected and less-protected workers, and permanent employees and fixed-term workers and other flexible workers, respectively. Diminished differences – and equal treatment – between permanent employees and fixed-term workers (and other flexible workers) can be achieved both through principles of non-discrimination and equal treatment proper (see further section 4) and reforms to regulation of employment protection and fixed-term work. These latter reforms relate to a new balance between numerical and functional flexibility, deregulation of employment protection and the creation of a ‘tenure track’ approach and progressive employment protection, and an increased focus on employability. As regards the balance between numerical and functional flexibility, (external) numerical flexibility – designed to achieve greater flexibility in the number of workers employed – has often been at the centre of attention in the labour market flexibility debate, as has flexible work. Functional flexibility, a matter of adaptability and versatility within permanent employment relationships, in turn, is closely linked to employability. Previous studies have shown, for example, that the Swedish labour law and industrial relations system provides a rather wide scope for functional flexibility and favourable conditions for the implementation of functional flexibility strategies. This is owing to the employee’s extensive obligation to work, the employer’s free right in principle to direct and allocate work and right of transfer,

28 See European Commission, Communication from the Commission, Europe 2020. A strategy for smart, sustainable and inclusive growth, COM(2010) 2020 and COM(2010) 682 final, above n 24. 29 See Proposal for a Council Decision on guidelines for the employment policies of the Member States. Part II of the Europe 2020 Integrated Guidelines, COM(2010) 193 final.

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and an industrial relations system built on collectivism, social partnership, and mechanisms for information, consultation and co-determination.30 A new balance between numerical and functional flexibility implies an increased focus on functional flexibility. In the new flagship initiative Agenda for New Skills and Jobs, emphasis is put on the importance of functional flexibility and working time (and pay) flexibility (here phrased as internal flexibility), not least in times of economic pressures and crisis. It is argued that ‘[w]hile both internal and external flexibility are important over the business cycle, internal flexibility can help employers adjust labour input to a temporary fall in demand while preserving jobs which are viable in the longer term. Employers can thus retain the skills of firm-specific workers which would be at a premium when recovery takes hold. Forms of internal numerical flexibility [and functional flexibility, my comment] include the adjustment of work organisation or working time (eg short-time working arrangements)’.31 When it comes to the deregulation of employment protection, and the creation of a ‘tenure track’ approach and progressive employment protection, one of the interests at hand is the need to provide ‘stepping-stones’ for ‘outsiders’ and fixedterm workers to move into stable contractual arrangements (instead of getting ‘trapped’ in fixed-term and flexible contractual arrangements).32 This notion of equal treatment between permanent employees and fixed-term workers is potentially ‘revolutionary’, and at the very heart of employment protection regulation. It relates to (permanent) open-ended employment contracts as the main rule, and the crucial functional relationship between open-ended employment contracts and fixed-term employment contracts. In principle, an open-ended employment contract is concluded for an indefinite period of time, and can be terminated only by means of dismissal, and then the employer must have just cause for dismissal. In Sweden, for example, the regulation of fixed-term employment contracts first became an important issue in the beginning of the 1970s. Statutory employment protection, first established through the 1974 Employment Protection Act, required regulation of fixed-term employment contracts, to prevent circumvention

30 See Rönnmar, ‘The Managerial Prerogative and the Employee’s Obligation to Work’, above n 16. See also A Numhauser-Henning and M Rönnmar, ‘Det flexibla svenska anställningsskyddet’ (2010/11) 22(2) Juridisk Tidskrift 382–411 for an analysis of recent Swedish case law developments in the area of employment protection. In relation to dismissals for reasons of redundancy, the statutory employment protection (and accompanying collective bargaining) leaves much room for the managerial prerogative, the possibility to flexible adjustment of the number of workers, and numerical flexibility. Particularly Labour Court judgment AD 2009 No 50, dealing with dismissals for reasons of redundancy and the close link between seniority rules and the employer’s obligation to offer alternative work, highlights the great respect for the managerial prerogative – and scope also for functional flexibility strategies – inherent in the statutory employment protection regulation. Employers have vast possibilities to reorganise and plan the process leading up to transfers, redundancy and dismissals, thereby in practice setting aside (from the individual employee’s perspective) seniority rules and the last-in-first-out-principle. 31 See COM(2010) 682 final, above n 24. Compare also P Auer, ‘What’s in a Name? The Rise (and Fall?) of Flexicurity’ (2010) 52 Journal of Industrial Relations 371. 32 See COM(2007) 359 final, above n 19, and European Expert Group on Flexicurity, Flexicurity Pathways, above n 14.

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of the employment protection linked to permanent open-ended employment contracts. In the Preamble to the Fixed-Term Work Directive/Framework Agreement on Fixed-Term Work, the parties recognise that ‘contracts of an indefinite duration are, and will continue to be, the general form of employment relationship between employers and workers’ (but also that ‘fixed-term employment contracts respond, in certain circumstances, to the needs of both employers and workers’). This is also articulated in recent policy documents – not least in response to the frequent criticism against the ‘deregulatory agenda’ of the flexicurity strategy. For example, it is held that ‘[i]t is sometimes claimed that flexicurity seeks to abolish employment protection legislation. This is not the case. Flexicurity promotes an appropriate design of EPL’.33 Pathway 1, ‘Tackling contractual segmentation’, developed inter alia in the report by the European Expert Group on Flexicurity, aims precisely to redesign the open-ended contract to include a progressive build-up of job protection, and redesign rules for economic dismissals. A possible future deregulation of employment protection is sketched in the following way: ‘workers would have an open-ended contract from the very beginning of the employment relationship with their employer and would no longer, as is now often the case, start with a series of fixed-term or agency contracts. The open-ended contract would be redesigned to include a progressive build-up of job protection. It would start with a basic level of job protection and protection would build up progressively with job tenure, until “full” protection is achieved. This “tenure track approach” would guarantee automatic progress into better contractual conditions; the risk of getting “stuck” in less protected contracts would thus be reduced’.34 Reforms of the employment protection regulation related to economic dismissals are proposed in order to address bureaucracy and length of procedure, improve transparency, and make the process more reliable.35 The Commission discusses the regulation of economic dismissals also in relation to the influential – but highly controversial – employment protection indicators developed by the OECD, and the OECD studies of the strictness of employment protection regulation in different countries.36

33

COM(2007) 359 final, above n 19. COM(2007) 359 final, above n 19. 35 See COM(2007) 359 final, above n 19. Compare also the report by the European Expert Group on Flexicurity, where the idea is considered to ‘[make] standard contracts more attractive by introducing a unitary contract, based on “tenure track”. These contracts would be permanent contracts but specific elements of protection (on top of the basics) can be built up progressively as the working relationship continues. These may concern notification periods, the amount of severance pay and the procedural aspects of dismissal protection. From the start, there should be an adequate though basic level of protection, under the law and/or collective agreements, which expands automatically and stepwise as the working relationship continues. At the same time, the (consecutive) use of fixed-term contracts should be limited and undeclared work should be reduced as rapidly as possible, notably by increasing effective inspections’, see European Expert Group on Flexicurity, Flexicurity Pathways, above n 14, p 23. 36 See eg COM(2007) 359 final, above n 19, with further references. Compare also the critical debate on the OECD employment protection indicators, and the attempt by Deakin et al to develop 34

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In the new Agenda for Skills and Jobs, the Commission presents different proposals to reinforce the four components of flexicurity, and argues that ‘in highly segmented labour markets, one possible avenue for discussion could be to extend the use of open-ended contractual arrangements, with a sufficiently long probation period and a gradual increase of protection rights, access to training, life-long learning and career guidance for all employees [emphasis added]. This would aim at reducing the existing divisions between those holding temporary and permanent contracts’.37 Thus, these ideas are put forward again here, and, I would argue, taken one step further. Here all open-ended employment contracts would include a sufficiently long probation period (during which employment protection is absent). In line with this, Barnard has put forward a proposal (in order to provoke discussion) to consider a ‘tier of rights approach’. She argues that ‘some rules, considered essential and universal (eg those concerning anti-discrimination), should be given to all workers, broadly defined: others should be given to those who have worked for a period of time (eg protection against dismissal on transfer of an undertaking should be given to those who have worked for a certain period such as one year)’.38 In contrast, from the French horizon, Gaudu has critically discussed the failed attempt in 2005 to introduce a similar open-ended single employment contract – replacing the fixed-term contract and the open-ended contract. Gaudu argues that ‘it is not possible to radically deregulate economic dismissals under the banner of a “single employment contract” that would replace the dualism of the fixed-term contract/openended contract’.39 However, it is important to remember that outside the realm of the European Employment Strategy, the Europe 2020 Strategy and the open method of coordination, the Green Paper on the modernisation of labour law, the Common Principles of Flexicurity, and the flexicurity strategy have not yet resulted in any new (‘hard’) legal proposals linked to employment protection. In general, employment protection as such is only partly regulated at EU level (see Article 153 TFEU and Article 30 of the EU Charter of Fundamental Rights), inter alia through the Fixed-Term Work Directive and the ‘restructuring’ Directives on

a more nuanced system of labour law regulation evaluation; see eg S Deakin, P Lele and M Siems, ‘The evolution of labour law: Calibrating and comparing regulatory regimes’ (2007) 146(3–4) International Labour Review 133–62, and S Deakin and P Sarkar, ‘Assessing the long-term economic impact of labour law systems: a theoretical reappraisal and analysis of new times series data’ (2008) 39(6) Industrial Relations Journal 453. 37

See COM(2010) 682 final, above n 24, p 5. C Barnard, Labour Law and the Crisis. Summary of the Main Issues, Paper on the occasion of the 3rd Annual Legal Seminar European Labour Law Network (2010) p 8. 39 F Gaudu, Collective Redundancies for Economic Motives: Convergences and Controversies. Part II, Keynote Paper on the occasion of the 3rd Annual Legal Seminar European Labour Law Network (2010) p 1. 38

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Transfers of Undertakings (2001/23/EC)40 and Collective Dismissals (1998/59/ EC).41 The Fixed-Term Work Directive was adopted in 1999, as a result of the European social dialogue. The purpose of the Directive is twofold: to improve the quality of fixed-term work by ensuring the application of the principle of non-discrimination, and to establish a framework to prevent abuse arising from the use of successive fixed-term employment contracts or relationships (see clause 1). When it comes to measures to prevent abuse arising from the use of successive fixed-term employment contracts or relationships – linked to the ‘tenure track’ approach and progressive employment protection – and where there are no equivalent legal measures to prevent abuse, the Member States shall introduce, in a manner which takes account of the needs of specific sectors and/or categories of workers, one or more of the following measures: objective reasons justifying the renewal of such contracts or relationships; the maximum total duration of successive fixed-term employment contracts or relationships; or, the number of renewals of such contracts or relationships (see clause 5). Thus, the Directive does not introduce any requirement for objective reasons for the parties’ first entry into a fixed-term employment contract.42 In Sweden, the latest reform of the regulation of fixed-term employment contracts entered into force on 1 July 2007. The reform aimed at simplifying and clarifying the regulation of fixed-term employment contracts, but also at meeting the need for security and involvement of employees within a flexible and efficient labour market, and at increasing the possibilities for employers to make use of fixed-term employment contracts. In part, the reform represents a new stance towards fixed-term employment contracts. A long ‘catalogue’ of fixed-term contracts has been replaced by a new form of fixed-term contract – ‘general fixed-term employment’ (see section 5 of the (1982:80) Employment Protection Act), supplemented only by temporary substitute employment, seasonal employment, fixed-term contracts for employees above the age of 67 years, and probationary employment.43 Consequently, the legal scope for fixedterm employment contracts is now broader. The employer is free to enter into general fixed-term employments, and there is no requirement for objective

40 Council Dir 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses, OJ L 82, 22.3.2001, pp 16–20. 41 Council Dir 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies, OJ L 225, 12.8.1998, pp 16–21. 42 Compare A Numhauser-Henning, ‘Fixed-term Work in Nordic Labour Law’ (2002) 18(3) International Journal of Comparative Labour Law and Industrial Relations 429 and Case C-144/04 Werner Mangold v Rüdiger Helm [2005] ECR I-9981. 43 See further M Rönnmar, ‘Labour Policy on Fixed-Term Work in Sweden’ in T Araki and H Nakakubo (eds), Regulation of Fixed-Term Employment Contracts. A Comparative Overview, Bulletin of Comparative Labour Relations Vol 76 (Alphen aan den Rijn, Kluwer Law International, 2010) 157–73. See also Governmental Bill prop 2006/07:111.

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reasons. However, when an employee has been employed – in a general fixedterm employment or as a temporary substitute – by one employer for a total of two years during the last five years, the contract is automatically converted into an indefinite permanent employment contract (see section 5 subsection 2 of the (1982:80) Employment Protection Act). The periods of employment spent in general fixed-term and temporary substitute employment are non-cumulative. An employee can therefore be employed for a total of four years (within a fiveyear period; seasonal and probationary employment may, in principle, by added to this). Before terminating a probationary employment contract, or a fixed-term employment contract concluded according to section 5 of the (1982:80) Employment Protection Act, provided that the employee has been employed for a total of 12 months during the last three years, the employer is obliged to inform the employee, and his or her trade union, and the employee and the trade union have a right to consult the employer (see sections 15–17, 30a and 31 of the (1982:80) Employment Protection Act). An employee with a fixed-term contract (except for probationary employment), who has been employed in total for more than twelve months during the last three years with the employer, and whose employment has been terminated for reasons of redundancy, has a priority right of re-employment during nine months after the expiry of the employment contract (see section 25 of the (1982:80) Employment Protection Act).44 There was no explicit implementation as regards the Fixed-Term Work Directive and clause 5 on measures against abuse of successive fixed-term employments. The existing regulation was deemed satisfactory.45(However, the reform in 2007 was partly linked to the Fixed-Term Work Directive and discussed inter alia in terms of implementation of the Directive.46) In 2007 the Swedish Confederation for Professional Employees (TCO) made a formal complaint to the European Commission as regards the Swedish State’s failure to correctly implement the Fixed-Term Work Directive. TCO criticised the content of the 2007 reform of the regulation of fixed-term employment contracts, inter alia the vast scope for general fixed-term employment without any need for objective reasons, and the effects on the non-cumulative calculation of the periods of employment spent in general fixed-term employment and temporary substitute employment. In March 2010, the European Commission made a formal notification (the second step in the infringement procedure) to the Swedish government regarding the insufficient implementation of the Directive.47

44 See K Källström and J Malmberg, Anställningsförhållandet. Inledning till den individuella arbetsrätten, 2nd edn (Uppsala, Iustus, 2009) p 118. Specific time limits apply for seasonal employment, cf s 25 of the (1982:80) Employment Protection Act. 45 See Governmental Bill prop 2001/02:97, pp 50 ff and Numhauser-Henning, ‘Fixed-term Work in Nordic Labour Law, above n 42. 46 See eg A Numhauser-Henning, ‘Från begränsad till allmän visstidsanställning’ in B Flodgren et al (eds), Vänbok till Axel Adlercreutz (Lund, Juristförlaget i Lund, 2007), 367–83. 47 Compare TCO, Anmälan mot Konungariket Sverige på grund av att nya regler om visstidsanställningar i Sverige innebär ett bristande genomförande av Direktiv 1999/70/EG om

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The Swedish regulation on fixed-term work is in line with the EU law flexicurity discourse. Fixed-term employment contracts for a short duration are normalised, and employers are offered increased numerical flexibility by way of general fixed-term employment and temporary substitute employment. Employees are provided with security by way of upper limits for maximum duration of successive fixed-term employment contracts, and the conversion of these fixed-term employment contracts into permanent employment contracts. In addition to this, rights and employment protection in the form of information, consultation and priority rights of re-employment progressively build up as employment continues. There have been no recent statutory labour law reforms of employment protection in Sweden aimed at deregulation or a redesign of employment protection with permanent employment contracts (even if the debate on seniority rules has been intensive). However, recent developments in collective bargaining and case law reflect the EU law flexicurity discourse, combining flexibility and security and numerical and functional flexibility.48 In addition, the EU law flexicurity discourse focuses on employability and labour market transitions, and thus implies a shift of emphasis from job security and traditional employment protection to security by way of employability in relation to the entire labour market.49,50 The focus on employability links employment protection and security for employees in crucial ways to the other flexicurity components, namely comprehensive lifelong learning, active labour market policies, and modern social security systems. Thus, what is important for the future is the development of strategies for, but also individual rights to, lifelong learning, training and education.

ramavtalet om visstidsarbete undertecknat av EFS, UNICE och CEEP (Stockholm, 2007-06-20) and S Engblom, ‘Fixed-Term-at-Will: The New Regulation of Fixed-term Work in Sweden’ (2008) 24(1) International Journal of Comparative Labour Law and Industrial Relations. 48

See Numhauser-Henning and Rönnmar, ‘Det flexibla svenska anställningsskyddet’, above n 30. Compare Wilthagen and the notion of employment security/employability security, see Wilthagen, The Flexibility-Security Nexus, above n 14. 50 In an earlier analysis from 2001, this author has argued that in order for Swedish employment protection to be really adjusted to the Knowledge Society, it must be uniform and coherent, and include and emphasise rights to education and training, also within the employment relationship. Life-long employment with the same employer is unlikely to occur on a large scale in the Knowledge Society. We are witnessing a shift of emphasis from ‘traditional’ employment protection, aiming at continued employment with one existing employer, to ‘new’ employment protection, designed to achieve continuous employment in relation to the labour market as a whole. Thus, employment protection in the Knowledge Society can be said to have two separate dimensions. The key to achieving a ‘real’ continuous employment in both these dimensions is employability and flexible qualification. Consequently, the Knowledge Society and its realities more or less take us beyond the dominating debate about deregulation and labour market flexibility, and point to employability and flexible qualification, instead of the mode of employment, as the decisive future factors for employment protection. See M Rönnmar, ‘Redundant Because of Lack of Competence? Swedish Employees in the Knowledge Society’ (2001) 17(1) International Journal of Comparative Labour Law and Industrial Relations 117–38. 49

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In the Swedish context, existing so-called Transition Agreements emphasise the importance of employability, and put forward different measures in support of employability for the employee in case of dismissal for reasons of redundancy. Furthermore, the employee’s qualifications – and employability – play a vital role in the statutory employment protection; for example, as regards the employer’s duty to provide the employee with alternative work and the priority right to reemployment.

4. FLEXICURITY, EQUAL TREATMENT AND PART-TIME, FIXED-TERM AND TEMPORARY AGENCY WORKERS

Diminished differences and equal treatment between permanent employees and flexible workers were addressed by the introduction of principles of nondiscrimination and equal treatment in the Part-Time Work Directive, FixedTerm Work Directive and Temporary Agency Work Directive, adopted in 1997, 1999 and 2008, respectively. The Directives all form part of the EU law flexicurity discourse (and relate to improvement of the quality of work, protection of employees, removal of discrimination and development of flexible work and work organisation), though their aims and purposes partly differ. The Part-Time Work Directive and Temporary Agency Work Directive perhaps most clearly relate to flexicurity, in sense of expressly promoting both flexibility and security. The purpose of the Part-Time Work Directive is to provide for the removal of discrimination against part-time workers and to improve the quality of parttime work, and to facilitate the development of part-time work on a voluntary basis and to contribute to the flexible organisation of working time in a manner which takes into account the needs of employers and workers (Clause 1). The purpose of the Temporary Agency Work Directive is to ensure the protection of temporary agency workers and to improve the quality of temporary agency work while taking into account the need to establish a suitable framework for the use of temporary agency work with a view to contributing effectively to the creation of jobs and to the development of flexible forms for working (Article 2). The Fixed-Term Work Directive is more restrictive as regards flexibility, and its purpose is to improve the quality of fixed-term work by ensuring the application of the principle of non-discrimination, and to establish a framework to prevent abuse arising from the use of successive fixed-term employment contracts or relationships (Clause 1). According to Numhauser-Henning, the ‘restrictive aspect’ of the Directive can be said to ‘evince a certain level of ambiguity, and it has been referred to as “normalizing” fixed-term work’.51 The principle of non-discrimination and equal treatment has not been given a coherent design in the Directives. In the Part-Time Work Directive and the

51 See Numhauser-Henning, ‘Fixed-term Work in Nordic Labour Law’, above n 42, compare also J Murray, ‘Normalising Temporary Work’ (1999) 28(3) Industrial Law Journal 269–75.

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Fixed-Time Work Directive there is a principle of non-discrimination, which states that in respect of employment conditions, part-time/fixed-term workers shall not be treated in a less favourable manner than comparable full-time/ permanent workers solely because they work part-time/have a fixed-term contract or relation unless different treatment is justified on objective grounds (Clause 4 in both Directives). In the Temporary Agency Work Directive the principle of equal treatment states that the basic working and employment conditions of temporary agency workers shall be, for the duration of their assignment at a user undertaking, at least those that would apply if they had been recruited directly by that undertaking to occupy the same job (Article 5).52 Rules in the user undertaking on protection of pregnant women, nursing mothers, children, and young people, rules on equal treatment for men and women, and rules on non-discrimination on other grounds must also be complied with.53 In relation to the question of the ‘semantics’ of the principles of nondiscrimination and equal treatment above Prechal has commented that ‘[i]n legal writing, reference is often made to the fact that the ECJ and the Community legislature both seem to regard the two concepts as equivalent, using them interchangeable’.54 Prechal herself, however, is hesitant to engage in the debate whether equality and discrimination are the same thing, or different things, and whether the one embraces the other. Principles of non-discrimination and equal treatment of flexible workers, such as part-time, fixed-term and temporary agency workers, display a basic difference with regard to traditional non-discrimination regulation.

52 According to Art 3, basic working and employment conditions are laid down by legislation, regulations, administrative provisions, collective agreements and/or other binding general provisions in force in the user undertaking, and relates to the duration of working time, overtime, breaks, rest periods, night work, holidays and public holidays and pay. 53 The Directive provides for certain exemptions from the principle of equal treatment. These exemptions constitute adjustments to specific national contexts (eg the Swedish, the UK and the German contexts). Art 5.3 relates inter alia to Sweden and its autonomous collective bargaining system. Here it is stated that ‘Member States may, after consulting the social partners, give them, at the appropriate level and subject to the conditions laid down by the Member States, the option of upholding or concluding collective agreements, which, while respecting the overall protection of temporary agency workers, may establish arrangements concerning the working and employment conditions of temporary agency workers which may differ from those referred to in paragraph 1’. The exemption in Art 5.2 is also relevant in the Swedish context, since most temporary agency workers are permanently employed and their collectively bargained pay includes a wage guarantee for periods between assignments. See N Countouris and R Horton, ‘The Temporary Agency Work Directive: Another Broken Promise?’ (2009) 38(3) Industrial Law Journal 329–38, R Eklund, ‘Who Is Afraid of the Temporary Agency Work Directive?’ in R Eklund et al (eds), Skrifter till Anders Victorins mine (Uppsala, Iustus, 2009) 139–66, K Ahlberg, ‘A Story of Failure – But Also of Success: The Social Dialogue on Temporary Agency Work and the Subsequent Negotiations between the Member States on the Draft Directive’ in K Ahlberg et al, Transnational Labour Regulation. A Case Study of Temporary Agency Work (Brussels, PIE Lang, 2008) 191–261 and J Malmberg, Hur ska bemanningsdirektivet genomföras i Sverige? Ett diskussionsunderlag, Working Paper 2010:2 (Uppsala, Uppsala Faculty of Law, 2010) pp 12 ff. 54 S Prechal, ‘Equality of Treatment, Non-Discrimination and Social Policy: Achievements in Three Themes’ (2004) 41 Common Market Law Review 533–51.

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Here, equal treatment is not based on the personal characteristics of the employee (such as race, age, or sexual orientation), but instead on the employment contract and its form and content.55 In relation to the FixedTerm Work Directive, Numhauser-Henning has pointed to the problematic fact that ‘what is forbidden by the non-discrimination provision – differential treatment as regards employment conditions – is at the same time part of what constitutes the groups that are to be compared. Different employment conditions pertaining to the mode of employment, and thus fundamentally to the termination of the employment contract, are a sine qua non for even distinguishing the protected group’.56 The principle of non-discrimination in the Part-Time Work Directive and the Fixed-Term Work Directive is more closely linked to the rules found in other non-discrimination Directives than the principle of equal treatment in the Temporary Agency Work Directive is. However, it is important to note that neither of the principles is phrased expressly in terms of prohibitions on direct and indirect discrimination or harassment and instruction to discriminate, and thus in line with the Recast Directive, the Race Directive and the General Equal Treatment Directive. The principle of non-discrimination in the Part-Time Work Directive and the Fixed-Term Work Directive is limited in that it requires the unfavourable treatment of the part-time worker or fixed-term worker to relate solely to the parttime work or fixed-term employment contract. It also enables the employer to justify such unfavourable treatment with objective grounds.57 Thus, the principle forbids direct discrimination, but not indirect discrimination. Furthermore, such direct discrimination can be justified (which is unusual in the non-discrimination field, apart from, for example, in cases of age discrimination).58,59

55 Compare Pettersson, however, who argues that ‘this proposed difference is exaggerated, as the individual legal subject, within contemporary law, is always conceived as shaped by social circumstances. In my view, there is one common denominator for all discrimination law, which does not exclude part-time and fixed-term work at all: subordination. Discrimination law deals with the conflict between different types of subordination, and the deep structural demand for individual autonomy’, see H Pettersson, ‘Discrimination of Part-Time and Fixed-Term Workers’ in M Rönnmar and A Numhauser-Henning (eds), Fifteen Years with the Norma Research Programme. Anniversary volume (Lund, the Norma Research Programme, Law Faculty, Lund University, 2010) 83–90, 85. 56 See Numhauser-Henning, ‘Fixed-term Work in Nordic Labour Law’, above n 42. 57 See Numhauser-Henning, ‘Fixed-term Work in Nordic Labour Law’, above n 42 and Governmental Bill prop 2001/02:97, p 31. 58 See Numhauser-Henning, ‘Fixed-term Work in Nordic Labour Law’, above n 42, C Barnard and B Hepple, ‘Substantive Equality’ (2000) 59(3) Cambridge Law Journal 562–85, C Vigneau et al, Fixed-term work in the EU. A European agreement against discrimination and abuse (Stockholm, SALTSA, National Institute for Working Life, 1999), p 164, Murray, ‘Normalising Temporary Work’, above n 51, p 27. In this regard, Numhauser-Henning argues that ‘[d]ifferential treatment based on another criterion, such as length of service etc, seems perfectly acceptable according to the Directive, even if it indirectly effects fixed-term workers more than regular workers’, NumhauserHenning, ‘Fixed-term Work in Nordic Labour Law’, above n 42, p 454. See also the frequent exception for employment of a person of a protected group ‘by reason of the nature of the particular occupational activities concerned or of the context in which they are carried out’, so-called Bfog

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Existing case law is still rather limited as regards the principles of nondiscrimination and equal treatment in the Directives (the Member States are to implement the Temporary Agency Work Directive by 5 December 2011 at the latest). The case of Wippel60 is central, and has been much discussed, inter alia as regards the question of comparability. The case concerned Ms Wippel, who was employed part-time on the basis of a framework contract of employment applying the principle of ‘work on demand’, and a dispute between Ms Wippel and her employer about the lack of an agreement in her contract regarding hours of work and organisation of working time. Did these terms of employment constitute discrimination in violation of the Part-Time Work Directive? The ECJ states that the ‘prohibition on discrimination in the abovementioned provisions is merely a particular expression of a fundamental principle of Community law, namely the general principle of equality under which comparable situations may not be treated differently unless the difference is objectively justified’ (para 56). According to the Court, ‘the employment relationship [of a full-time worker employed by the employer] … differs, as to subject-matter and basis, from that of a worker such as Ms Wippel. It follows that no full-time worker in the same establishment has the same type of contract or employment relationship as Ms Wippel. … there is therefore no full-time worker comparable to Ms Wippel within the meaning of the Framework Agreement’ (paras 61–62) – wherefore there could be no discrimination. According to Numhauser-Henning, the reasoning and outcome in Wippel is a reflection of the problem connected to the principles of non-discrimination as regards part-time workers and fixed-term workers, namely that ‘what is forbidden by the non-discrimination provisions – differential treatment as regards employment conditions – is, at the same time, part of what constitutes the groups that are to be protected’.61,62

(Bona fide occupational qualities) or GOR (Genuine Occupational Requirements) defences, see Numhauser-Henning’s chapter. 59 Non-discrimination of part-time workers also relates to the case law from the ECJ on discrimination of part-time employed women as indirect discrimination on grounds of sex, since considerably fewer men than women work part-time, see eg Case C-170/84 Bilka-Kaufhaus [1986] ECR 1607 and Case C-96/80 Jenkins [1981] ECR 911. 60 Case C-313/02 Nicole Wippel v Peek & Cloppenburg GmbH & Co KGK [2004] ECR I-9483. 61 A Numhauser-Henning, Report to the European Commission on the implementation of Directive 1999/70 in Finland, Sweden and Denmark (2004) p 8. See also Pettersson, who in connection with Wippel, comments on the issue of comparability and the fact that the ‘use of comparability as an “escape route” in cases of possible direct discrimination is not uncommon. However, it is problematic, as it introduces the possibility for justification of less favourable treatment, where justification is not supposed to take place. In cases of classical prohibitions on direct discrimination, which ideally could never be justified, it opens up one possibility for justification’, see Pettersson, ‘Discrimination of Part-Time and Fixed-Term Workers’, above n 55, p 88. Compare also Prechal, ‘Equality of Tratment’, above n 54, p 543, A Numhauser-Henning, ‘EU sex equality law postAmsterdam’ in H Meenan (ed), Equality Law in an Enlarged European Union. Understanding the Article 13 Directives (Cambridge, Cambridge University Press, 2007) 145–77 and J Kenner, ‘New Frontiers in EU Labour Law: From Flexicurity to Flex-Security’ in M Dougan and S Currie (eds), 50 Years of the European Treaties (Oxford, Oxford University Press, 2009), pp 293 ff. 62 Cf also Case C-268/06 Impact and Case C-486/08 Tirols clarifying that Clause 4.1 of the Framework Agreement of Fixed-Term Work/Fixed-Term Work Directive has direct effect. The ECJ

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In Sweden, the principle of non-discrimination in the Part-Time Work Directive and Fixed-Time Work Directive was implemented through the creation of a new Act, the (2002:293) Prohibition of Discrimination of Employees Working PartTime and Employees with Fixed-Term Employment Act.63 The Act was aligned with other Swedish non-discrimination legislation, and contains prohibitions on direct and indirect discrimination (thereby departing from the Directive, and going beyond its requirements).64 There is only very limited case law concerning the principle of non-discrimination in the Act. It has been difficult for employees to prove that they are in a comparable situation (with a full-time or permanent employee), or that they have been treated less favourably on grounds of a parttime or fixed-term employment contract.65 A governmental inquiry, whose task it is to analyse the implementation of the Temporary Agency Work Directive and to make legislative proposals, is to report back to the Government in the beginning of 2011. The starting point for the governmental inquiry is the autonomous collective bargaining system

states in Impact, para 68, that ‘[i]t follows that Clause 4(1) of the framework agreement appears, so far as it subject-matter is concerned, to be unconditional and sufficiently precise for individuals to be able to rely upon it before a national court’. In Tirol the ECJ elaborates on the notion of objective grounds and the employer’s possibility to justify differential treatment, and states that according to ‘settled case-law, the concept of “grounds” for the purposes of Clause 5.1(a) of the framework agreement on fixed-term work must be understood as referring to precise and concrete circumstances characterising a given activity, which are therefore capable, in that particular context, of justifying the use of successive fixed-term employment contracts … The same interpretation is necessary, by analogy, regarding the identical concept of “objective grounds” within the meaning of Clause 4.1 of the framework agreement on part-time work … In those circumstances, the concept “objective grounds” within the meaning of that clause must be understood as not permitting a difference in treatment between fixed-term workers and permanent workers to be justified on the basis that the difference is provided for by a general, abstract national norm. On the contrary, the concept requires the unequal treatment at issue to respond to a genuine need, be appropriate for achieving the objective pursued and be necessary for that purpose’. See also Case C-307/05 Yolanda Del Cerro Alonso. See also, generally on the application of the principle of non-discrimination as regards part-time workers Joined Cases C-55/07 and C-56/07 Michaeler and Joined Cases C-395/08 and C-396/08 Bruno and Lotti. 63 See Governmental Bill prop 2001/02:97.With regard to fixed-term employees existing labour law legislation and collective agreements were in principle deemed to be in line with the principle of nondiscrimination of the Directive. – Swedish labour law in general is characterised by its uniform and extensive personal scope, and a traditionally high degree of equal treatment of different categories of employees. Inter alia against this background there is no tradition in Sweden to differentiate terms and conditions of employment between fixed-term employees and permanent employees, cf Engblom, ‘Fixed-Term-at-Will: The New Regulation of Fixed-term Work in Sweden’, above n 47. However, legislation was necessary with regard to part-time work, and in the interest of legal transparency and coherence, a common Act was created. Cf European Commission, Commission Staff Working Document, Report by the Commission services on the implementation of Council Directive 1999/60/EC of 28 June 1999 concerning the Framework Agreement on Fixed-term work concluded by ETUC, UNICE and CEEP (EU-15), SEC(2006) 1074. 64 See Numhauser-Henning, ‘Fixed-term Work in Nordic Labour Law’, above n 42. See ss 3 and 4 of the Act. 65 Cf Labour Court judgments AD 2008 No 32 (wages for fixed-term and part-time employees, being advertisement producers) and AD 2008 No 97 (vacation for fixed-term employed actors). See also Case C-313/02 Nicole Wippel v Peek & Cloppenburg GmbH & Co KGK [2004] ECR I-9483.

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in Sweden. A solution that interferes as little as possible with existing collective agreements – some of which already encompass principles of equal treatment – should be sought.66 When it comes to the principle of equal treatment the inquiry is to analyse whether this principle can be implemented wholly or partly through collective agreements. Since the coverage of collective bargaining is not total in Sweden (there is no mechanism for extension of collective agreements) it is most likely that some complementary legislation must be enacted to provide all employees with the protection offered by the Directive.67 Temporary agency work was legalized in 1991, and more effectively liberalised in 1993 by the adoption of the (1993:440) Private Job Placement and Hiring-out of Labour Act.68 The 1993 Act establishes one of Europe’s most liberal systems.69 The 1993 Act contains only three basic restrictions on temporary agency work: 1) the temporary-work agency may not charge the worker any fees (to do so is a criminal offence), 2) the temporary-work agency may not hinder the worker from accepting an offer of direct employment from the user undertaking, and 3) a worker who has terminated her employment with one company and taken up employment with a temporary-work agency must not be hired out to her former employer until six months have passed from the termination of her former employment. Today, the sector is principally covered by collective bargaining, stipulating inter alia wage guarantees and equal treatment as regards pay. Collective bargaining is complemented by a voluntary system of authorisation, administered by the social partners.70 Temporary agency work relates in different and interesting ways to the EU law flexicurity discourse. For the user/employer, temporary agency work represents both numerical flexibility (the possibility to flexible adjustment of the number of workers), and functional flexibility (the possibility to engage workers with special skills and competencies). For the employee, temporary agency work – especially in Sweden where temporary agency work is integrated into the industrial relations system, and basic principles of open-ended contracts, wage guarantees and equal treatment as regards pay have evolved through the autonomous collective bargaining system – represents not only numerical flexibility and flexible work, but also security. 66 See Instructions for a Governmental Inquiry on the Implementation of the Temporary Agency Work Directive, Kommittédirektiv Dir 2009:85, Genomförande av Europaparlamentets och rådets direktiv om arbetstagare som hyrs ut av bemanningsföretag. 67 See Malmberg, ‘Hur ska bemanningsdirektivet genomföras i Sverige?’, above n 53, pp 20 ff. 68 See Governmental Bill prop 1992/93:218. 69 See A Berg, Bemanningsarbete, flexibilitet och likabehandling. En studie av svensk rätt och kollektivavtalsreglering med komparativa inslag (Lund, Juristförlaget i Lund, 2008). 70 ss 38 and 39 of the (1976:580) Co-determination Act provide trade unions, bound by a collective agreement with the employer, with a right to negotiation before the employer decides to have work performed for her by someone who is not her employee, including temporary agency workers. If the hiring of temporary agency workers seems likely to involve setting aside legislation or a collective agreement for the work or otherwise run contrary to generally accepted practice in the industry the trade union has a right to veto. This happens rarely.

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The EU law flexicurity discourse and its aim to reduce labour market segmentation also relates to the boundaries and personal scope of labour law, the notion of an employee, and the equal treatment of different persons performing work (and being in need of protection and core labour rights). The 2006 Green Paper on the modernisation of labour law addressed the personal scope of labour law and the notion of an employee. It emphasised that the boundaries between labour law and commercial law had become less clear and that the ‘traditional binary distinction between “employees” and the independent “self-employed” is no longer an adequate description of the economic and social reality of work. Disputes concerning the legal nature of the employment relationship can arise where that relationship has either been disguised or where a genuine difficulty arises in seeking to fit new and dynamic work arrangements within the traditional framework of the employment relationship’.71 The concept of economically dependent work – falling between the concepts of subordinate employment and independent self-employment – was discussed.72 The practice of extending the personal scope of labour to different categories of ‘quasi-employees’, as, for example, in the UK to ‘workers’, was also put forward as one example of ‘how categories of vulnerable workers involved in complex employment relationships have been given minimum rights, without an extension of the full labour law entitlements’.73,74 This discussion clearly relates to an influential and lively academic debate in recent years precisely about the personal scope of labour law and the notion of an employee. Sciarra, however, in a critical analysis of the Green Paper remarks that one ‘could be amazed most of all not to find in it specific traces of the analysis carried out in academic research. It is particularly surprising that the Supiot Report … should not be acknowledged’.75 In addition to Supiot,

71

COM(2006) 708 final, above n 19, p 10. In addition, the question of the informal economy and undeclared work was discussed and presented as a particularly problematic – and increasing – feature of today’s labour market, see COM(2006) 708 final, above n 19, p 14; compare COM(2010) 682 final, above n 24, p 15. This question is also linked to aspects of enforcement, inter alia highlighted by the Commission in relation to posting of workers in the aftermath of the Laval Quartet. 73 COM(2006) 708 final, above n 19, p 10. Compare also the German example ‘arbeitnehmerähnliche Personen’ and the Italian example ‘lavoro parasubordinato’, see eg S Engblom, Self-employment and the Personal Scope of Labour Law. Comparative Lessons from France, Italy, Sweden, the United Kingdom and the United States, Doctoral thesis (Florence, Department of Law, European University Institute, 2003). 74 Compare also the work by the ILO in this area of law, namely through the adoption in 2006 of the ILO Recommendation on the Employment Relationship 198 (frequently referred to by the European Commission). 75 In the Supiot Report, different guidelines related to the work and employment status are proposed, inter alia that ‘employment status should be redefined to guarantee the continuity of a career rather than the stability of specific conditions’ and that ‘employment status should no longer be determined on the basis of the restrictive criteria of employment, but on the broader notion of 72

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Freedland , for example, has analysed the family of personal work contracts and put forward the concepts of ‘personal work nexus’ and ‘personal employment contract’.76 Different notions of an employee have developed (often in case law) in the different Member States. In Sweden, the notion of an employee is not statutorily defined. Instead its content and meaning have been described and developed by the courts in case law and the legislator in preparatory works.77 The development during the 20th century has gone towards a uniform and far-reaching notion of employee.78 The notion of employee is a mandatory concept. In order to prevent the contract parties from circumventing labour law legislation and depriving the employee of protection, the courts are not bound by the description or definition of the relationship given by the parties themselves; for example, in a written contract. The court makes an independent assessment of the legal nature of the relationship on the basis of the situation at hand. In order to determine whether or not a specific person is an employee the court makes an overall assessment of the situation, taking all the relevant factors of the individual case into consideration. The multi-factor test applied by the courts focuses on the individual person in question, and on whether the overall situation of this particular person is similar to that of an ordinary employee or an ordinary selfemployed worker.79 Modifications of the ‘general’ notion of employee, resulting

work’, see A Supiot (general rapporteur), Transformation of labour and future of labour law in Europe. Final report (Luxembourg, European Commission, 1999) p 92. Cf Kenner who states that the ‘importance of worker autonomy has been advanced by Supiot who has sought to focus debate on the subjective experience of the worker in his or her working life and advanced the notion of a continuum between working time and leisure time, Kenner, ‘New Frontiers in EU Labour Law’, above n 61, p 281. 76 See eg M Freedland, ‘From the Contract of Employment to the Personal Work Nexus’ (2006) 35(1) Industrial Law Journal 1–29. Compare also S Deakin, ‘Does the “Personal Employment Contract” Provide a Basis for the Reunification of Employment Law?’ (2007) 36(1) Industrial Law Journal 68–83 and Engblom, Self-employment and the Personal Scope of Labour Law, above n 73. In the book ‘Boundaries and Frontiers of Labour Law’ numerous authors have approached this theme, see G Davidov and B Langille(eds), Boundaries and Frontiers of Labour Law (Oxford, Hart Publishing, 2006). 77 For a classical and comprehensive study of the notion of employee, see A Adlercreutz, Arbetstagarbegreppet. Om arbetstagarförhållandet och därtill hörande gränsdragningsfrågor i svensk civil- och socialrätt (Stockholm, PA Norstedts & Söners Förlag, 1964). See also F Schmidt et al, Löntagarrätt, rev  edn (Stockholm, Juristförlaget, 1994) and Governmental White Paper SOU 1975:1, pp 721 ff. 78 See Governmental White Paper Ds  2002:56, p  82 and Engblom, Self-employment and the Personal Scope of Labour Law, above n 73, pp 141 ff. 79 The courts take the following factors into consideration when making their overall assessment: (1) a personal duty to perform work according to the contract, (2) the actual personal performance of work, (3) no predetermined work tasks, (4) a lasting relationship between the parties, (5) the worker is prevented from performing similar work of any significance for someone else, (6) the worker is subject to the orders and control of the principal/employer concerning the content, time and place of work, (7) the worker is supposed to use machinery, tools and raw materials provided by the principal/employer, (8) the worker is compensated for his expenses, (9) the remuneration is paid, at least in part, as a guaranteed salary, and (10) the economic and social situation of the worker is equal to that of an ordinary employee.

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from established custom in a specific branch of business or regulation in collective agreements, are respected by the Labour Court, and often prove decisive for the overall assessment of a person’s status.80 In a comparative study from 2003 of Sweden, the United Kingdom, France and the United States, Engblom concludes that the Swedish notion of employee is the most far-reaching. Furthermore, in Sweden less emphasis is put on the subordination of the worker, traditionally a fundamental criterion for the existence of an employment relationship.81 The far-reaching notion of employee in Swedish labour law, and the multi-factor test applied by the courts, has proved to provide adaptability and flexibility with regard to changing labour market conditions and organisational changes.82 The personal scope of most EU labour law – and EU labour law Directives – is defined in relation to the different notions of an employee, developed and existing in the Member States. However, in the area of free movement of workers, EU law contains a separate and autonomous notion of an employee. This notion of an employee, ‘worker’ in Article 45 TFEU, has been developed for the purpose of promoting and ensuring freedom of movement for workers. This notion of an employee in EU law is far-reaching. The ECJ has declared that it has a Union meaning, and must be interpreted broadly. It must not be interpreted differently, or restrictively, according to the law of each Member State.83 In Lawrie-Blum84 the ECJ stated that ‘[t]hat concept must be defined in accordance with objective criteria which distinguish the employment relationship by reference to the rights and duties of the persons concerned. The essential feature of an employment relationship, however, is that for a certain period of time a person performs services for and under the direction of another person in return for which he receives remuneration’. The ECJ has, for example, irrespective of the national notion of an employee, found that on-call workers and trainees have been employees.85 This uniform notion of an employee has recently seemed to ‘spread’ into other areas of labour law, such as equal pay and working time (compare, for example, the Allonby and Union syndicale cases, where the ECJ has adopted the notion of an employee described in Lawrie-Blum above).86 In this context – and starting from the EU law flexicurity discourse – Kenner has addressed the boundaries of labour law, and ‘what steps should be taken to extend the scope of employment protection legislation to include all those in

80 See Engblom, Self-employment and the Personal Scope of Labour Law, above n 73, pp 154 ff and Governmental White Paper Ds 2002:56, pp 120 ff. 81 See Engblom, Self-employment and the Personal Scope of Labour Law, above n 73, pp 206 ff. 82 Compare Governmental White Paper Ds 2002:56, p 131. 83 See C Barnard, EC Employment Law, 3rd edn (Oxford, Oxford University Press, 2006) pp 172 ff, Kenner, ‘New Frontiers in EU Labour Law’, above n 61 and C-53/81 Levin v Secretary of State for Justice [1982] ECR 1035. 84 C-66/85 Lawrie-Blum v Land Baden-Württemberg [1986] ECR 2121. 85 See R Nielsen, European Labour Law (Copenhagen, DJØF, 2000), pp 251 ff and Governmental White Paper Ds 2002:56, pp 107 ff. 86 See Case C-256/01 Allonby and Case C-428/09 Union syndicale Solidaires Isère, compare also Barnard, Labour Law and the Crisis, above n 38 and Kenner, ‘New Frontiers in EU Labour Law’, above n 61, pp 290 ff.

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diverse ‘non-standard’ but dependent working relationships’.87 In this regard, he has presented and analysed three scenarios for extending the personal scope of employment protection and labour law in the EU. The first scenario is to utilise the open method of coordination (this is already on its way, inter alia, within the framework of integrating the Common Principles of Flexicurity into the European Employment Strategy and the Europe 2020 Strategy). Second, a Directive could be proposed in order to establish a common legal definition of a ‘worker’, applicable horizontally (compare the Burden of Proof Directive88) to all EU labour law Directives. Third, the ‘Cinderella Directive’89 could be revised as a framework Directive (with its application reaching into the national context), setting out common approaches towards establishing the existence of an employment relationship. Here, indicators of dependency could be derived from national laws and from the ILO Employment Relationship Recommendation No 198. Kenner suggests that ‘these indicators would create a presumption of entitlement to employment protection. It is envisaged that this presumption would be applied over time to all economically dependent workers, including those in casual, home or agency work’.90 Along the same lines, Barnard has proposed to ‘define the personal scope of the employment Directives more clearly and not simply by reference to national law’. Like Kenner, she argues that inspiration might be found in the case law of the ECJ in relation to free movement of workers and the developments in this regard in the area of equal pay and working time.91 Kenner emphasises that if labour law wants to remain true to its traditional protective purpose it is imperative for it, to ‘occupy new, largely unmapped, territory in order to bring in those outsiders. The flexicurity dynamic, with its emphasis on finding pathways to inclusion, offers the EU an opportunity to act on this imperative’.92 He advocates employing the ‘tenure track’ and core labour rights approach, in order to develop what he calls ‘flex-security’ for all workers within the scope of labour law in the EU, ie increased equal treatment of different workers and a real balance between flexibility and security.93 Thus, the notion of equal treatment of different workers and the personal scope of labour law also relate to the establishment of core labour rights. This, in turn, is linked to the fundamental work by the ILO in recent years on Core Labour Standards, a Decent Work Agenda and Fair Globalisation (expressed inter alia

87

Kenner, ‘New Frontiers in EU Labour Law’, above n 61, p 280. Council Dir 97/80/EC of 15 December 1997 on the burden of proof in cases of discrimination based on sex, OJ L 14, 20.1.1998, pp 6–8. 89 Council Dir 91/533/EEC of 14 October 1991 on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship, OJ L 288, 18.10.1991, pp 32–35. 90 Kenner, ‘New Frontiers in EU Labour Law’, above n 61, p 297. 91 See Barnard, Labour Law and the Crisis, above n 38, compare Case C-256/01 Allonby and Case C-428/09 Union syndicale Solidaires Isère. 92 Kenner, ‘New Frontiers in EU Labour Law’, above n 61, p 308. 93 See Kenner, ‘New Frontiers in EU Labour Law’, above n 61. 88

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in the 1998 ILO Declaration of Fundamental Principles and Rights at Work, the 1999 Decent Work Agenda, the 2004 Report on a Fair Globalisation: Creating Opportunities for All, and the 2008 ILO Declaration on Social Justice).94 This work by the ILO is endorsed by the European Commission, inter alia through different policy statements and through their encouragement to all Member States to ratify all up-to-date ILO Conventions.95 As we have seen, this work by the ILO is also linked to discussions within the EU law flexicurity discourse on a ‘tenure track’ approach as regards employment protection and a ‘tier of rights’ approach, more in general. Thus, the European Expert Group on Flexicurity has remarked in this respect that ‘[f]lexicurity also has to be embedded in the wider framework of labour market regulation and employment rights. This framework also encompasses rights such as representation and consultation, regulation of working conditions and non-discrimination. Evidently these rights should also apply to all workers’.96

6. CONCLUDING REMARKS

The aim of this chapter has been to explore and critically discuss the different notions of equal treatment inherent in the EU law flexicurity discourse, and to point to some conceptual and analytical points of departure. Swedish labour law has served as the main national example. A common denominator for the different notions of equal treatment inherent in the EU law flexicurity discourse is the aim to reduce labour market segmentation. The discussion in previous sections has confirmed that the EU law flexicurity discourse and flexible and reliable contractual arrangements really entail different – partly conflicting, and also sometimes ‘elusive’ – notions of equal treatment, which are legally ‘materialised’ in a variety of ways. The different notions of equal treatment explored and discussed in the chapter are as follows: equal treatment, as in reduced labour market segmentation in general; equal treatment of permanent employees and fixed-term workers, as in increased protection for fixed-term workers and challenges to and reforms and deregulation of employment protection; equal treatment of permanent

94 The Core Labour Standards encompass 1) Freedom of association and the effective recognition of the right to collective bargaining, 2) Elimination of all forms of forced or compulsory labour, 3) Effective abolition of child labour, and 4) Elimination of discrimination in respect of employment and occupation. The Decent Work Agenda refers inter alia to the promotion of rights at work, employment, social protection and social dialogue. Herzfeld Olsson remarks that ‘the ILO has strengthened its ability to play an important role in making a market driven globalisation for all’, see Herzfeld-Olsson’s chapter p 30. 95 See eg Promoting Core Labour Standards and improving social governance in the context of globalisation COM(2001) 416 final and Promoting Decent Work for All – the EU Contribution to the Implementation of the Decent Work Agenda in the World COM(2006) 249 final. 96 See European Expert Group on Flexicurity, Flexicurity Pathways, above n 14, p. Compare also Sciarra, Is Flexicurity a European Policy?, above n 27, p 7.

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employees and flexible workers, ie part-time, fixed-term and temporary agency workers, as in principles of non-discrimination and equal treatment proper; and, finally, equal treatment, as in redefining the boundaries and personal scope of labour law and developing core labour rights. The EU law flexicurity discourse and the flexicurity strategy in recent years (outlined and implemented in inter alia the Common Principles of Flexicurity, the European Employment Strategy and the Europe 20202 Strategy) imply a shift of emphasis from employment law to employment policy.97 Until now, probably the most articulated legal expressions of the EU law flexicurity discourse are the Part-Time, Fixed-Term and Temporary Agency Work Directives. Equal treatment of permanent employees and flexible workers, as apostrophised in principles of non-discrimination and equal treatment proper, is most closely linked to general EU equality law developments and key concepts. However, equal treatment of permanent employees and flexible workers represents a somewhat different perspective on equality, mainly related to the flexicurity, employment policy and globalisation discourses, and not to the non-discrimination and human rights discourses. Equal treatment of flexible workers aims at increased protection of flexible workers and a move into stable contractual arrangements, but is also perceived (as follows inter alia from the discussion in the 2006 Green Paper on the purpose of labour law and its modernisation) as a way to promote employment and economic growth. Furthermore, equal treatment of part-time, fixed-term and temporary agency workers displays another fundamental difference with regard to ‘traditional’ non-discrimination regulation. Equal treatment is here not based on the employee’s personal characteristics (such as sex, race, age, sexual orientation), but on the employment contract and its form and content. The principle of non-discrimination in the Part-Time Work Directive and the Fixed-Term Work Directive is limited in that it requires the unfavourable treatment of the part-time worker or fixed-term worker to relate solely to the part-time work or fixed-term employment contract. It also enables the employer to justify such unfavourable treatment with objective grounds. Thus, the principle forbids direct discrimination, but not indirect discrimination. Furthermore, direct discrimination can be justified. It follows from ECJ case law (and especially Wippel) that the question of comparability has been difficult to overcome, and this has resulted in less protection for part-time and fixed-term workers. Thus, this principle of non-discrimination and notion of equal treatment contain only limited elements of substantive and transformative equality. Barnard and Hepple have argued that these Directives ‘apply an individual liberal principle of nondiscrimination which is not sufficient in order to promote substantive equality’.98 Thus, there are greater possibilities for the employer to justify prima facie, also direct, discriminatory behaviour when it comes to these flexible workers. 97 98

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This begs important and critical questions: Can this spread of the principle of non-discrimination and equal treatment – and expression of comprehensive equality – risk diluting the strength of the principle itself, and thereby counteract the battle for substantive and transformative equality in other areas? The aim to reduce labour market segmentation – the common denominator for the different notions of equal treatment inherent in the EU law flexicurity discourse – relates to the bases and values of social inclusion and solidarity, sometimes put forward as alternatives to the notion of equal treatment (section 1). In this respect, Hepple has argued that although both social inclusion and solidarity are positive concepts focused on assisting disadvantaged people and facilitating their integration and participation in society, ‘these attempts to reconceptualize equality law run the serious risk of unravelling clear and consistent legal principles that have been developed with much thought over the past five decades’.99 Equal treatment of permanent employees and fixed-term workers implies both increased protection for fixed-term workers, and challenges, reforms and deregulation of employment protection. This notion of equal treatment is thus potentially ‘revolutionary’, and at the very heart of employment protection regulation and the protective principle of the permanent open-ended employment contract as the main rule. Here the recent vague proposals in the Agenda for New Skills and Jobs seem to imply a far-reaching ‘reformulation’ of the open-ended employment contract, which remains to be followed and further analysed. However, equal treatment of permanent employees and fixed-term workers is also said to entail a new balance between numerical and functional flexibility, and increased focus on functional flexibility, ie the achievement of flexibility within the framework of permanent employment relationships and employment protection. Similarly a ‘tenure track’ approach and progressive build-up of rights (for example, as in, measures to prevent abuse arising from the use of successive fixed-term employment contracts or relationships, regulated in the Fixed-Term Work Directive) can be seen as expressions both of deregulation and of solidarity and redistribution.100 Still, it is important to remember that outside the realm of the European Employment Strategy, the Europe 2020 Strategy and the open method of coordination, the 2006 Green Paper on the modernisation of labour law, the Common Principles of Flexicurity, and the flexicurity strategy have not yet resulted in any new legal proposals linked to employment protection.

99

Hepple, ‘Aims of equality law’, above n 7, p 20. Equality law, at least in its transformative phase, implying the dismantling of systemic inequalities, the eradication of poverty and disadvantage and equality of capabilities and opportunities, entails a redistributive element. Compare in this regard also the theory of normative patterns in a normative field, originally developed by Christensen, and the way in which NumhauserHenning has fruitfully analysed legal developments in area of equality and non-discrimination by way of normative patterns such as the pattern of just distribution, the pattern of belonging and the pattern of integration, see eg A Numhauser-Henning (ed), Legal Perspectives on Equal Treatment and Non-Discrimination (the Hague, Kluwer Law International, 2001) and Christensen 1999. See also Numhauser-Henning’s chapter. 100

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In addition, the focus on employability and labour market transitions links employment protection and security for employees in crucial ways to the other flexicurity components, namely comprehensive lifelong learning, active labour market policies, and modern social security systems. The EU law flexicurity discourse could be said to entail an emphasis of labour law and social security law as complementary systems. Social security has developed as part of the industrial society, and can be understood as a complementary and dependent system to wage work. At an aggregated societal level, social security supplements wage work and its distribution of resources. Social security provides protection and maintenance in situations (against ‘risks’) when a person is unable to earn a living through wage work, owing to sickness, old age, unemployment or childbirth.101 At the same time, critics would argue that the EU law flexicurity discourse as it currently stands puts too much emphasis on labour law providing flexibility, and social security law (together with lifelong learning and active labour market policies), providing security. The notion of equal treatment in terms of redefining the boundaries and personal scope of labour law (to include inter alia economically dependent workers) and developing core labour rights relates to a large academic debate and the work by the ILO in recent years on Core Labour Standards, a Decent Work Agenda and Fair Globalisation. This notion of equal treatment also reflects an endeavour to achieve social inclusion and solidarity. Kenner puts forward proposals – and scenarios – for extending the personal scope of employment protection and labour law in the EU, and advocates employing the ‘tenure track’ and core labour rights approach, in order to develop what he calls ‘flex-security’ for all workers. However, in relation to such an extension of the personal scope of labour law and a core labour rights approach it is important to be aware of the fact – highlighted by NumhauserHenning – that a promotion of inclusive labour and social rights for all may risk undermining labour law in general and creating ‘precariousness from within’.102 Finally, in an attempt to put the overall drive for flexicurity into the broader context of EU labour law and its relationship with globalisation, De Vos interestingly – and in line with the discussion on the EU law flexicurity discourse and notions of equal treatment in this chapter – argues that the evolution of EU labour law can be described as a development from national labour law as market correcting (starting from the basic inequality of bargaining power inherent in the employment contract and the need to protect workers), to original EC labour law as market making (in (mainly) promoting free movement) and further to the EU law flexicurity discourse, strategy and labour law as market embracing.103 101

See A Christensen, ‘Normativa grundmönster i socialrätten’ (1997) 78 Retfaerd 69. Compare the Keynote address made by Numhauser-Henning at the ELLN Annual Seminar 2009, in Frankfurt. Numhauser-Henning also argued that, generally speaking, the broader the coverage and personal scope of labour law, the more evident the need for differentiated rights for different groups. 103 See De Vos, ‘European Flexicurity and Globalisation’, above n 27. 102

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9 The Swedish Parental Benefit in Relation to the EU Rules on Coordination of Social Security Benefits – Is Free Movement of Families Really Achieved? EMMA HOLM*

1. INTRODUCTION

The general aim of this chapter is to examine the Swedish parental benefit in relation to the EU principles on free movement, namely, the Treaty provisions on free movement for workers and Union citizens, and more specifically, the secondary legislation on coordination of social security benefits – Regulation 1408/711 and its successor, Regulation 883/2004.2 The application of the EU rules as applied in the Swedish context will be examined and analysed in terms of the effects on the free movement of families.3 The right to move freely within the European Union is a basic principle in EU law, and seems almost self-evident nowadays. Although the migration numbers are quite low, surveys show that many Europeans move for family reasons; for example, when a spouse follows a partner who starts working in

* Doctor of laws at the Law Faculty, University of Lund. Employed at the Supreme Administrative Court in Stockholm and lecturer at the national education programme for judges. 1 Reg (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community [1971] OJ L 149/2, 5.7.1971, pp 2–50. 2 Reg (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems [2004] OJ L 166/1, 30.4.2004, pp 1–123. 3 This chapter summarises the main conclusions of the author’s doctoral dissertation on the topic: ‘Fri rörlighet för familjer – en normativ analys av föräldrapenningen och EU-rätten’ (‘Free movement of families – a normative analysis of the Swedish parental benefit in relation to EU law’).

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another Member State.4 The rights enshrined in the Treaty on the Functioning of the European Union, and further developed in secondary legislation, mean that there should be no obstacles hindering people from exercising their right to free movement. An important aspect is that the movement should not result in loss of social security benefits, such as benefits relating to childbirth and family costs. In reality, however, there are many obstacles to free movement in this area. According to the theory of law as normative patterns in a normative field, legal solutions in the area of the social dimension – in this case, the area of social security – can be said to oscillate between at least three basic normative patterns, or poles, in a normative field.5 These are the pattern of protection of the established position, the market-functional pattern and the pattern of just distribution. Rules based on income replacement represent the pattern of protection of established position. A person who has established a certain position, for example by working, must not be deprived of that position without a just cause. Work is normally a condition for receiving income replacement benefits, in which case the rules also represent the market-functional pattern. The market-functional pattern is the normative pattern underlying the market economy and includes the freedom of contract, the right of property and freedom of trade. Benefits based on need, or implying a solidarity-based redistribution of resources, represent the pattern of just distribution. Such benefits are normally residence-based. The idea is that resources should be distributed and redistributed based on some material principle of justice. These normative patterns are contradictory and conflicts constantly arise. They cannot be ordered into a hierarchy and there are no principles to determine which normative pattern should be the most predominant. The Swedish provisions on parental benefits, together with the EU rules on free movement and coordination of social security, can be placed in the normative field, wherein the tensions between these legal solutions may be seen. Another important aspect is the tension between individualised and familybased rights. Whereas the Swedish social security system, including parental benefit, presupposes that the individual is insured in his or her own right, the EU rules on free movement and social security benefits also grant certain rights to family members of an insured person.

4 European Commission Press release IP/06/389 Europeans Move for Love and a Better Quality of Life. 5 A Christensen, ‘Normative Patterns and the Normative Field: A Post-liberal View on Law’ in Wilhelmsson and Hurri (eds), From Dissonance to Sense. Welfare State Expectations, Privatisation and Private Law (Altershot Ashgate, 1999) 83 ff. See also A Numhauser-Henning, Freedom of Movement and Transfer of Social Security Rights (Norma, 2003:1) 40 ff.

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2. FREE MOVEMENT IN THE EU

2.1 The Right to Movement and Social Benefits in General The rules on free movement of workers in Article 45 of the Treaty, and the development towards free movement for all Union citizens, enshrined in Article 21 of the Treaty, also have an impact on the coordination of social security benefits, although this issue is regulated in a specific Treaty provision (Article 48) and in Regulation 883/2004. The free movement of workers in Article 45 has been a cornerstone in European integration. No discriminatory conditions must be imposed on a person taking work in another Member State. In order to achieve this goal in practice, Regulation 1612/686 was adopted, which contains rules concerning not only the right to take up employment, but also for the worker to enjoy the same social advantages as the host state’s own nationals. The term ‘social advantage’ has been interpreted widely7 and may also include social security benefits; although, as mentioned above, there are specific rules in Regulation 883/2004 concerning such benefits. Regulation 883/2004 often grants more extensive rights, such as the exportability of benefits. The right to free movement and equal treatment also includes the worker’s family members. These rules reflect the normative pattern of protection of established position as a result of employment. Since the introduction of the notion of European Union citizenship, the free movement provisions have been broadened to cover non-active persons, as manifested in Article 21 of the Treaty. This general right to free movement is regulated in Directive 2004/38/EC,8 whereby all Union citizens are granted a right to enter and stay for three months in another Member State. The principle of equal treatment also applies. These rules express the normative pattern of just distribution. However, the principle of equal treatment is restricted in the Directive with regard to social assistance for those who are not workers.9 Furthermore, a stay longer than three months in the new host state presupposes some level of economic activity or the existence of sufficient means.10 In its case law, the Court of Justice of the European Union has interpreted Articles 45 and 21 in a broad sense, and introduced the idea of a proportionality assessment in situations where free movement is restricted.11 This means that non-active

6 Reg (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community [1968] OJ L 257/2, 19.10.1968, pp 2–12. 7 See eg case 32/75 Fiorini [1975] ECR 1085, case 261/83 Castelli [1984] ECR 3199. 8 Dir 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States amending Reg (EEC) No 1612/68 and repealing Dirs 64/221/EEC, 68/360/ EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC [2004] OJ L 158/77, 30.4.2004, pp 77–123. 9 Art 24.2. 10 Art 7. 11 See eg case C-413/99 Baumbast [2002] ECR I-7091, C-456/02 Trojani [2004] ECR I-7573, C-184/99 Grzelczyk [2001] ECR I-6193. See also M Dougan, ‘The Constitutional Dimension to the Case Law on Union Citizenship’ (2006) 31 European Law Review 613 ff.

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Union citizens moving to another Member State may have more extensive rights than those enshrined in Directive 2004/38/EC. The limits imposed by a host state may be upheld only if they are proportionate. Thus, difficulties arise when attempting to draw the line between the rights reserved for workers and those granted to all Union citizens.

2.2 Social Security Coordination – The Main Features of Regulations 1408/71 and 883/2004 In order to ensure that migrants do not lose social security benefits such as pension, unemployment benefits, and child allowance, Article 48 of the Treaty gives the EU authority to adopt important regulations on the coordination of social security schemes. The first Regulation was adopted as early as 1958 and, in 1971, this was replaced by Regulation 1408/71. The latter was in force for almost 40 years and, although many changes were made during its existence, Regulation 1408/71 was relatively outdated when the new Regulation 883/2004 was finally ready for application in May 2010. One of the main changes in Regulation 883/2004 is that it covers all Union citizens who are, or who have been, insured in a national social security system and their family members,12 as compared to Regulation 1408/71, which was based on the original concept of free movement of workers (including those who had worked previously) and their family members.13 The secondary legislation in this area has thus moved from mainly reflecting the normative pattern of protection of established position towards reflecting the normative pattern of just distribution as well. Nevertheless, the coordination system is still, to a large extent, only granting rights to workers and, although many Union citizens are now covered by the personal scope of the Regulation, the practical implications for non-active persons are unclear. Most social security benefits require that economic activity has been performed and, if this is not the case, then the personal scope of the Regulation may not be sufficient for entitlement. With regard to the right of family members, the Court of Justice of the European Union has stated that there is a distinction between individual and derived rights. Family members are entitled to derive benefits from a working family member, but some provisions, such as those regarding unemployment benefits, apply solely to workers.14 The overall goal of the coordination regulations is to ensure that the different national social security systems work together in relation to migrants, so that social security protection is not lost. Benefits covered include, primarily, sickness benefits, unemployment benefits, old-age benefits, maternity/paternity benefits

12

Art 2. ibid Art 2. See also Case 75/63 Unger [1964] ECR 177. 14 Case C-308/93 Cabanis-Issarte [1996] ECR I-2097. 13

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and family benefits.15 However, the national social security systems remain the province of the respective Member States. These systems are based on a territoriality principle, meaning that only people with a certain belonging, such as nationality or residence, are covered.16 In order to make sure that migrants are not affected by discriminatory conditions, the regulations contain coordination rules which are to be applied in each specific situation concerning a migrant person. These contain rules on applicable legislation, meaning that a person can only be covered by the legislation of a single state (single state rule).17 The legislation of the work state (lex loci laboris) is applicable for employed persons, even if they reside in another Member State.18 The work state may thus not uphold residence conditions towards an employed person.19 Non-active people, on the other hand, are covered by the legislation in the state of residence (lex loci domicilii).20 In each case, the state whose legislation is applicable is called the Competent State. In certain situations, cash benefits are to be paid from the Competent State, regardless of the person’s place of residence or stay. This is called the exportability principle.21 The scope of this principle depends on the type of benefit. Pensions, for example, are fully exportable, whereas unemployment benefits may only be exported for a maximum of 6 months.22 The regulations also contain a principle of equal treatment,23 which is a clarification of the basic principle in Article 18 of the Treaty. Another important principle is the principle of aggregation of insurance periods, meaning that a Member State must also take into consideration periods of insurance from other Member States when determining whether a national qualification time is fulfilled.24 This seems to presuppose that some relevant insurance periods, for example periods of work, have been fulfilled in the Member State in question.25 A new principle in Regulation 883/2004 is one regarding assimilation of benefits, income, facts or events occurring in any other Member State, and treating these as if they had taken place in the state’s own territory. The meaning of this new Article is uncertain.26 This is particularly the

15

Art 3 in Reg 883/2004, above n 2 (Art 4 in Reg 1408/71, above n 1). R Cornelissen, ‘The principle of territoriality and the Community regulations on social security (Regulations 1408/71 and 574/72)’ (1996) 33 Common Market Law Review 439 ff. 17 Art 11.1 in Reg 883/2004, above n 2 (Art 13.1 in Reg 1408/71, above n 1). 18 Art 11.3a in Reg 883/2004, above n 2 (Art 13.2a in Reg 1408/71, above n 1). 19 Case 2/89 Kits van Heijningen [1990] ECR I-1755. 20 Art 11.3e in Reg 883/2004, above n 2 (Art 13.2f in Reg 1408/71, above n 1). 21 Art 7 in Reg 883/2004, above n 2 (Art 10 in Reg 1408/71, above n 1). 22 Art 64 in Reg 883/2004, above n 2. 23 Art 4 in Reg 883/2004, above n 2 (Art 3 in Reg 1408/71, above n 1). 24 Art 6 in Reg 883/2004, above n 2 (There was no general principle of aggregation in Reg 1408/71, above n 1– it was instead stipulated separately for each type of benefit, eg, Art 18 concerning sickness and maternity benefits). 25 See Art 12.2 in Reg (EC) No 987/2009 of the European Parliament and of the Council of 16 September 2009 laying down the procedure for implementing Reg (EC) No 883/2004 on the coordination of social security systems [2009]  OJ L 284/1, 30.10.2009, pp 1–42. The question is however unclear, see reference for a preliminary ruling from the Swedish Supreme Administrative Court in case C-257/10 Bergström (pending). 26 See Y Jorens and F Van Overmeiren ‘General principles of Coordination in Regulation 883/2004’ (2009) 11 1–2 European Journal of Social Security 65 ff. 16

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case for non-active migrants to the new host state.27 If interpreted broadly by the Court of Justice of the European Union, this principle has the potential to impact the territoriality principle significantly.

2.3 Connections and Tension between the Different EU Norms The EU rules on free movement in Articles 45 and 21 of the Treaty interact – and conflict – with the coordination regulation based on Article 48. There are important connections between these systems of norms. For example, the right to stay in a new host state – and thereby the right to equal treatment – may be fulfilled by the export of social security benefits from another Member State, or by a person being granted entry into the social security system of the new host state (possibly by applying the principles on aggregation and assimilation). Although social security benefits are regulated in lex specialis, Regulation 883/2004, the Court of Justice of the European Union has also started to use Articles 45 and 21 and the proportionality assessment when settling cases concerning social security benefits.28 Limitations to free movement may be upheld only if they are proportionate. This raises the question regarding to what extent the rules in Regulation 883/2004 may be upheld, for example, the lex loci laboris principle and the restrictions on exportability for certain benefits.29 Although these situations may allow the granting of extensive rights to migrants, such conflicts between norms may lead to uncertainties as to where to draw the lines for free movement.

3. COORDINATION OF BENEFITS RELATING TO CHILDBIRTH AND FAMILY

Substantial problems have been encountered in the interpretation and coordination of benefits related to childbirth and family. This became apparent when the Swedish parental benefit was to be applied in relation to the coordination regulation. Regulation 883/2004 makes a division between maternity/paternity benefits (the latter were not covered by previous regulations), and family benefits. The interpretation of the notion ‘family benefit’ – which is broadly defined in the regulation as all benefits intended to meet family expenses30 – has been difficult, and there are several cases from the Court of Justice of the European Union regarding this issue.31 Classification of national benefits relating to

27

See reference for a preliminary ruling in C-257/10 Bergström (pending). See eg case C-228/07 Petersen [2008] ECR I-6989 and case C-287/05 Hendrix [2007] ECR I-6909. 29 See M Coucheir and M Sakslin (eds) Think Tank Report 2008 The relationship and interaction between the coordination Regulations and Directive 2004/38/EC, Training and Reporting on European Social Security, Project DG EMPL/E/3-VC/2007/0188. 30 Art 1z in Reg 883 /2004, above n 2. 31 See eg case C-78/91 Hughes [1992] ECR I-4839, joined cases C-245/94 and C-213/94 Hoever och Zachow [1996] ECR I-4895, case C-333/00 Maaheimo [2002] ECR I-10087, case C-275/96 Kuusijärvi [1998] ECR I-3419. 28

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childbirth and family is therefore complicated, but of great importance since the coordination rules on these types of benefits vary and may lead to different results for the families concerned. Maternity and paternity benefits are intended to refer to national benefits connected to the individual worker’s loss of income as a result of child rearing during the first period of a newborn child’s life.32 It is not possible for a family member to derive rights from the individual worker in order to receive incomebased maternity or paternity benefits. Aggregation of periods is possible, but the Competent State might base the benefit only on income from work in its own territory.33 The individual worker has the possibility of exporting benefits from the Competent State as long as the insurance period lasts.34 These rules express a basic normative pattern of protection of established position as a result of employment. Those who have fulfilled the work condition are entitled to benefits, and enjoy a strong protection against loss of insurance coverage. Family benefits, on the other hand, are regarded as benefits granted to the family as a collective.35 The rules seem to be constructed in such a way as to comprise flat-rate benefits, normally residence-based, such as general child allowance. Since such benefits normally do not require insurance periods, the role of the aggregation principle is unclear.36 Family benefits are exportable in the situation where a person is working in one Member State and whose family members remain domiciled in another Member State.37 A husband and child living in Germany may thus be entitled to Swedish family benefits via the wife and mother, who is working in Sweden. According to the case law of the Court of Justice of the European Union, non-active migrants (such as people on parental leave who have ceased their employment) are not guaranteed export of family benefits from the last state of employment.38 The coordination rules on family benefits express the normative pattern of just distribution. They are intended to provide a basic protection for all families. The Court of Justice of the European Union has, however, defined family benefits in broad terms, and included not only basic allowances such as general child allowance but also income-related parental benefits, such as the Swedish parental benefit.39 The Court found that this benefit was intended to enable one of the parents to devote himself or herself to the raising of a young child, and was designed, more specifically, to remunerate the service of bringing up a child, to meet the other costs of caring for and

32 See p 19 in the preamble of Reg 883/2004. See also opinion from Advocate General Jacobs in case C-111/91 Commission v Luxemburg and V Paskalia, Free Movement, Social Security and Gender in the EU (Oxford, Hart Publishing, 2007) 246. 33 Art 21.2 in Reg 883/2004, above n 2 (Art 23 in Reg 1408/71, above n 1). 34 Arts 11.2 and 21 in Reg 883/2004, above n 2 (Art 22.1b in Reg 1408/71, above n 1). 35 Joined cases C-245/94 and C-213/94 Hoever och Zachow, above n 31. 36 See F Pennings, Introduction to European Social Security Law (Antwerpen, Intersentia, 2003) 203 and Paskalia, Free Movement 209 ff. 37 Art 67 in Reg 883/2004, above n 2 (Art 73 in Reg 1408/71, above n 1). 38 Case C-275/96 Kuusijärvi , above n 31. See also case C-135/99 Elsen [2000] ECR I-10409, case C-28/00 Kauer [2002] ECR I-1343. See s 5.2 below. 39 See above n 31.

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raising a child and, as the case may be, to mitigate the financial disadvantages entailed in giving up income from an occupational activity.40 The Court seems to have taken note of the fact that the benefit is granted for an extended period of time (480 days, to be claimed at any time up until the child’s eighth birthday) and that it is can also be paid to the father, if he is the parent caring for the child. When classifying the Swedish parental benefit as a family benefit, the Court, perhaps more surprisingly, referred to the fact that the benefit compensates for loss of income. This broad definition made by the Court has consequences for the coordination of parental benefits, as will be shown in section 5 below. Closely connected with benefits relating to childbirth and family is the notion of ‘family’ itself. Although EU law does not contain a general definition of this concept – which is deeply rooted, but different, in each of the Member States – the rules on free movement, immigration and equal treatment still force the EU to take a stand in this delicate issue.41 A narrow definition has been adopted, protecting mainly the ‘family’ in a traditional sense and excluding others, such as cohabitants and same-sex partners.42 Those moving to or taking up work in another Member State may thus be faced with the situation where their family member in the country of residence is not considered a family member in the work state and is thus denied benefits.43 For those falling within the definition of ‘family’, however, the EU rules grant extensive rights. The family member is, according to Directive 2004/38/EC, entitled to free movement and equal treatment. As regards those social security benefits classified as family benefits under Regulation 883/2004, the Court of Justice of the European Union has stated that the family as a whole is entitled.44 A child or spouse of a worker may, in their own right, claim such benefits from the work state.

4. THE SWEDISH PARENTAL BENEFIT

The Swedish social security system is highly individualised, meaning that family members cannot derive rights from a working person. Each person must fulfill the insurance conditions in their own right. The Swedish parental benefit45 is designed to give – after only 29 days of maternity leave – both parents the possibility of combining work and family responsibilities, by granting the parent who stays at home to care for the child an income-related, work-based benefit.

40

See also joined cases C-245/94 and C-213/94 Hoever och Zachow, above n 31. C McGlynn, Families and the European Union. Law, politics and pluralism (Cambridge, Cambridge University Press, 2006) 151. 42 See eg case C-249/96 Grant [1998] ECR I-621, joint cases C-122/99 P and C-125/99 P D and others v Council [2001] ECR I-4319 and case 59/85 Reed [1986] ECR 1283. 43 See S Roberts and M Sakslin, ‘Some are More Equal than Others: The Impact of Discrimination in Social Security on the Right of Same-sex Partners to Free Movement in the European Union’ (2009) 17 3 The Journal of Poverty and Social Justice 249 ff. 44 See above n 40. 45 See cc 11–12 and 25 in the Social Insurance Act (2010:110). 41

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This presupposes that the parent is entitled to sickness benefit in cash, which is based on expected annual income from work in Sweden (sjukpenninggrundande inkomst). In order to receive the income-related benefit the first 180 days of parental leave, the parent must also be entitled to a sickness benefit qualifying annual income exceeding 180 Swedish kronor per day for 240 consecutive days before the expected delivery date (240-days condition). Once a person has fulfilled these conditions, many protective rules come into force to maintain an income-related level of compensation during periods of non-activity. These rules reflect the normative pattern of protection of established position. For those who have not worked, parental benefit at a basic level (grundnivå) is granted. This is a residence-based benefit. However, regardless of whether the working condition or the residence-only condition is fulfilled, a number of the parental benefit days (90) are residence-based and granted only at a minimum level (lägstanivå). The rules on minimum level and basic level parental benefit express the normative pattern of just distribution. The parental insurance is thus a combination of income-related and basiclevel protection. Parents are granted a total (maximum) of 480 parental benefit days per child, which may be claimed up until the child is eight years old. The notion of family member as regards parental insurance in Sweden is quite broad, comprising cohabitants under certain conditions and same sex married couples.

5. THE SWEDISH PARENTAL BENEFIT IN RELATION TO THE EU RULES

5.1 Families Moving to Sweden in Connection with Parental Leave What, then, are the practical implications in relation to the application of the norms mentioned above? Firstly, there have been problems in relation to families moving to Sweden. This particularly concerns the income-related benefit. Since parental benefit is granted for 480 days and may be claimed until the child is eight years old, families moving to Sweden with young children often have benefit days to claim. Sweden has seen a risk for social tourism in this regard. The Swedish view has been that at least one of the 240 days of insurance before the birth of the child (the 240-days condition, stipulated in Swedish legislation) must be fulfilled in Sweden. This was established in a case from the Administrative Court of Appeal in 1995.46 Families moving to Sweden after the birth of their children have thus been denied income-related parental benefit. However, the European Commission found this to be in breach of the principle of equal treatment in Regulation 1408/71 and suggested that a specific rule should be added to Annex VI of Regulation 1408/71, meaning that periods of work from other Member

46

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States should be considered as work in Sweden in this regard.47 The Swedish government did not accept this and the suggested amendment was not made. Instead, two cases came before the Court of Justice of the European Union regarding the application of the 240-days condition.48 The cases concerned people who had worked in EU institutions, and who are thus not covered by Regulation 1408/71 and cannot rely on the aggregation principle. 49 Although the Court of Justice of the European Union found that periods of work in EU institutions must be considered when applying the 240-days condition, the question of how the aggregation principle in Regulation 1408/71 was to be applied in this regard was never answered. In the light of these cases, it seems that the Swedish authorities now accept that the 240-days condition can be fulfilled by work in other Member States only.50 There is however still no clear case-law concerning this issue. Even so, there is a requirement for an expected income from work in Sweden in order to qualify for income-related parental benefit. This condition has also led to problems of interpretation. The question has arisen as to whether people moving to Sweden without starting to work can count the income from another Member State as income in Sweden. The Swedish Supreme Administrative Court has recently referred a case concerning this issue for a preliminary ruling from the Court of Justice of the European Union.51 The case concerns a woman who had been working in Switzerland and who moved to Sweden without taking up employment. The two principal questions here are whether she can include her employment in Switzerland in order to fulfil the 240-days condition and whether the income from Switzerland qualifies her for income-related Swedish parental benefit. Regulation 1408/71 is applicable in this particular case, but in the latter question the new assimilation principle in Regulation 883/2004 may cause specific problems of interpretation in the future. According to the wording of this provision, a person should be able to refer to an income from another Member State. This could also have consequences for the right to stay in Sweden in accordance with Directive 2004/38/EC, as entitlement to income-related parental benefit would mean that the person has sufficient means. Sweden has inserted a specific provision in Annex XI to Regulation 883/2004, stipulating that:

47 COM (2005) 676 Proposal for a regulation of the European Parliament and of the Council amending Council Reg (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community and Council Reg (EEC) No 574/72 laying down the procedure for implementing Reg (EEC) No 1408/71. 48 Case C-137/04 Rockler [2006] ECR I-1441, case C-185/04 Öberg [2006] ECR I-1453. 49 Case C-411/98 Ferlini [2000] ECR I-8081. 50 See www.forsakringskassan.se/irj/go/km/docs/fk_publishing/Dokument/Publikationer/Faktabl ad/Andra_sprak/Engelska/foraldrapenning_eng.pdf. 51 See reference for a preliminary ruling in C-257/10 Bergström (pending) OJ C 195, 17.7.2010, p 15.

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For a parent for whom sickness benefit generating income is calculated on the basis of income from gainful employment in Sweden, the requirement to have been insured for sickness benefit above the minimum level for at least 240 consecutive days preceding the child’s birth shall be satisfied if, during the period mentioned, the parent had income from gainful employment in another Member State corresponding to insurance above the minimum level. (emphasis added)

Thus, only those with income from Sweden may be credited days of work abroad when applying the 240-days condition. The question remains as to how this provision will be considered by the Court of Justice of the European Union, especially in the light of the proportionality principle.

5.2 Families Moving from Sweden in Connection with Parental Leave Families moving from Sweden run the risk of losing their Swedish parental benefit. This became apparent after the Kuusijärvi ruling,52 where the Court of Justice of the European Union stated that a non-active woman – she was unemployed after having worked in Sweden – moving from Sweden during parental leave could be denied further payment of parental benefit. A person who had ceased all employment in a state was not covered by the legislation of this state in accordance with Article 13.2 a) (lex loci laboris) in Regulation 1408/71. Nor was there – since the Court of Justice of the European Union classified the Swedish parental benefit as a family benefit – any provision in Regulation 1408/71 which provided for export of benefits in such a situation.53 The residence condition in Swedish legislation could thus be upheld. Although the woman in the case was to be covered by the legislation of the new Member State of residence, according to the lex loci domicilii-principle she had probably not earned the right to income-related parental benefits in that country. Thus, moving during parental leave had serious consequences and many people – mostly women – have been affected. However, the new Regulation 883/2004 stipulates that people receiving cash benefits because of, or as a consequence of, their activity as employed or selfemployed people should be considered to be pursuing the said activity (Article 11.2). This implies that the benefit for a person who moves while receiving workbased parental benefit, can no longer be withdrawn, as in the Kuusijärvi case. As mentioned above, residence conditions may not be upheld from the work state against an employed person. However, this provision may cause new problems of interpretation. Will the affiliation to the social security system of the last state of employment continue as long as there are some benefits left in that system? If

52

See above n 31. For maternity benefits there was a right to export benefits in such a situation, according to Art 22.1b in Reg 1408/7, above n 1. See opinion from Advocate General Jacobs in case C-275/96 Kuusijärvi, above n 31. 53

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so, the consequences for Sweden will be severe, as Swedish parental benefit days may be saved and claimed until the child is eight years old and so a person leaving Sweden with a young child may remain covered by the Swedish legislation for a long time. According to the single state rule, all social security benefits covered by the Regulation must then be granted by Sweden. This could lead to deterioration of the national parental insurance in order to avoid such situations. Also, the question arises as to which state is responsible for the payment of parental benefits if a family moves from the last state of employment before the birth of the child and parental benefit is not claimed until later. For people receiving only residence-based parental benefit, it is likely that the Kuusijärvi ruling will still be upheld and benefits will be withdrawn when a person moves from Sweden and has ceased all employment there. However, more recent cases from the Court of Justice of the European Union may affect the implications of the Kuusijärvi case, in the sense that non-active people may in fact be entitled to benefits from the state where they last worked. In Elsen54 and Kauer55 the Court stated that the fact that the women were employed in a Member State when their children were born meant that this State must take into account periods of child rearing for the purposes of old-age insurance, even though the women had stopped working in that State. In the case of Dodl and Oberhollenzer,56 two women on unpaid parental leave were still considered as employed. However, in contrast to Kuusijärvi, both women had existing employment relationships, although these did not involve any duty to perform work or pay remuneration or any social security obligations under national law. The right to retain Swedish parental benefit after moving from Sweden is thus still unclear, and this has an adverse effect on the free movement of families.

5.3 Families Working and Living in Different Member States during Parental Leave For families working and living in different Member States, for example, when a family lives in Sweden and one parent works in Sweden and the other parent works in Denmark, specific coordination problems occur. Since the parental benefit is classified as a family benefit, the rules in Regulation 883/2004 concerning overlapping family benefits are applicable. These rules mean that in situations where the family is entitled to benefits (such as general child allowance) from more than one state, one of the states is primarily responsible, while the other state is only required to pay a supplement if its benefits are higher.57 This means

54

Case C-135/99 Elsen [2000] ECR I-0409. Case C-28/00 Kauer [2002] ECR I-01343. 56 Case C-543/03 Dodl and Oberhollenzer [2005] ECR I-5049. 57 Art 68 in Reg 883/2004, above n 2. As for the overlapping rules in Reg 1408/71, above n 1, see Pennings, Introduction to European social security law 208 ff, above n 36. 55

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that all family benefits from each state are summed up and compared. The inclusion of income-related benefits in this comparison is problematic. Not only is Sweden required to pay supplements to other Member States where parental benefits are not classified as family benefits,58 but the individual family may also be negatively affected. When income-related parental benefit is deducted from flat-rate benefits such as child allowance in another, primarily responsible, state, such benefit may ‘disappear’ if, for example, this state has a higher child allowance. According to the proposal on a new multilateral Nordic convention, income-related family benefits are not to be included in the calculation of supplementing family benefits, since this method of calculation has had a negative effect on free movement of families. This solution, however, concerns only the Nordic states.59 The idea of the family as a unit as regards family benefits is also odd in relation to the income-related parental benefit. Should a non-working spouse of a worker in Sweden, residing in another Member State, be able to claim Swedish parental benefit based on the income-level of the worker? According to Swedish law, each individual must fulfil the insurance conditions on his/her own. Sweden has therefore inserted a specific provision in Annex XI of Regulation 883/2004 stipulating that when parental benefit is paid under Article 67 to a family member who is not employed, only basic or minimum level benefit can be paid. The question is whether this provision is possible to reconcile with the view on family and family benefits manifested in the case law of the Court of Justice of the European Union. The interpretation of the concept ‘family member’ may cause problems for families who live in Sweden and where one parent works in another Member State. According to Regulation 883/2004, ‘member of the family’ means any person defined or recognised as a member of the family or designated as a member of the household by the legislation under which benefits are provided.60 It is, therefore, not self-evident that, for example, a same-sex spouse will be considered as a family member in the other Member State, and so the family could be refused payment of family benefits from that state. People living in non-traditional family constellations may thus be deterred from exercising their right to free movement.

6. CONCLUDING REMARKS

Many of the above-mentioned problems relating to the coordination of the Swedish parental benefit are connected to the fact that the EU coordination rules

58 This has been the case in relation to Finland, see Försäkringskassan analyserar 2005:3 (Analysis from the National Insurance Board). 59 Rapport från arbetsgruppen för översyn av den nordiska konventionen om social trygghet (projekt nr. 80389). 60 Art 1i in Reg 883/2004, above n 2.

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on family benefits reflect the normative pattern of just distribution, whereas the Swedish rules on income-related parental benefit reflect the normative pattern of protection of established position as a result of employment. The EU rules on maternity/paternity benefits, reflecting the normative pattern of protection of established position, may better fit the income-related parental benefit, but are not suitable for the part of the Swedish parental benefit that is residence-based and granted on a basic or minimum level. Although many problems occurred with the application of Regulation 1408/71, the new Regulation 883/2004 takes no notice of the issue of coordination of parental benefits. Furthermore, the Member States do not seem to classify this type of benefit in the same way. The author therefore, de lege ferenda, suggests a division of the Swedish parental benefit into two separate parts: one work-based, income-related benefit to cover loss of income during only the first period of the child’s life, and one residence-based, basic allowance for child-rearing during a longer period. The former could be coordinated as a maternity/paternity benefit and the latter as a family benefit. This would facilitate the coordination of the Swedish parental benefit, with respect to issues such as overlapping benefits, export of benefits and aggregation of insurance periods, although it would not solve all of the above mentioned problems. Under present conditions, the coordination of parental benefits will continue to be problematic. For example, the new principle in Regulation 883/2004, in which a person is considered to be employed as long as a cash benefit is received as a consequence of employment, is difficult to reconcile with parental benefit as a family benefit. The question arises as to which state is responsible – the last state of employment, or the new state of residence. Since there are no specific limitations on the aggregation of insurance periods for family benefits, as compared to maternity/paternity benefits, there seems to be a responsibility for the new host state to grant such benefits, perhaps even if they are incomerelated. The new principle of assimilation in Regulation 883/2004 may also apply in such cases, although its limits are still unclear and the implications for non-active migrants remain uncertain. A further complication when coordinating parental benefits is the applicability of Articles 45 and 21 of the Treaty. If a proportionality assessment is to be made in addition to applying the rules in Regulation 883/2004, the limits on free movement are almost impossible to predict. This is particularly the case for non-active migrants. Also, the fact that the coordination rules might not be strictly upheld challenges the idea that national social security systems are to be coordinated only, and not harmonised. As far as the overall normative development is concerned, the rules on free movement have shifted from mainly expressing a normative pattern of protection of established position as a result of employment towards also reflecting a normative pattern of just distribution. This is illustrated, in particular, by the fact that non-active Union citizens are now also granted certain rights. The same development can be seen in the area of coordination of social security. However,

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the rules are constantly shifting between the normative poles, depending on whether the person concerned is a worker or a non-active Union citizen, and depending on whether the benefit in question is a maternity/paternity benefit or a family benefit. In some situations restrictive conditions may be imposed upon those who have not worked and who are not covered by the protection of established position, whereas in other situations the rules are to be applied in a way that reflects the normative pattern of just distribution. This may be one explanation for the complexity of this area of law.

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10 The Swedish Social Security Reforms of 2008 and their Impact on the National Sickness Insurance System: Some Reflections from an EU Law and Flexicurity Perspective PER NORBERG*

1. INTRODUCTION1

The Swedish national sickness insurance system was fundamentally changed in 2008. I will describe two important new features. The first is the requirement to seek new employment from day 180 of the sickness period. At this point a person too sick to do their current work will lose their sickness insurance benefit if he or she can perform any other normal work available in the national labour market. Instead, they will receive unemployment insurance while looking for a new job. The other new feature is a temporary withdrawal of sickness insurance benefit from day 915 in the sickness period. This cessation applies to people who are not permanently sick, but sick enough to be unable to work in any normal job existing in the national labour market. The Public Employment Agency shall offer these people labour market activities for the 90 days they must subsist, without sickness insurance benefit, before they can return to the sickness insurance system.

* Doctor of Laws at the Law Faculty, University of Lund, specialising in housing, social security, labour and discrimination law. 1 This chapter is written as a part of the research project ‘The new reform of the sickness insurance system – what are the consequences for labour law and the unemployment insurance system’, which is supported by the Swedish National Social Insurance Board (Försäkringskassan). The main aim of this project is to assess the problems arising for people being moved from sickness insurance to unemployment insurance.

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The aim of this chapter is to give a description of the historical development of the Swedish national sickness insurance system, to describe the central elements of the two new rules and to reflect on these rules as a new way to achieve flexicurity. The new rules are also problematic in relation to the EU coordination regulation regarding social security.

1.1 Flexicurity in Relation to Early Retirement and Sickness Insurance The connection between social security and the functioning of the labour market is at the core of the concept of flexicurity.2 In an EU context it is defined as an integrated strategy to simultaneously enhance both flexibility and security.3 One aspect of flexicurity is that there is a good social security system to help people who lose their job. Another important part is to focus attention on employability so that if a person loses his or her job, that person is well equipped to take up another job. For healthy people, employability can be achieved through life-long learning. Much of the discussion about flexicurity focuses on the problem of long term unemployment for healthy workers. The Commission describes four typical pathways. The first regards tackling contractual segmentation, the second regards developing flexicurity within the enterprise and offering transition security, the third is about tackling skills and opportunity gaps among the work force and the fourth concerns benefit recipients and informal workers. Unemployment insurance is the social security system that is at the heart of the fourth pathway.4 However, the concept of flexicurity goes further; it also means transitions from all kinds of inactivity, including early retirement, into active participation in the labour market.5 Overuse of early retirement seems to be a European problem. Only 46 per cent of older workers (55–64 years) are employed in the EU compared to over 62 per cent in the US and Japan.6 It is reasonable to assume that early retirement is an important factor behind these figures.

2 For a general overview of flexicurity in relation to the Swedish employment regulation see M Rönnmar, ‘Flexicurity and Swedish Employment Regulation’ (forthcoming) Bulletin de droit comparé du travail et de la sécurité sociale. 3 European Commission, Communication from the Commission to the European Parliament, the Council, The European and Social Committee and the committee of the regions, Towards Common Principles of Discrimination – More and Better Jobs through Flexibility and Security, Com (2007) 359 final S 2. Quoted Commission 2007 a. 4 ibid Annex I. 5 See European Commission Staff Working Document – Accompanying the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Towards Common Principles of Flexicurity: More and Better Jobs through Flexibility and Security – Impact Assessment, S 3.1. SEC (2007) 861 final. Quoted Commission 2007 b. 6 European Commission, Communication from the Commission, Europe 2020 – A Strategy for Smart Sustainable and Inclusive Growth, COM (2010)2020, p 5.

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Early retirement and long term sickness have been focal points of the Swedish debate in recent years. It has not been an issue of poverty,7 but instead has been a moral issue. If a person has a capacity for work, this capacity should be used. Sweden had periods of high unemployment in the 1970s and in the 1990s. It was not only the unemployment figures that climbed; sickness insurance and early retirement also expanded. The harder it was to find work, the less severe were the socio-medical problems required to enable a person to live on sickness insurance benefit or early retirement.8 It was obvious that the concept ‘too sick to work’ related both to the medical condition and to the effect it had on the chances of the person finding a job. Sweden attempted to reform these two social security systems in the 1990s and in 2008. Only people who were too sick to work or to participate in labour market programmes should have a right to sickness insurance benefit or early retirement. A person with a sickness which made it almost impossible to find a job, should use his or her remaining work capacity in labour market programmes. Denying sickness benefit and requiring the sick person to register with the Public Employment Agency was viewed as a stepping stone towards employment. Creating stepping stones for people excluded from the labour market can be viewed as a way of reducing the differences between outsiders and insiders in the labour market, which is one explicit goal of EU flexicurity.9 Superficially, reducing the number of people living on sickness insurance benefit and early retirement, in a way that instead increases unemployment, does not look like a strategy for reducing social exclusion. Old age retirement systems and early retirement systems are often viewed as ‘non stigmatising‘ systems. The benefit recipients are not supposed to work and, as long as the benefit levels are adequate, there is no problem. Unemployment insurance, on the other hand, is often perceived as stigmatising. The unemployed person has ‘failed’ to find employment and needs to work hard to do so. However, if one looks at individuals, the division between these social security systems can never be clear. A medical condition normally reduces work capacity. At a certain point the reduction is large enough for sickness insurance benefit or early retirement to be allowed and there will always be people close to this point. Reclassification of a person – whose health has not improved – as being unemployed rather than sick creates both opportunities and dangers. One goal of this chapter is to reflect on some particular details of the Swedish reform in this context.

7 Compare ibid p 17. Social Exclusion is in the flagship initiative ‘European Platform against Poverty’. 8 Government White Paper 2006:86, p 54. Locally, high unemployment and high use of sickness insurance and early retirement change together. Nationally, a period of rising unemployment may have the effect of making a worker afraid of losing their job and therefore they do not take sickness leave if they can avoid it. Both figures rise over the period covered by this chapter but not in a synchronised way. 9 European Commission 2007 a., S 5.4, above n 3.

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1.2 The Definition of Sickness and Invalidity in EU Law and Why it Can be a Problem in Sweden The term social insurance is used to describe social security in Sweden. The person receiving the benefit is called the insured. In Sweden even benefits such as child benefit, that has the same level for everyone, is regarded as social insurance. The important thing is which authority administers the benefit in question.10 Since social insurance covers almost all social security areas of EU law, I will use the term in this wide sense and as a synonym for social security.11 The Member States are free to make a lot of choices with regard to social security. The goal of Regulation 883/2004 and its predecessors has always been to co-ordinate and not to harmonise the legislation.12 Exportability is at the heart of the EU legislation.13 A sick person is allowed to take the cash benefit to other countries and this is part of the implementation of free movement for workers in Articles 45–48 of the Treaty on the Functioning of the European Union. Legislation co-ordination aims to make this freedom a reality. Medical check-ups at regular intervals are necessary to assess whether a right to sickness benefit still exists. If a person is required to return to the Competent State (the state paying out the benefit) each time this is to be done, this constitutes a severe limitation of free movement, compared with the sick person being allowed to use a doctor in the state of residence. Short-term incapacity to work is regulated as a sickness benefit in chapter 1 of Regulation 883/2004. Cash benefits should be paid out by the Competent State. The main rule is that the person can go to a doctor in his or her resident state to get an assessment of the medical condition, the incapacity to work and its duration. This is stated in Article 27 of Regulation 987/2009. According to Article 27.6, the Competent State can reserve their right to have the patient examined by a doctor of its choice, but this should be after the residence state has made the first assessment. There is a procedure of co-operation. According to Article 27.4, the employer or the competent institution may call upon the patient to return in order to participate in activities designed to promote and assist the return to health and employment. This rule deals with rehabilitation, but if it is interpreted extensively it may also apply to the Swedish problem.

10 Social Insurance Code (2010:110) Ch 2 S 2, defines social insurance in relation to which organ administers it. Benefits administered by the National Social Insurance Board, The National Pensions Board and the National Tax Authority are called social insurances. 11 Unemployment insurance is not counted as social insurance in Sweden, even though it is the most insurance-like of the social security systems. Not paying the contribution can, for instance with regard to unemployment insurance, lead to the loss of part of the protection. The unemployment insurance is operated by specialised and often union operated funds (compare above note 10). I will however call it a social insurance in this chapter. 12 F Pennings, Introduction European Social Security Law, 4th edn (Antwerp, 2003) 7. 13 ibid p 12.

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The detailed regulation on sickness is thus based on an underlying assumption that the concept of sickness is similar enough in all EU countries for doctors to be able to apply. This is the starting point for the co-operation procedure. In EU law early retirement is called invalidity. It is regulated in chapter 4 of Regulation 833/2004 and the salient feature of the concept is that the incapacity is long term. Therefore, financial consequences for the Competent State are much larger than for sickness.14 The incapacity can be related to general living situation or working life. If it is measured against working life, the basic point for measurement can be the occupation of the worker, or the Competent State may ask whether there is any work on the labour market that can be performed despite the invalidity. Decisions about the existence of, or the degree of, invalidity, and about any changes to the degree of invalidity are always controlled by the Competent State. Actors in another state can only make a binding decision if both states have adhered to annex VII and declared that the concept of invalidity is in accordance with basic principles applicable in both nations according to Article 46.3. Early retirement decisions are thus regarded as closely linked to the different national concepts of invalidity. One country may have only low unemployment and plenty of opportunities for support through active labour market policy measures. In such a country, invalidity can be defined in a narrow way. Another country may have high unemployment and decide to concentrate labour market activities on healthy people with many productive years ahead of them. Invalidity – especially for those near the official retirement age – may then be constructed widely. The detailed regulation on invalidity is therefore based on a different underlying assumption compared to sickness benefits. With regard to invalidity, the doctor in the resident state must be familiar with a concept of invalidity that is close to the one applied by the Competent State. In Sweden an important part of flexicurity concerns moving people between national social insurance systems. Moving a person out of early retirement into sickness insurance benefit is viewed as a way of getting the person closer to the labour market. Moving somebody out of sickness insurance into unemployment insurance is seen as a big step in the direction of future employment. The Swedish sickness insurance system operates with a concept of sickness that is as complex as any invalidity concept in other countries. And it must be so, since long term sick people are supposed to be moved between the sickness insurance system and the unemployment insurance system. This issue will also be explored in the Discussion.

1.3 Disposition Sweden is currently in the process of moving many people from early retirement and sickness insurance benefit to unemployment insurance and

14

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labour market activities. Historically, this society has often moved people in the opposite direction, away from the unemployment insurance and towards early retirement and sickness insurance. I will attempt to explain why early retirement and the national sickness insurance system was allowed to expand and swallow many people with only moderate reductions in working capacity. This is done in Section 2, where the birth of the sickness insurance and the early retirement system is described up until the 1960s. Some basic knowledge of unemployment insurance is given as well. Sections 3 and 4 describe what happened to early retirement and sickness insurance in the 1970s and 1980s. In that period it was not self evident that everybody who could work, should work. Instead, the state actively encouraged some people, who were healthy enough to work, to take early retirement and this also affected sickness insurance. Section 5 describes the ‘purification’ of the Swedish sickness insurance. In the 1990s, the legislator tried to amend the social security system so that people who were too sick to do their ordinary work, but could do other work, should have to try to find other work instead and register as unemployed during the time it took them to find a job. These efforts were not successful. It was not until 2008 that successful reforms to this effect came about. Finally, Section 6 contains a discussion in which I make some points about the Swedish reform in relation to flexicurity and the need to make some adaptations with regard to EU co-ordination rules.

2. A BACKGROUND TO SWEDISH SOCIAL INSURANCE

In Sweden we do not distinguish between illness, sickness and disease. We have one term sickness. This term can be understood in a medical sense, in a social sense and so on. Allowing the term to be understood in a social sense or restricting it to a medical sense is part of the process of deciding who shall receive sickness insurance benefit or early retirement. Sickness insurance has always been divided between sickness insurance for short term sickness and early retirement, which since 2003 is called sickness benefit, and activity benefit,15 in order to emphasise that the system should encourage people on early retirement to return to the labour market.16 State-supported private sickness insurance has existed in Sweden since 189117 and early retirement was introduced with the first general pension system in 1913.18 The first national sickness insurance system was introduced in 1947, with

15 Act (2001:489) on changing the National Insurance Act (1962:381). Activity benefits are for people under 30 years old. 16 Government bill 2000/01:26, p 70. 17 P Edebalk Välfärdsstaten träder fram (Lund, 1996) 47 f. The support from the state was limited to contributions towards administrative costs. 18 Act 30 June 1913 on National Pension Insurance.

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a benefit period limited to 730 days.19 This limitation was removed in 1962 when several social insurance systems were assembled in a comprehensive law called the National Insurance Act (1962:381). The basic definition of sickness was given in preparatory works from 1944 and described the concept as: Every non normal bodily or mentally condition, not connected to normal processes of life.20

This description is based on a medical definition of sickness. Sickness should be defined in the same way as it is in medical science, something which still applies today – as a starting point – both to sickness insurance and to early retirement.21 Unemployment insurance started – as was the case for sickness insurance – with voluntary systems. Sickness insurance was provided by many types of organisations, for instance churches, the temperance movement, and trade unions. Unemployment insurance was almost exclusively provided by the trade unions and the first system was created in 1892.22 Unemployment insurance was connected to wage negotiations – boycotting employers who paid under the requested amount was easier if unemployment benefit could be given out. When these systems had no state subsidy, the time limit for insurance benefit was short, about two months, and the cost was too high for most people to afford.23 The first state provisions, in 1914, were emergency aid work programmes. The state created a system whereby the municipality organised work such as digging ditches. Aid was given to people willing to participate in these activities with the level of economic benefit far below that of the minimum wage for a manual worker. The state paid half the cost of the benefits and the rest was paid by the municipality. This aid was similar to unemployment insurance in the sense that it did not require the person to use up their savings. It was not means tested but it was very controversial: unemployed people could be asked to take up work previously done by striking workers. In 1933 the system was changed so that the work programmes paid the minimum wage for a manual worker.24 In 1934 a new and state-subsidised unemployment insurance was created. During the 1950s and 60s the subsidies for unemployment insurance became so generous that the vast majority bought insurance.25 In this period there was full 19 Act 1947:1 National Sickness Insurance Act. This Act was decided by the Parliament but it never went into force in the way intended by its creator Gustaf Möller. Instead a new Minister for Social Affairs, Gunnar Sträng replaced Möller in 1951 and made fundamental changes to the Act. The year 1955 is therefore often given as the date when Sweden got a national sickness insurance because at that time the sickness insurance system became mandatory. The benefit period of 730 days was kept, though. 20 Government White Paper 1944:15, p 162. All quotes from Swedish material are based on the author’s translations. 21 L Ryberg-Welander, Ersättning vid Sjukdom (Stockholm, 2008) 122. 22 Edebalk, Välfärdsstaten, p 107, above n 17. 23 A Christensen, Grunderna i socialförsäkringsrätten), 3rd edn (Lund, 1999) (unpublished) 69. 24 ibid p 71. 25 At its peak the subsidy was 100 % of the benefits paid out by the insurance provider.

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employment. The state work programmes were almost exclusively for people with disabilities, or those with problems connected to old age or with other difficulties in entering the labour market.26 This period can be described as ‘the golden years’. With full employment, economic development was so strong that the general public expected their standard of living to increase by several percent per year, and politicians encouraged these expectations.27 The time limit for sickness insurance benefit was removed in 1962. Sickness insurance could then, in principle, encompass people with reduced work capacity for very long time periods. But at this point in time (the 1960s) there was no need for such a development. Sweden had an overheated labour market. If a person had a medical problem he or she could often find a job anyway. Sickness benefit and early retirement were only given to people with quite severe medical problems. In the early 1970s unemployment levels rose.28 An Employment Protection Act was enacted in 1974.29 Swedish society had to adapt to a reality where unemployment existed. Employers did not need to hire people with medical problems, because they suddenly found that they had many applicants for each vacant position. Current unemployment insurance received its basic form in 1997. Unemployment insurance requires the person to actively seek employment and this activity is monitored by the Public Employment Service. If a person uses up their 60 weeks of insurance they will then enter labour market programmes. These programmes require daily work. Formally, neither work programmes, nor unemployment insurance, are social insurance. There is no explicit individual right to belong to a programme if certain conditions are fulfilled. Placement in work programmes require that the decision is motivated both from a general and from an individual point of view.30 To date, however, it has been almost unheard of for a person to rely on means-tested social aid due to the lack of a work programme place for him or her. For many years, it has been possible to move people from sickness insurance benefit to, for instance, work with wage subsidies or other labour market activities. Such subsidies can be very high. It has basically been up to the Public Employment Service to decide these cases. If they offer work adapted to the sick person’s work capacity, sickness insurance benefit cannot be paid out. If such a placement is not offered, sickness insurance benefit or early retirement will continue.

26 Compare Christensen, Grunderna, p 75, above n 23. In the year 1960/61 60 % of people who used up all their days of unemployment protection were over 60 years old, but it was not until 1968 that special support for the elderly was introduced. 27 See L Magnusson, Sveriges ekonomiska historia (Falun, 1997) 455. 28 ibid p 473. In 1971–72 there was a severe recession which started a period with rapid increase of unemployment. 29 Employment Protection Act (1974:150). 30 Goverment bill 2006/07:89, p 50.

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3. EARLY RETIREMENT IN THE 1970S AND 80S

With unemployment came difficulties for people with medical problems who had been able to work during the golden years.31 It became important to find a place for such people within the social security system in order to avoid means tested social aid. In 1974 the social aid inquiry stated the following (SOU 1974:39): An important departing point in the social aid debate is that the extent of social aid is a measurement of shortcomings in the society and the social political system.32

When the inquiry found that large families often fell below the poverty line and were awarded social aid, it became important to raise child and housing benefits. Similarly, when unemployment was identified as another major cause of people needing means tested social aid, it became important to make improvements to that social security system. For the elderly, early retirement was an alternative to unemployment. In 1970 Chapter 7 Section 3 of the National Insurance Act was changed: an older (above the age of 60) person’s capacity to work should be mainly judged by that person’s ability to perform the kind of work he or she had previously done or other suitable jobs which were available to the insured. If a person worked in a physically or psychologically demanding job, the National Social Insurance Board,33 was instructed to accept statements from the older worker that he or she no longer had the strength to continue to work. The fact that people living on early retirement had less money than working people, was thought to be enough of a deterrent against the individual seeking early retirement if healthy.34 Almost all comments from organisations and state authorities were positive. The inquiry on labour market reforms wrote the following: From a labour market perspective, leaving the choice to the individual is appropriate. There is a manifest link between the willingness to work and the ability to do so. If the willingness to work is weak, labour market programmes which otherwise would have been successful will often fail.35

The problem discussed in the legislative process was the situation for people who wish to work but are hindered by medical reasons connected to sickness or ageing. The importance of their employer taking responsibility and of labour 31 In 1971 two acts supporting the elderly in the labour market were introduced. The background is described in Government bill 1971:107, p 49. Special support was needed because elderly people were much less likely to find a new job after being dismissed. Some degree of invalidity was named as a likely factor often contributing to this state of affairs. 32 Government White Paper, 1974:39 p 86. For more discussion on this particular statement see L Vahlne-Westerhäll, Den starka statens fall? (The Downfall of the Strong State?) (Stockholm, 2002) p 135. 33 At this point in time its name was Riksförsäkringsverket. 34 Government bill 1970:66, p 40. 35 ibid.

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market programmes staying open for them was clearly stated. Early retirement should be optional for those who could work. Nobody questioned the right of, for instance, a 60 year old building worker with many years in the trade to take early retirement. However, uncertainty arose in the case of a person with weak links to the labour market. What should one do with a 60 year old person who had been unemployed for long periods of time and only worked intermittently? The preparatory work said that it would not be possible to exclude such people from early retirement. In 1972 early retirement for labour market reasons could generally be given to people who had reached 60.36 In practice, the age at which early retirement based on labour market considerations was awarded, crept down. When the age of 60 years was written into the law in 1992 it was done to emphasise that people below that age should not get early retirement for labour market reasons.37 The central element in the early retirement rules was that there existed a group of people who should be given the option to decide for themselves whether they wanted to live on early retirement, or retrain for another job, or maybe even relocate to a town with better labour market conditions.

4. SICKNESS INSURANCE AFTER THE 1970S AND 80S

Early retirement for labour market reasons has always been an exemption. As a general rule people have to work if they are able to do so. The sickness insurance system never had a legal reform requiring the National Social Insurance Board to allow people to choose to live on sickness benefit despite being capable of working. In the 1970s and 80s sickness insurance was expanding. An increasing number of people were allowed to live on sickness insurance benefit as the concept of sickness was given a wider interpretation. Symptom-based diagnosis was accepted. Therapeutic and prophylactic reasons could also sometimes be given for allowing a person to live on sickness benefit.38 Vahlne Westerhäll maintains that a socio-medical definition of the concept of sickness was applied up to the mid-1990s. She exemplifies this with a single mother of five children who complained about pain in the neck and shoulders.

36 Compare Ryberg-Welander, Ersättning vid Sjukdom, p 210, above n 21. In redundancy cases it was common for the trade unions and the employers to agree to let persons who could receive unemployment benefit and who became 60 before the unemployment benefit expired, lose their jobs and save the employment of younger people. All people involuntary unemployed at 60 were virtually guaranteed early retirement and since unemployment benefits at the time were given for 90 weeks for people above 55 years, the people who were 58 years and three months or older were singled out for this treatment. 37 Government bill 1994/95:147, p 40. 38 Vahlne Westerhäll, Den starka statens fall, p 261, above n 32.

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The damage that could be verified by X-ray was not severe enough to justify sickness insurance benefit, but the Supreme Court for Social Insurances found her story likely to be true. The proven medical problems, together with her social situation justified sickness insurance.39 Social problems without a medical component could not lead to sickness insurance benefit or early retirement.40 Formally, statements in the preparatory works of the first sickness insurance act were still valid (SOU 1944:15)41 and could be interpreted as denying sickness benefit unless the person could perform less than half the normal amount of work.42 But the government sometimes also expressed satisfaction with the legal development towards a socio-medical concept. The inconsistencies in the application of the concept of sickness were large. The socio-medical concept of sickness naturally affected people near early retirement. An old person with medical problems living in a region with high unemployment had a high probability of receiving early retirement. The law explicitly stated that the labour market situation should be taken into account. When early retirement started to be awarded to persons below 60 years it became very difficult to make strict rules separating the two groups, for instance allowing a 57 year old person to chose early retirement, and at the same time require a 56 year old person to retrain, seek another job and relocate to a town with a better labour market. Allowing sickness benefit to run for an extra year, so that early retirement could be given, seemed much more humane. Sickness benefit was thus awarded until early retirement could be given. The idea – clearly articulated by the legislator regarding early retirement – that sick people with capacity to work could, under some circumstances, choose early retirement, thus affected sickness insurance, even though the legislator did not intend this.

5. PURIFYING THE SWEDISH SICKNESS INSURANCE IN THE 1990S AND ONWARDS

5.1 The Intent of the Legislator with Regard to the Reforms of the 1990s Something dramatic happened in Sweden in the 1990s. The crisis in the early half of that decade resulted in record unemployment. The concept of social exclusion in Sweden began to change. Exclusion no longer equalled social aid. Instead, the people living on sickness insurance, work injury insurance, unemployment benefit, early retirement, etc. and on social aid were added to the number of excluded people (roughly 20 percent of the labour force). This was

39

FÖD 1981-09-29 case 287/81:1. L Vahlne Westerhäll, ‘Det sjukförsäkringsrättsliga arbetsoförmågebegreppet’ in L Vahlne Westerhäll (ed), Arbets(o)förmåga (Stockholm, 2008) 233. 41 Government White Paper 1944:15, p 21. 42 See L Westerhäll-Gisselson, Sjukdom och arbetsoförmåga (Lund, 1983) pp 243 f. 40

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a significant new way of thinking. Early retirement and sickness insurance were at the centre of this change. The goal was to ‘purify’ the sickness insurance.43 If a person was sick but had some residual working capacity, they should be in the unemployment insurance system. It was important that society described social problems correctly. Costs related to unemployment should be met by this national insurance system and people with work capacity should receive help with finding work that matched their skills.44 The definition of sickness was changed in 1995 so that Chapter 3 Section 7 of the National Insurance Act (1962:381) clearly stated that when sickness (reduction in capacity to work) was measured, labour market, economic, social and other similar circumstances should not be taken into account.45 According to the legislator, both the sickness insurance system and the early retirement system were on a path leading to them becoming general income insurances rather than insurances for people who had lost their capacity to work.46 In 1997 the paragraph was further amended so that a new passage with a step-by-step approach was introduced. The first step was an assessment of work capacity at the job currently held. Secondly, alternative employment opportunities should be explored with the current employer. Thirdly, the work capacity should be assessed against the most suitable normal job on the labour market, given the impairment caused by the sickness.47 This legislative change was very explicit. A sickness insurance system based on a medical definition of sickness and reduction in work capacity could be expected to result in similar levels of sickness and early retirement over time and in different parts of the nation. The number of people who contract a disease is roughly the same in all areas of the country. The back stress experienced by a worker in the health sector is also similar irrespective of time and place, so the level of early retirement due to back problems ought to be consistent. The preparatory work is very explicit in that the concept of normal work is to be understood in relation to the national labour market.48 The work need not be available in the place where the sick person lives.

43

Vahlne Westerhäll, Den starka statens fall, pp 341 ff, above n 32. Government bill 1996/97:28, p 26. 45 Acts (1995:508) and (1996:1542) on changing the National Insurance Act (1962:381). There were exceptions but these exceptions were restrictively framed. 46 Government White Paper 1995:149: p 216, Vahlne Westerhäll, Det sjukförsäkringsrättsliga, p 235, above n 40. See also S Stendahl, Communicating Justice, Providing Legitimacy (Uppsala, 2003) 107. 47 In the law three steps can be identified. In the preparatory works each of these three steps are divided into two sub-steps and early retirement is presented as the seventh and final step, Government bill 1996/97:28, pp 18 ff. 48 Government bill 1996/97:28, p 18. 44

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5.2 The Effects of the Reform in the 1990s The wording of the law changed, the rhetoric of the preparatory works changed, and case law also changed. Sara Stendahl, looking at the practice of Swedish administrative courts, describes how it became harder for the insured to win legal cases in the period 1993–1999 and that the courts tended to favour the opinion of the insurer’s physician over the patient’s physician if there was any disagreement. 49 But the number of sickness insurance days was unaffected. The number of days claimed for sickness insurance benefit halved from 1990 to 1996/97, but then, as the new tougher rules started to be applied, the number increased again and in 2002 the level of sickness days claimed was back to the 1993 figures.50 The effect of the changed case law was nullified. People almost never went from sickness insurance to unemployment. In regions with high unemployment the inhabitants registered more days of sickness/early retirement (by a factor of almost four) compared to regions with a better job market.51

5.3 The Debate before the 2006 Change of Government Björn Johnson is a political scientist who has written a book ‘The Struggle over the Sickness Leave’,52 in which he analyses the public debate. In the late 1990s there was very little debate and to the extent that there was any, sickness insurance was perceived as a financial problem for the state, not a problem in itself. Sweden was at that time recovering from the deep recession of the early 1990s. The years 1996 and 1997 were identified as ones with an exceptionally high level of public debate and the reform described above was identified as one of three reasons for the large number of articles published at this time which covered this issue.53 The people who lost their sickness insurance benefit due to the new legislation (statistically, they were few) were described as victims of budget deficit reducing measures, and not connected to any shift in ideology. At the start of the first decade of the 2000s, the debate became more political. Sickness absence was viewed as a problem in itself. In the years 2000 and 2001, the work environment was proposed as the most important factor leading to people having to use sickness insurance benefit. The work environment is the responsibility of the employers and legislative solutions

49

Stendahl, Communicating Justice, pp 191–97, above n 46. Government White Paper 2006:86, p 53. 51 ibid p 54. The Swedish official unhealthfigure (ohälsotalet) is arrived at by adding claimed days of sickness insurance benefit to days claimed for sickness benefits (early retirement) and claimed days of rehabilitation insurance. A longer way of saying this is: ‘total number of working days lost to ill health’ 52 B Johnson, Kampen om sjukfrånvaron (Halmstad, 2010). 53 ibid p 77. 50

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were directed at making sickness costly for them; one example is a legislative proposal suggesting that the employer should pay sickness wage for the first 60 days of the sickness period.54 It was not until 2002 that ‘overuse’ replaced the work environment as the main cause for the high sickness rate in Sweden in the public debate.55 An ‘overuser’ is not necessarily a welfare cheat. A person too sick to do their current work can be labelled as an ‘overuser’ if he or she is healthy enough to do less demanding work. The way the concept of overuse was applied focuses the problem on the individual. If a person is too sick to work in their current job, but able to work in another job, this person is the one who ‘owns’ the problem. Political remedies then shift the balance of responsibility from the employer to the sick person. The term overuse can imply systemic failure as well. If a person has only half of their working capacity left, it may be impossible to find a new job since the employer is required to pay at least minimum wages according to the applicable collective agreement. Systematic failures were discussed,56 but the focus was more on the individual than on the system. Sometimes, overuse was described as a phenomenon bordering on cheating, for instance in the case of a person with a cold choosing to stay at home for an extra day to be ‘on the safe side’. Overuse is thus a political term. It has been at the centre of the Swedish debate and therefore I will use the term even though it has no universally accepted definition. This shift of emphasis began during the Social Democratic government. In 2004 Anna Hedborg, was asked by the Social Democratic government to perform a thorough analysis of social insurance in Sweden. The directives given to the inquiry suggested that ‘overuse’ could be a problem. There were reasons to look into the question of whether sickness insurance and early retirement had become forms of general income insurances through a gradual application of a socio-medical concept of sickness/invalidity. Financial incentives for individuals to use sickness insurance benefit rather than unemployment insurance benefits were also put forward as a problem within the social security system.57

5.4 The Election 2006 The Swedish political landscape was totally rewritten in 2006, when the Social Democrats were ousted by a centre-right alliance of four liberal and conservative parties. The main conservative party, which led the Alliance, called itself ‘the

54 Government White Paper 2000:72, p 130. Statutory sickness pay is currently at 80% of the wage and has been close to this level since the system was introduced in 1991. 55 Johnson, Kampen, pp 111 ff, above n 52. 56 Government White Paper 2006:86 has a s 5.2 on differences between the national unemployment insurance system and the national sickness insurance system and the incentives it creates for persons to stay in the sickness insurance. The Government has so far not reacted to this type of problem. See also the directive of note 57 where the previous Social Democratic government wanted this type of systematic failure analysed. 57 Dir 2004:199, Annex 1 to Government White Paper 2006:86, p 203.

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new labour party’ and emphasised the need for social justice and a traditional Swedish welfare state, including strong unions. At the same time the Alliance presented a common programme for the period 2006–2010. The defining theme was that the Social Democratic party had allowed social exclusion to grow and exclusion was defined as people not being in the labour market. Overuse of sickness insurance benefit and early retirement was described as the main problem. According to the Alliance, the problem was thus ‘owned’ by the sick individual. The social security system should be redesigned to assist the individual in returning to employment. This thinking was present already in the directive given to Anna Hedborg by the Social Democratic Government. Nevertheless the Alliance was able to claim it as ‘their’ policy.

5.5 The Government White Paper of 2006 In 2006 Anna Hedborg’s white paper was presented to the new Alliance government. She had started her career as an economist with LO (the Swedish Trade Union Confederation). This organisation was firmly in the ‘work environment’ camp. She was also a Social Democratic minister with responsibility for the national sickness insurance system 1994–1996 and was publicly known for identifying the work environment as the main cause of long-term sickness and early retirement after she left the government and started to work as the head of the National Social Insurance Authority.58 Because of this, and because the directives given in 2004 by the then Social Democratic Government had been forgotten by the public, the contents of the white paper caused a sensation. The previous sickness insurance review (SOU 2000:72), which had been based on ‘work environment’ principles and for instance had suggested that the duty of employers to provide sick wage should be extended to 60 days, was not mentioned.59 Instead the focus of the 2006 white paper is totally on overuse by individuals. It states explicitly that the goal of the reform is achieved, the day when every sickness case starts with a discussion on how to end the sickness and when it is regarded as half a victory if the sick person goes into unemployment.60

Declaring unemployment to be half a victory is new. It is an ideological commitment that is much more extensive than that underlying the reform of 1997, where the aim was that costs should be placed on the right social security system.

58

(Rationaliseringan ökar sjukskrivningen) TT 21 November 1998. Even if this Government White Paper was based on ‘work life’ as the main cause of sicknesses, it also contained an idea of a sickness insurance limited to one year and after that period either early retirement or labour market support should be paid out (pp 135–37 c 9.3.3). As the idea of a time limit is one of the most important new ideas in Government White Paper 2006:86 it is strange not to mention the earlier inquiry. 60 Government White Paper 2006:86, p 63. 59

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The same white paper also said that, Support from social insurance shall be a right for people who work, not an option for people who do not want to work.61

In 2008 the Alliance made some important changes to the sickness insurance system and early retirement. The preparatory works show complete commitment to analyzing the problems in terms of individual overuse. The changes will be described below.

5.6 The Reform of 2008 – Assessment of Work Capacity The concept of ‘sickness’ was understood as limited to medically diagnosed diseases. The work capacity of the sick person should be assessed first against their current job, secondly against other employment opportunities with their current employer and thirdly against the national labour market. These main principles were almost identical to those of the 1997 reform. The new thing was the steps that were taken to impress the serious intent of these principles upon the participants in the assessment process. The National Insurance Act Chapter 3 Section 7 was changed so that all important time limits became enshrined in law, not in legal documents of lower rank. Today62 the rules have been moved into the Social Insurance Code (2010:110). At the present time, during days 2 to 89 of the sickness period the work capacity shall be assessed against the current duties of the employee, during days 90 to 179 against other employment opportunities that the current employer may provide, and during days 180 to 365 against the national labour market, unless there are particular mitigating circumstances. General labour market support systems, like for instance the support that can be given to healthy long-term unemployed people, shall be taken into account.63 From day 365 the instruction to look at every normal job in the national labour market is even more explicit.64 If a person is offered a specific subsidised job or another form of individually adapted labour market activity, their work capacity shall be assessed in relation to this job or activity. This does not constitute a change from previous arrangements. The most important innovation is the 180-day limit, when the work capacity of the sick person shall be assessed in relation to all normal job openings in the national labour market. According to the 1997 reform this was supposed to happen after 365 days, but in practice the rule was not enforced.

61

ibid p 70. 1 January 2011. This is an extension of the concept of normal work and wording of the law has changed slightly to emphasise this. 64 The exception is if it is not inequitable according to the Social Insurance Code (2010) Ch 27 S 49. The exception was absolute until Act (2009:1531) on changing the National Insurance Act (1962:381). 62 63

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The government needed to impress upon all parties that this reform was for real. In order to achieve this, a new act defining a right to leave for workers who needed to change jobs because of sickness was enacted.65 The explicit66 obligation on the employer to accept leave can be used only if the worker applies for leave due to an employment contract signed during days 91–180 of the sickness period and extending for 6–9 months only. This construction is used to emphasise that the worker has a duty to seek work even during the period when sickness benefit applies. If the worker waits after day 180, the person will be moved from the sickness insurance system to the unemployment insurance system and if the person then finds work, they will need to obtain permission from their old employer according to general principles of Swedish labour law, which is unclear with regard to people too sick to do their permanent job but healthy enough to do a less demanding job and actually having found employment in such a job. Giving an explicit right to leave only during days 91–180 of the sickness period, is a means of sending a message to sick people that they need to actively seek other employment early in the sickness period or face negative consequences. Yet it is strange that a person starting to actively seek new employment on day 90 of the sickness period and finding a new job day 185 should not be protected by the new Act. The preparatory works accompanying the new legislation also instruct the Public Employment Service to register and actively work with people from day 91 in a sickness period.67 From day 91 to day 180 it should be normal for a person to receive sickness benefit and to actively seek new employment. The sick person who can perform another task than their current employment can expect to lose sickness benefit from day 180 and should work actively to find other work from day 91. Section 19 a of Ordinance 1997:835 was changed to state that a person having leave for health reasons from one employer, and being deemed by the National Social Insurance board to have enough work capacity to carry out normal job, cannot be denied unemployment benefit on the grounds that the Public Employment Service assesses the work capacity differently.68 The assessment of work capacity by the National Social Insurance Board is thus binding on the Public Employment Service. The rules for early retirement were changed as well. Social circumstances such as age, the local labour market, and so on should no longer be taking into account according to the Social Insurance Code Chapter 33 Section 1069 when assessing work capacity.70 Everybody who can perform work that exists in the normal labour market should actively seek such a job. An older person will be

65

Act (2008:565) on Right to leave for people who because of sickness need to try other work. There may be implicit obligations within the general principles of Swedish labour law. 67 Government bill 2007/08:151, p 10. 68 Ordinance (2008:937) on Changing Ordinance (1997:835) on Unemployment Insurance. 69 Ch 7 S 3 of the old National Insurance Act. 70 Government bill 2007/08, pp 87 ff. 66

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asked to retrain and change profession or to move to a place where suitable work exists. The legislation no longer tries to have two concepts of sickness, one based largely on social circumstances, for early retirement cases, and another based on medical problems, for sickness insurance benefit.

5.7 The Reform of 2008 – The Risk of Losing Social Insurance In Sweden there had, since 2003, been two forms of early retirement:71 permanent early retirement and time limited early retirement. In 2008 time limited early retirement was abolished. Due to transitory rules, from 1 January 2010 a lot of people previously on this benefit form would lose it and be tested and either given permanent72 early retirement or be transferred to the Public Employment Service if they were not permanently sick. The normal sickness insurance was divided into two benefit periods. The new construction is very complicated. For the first 365 days, the benefit level is 80 per cent, then for the second period of 550 days the benefit level is 75 per cent.73 There is thus a total of 915 days during which benefit can be received. In 2008, when the new rules came into force, the first period – but not the second period – could be extended. The first period can still be extended if exceptional reasons are present. The wording has now been changed to serious illness but no change of practice was intended.74 There is no formal time limit for such prolongation. Cancer diseases and transplantations are given as examples.75 If a person is in need of an organ transplant they are unlikely to be able to work during the waiting time. They cannot do anything themselves to hasten the process so an exemption is necessary. The same reasoning applies to some forms of cancer with long treatment periods – 75 per cent of the people using this rule have cancer.76 The National Board of Health and Welfare (Socialstyrelsen) has issued recommendations for the application of the term serious diseases and these contain a non-exhaustive list of medical conditions that are, in principle, acceptable.77 In order to be able to use this rule the sick people needed to apply for extension. If they were turned down (for instance because they were not seriously ill or that

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Act (2001:489) on changing the National Insurance Act (1962:381). Early retirement is called sickness benefit. Permanent sickness benefit is not permanent. The medical condition of the person must be tested regularly and there cannot be more than three years between such assessments, AFL Ch 7 S 3 b. 73 According to Ch 28 S 7 of the Social Insurance Code (2010:110) one needs to multiply 80% and 75% with 0.97 to arrive at the true replacement rate. 74 Act 2009:1531 on changing the National Insurance Act (1962:381). Report of the Social Insurance Committee (SfU2009/10:13). 75 Government bill 2007/08:136 p 81. 76 The National Social Insurance Board, Yearly Report 2009, p 63. 77 www.socialstyrelsen.se/riktlinjer/forsakringsmedicinsktbeslutsstod/Documents/AllvarKriterier 15 April%20(2).pdf. 72

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the diagnosis was not on the list) they then started to use up the 550 days of the second benefit period.78 To them it looked like the last 550 days were the end of their sickness insurance benefit. The only chance to continue the 550 days of the second period was to have one’s problem classified as a work injury (including working diseases). All other people faced a loss of sickness insurance benefit and, given that the rules started to apply 1 July 2008, they believed that they would lose their sickness insurance benefit on the 1 January 2010. If they were permanently sick they could get early retirement, but if there was the possibility of them becoming well again, early retirement was not an option. A hospitalised person with a chance of recovery would thus lose their sickness insurance benefit and need to live on means-tested social aid. This absence of options for continuing the last period of 550 days greatly changed expectations. It put a lot of psychological stress on people too sick to work and it also placed a lot of pressure on the National Social Insurance Board and the Public Employment Service. Sick people (the vast majority too sick to do a normal job) came to the Public Employment Service on 1 of January 2010 and the National Social Insurance Board could do nothing to prevent it. The Public Employment Service had to plan suitable work programme activities for this group. The threat of losing sickness insurance benefit was not ameliorated until 22 October 2009 (just ten weeks before 1 January 2010), when a Government bill was presented which suggested changes to the law (prop 2009/10:45). Three new79 possibilities to continue the second period of 550 days of sickness insurance was introduced in the Social Insurance Code Chapter 27 Section 24 a. 1. If the person is hospitalised 2. If the person has lost his or her ability to understand their situation and/or to receive information. 3. When a return to work would lead to a risk of serious (allvarlig) deterioration of the insured person’s sickness.

It is obvious that equity requires a hospitalised person to receive sickness benefit if early retirement is ruled out. The second point concerns the mentally disabled who may have work capacity, but may be unable to use it. The third point is the one that is most generally applicable. If a person cannot work, this is often because it is detrimental to their health to do so. But it should be noted that there must be a risk of serious deterioration for the exemption to apply. The government emphasizes the word ‘serious’ and asks the courts to use the exemption restrictively, in the same way as for exceptional reasons.80 To summarise the system, if a person suffers from a serious and easily diagnosed medical disease the number of days of benefit at the 80 per cent level

78 79 80

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can be prolonged indefinitely. There is a recommended non-exhaustive list of medical conditions.81 This is called extended sickness insurance. Extending the sickness insurance protects the replacement level of 80 per cent and saves the later 550 days for future use. The Public Employment Agency may however at any point provide the person with a labour market activity and if that happens the work capacity of the person shall be assessed in relation to this particular activity. When the second 550 day period has been used, there is a possibility of benefiting from continued sickness insurance. This is the name given to the prolonging system applying to work injuries and the new grounds introduced ten weeks before the 1 January 2010. One difference with this system is that the continuation gives a benefit level of 75 per cent. Another important difference is that a continuation of the 550 days is given more restrictively compared to extended sickness insurance.

5.8 The Reform of 2008 – The Point of Entry for Sickness Insurance Entering Swedish sickness insurance is quite easy. A person is protected from the first day that an employment contract applies, according to Social Insurance Code Chapter 6 Section 8. Sickness insurance is 80 per cent of sickness benefit income (SGI) for the first 365 days. This is the income the person can be assumed to earn during a year. If the employment is long term (6 months or more) the SGI is based on this income.82 If a person works only temporarily the National Social Insurance Board estimates what the person is likely to earn during a year. A small amount of work can result in a SGI. If a person has a SGI, there are a lot of special rules preventing the SGI from being reduced if the person, for instance, is unemployed or sick.83 The entry point is unchanged.84 The time limit necessitates rules on re-entry. If a person is too sick to perform a job normally present in the labour market and can re-enter the sickness insurance immediately after the 365 + 550 days have expired, the time limit has no function. The rules on re-entry are quite generous. A new first period of 364 days (followed by 550 days) shall be awarded if the person has not had 364 days of sickness insurance during the last 450 days according to the Social Insurance Code Chapter 27 Section 21. The essential requirement is not to have taken out sickness insurance benefit. If a person is in a work programme and receiving

81 www.socialstyrelsen.se/riktlinjer/forsakringsmedicinsktbeslutsstod/Documents/AllvarKriterier 15April%20(2).pdf. 82 Social Insurance Code (2010:110) Ch 25, S 3 point 2. 83 Ibid Ch 26 S 9–31. 84 The Alliance manifesto for both 2006 and 2010 stated that they thought it wrong in principle and that the sickness insurance should in the future be based on historical earnings during a reference period.

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benefit for this, they receive another form of social security and are thus collecting the 90 days outside the sickness insurance system necessary to re-qualify and they keep their SGI. If the Public Employment Service pays out benefit for 90 days when the person fails to participate because of his or hers sickness, the Service can then maintain that they have tried, this person is doing his or her best, but is too sick to participate in activities. This person will have no problem returning to the sickness insurance system. Sweden is thus still a country where social security covers most people and only small groups need to rely on meanstested social aid.

5.9 The Reform of 2008 – The Effects of the New Rules The new system is working. Regional differences have been reduced in the last two years.85 It is impossible to say to what degree this is because of the rules described here. Other reforms such as stricter recommendations for normal sickness periods for specified illnesses, have also contributed to this result. The time limit of 915 (365 + 550) days has been effective too. The Public Employment Service and the National Social Insurance Board have worked actively with people losing their sickness insurance or time limited early retirement. On the 1 January 2010, 17,800 people faced either that the days of their sickness insurance had expired or that their time limited early retirement had expired. 3,500 people could stay in the sickness insurance system and 14,300 people left it. 12,600 of these registered themselves as unemployed, of which 5,800 have since returned to the sickness insurance.86 The Public Employment Service and the National Social Insurance Board monitors this group extensively. There are monthly reports. It is evident that the reform works. Only 422 of the people losing sickness benefit or early retirement were deemed to have a work capacity sufficient to be able to take normal unsubsidised work.87 It is only within this group that there can be individuals who have ‘overused’ the system by choice. If they have been healthy enough to do normal work for a long period they should have been denied sickness insurance or early retirement (but some of them must reasonably be assumed to have become well close to the expiry of their benefit). It is safe to assume that in Sweden today it is normal that a sick person, for whom the authorities do not doubt that sickness in the medical sense exists, and whose capacity to work is reduced, are forced to use the work capacity they have left in labour market activities adapted to their reduced capacity to work.

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The National Social Insurance Board, Yearly Report 2009, p 59. The Public Employment Agency and National Social Insurance Board, Dnr 052245-2010, Uppföljning av de personer som uppnådde maximal tid i sjukförsäkringen vid årsskiftet 2009/2010, pp 3 ff. 87 ibid p 8. 86

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It is much harder to get a picture of what is happening on day 180 in the sickness period. The National Social Insurance Board reports that in 50 per cent of the cases where a sickness extends for longer than 180 days a decision is made with regard to the national labour market. But it does not say what this decision is.88 In 2009 the number of rejections almost doubled from 1.7 per cent to 3 per cent.89 One possible reason is that the instruction to look at the national labour market on day 180 results in rejections. But other reforms, such as more stringent central guidance on the length of sickness leave regarding certain diseases, have also contributed to this effect. A person deemed to be healthy enough to return to their previous work is not differentiated from a person not being able to do their previous work and in need of assistance from the Public Employment Service. At the Public Employment Service, these people are not registered separately either. Each person leaving the sickness insurance and needing to live on unemployment insurance is offered a transfer meeting but not all of them wish it.90 The Public Employment Service and the National Social Insurance Board report to the government that people between days 90 and 179 of their sickness period are not part of the national action plan organised by the two authorities (but they are offered a contact meeting). People with sickness which lasts 180 days or more are as a group covered by the national action plan, but it is hard to identify these individuals. Both authorities agree that the government instructed them to give priority to the long term sick.91 Despite newspaper stories about people losing their unemployment benefit from day 180 in the sickness period, it is still relatively rare that a person lose their sickness benefit on day 180 in the sickness period and have to register as unemployed. Those who lose their benefit are still mostly the ones who can return to their old employer, or who have found new work.92

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The National Social Insurance Board, Yearly Report 2009, p 62. ibid. See The National Social Insurance Board, PM 2010-06-23, Dnr 050194-2010, Delredovisning Uppföljning av rehabiliteringskedjan m.m p 10. There were almost 8,000 transfer meetings in November and December 2009, so around 60 % of those who registered themselves with the Public Employment Agency because they were loosing their sickness insurance on 1 January 2010 are likely to have had a meeting. 91 The National Social Insurance Board and the Public Employment Service, Dnr 047164-2010 Återrapportering om insatser för att fler sjukskrivna skall återfå arbetsförmåga och få ett arbete, p 6. 92 The National Social Insurance Board, PM 2010-06-23, pp 3, 20 and 27. The likelihood of a sickness period ending in the person getting unemployment insurance went up from 1.3 % to 1.7 %. The risk of having sickness insurance taken away is greatest during days 180–365 (4.3 %). This is compared to 1.2 % during days 91–180 and 2.5 % days 366–915. Something is happening on day 180 in the sickness period, but so far it is not a big change. 89 90

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6. DISCUSSION

One feature of the new Swedish system that has significance for the flexicurity discussion is the goal of moving people from sickness insurance and early retirement, to unemployment insurance and labour market activities. Moving somebody out of sickness insurance into unemployment insurance is seen as a big step in the direction of future employment. The goal of using a person’s work capacity, even when this has been reduced by sickness, is natural. Active participation in the labour market cannot only be reserved for the most healthy individuals. The new rules put a lot of pressure on the Public Employment Agency to create work programmes for sick people. Creating a labour market flexible enough to allow sick people to work will probably also be good for society at large. This opportunity can be realised with a reform of the Swedish type. Sweden failed with regard to the ‘security side’ of flexicurity. The new system is extremely complex and contradictory. It will need further reforms, and only after these reforms are in place will it be possible to assess the protection provided by the social security systems. Ideally, people should be able to rely on getting appropriate benefit or support in some form. If a person is deemed too sick to perform their usual work but healthy enough to do some work, the move to unemployment insurance or labour market programmes must be done in a way that emphasises that the person is not a welfare cheat (overuser) and that the person should regard their unemployment benefit and other forms of labour market support as rightfully theirs. So far, the best that can be said about the 2008 reform is that some potential disasters have been averted with legislative interventions at the last minute. Out of 12,800 people losing early retirement or sickness benefit on 1 January 2010, only 422 were healthy enough to take up a normal job. For the remainder, two reasons can be given for requiring them to work. The first reason is that a small amount of work is better than none for society and the second is that working may be good for the sick person’s health. Assuming that social exclusion is harmful, a sick person may be in a vicious circle. Because of the sickness he or she cannot participate in the labour market and this lack of participation may contribute to the sickness and exclusion problem. Trying to break such a circle with a legal requirement to participate in labour market activities for 90 days and then making an evaluation of the success of this participation, may be a good way to break such a circle. Creating this period of 90 days with an exceptional definition of sickness/ incapacity to work has been at the heart of the reform. If a person is long term sick, revoking sickness benefit or early retirement can be interpreted negatively. The person can feel that he or she is viewed as a welfare cheat. The National Social Insurance Board may view the revocation as meaning that the initial decision was wrong. If there is a market improvement in the person’s health a revocation is natural. But if the health of the person neither

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deteriorates nor improves the risk for inertia is real. In Sweden today there is no requirement for a reason to move a person from sickness insurance to unemployment insurance or labour market activities from day 915 in the sickness period. It is the decision not to move the person from sickness insurance to unemployment insurance or labour market activities, that must be motivated. Only the strongest motives are accepted. There must, for instance, be a risk of serious deterioration in the person’s health. In order to understand this rule, it is important to understand that the government believes that it is good for most sick people to do some work. Therefore, they want most people who have been sick for 915 days to be tested by the Public Employment Service in work activities adapted for them. If the health of the person deteriorates, it takes only 90 days without sickness benefit before they can return to the sickness insurance system. However, the fact that their health deteriorates cannot be positively known before the person is tested and the doctor is thus not asked to assess whether work is deleterious for the patient, but only to assess if something could go seriously wrong if the patient is asked to work. This is a particular Swedish concept of sickness/incapacity to work. To the best of my knowledge, at this point in time, Swedish law has a more narrow definition of sickness/incapacity to work than any other country. It is so narrow that it would be inhuman if it were to apply for much more than 90 days. ‘Too sick to even test working’ is indeed a very narrow concept. Such a concept of sickness is not what Chapter 1 of Regulation 883/2004 is designed to coordinate. If other countries follow Sweden, the EU will need to adapt its social security co-ordination system to recognise that some countries have points in time where the concept of sickness/invalidity/incapacity to work for a short period of time has an exceptionally narrow meaning. In Sweden early retirement is for people who have a low probability of becoming better in a few years time. Sickness insurance is for individuals who are not permanently sick and this means those who have a better chance of becoming healthy. The difference between the two groups is quite small in Sweden. The exceptional requirement of a test on day 915 in the sickness period applies only to people in the sickness insurance, but people receiving early retirement should also have their work capacity reassessed at regular intervals. The Swedish sickness insurance still operates as a residual insurance. The true meaning of the limitation of sickness insurance to 915 days (365 + 550) is not that it expires after that date. Instead, the sick person is required to participate in labour market activities for 90 days. If the Public Employment Service at that point decides that the person is too sick to participate, he or she can return to sickness insurance for another 915 days. There is no formal limit on how often a person can receive additional days in this way. Because of this residual character, long term sick people, who in other countries would receive early retirement or other forms of social security, are in Sweden receiving

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sickness insurance and are sometimes transferred to the Public Employment Agency.93 Chapter 1 of Regulation 883/2004 and the corresponding rules in the implementation regulation are based on an expectation of the concept of sickness to be reasonably similar in all Member States. In Sweden the assessment is not of the sickness itself but rather of the effects the medical condition has on the work capacity of the person. The assessment of the medical condition’s consequences for work capacity starts with normal sickness insurance principles. Relating the effect of the sickness to the demands of the work normally performed by the sick person must reasonably be assumed to be the starting point in most EUcountries. But as soon as day 180 in the sickness period a very specific concept of sickness can, at least in theory, be applied. At that point the work capacity must sometimes be assessed against a specific labour market offered to the sick person. This rule is necessary, given the fact that some people will be on their second set of 915 days and for these individuals it is appropriate to refer to sickness/invalidity, as the assessments of the consequences of their medical conditions in relation to the labour market is at least as complicated as that of a typical invalidity case in other Member States. The Swedish law requires evaluation case by case. The concept of sickness/invalidity must sometimes be adapted to a specific labour market activity offered to the individual. There is no general concept that can be defined for a foreign doctor. The construction of the new sickness insurance system is extremely complex. Understanding a system of 915 days, that can be prolonged on different conditions after day 365 and day 915 in the sickness period, is hard. The conditions for prolongment applying after day 365 in the sickness period is called extended sickness insurance and was necessary when the total loss of social insurance system benefits looked like a possibility for many people. It applies only to some illnesses which are considered serious enough, and it is the period with a benefit level of 80 per cent that is prolonged. For a long time – more than a year – it looked like people who were sick, but from other illnesses or for other medical reasons than those deemed serious, would face a large risk of losing their sickness insurance and would need to apply for means tested social aid. Today, when new continuation possibilities after day 915 has been introduced and when only a few people need to resort to means-tested social aid, the possibility of prolongation that applies after day 365 seems confusing. Why have two grounds (extension and continuation), one resulting in additional days with 80 per cent of the income replaced, and the other providing an income replacement rate of 75 per cent? If a person suffers a serious deterioration of his or her health when tested by the Public Employment Agency, they return to the sickness insurance system,

93 Government bill 2007708:136, p 77. The sickness insurance in 12 Member States is described. One year was the normal time limit. France and Portugal had a three year time limit.

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and start a new period of 915 days. Their sickness benefit is thus raised from 75 per cent to 80 per cent for a year. For the first 90 days they will only need to take up their old work for their employer (if they have managed to keep their employment). Only from day 180 can they be tested again against the national labour market or against an individually adapted labour market activity. Being moved to day one in a new sickness period is not a logical step in this situation. Continuation of the 550 days seems to be a much more natural solution. In Sweden a lot of people are afraid of losing their sickness insurance from day 915 in the sickness period. The threat of means-tested social aid was real for more than a year. This threat was taken away just ten weeks before the new rules came into effect on 1 January 2010. Either this was planned by the government or it was a mistake. If intended, this handling of the reform was really inhumane. Trust that social security effectively protects a person who loses his or her job is important to gain acceptance for flexibility. One element of this trust is that people that are moved from one form of social insurance to another form, can rely on the two systems to co-operate so that nobody falls between the protection offered by the systems. Sick people in Sweden could, for more than a year, not rely on receiving social insurance benefits after day 915 in the sickness period – even hospitalised individuals could have been evicted from the sickness insurance system without entering into another system. The fact that only 422 of the 12.800 people losing sickness benefit and early retirement on 1 January 2010 and registering themselves with the Public Employment Agency, were healthy enough to get a job without extra support proves that the threat of means-tested social aid was unproductive. The remaining 12.400 people were never able, by themselves, to start a virtuous circle of work, social contacts and increased self esteem, leading to better health. They were totally dependent on the Public Employment Agency and they should have been reassured that sickness insurance would not end unless there was a suitable activity for them organized by the Public Employment Agency. The threat of losing social insurance benefit is effective in making welfare cheats leave sickness insurance and take up work. But in applying this threat the government also created a lot of anxiety for the people who really needed the help of the social insurance systems and this anxiety probably made it harder for them to improve their medical status. This group was much bigger than the (possible) cheaters. The lack of possibility of continuing the second 550 days may, however, have been a pure mistake. From day 1 of the reform, the government intended re-entry to be easy. It was obvious that the time that a person needed to rely on meanstested social aid would be short. Maybe the government thought that it was therefore an acceptable solution. The current Swedish sickness insurance system is based on a logic saying that a normal long term sickness shall start with a year were the benefit level is 80 per cent of lost income, then comes 18 months on 75 per cent of lost income, and then comes either unemployment or early retirement. In such a scenario the rules are quite logical.

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However, almost half of the people registering with the Public Employment Agency around the 1 of January 2010 have returned to the sickness insurance with a new set of 915 days. It seems very illogical that these people should have 80 per cent in benefit level and have their work capacity assessed only against their former work (if they have managed to keep their employment) for the first 89 days. The easy re-entry rule is logical if a person gets well and then falls ill again with a new medical diagnosis. But it is not logical when a person continues to be sick with the same medical condition. Had the government really anticipated how many people would be returned to the sickness insurance system with a new set of 915 days, they would probably have made different rules for this group. The reform of the sickness insurance looks like a full-scale experiment. The government may have expected the Public Employment Agency to be able to create good labour market activities for the vast majority of people reaching day 915 in the sickness period and to be able to award early retirement to the rest. If so, it was natural not to make possibilities for people to remain in the sickness insurance through an continuation of the last 550 days. The reason for the continuation possibilities being presented only ten weeks before the 1 of January 2010 may have been that this was the time when the government realised that the Public Employment Agency could not take care of everyone. There is a lesson to be learned here. The trust in the Swedish social insurance system has been damaged. Moving a person from one insurance system to another can be explained and motivated. But knowingly or accidentally creating a system with obvious lacunas were people could risk losing social insurance through no fault of their own is damaging. Security is derived from relying on social insurance systems to provide effective protection and this sense of security is not only important to sick people, but to healthy people as well. To allow for flexibility, social insurance systems must be viewed by the general public as a stable safety net, breaking the fall should someone lose his or her job for sickness as well as for other reasons. Unemployment insurance and labour market activities can be viewed as more stigmatising compared to early retirement and sickness insurance. A sick or retired person should be left to rest. An unemployed person should be made to work hard at getting a job, and not finding a job is a ‘failure’. The focus of the government on the individual may have been counter-productive in this regard. If they had understood beforehand that 12.400 out of 12.800 people who registered themselves with the Public Employment Agency had a work capacity that really made it impossible for them to find a job, the rhetoric placing the burden on the Public Employment Agency would probably have been more pronounced and the rhetoric placing the burden on the individual would probably have been downplayed. The stigmatisation problem would then have been ameliorated. Somehow being transferred from the sickness insurance to the Public Employment Agency, is often perceived as a statement from the National Social Insurance Board that the person is no longer sick. The person feels called in

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question and may be even labelled as an ‘overuser’ of the sickness insurance. Nothing could be more wrong. Yet the politicians are to blame to a large degree. They describe the unemployment insurance as dealing with unemployment problems only. Remember that they describe this set of reforms as a form of purification of the national social insurance systems. However, the unemployment insurance and the sickness insurance cannot both be ‘pure’ simultaneously. The unemployment insurance could be described as pure when the sickness insurance and early retirement system formed a combined social insurance where people with a mix of medical and employability problems could reside. Today many sick people are registered with the Public Employment Agency. This can only be seen as natural if one accepts that the unemployment insurance today has evolved into a combined insurance for pure unemployment problems as well as for people whose problems are that medical conditions prevents them from working in their former job but who has some work capacity left that can be used in other jobs. Recognizing a component of sickness insurance within the unemployment insurance is a very sensitive issue in Sweden. Yet if this point is not made absolutely clear, a normal person will not understand why he or she is transferred to the Public Employment Agency despite being sick.

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Appendix The Swedish Labour Court, Judgment No 89/09 Case No A 268/04 Summary A Latvian company posting workers from Latvia to work for construction companies in Sweden was subjected to industrial actions by Swedish labour unions. The industrial actions, which were for the purpose of compelling the Latvian company to sign a tie-in agreement related to Byggnad’s collective agreement, resulted in the work terminating prematurely and the Latvian workers leaving Sweden. The Labour Court requested a preliminary ruling from the European Court of Justice when trying the issue of the lawfulness of the industrial actions and thus stayed the case. The European Court of Justice found in its preliminary ruling that the industrial actions were in conflict with the EC treaty, as they entailed a restriction of the freedom to provide services that was not found to be justified. The Labour Court now tries the claims for damages that the Company makes in the case, finding the Labour Unions liable to pay damages to the Company for the harm caused by the industrial actions taken in violation of EC law. With respect to the claim for economic damages, the Labour Court finds that though it certainly can be considered evident that the Company suffered economic harm as a consequence of the industrial actions, the Company has not been able to prove that it suffered economic harm in the amount claimed. That claim is denied. The Labour Court orders the Labour Unions to pay exemplary damages to the Company and to bear the majority of the Company’s trial costs and legal fees. The issue as to the permissibility of the Company’s petition for a declaratory judgment is also addressed.

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An unofficial translation by Jur. Dr Laura Carlson THE LABOUR COURT JUDGMENT Judgment No 89/09 2009-12-02, Case No A 268/04 Stockholm THE PLAINTIFF Laval un Partneri Ltd, c/o Guntars Tiltins, Vienibas gatve 167, Marupe, Marupes nov., LV 2167, Latvia Legal Counsel: Licensed Attorney Anders Elmér, Elmzell Advokatbyrå AB, Gamla Brogatan 32, 111 20 Stockholm and Licensed Attorney Martin Agell, Advokatfirman Lindahl, Box 1065, 101 39 Stockholm THE DEFENDANTS 1. Svenska Byggnadsarbetareförbundet, 106 32 Stockholm 2. Svenska Byggnadsarbetareförbundet, avdelning 1, Box 1288, 171 25 Solna Legal Counsel for 1 and 2: Licensed Attorney Peter Kindblom, Advokatfirma Lindhs DLA Nordic KB, Box 7315, 103 90 Stockholm 3. Svenska Elektrikerförbundet, Box 1123, 111 81 Stockholm Legal Counsel for 3: Head Legal Counsel Dan Holke, LO-TCO Rättsskydd AB, Box 1155, 111 81 Stockholm ISSUE Damages ______________________ BACKGROUND The Industrial Actions Laval un Partneri Ltd. (Laval or the “Company”) is a Latvian company with its registered office in Riga, Latvia. The Company previously leased workers from Latvia to companies conducting operations in Sweden, including in connection with building projects managed by the company, L&P Baltic Bygg AB (Baltic), in the municipality of Danderyd and the city of Vaxholm. Baltic managed a construction project with respect to Söderfjärd School in the city of Vaxholm up to and including the month of February 2005, for which Laval leased workers. Baltic was put into bankruptcy in March of 2005. Laval signed collective agreements with the Latvian Construction Workers’ Union on 14 September 2004 and 20 October 2004, respectively, but was not bound by a collective agreement in relation to either the Swedish Building Workers’ Union (Byggnads), its Local Branch No. 1 (Byggettan or the Local Branch) or the Swedish Electrician’s Union (Electrician’s Union). None of these organisations had any members employed by Laval.

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Contacts were established in June 2004 between Byggettan, on one side, and a representative for Laval and Baltic on the other. Discussions were held as to whether Laval should sign Byggnad’s collective agreement. A number of negotiations occurred afterwards without resulting in the reaching of any agreement. The Local Branch gave notice in writing on 19 October 2004 to Laval as to industrial action, including a blockade with respect to all buildingand foundation work at Laval’s workplaces. Laval stated in writings to the Local Branch that, among other things, the industrial actions were unlawful and that during that period, a duty to maintain the industrial peace was in effect as the noticed blockade was based on a demand for a collective agreement that entailed an impermissible limitation of the right to provide services in accordance with Article 49 EC-treaty. The industrial actions went into effect on 2 November 2004. The Swedish Electrician’s Union gave notice in writing on 23 November 2004 to the Electrical Installer’s Organisation EIO as to sympathy actions. The sympathy actions went into effect on 3 December 2004. Request for a preliminary ruling Laval filed a lawsuit with the Labour Court on 7 December 2004 against Byggnads, the Local Branch and the Swedish Electrician’s Union. The Company petitioned therewith that the Court, through an interlocutory decision, declare that the industrial actions by Byggnads and the Local Branch, as well as the sympathy actions by the Swedish Electrician’s Union, were unlawful and should cease. Damages were also requested. The Labour Unions objected to the Company’s request as to an interlocutory order. In an order dated 22 December 2004, the Labour Court denied the Company’s request as to an interlocutory order (Decision 2004 no. 111). The Labour Court held the trial in the case on 11 March 2005. The Company petitioned therewith that the Labour Court, in accordance with Article 234 ECtreaty, request that the European Court of Justice issue a preliminary ruling. The Labour Court decided on 29 April 2005 (Decision 2005 no. 49) to obtain a preliminary ruling from the European Court of Justice based on Article 234 EC treaty. The Labour Court, in the request for a preliminary ruling dated 15 September 2005, posed the following questions to the European Court of Justice: 1. Is it compatible with the rules of the EC Treaty on the freedom to provide services and the prohibition of a discrimination on the grounds of nationality

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and with the provisions of Directive 96/71/EC for Labour Unions to attempt, by means of collective industrial action in the form of a blockade, to try to compel a foreign provider of services to sign a collective agreement in the host country in respect of terms and conditions of employment, such as that described in the decision of the Labour Court of 29 April 2005, if the situation in the host country is such that the legislation implementing Directive 96/71 has no express provisions concerning the application of terms and conditions of employment in collective agreements? 2. The Co-Determination Act prohibits a Labour Union from taking collective action with the intention of circumventing a collective agreement concluded by other parties. That prohibition, however, pursuant to a special provision contained in part of the Swedish law known as “Lex Britannia”, only applies where a Labour Union takes collective action in relation to conditions of work to which the Co-Determination Act is directly applicable, which means in practice that the prohibition is not applicable to collective action against a foreign undertaking which is temporarily active in Sweden and which brings its own workforce. Do the rules of the EC Treaty on the freedom to provide services and the prohibition of discrimination on grounds of nationality and the provisions of Directive 96/71 preclude application of the latter rule – which, together with other parts of the Lex Britannia, mean in practice that Swedish collective agreements become applicable and take precedence over foreign collective agreements already concluded – to collective action in the form of a blockade taken by Swedish Labour Unions against a foreign temporary provider of services in Sweden? The preliminary ruling of the European Court of Justice The European Court of Justice issued a judgment in the case, Case C-341/05, ECR 2007, p. I-11767, (hereafter the “Laval case” and the “Laval judgment”, respectively) on 18 December 2007. The European Court of Justice stated, with respect to the first issue, that it was to be understood as that the Labour Court primarily sought clarity as to “whether Articles 12 EC and 49 EC, and Directive 96/71, are to be interpreted as precluding a labour union, in a Member State in which the terms and conditions of employment concerning the matters referred to in Article 3(1), first subparagraph, (a) to (g) of that directive, save for minimum rates of pay, are contained in legislative provisions, from attempting, by means of collective action in the form of blockading 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

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legislative provisions, while other terms relate to matters not referred to in Article 3 of the directive.” In the judgment, the European Court of Justice gave the following answers as to the request for the preliminary ruling. 1. Article 49 EC 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 labour 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. 2. Where there is a prohibition in a Member State against labour 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. The European Court of Justice stated the following in its reasoning with respect to the first issue. 71. [A] Member State in which the minimum rates of pay are not determined in accordance with one of the means provided for in Article 3(1) and (8) of Directive 96/71 is not entitled, pursuant to that directive, to impose on undertakings established in other Member States, in the framework of the transnational provision of services, negotiation at the place of work, on a caseby-case basis, having regard to the qualifications and tasks of the employees, so that the undertakings concerned may ascertain the wages which they are to pay their posted workers. 80. Nevertheless, Article 3(7) of Directive 96/71 cannot be interpreted as allowing the host Member State to make the provision of services in its territory conditional on the observance of terms and conditions of employment that go beyond the mandatory rules for minimum protection. As regards the matters referred to in Article 3(1), first subparagraph, (a) to (g), Directive 96/71

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expressly lays down the degree of protection for workers of undertakings established in other Member States who are posted to the territory of the host Member State which the latter State is entitled to require those undertakings to observe. Moreover, such an interpretation would amount to depriving the directive of its effectiveness. 81. Therefore – without prejudice to the right of undertakings established in other Member States to sign of their own accord a collective labour agreement in the host Member State, in particular in the context of a commitment made to their own posted staff, the terms of which might be more favourable – the level of protection which must be guaranteed to workers posted to the territory of the host Member State is limited, in principle, to that provided for in Article 3(1), first subparagraph, (a) to (g) of Directive 96/71, unless, pursuant to the law or collective agreements in the Member State of origin, those workers already enjoy more favourable terms and conditions of employment as regards the matters referred to in that provision. 91. Although the right to take collective action must therefore be recognized as a fundamental right which forms an integral part of the general principles of Community law the observance of which the Court ensures, the exercise of that right may nonetheless be subject to certain restrictions. As is reaffirmed by Article 28 of the Charter of Fundamental Rights of the European Union, it is to be protected in accordance with Community law and national law and practices. 93. [T]he protection of fundamental rights is a legitimate interest which, in principle, justifies a restriction of the obligations imposed by Community law, even under a fundamental freedom guaranteed by the Treaty, such as the free movement of goods … or freedom to provide services… 94. As the Court held in the judgments in Schmidberger and Omega, the exercise of the fundamental rights at issue, that is, freedom of expression and freedom of assembly and respect for human dignity, respectively, does not fall outside the scope of the provisions of the Treaty. Such exercise must be reconciled with the requirements relating to rights protected under the Treaty and in accordance with the principle of proportionality… 95. It follows from the foregoing that 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.

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96. It must therefore be examined whether the fact that a Member State’s Labour Unions may take collective action in the circumstances described above constitutes a restriction on the freedom to provide services, and, if so, whether it can be justified. 97. It should be noted that, in so far as it seeks to abolish restrictions on the freedom to provide services stemming from the fact that the service provider is established in a Member State other than that in which the service is to be provided, Article 49 EC became directly applicable in the legal orders of the Member States on expiry of the transitional period and confers on individuals rights which are enforceable by them and which the national courts must protect… 98. Furthermore, compliance with Article 49 EC is also required in the case of rules which are not public in nature but which are designed to regulate, collectively, the provision of services. The abolition, as between Member States, of obstacles to the freedom to provide services would be compromised if the abolition of State barriers could be neutralised by obstacles resulting from the exercise of their legal autonomy by associations or organisations not governed by public law… 99. In the case in the main proceedings in the Labour Court, it must be pointed out that the right of Labour Unions of a Member State to take collective action by which undertakings established in other Member States may be forced to sign the collective agreement for the building sector – certain terms of which depart from the legislative provisions and establish more favourable terms and conditions of employment as regards the matters referred to in Article 3(1), first subparagraph, (a) to (g) of Directive 96/71 and others relate to matters not referred to in that provision – 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 within the meaning of Article 49 EC. 100. The same is all the more true of the fact that, in order to ascertain the minimum wage rates to be paid to their posted workers, those undertakings may be forced, by way of collective action, into negotiations with the Labour Unions of unspecified duration at the place at which the services in question are to be provided. 101. It is clear from the case-law of the Court that, since the freedom to provide services is one of the fundamental principles of the Community…, a restriction on that freedom is warranted 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

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the objective which it pursues and not go beyond what is necessary in order to attain it… 107. In that regard, it must be observed that, in principle, blockading action by a Labour 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. 108. [T]he obstacle which that collective action forms cannot be justified with regard to such an objective linked to signature of the collective agreement for the building sector, which the Labour Unions seek to impose on undertakings established in other Member States by way of collective action such as that at issue in the case in the main proceedings... 109. Finally, as regards the negotiations on pay which the Labour Unions seek to impose, by way of collective action such as that at issue in the main proceedings, on undertakings, established in another Member State which post workers temporarily to their territory, it must be emphasised that Community law certainly does not prohibit Member States from requiring such undertakings to comply with their rules on minimum pay by appropriate means… 110. However, collective action such as that at issue in the main proceedings cannot be justified in the light of the public interest objective referred to in paragraph 102 of the present judgment, 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… With respect to the second issue that the Labour Court had submitted, the European Court of Justice stated the following. 114. It is clear from settled case-law that the freedom to provide services implies, in particular, the abolition of any discrimination against a service provider on account of its nationality or the fact that it is established in a Member State other than the one in which the service is provided… 115. It is also settled case-law that discrimination can arise only through the application of different rules to comparable situations or the application of the same rule to different situations…

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116. In that regard, it must be pointed out that national rules, such as those at issue in the case in the main proceedings, 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. 117. It follows from Article 46 EC, which must be interpreted strictly, that discriminatory rules may be justified only on grounds of public policy, public security or public health. 118. It is clear from the order for reference that 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 Labour 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. 119. Since none of the considerations referred to in the previous paragraph constitute grounds of public policy, public security or public health within the meaning of Article 46 EC, applied in conjunction with Article 55 EC, it must be held that discrimination such as that in the case in the main proceedings cannot be justified. After receiving the judgment of the European Court of Justice, the Labour Court recommenced the proceedings in the case and held a new trial. THE CLAIMS The Company, as the case has now finally been defined, has petitioned: 1. That the Labour Court declare that the industrial actions by Byggnads and the Local Branch against all the workplaces of the Company with respect to a total shut-down of work, strike and blockade are unlawful and are to cease, 2. That the Labour Court order Byggnads to pay to the Company exemplary damages in the amount of SEK 500 000, 3. That the Labour Court order the Local Branch to pay to the Company exemplary damages in the amount of SEK 500 000, 4. That the Labour Court order the Swedish Electrician’s Union to pay to the Company exemplary damages of SEK 350 000, and 5. That the Labour Court order Byggnads, the Local Branch and the Swedish Electrician’s Union to jointly and severally pay to the Company economic

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damages in the amount of SEK 1 420 000, or – in the event the Labour Court finds that § 61 of the Co-Determination Act is applicable – allocated as to the defendants in accordance with the defendants’ membership or according to another allocation that the Labour Court finds fair. As to the amounts with respect to the claimed exemplary damages that the Company states in the Complaint, the Company has also petitioned for interest in accordance with § 6 of the Interest Act from the date of service (9 December 2004, 9 December 2004 and 8 December 2004, respectively) until payment is made with respect to SEK 150 000 for Byggnads, SEK 200 000 for the Local Branch and SEK 200 000 for the Swedish Electrician’s Union. As to the thereafter-remaining amounts with respect to exemplary damages, and as to the economic damages, interest has been petitioned in accordance with § 6 of the Interest Act from the date of 15 June 2008 (in other words. thirty days after service of the claims) until payment is made. In addition, the Company has – in the event the Labour Court should find that the Company’s claims with respect to damages cannot be granted – requested that the Labour Court obtain a preliminary ruling from the European Court of Justice as to whether damage liability for the defendants exists in this case. The Company has petitioned for compensation for trial costs and legal fees. The Labour Unions have argued that when it comes to the petition as to a declaratory judgment under item 1, that it should first be dismissed with reference to the fact that any need for a declaratory judgment is absent, and in the alternative, that it should be denied. The Labour Unions have contested the complaint in general but attest that the claims for interest are reasonable in themselves. The Labour Unions have in addition – in the event the Labour Court should find that the Company’s claims for damages should be granted – requested that the Labour Court obtain a preliminary ruling from the European Court of Justice with respect to the issue of whether Article 49 EC gives the Company the right to damages from the Labour Unions upon violation of that provision. The Company has contested the Labour Unions’ demand as to dismissing the Company’s claim under item 1. According to the Company, it is not a question of a petition for a declaratory judgment but rather a petition for an executive judgment with respect to a negative obligation, which is why the provision in § 4:6 of the Labour Disputes Act with respect to the requirements for standing for a declaratory judgment is not applicable.

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THE PARTIES’ STATEMENTS OF THE CASE [Omitted] THE COURT’S REASONING The Dispute The dispute in this case concerns the issue of whether the industrial actions the Labour Unions took against the Company posting workers from Latvia to Sweden were in conflict with EC law, and whether these organisations are therefore liable to pay damages to the Company. The European Court of Justice in its judgment in the preliminary ruling found that the industrial actions were unlawful according to EC law, which now is uncontested between the parties in the case. That which the Labour Court now has to take a stance regarding is primarily whether the three labour unions are obligated to pay exemplary and/ or economic damages to the Company due to the unlawful industrial actions. Other remaining disputed issues are whether the industrial actions of Byggnads and the Local Branch have now ceased, and whether the Labour Court is to try the Company’s petition that the Court declare the industrial actions unlawful and that they are to be terminated. The Company’s petition for a declaratory judgment The Labour Court has received the preliminary ruling from the European Court of Justice as to the question of the lawfulness of the industrial actions according to EC law, as seen from the introduction to this judgment. The Company maintained that the industrial actions were unlawful, in part due to the fact that the demand for a collective agreement violated the EC-treaty and the directive concerning the posting of workers, and in part due to that the third paragraph of § 42 of the Co-Determination Act, which is included in lex Britannia, should not be applied as the provision is in conflict with the European Community law’s prohibition against discrimination. The defendants objected to the allegation that the industrial actions violated EC law. The European Court of Justice found in its preliminary ruling that the industrial actions were in conflict with Article 49 EC and Article 3 in the directive concerning the posting of workers, as well as that the recently mentioned provision in lex Britannia is in conflict with respect to Articles 49 and 50 EC. It is now uncontested in the case that the industrial actions were unlawful, but the Company has maintained its request that the Labour Court declare the industrial actions of Byggnads and the Local Branch unlawful and that they should cease. Byggnads and the Local Branch have objected, arguing that this request should be dismissed, as there presently is no standing for a declaratory

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judgment as the industrial actions are no longer ongoing. The Company objects to the request for dismissal, arguing that the requirement of standing for a declaratory judgment is not applicable as the request should be seen as a request for performance with respect to a negative obligation. The Labour Court finds that the Company’s petition that the Labour Court declare that the industrial actions “are unlawful and should be terminated” has been formulated as a petition for a declaratory judgment, and that it ought to be treated as such. In accordance with § 4:6 of the Labour Disputes Act, a petition that does not contain a claim that the opposing party is to be obligated to fulfill or to omit doing something, in other words, a petition for a declaratory judgment, is to be dismissed if it is not of considerable significance for the plaintiff that the question be tried. The Labour Court has found in previous case law (see, for example, AD 1982 no. 35) that a petition for a declaratory judgment has considerable significance for a party where there is reason to assume that a favorable judgment will either directly affect the opposing party in legal actions in relation to that party or is directly decisive for a subsequent lawsuit including claims that the opposing party be ordered to fulfill or omit. Normally, it is the circumstances at the commencement of the lawsuit that are decisive for the permissiveness of the petition, but there are certain possibilities to also take into consideration subsequently revealed circumstances that directly affect the significance of having the case tried. Such circumstances can be a judgment issued in the period during which the trial is ongoing or that the question has become uncontested between the parties (see AD 1996 no. 74). The Company in this case also petitions for an executory judgment which for its granting assumes, among other things, that the industrial actions were unlawful, which is why the trying of the petition for a declaratory judgment cannot have the above described effect as to a subsequent petition for an executory judgment. The issue consequently is primarily whether there is reason to assume that a favorable declaratory judgment will directly affect Byggnads and the Local Branch in their legal actions in relation to the Company in such a manner that it can be seen to be of considerable significance for the Company that the petition for a declaratory judgment be tried. The portion of the petition for a declaratory judgment constituting the request as to a declaration that the industrial actions “be terminated” assumes, for its granting, that the industrial actions are ongoing. Byggnads and the Local Branch have declared in this case that the industrial actions are no longer ongoing. The Chairperson of Byggnads, upon inquiry by the Company, in writing in addition has expressly declared that Byggnads’ industrial action has ceased.

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Naturally, it is important with respect to the effects of an industrial action on the party subjected and any third parties that a commenced industrial action be terminated in a clear manner, for example, by an explicit notice to those who have received the notice as to industrial action, however, no statutory provisions as to this exist. An industrial action can be terminated without having to observe any formal requirements. As stated, at present it is uncontested between the parties that the industrial actions were unlawful, and the Labour Court therewith has this as a starting point in its assessment of the petition for an executory judgment that the Company also presents. In addition, the European Court of Justice in its preliminary ruling may be said to have found that the industrial actions were unlawful. As far as can be seen in the case, the Company no longer conducts any operations in the construction industry, either in Sweden or abroad. Under the described circumstances, it can no longer be of any considerable significance to the Company, according to the view of the Labour Court, to now have the specific petition for a declaratory judgment that the industrial actions are – or were – unlawful and are to be terminated, tried by the Labour Court. The Company’s petition for a declaratory judgment shall therefore be dismissed. The Court now turns to the question of whether the Labour Unions are liable for damages to the Company due to the violations of EC law that the industrial actions entailed. The legal bases for the liability to pay damages for violations of EC law By way of introduction, it can be stated that there are no explicit Swedish statutory provisions that, even after an interpretation consistent with the treaties, give the Company a right to damages from the organisations based on a violation of the treaties caused by the industrial actions, and neither is there support for such a right to damages in the Swedish case law regarding domestic law. Damage liability for the Labour Unions must therefore be solely based on that following from EC law. According to EC law, member states are obligated, in accordance with the duty of loyalty – or the principle of solidarity – to ensure the effective enactment of EC law, which among other things entails that violations of EC law are to carry effective sanctions. This principle is expressed in Article 10 EC in the following wording: Member States shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community. They shall facilitate the achievement of the Community’s tasks.

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They shall abstain from any measure which could jeopardise the attainment of the objectives of this Treaty. That a violation of an EC law provision can lead to liability for damages on an EC law basis has been established by the European Court of Justice primarily in cases where member states or EU institutions have committed harmful actions against individuals. According to the established case law of the European Court of Justice, damage liability for the state can arise under the condition that the following three criteria are fulfilled: 1. The State has infringed a rule of law intended to confer rights on individuals; 2. The breach must be sufficiently evident; and 3. There must be a direct causal link between the breach and the loss or damage sustained. There are no generally applicable regulations as to when and how damage liability is to be imposed in the EC-treaty. Instead, it is the member state regulations that are to be applied when damage liability follows from EC law. It is the obligation of each member state to establish in its legal system the criteria rendering it possible to determine the scope of damages, on terms and conditions that may not be less favorable than those concerning similar claims for damages based on national law (the principle of equivalence) and that in any event, they may not be such that in practice it becomes impossibly or unreasonably difficult to be awarded damages (the principle of effectiveness). The damages are also, in order to be effective and have a deterring effect, to be in a reasonable proportion to the harm caused (the principle of proportionality). Liability for damages on an EC law basis has been extended in the case law of the European Court of Justice to exist in situations in which a private party claims rights in accordance with EC law as against another private party. In order for damage liability for violations of EC law to exist between private parties, the EC legal regulations that are violated must have direct effect on the national level, and therewith, create rights for the individual that the national courts have to protect. Thereto is required that direct effect is also applicable in the relationship between the two private parties, “horizontal direct effect”. Articles in the EC-treaty can have direct effect even if they do not contain any prohibitions. A regulation according to the EC-treaty is to be generally applicable as well as binding in its entirety and therewith has direct effect. The relationship is otherwise with respect to directives. The European Court of Justice has found that provisions in directives can, under certain conditions, have vertical direct effect, in other words, be applicable in the relationship between the state and the individual, but in principle they do not have horizontal direct effect.

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Article 49 EC, to the extent it purports to abolish limitations of the freedom to provide services having as their basis that the service provider is established in a member state other than where the services are to be provided, is to be viewed as having direct effect (see paragraph 97 in the Laval judgment with therein given references). That the articles in the EC-treaty concerning competition law, applicable as to agreements that companies execute, have horizontal direct effect, and that therewith, directly through these articles, rights are created for individuals that the national courts are obligated to protect, was already clear early (see, inter alia, judgment of the 20 September 2001 in Case C-453/99, Courage v. Crehan, ECR 2001, p. 1-6297 and judgment of the 13 July 2006 in the joined cases C295/04 to C-298/04, Manfredi v. Lloyd, ECR 2006, p. I-6619). With respect to the articles regulating free movement, the European Court of Justice, in its judgment of the 11 December 2007 in Case C-438/05, International Transport Workers’ Federation v. Finnish Seamen’s Union, ECR 2007, p. I-10779 (Viking Line judgment), determined that it follows from the established case law that Articles 39, 43 and 49 EC are not only applicable to the operations of public authorities, but also encompass other forms of regulations that have the purpose of regulating, in a collective manner, employment, self-employed operations and the provision of services (paragraph 33 with references). As the terms and conditions of employment in the different member states are regulated at times through legislation and other acts, and at other times through collective agreements and other legal agreements entered into or adopted by private parties, a limitation of the prohibitions in the above mentioned articles to only include the actions of public authorities could lead, according to the European Court of Justice, to differences in the application of these prohibitions. A statement of the same content can also be found in the Laval judgment, paragraph 98. There it is stated, with reference inter alia to the judgment of the 12 December 1974 in Case 36/74, Walrave and Koch, ECR 1974, p. 1405, Swedish special issue, vol. 2, p. 409, and the judgments in the cases Bosman and Wouters, that Article 49 EC is applicable even when it is a question of a “nonpublic regulation, that has the purpose in a collective manner of regulating the provision of services”. According to the Court, the removal of impediments to the freedom to provide services between the member states would be jeopardized if the removal of state impediments could be countermanded by impediments stemming from associations and labour unions, not regulated by public law, exercising their legal autonomy. The question of whether Article 43 EC, prohibiting limitations in the free right to establishment, can have horizontal direct effect was tried by the European Court of Justice in the Viking Line case. The issue addressed there concerned whether this article could entail rights for a private enterprise that it could

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invoke against a labour union or an association of labour unions. The European Court of Justice referred herewith to its above-mentioned case law, adding that the Court furthermore had already found that the fact that certain of the Treaty’s provisions are formally directed to the member states did not exclude that rights at the same time are created for individuals that have interests in that the obligations adopted in such a manner are observed, and that the prohibition according to a mandatory provision in the treaty against restricting a fundamental freedom encompasses, among other things, all agreements that have the purpose of collectively regulating employment (paragraph 58 with references). The conclusion was that Article 43 EC, regulating a fundamental freedom, could entail rights for a private enterprise that it can invoke against a labour union or an association of labour unions. That the industrial actions taken by the Labour Unions are to be considered encompassed by the legal autonomy that these nonpublic organisations exercise could also be seen from the judgment in that case (paragraph 35). It can be seen from the European Court of Justice’s judgment of the 17 July 2008 in Case C-94/97, Raccanelli, ECR 2008, p. I-5939, that liability for damages between private parties for violations of EC law can come into question even with respect to violations of Article 39 EC containing regulations concerning freedom of movement for employees. That case concerned the question of whether an Italian doctoral candidate had been discriminated against by a private research institution in Germany due to nationality, by not having been treated in the same manner as domestic doctoral candidates. The European Court of Justice stated that even a private association, such as the research institution in question, is encompassed by the prohibition against discrimination of employees as stated in Article 39 EC. The Court also had to answer the question of what were to be the consequences in the event the foreign doctoral candidate had been discriminated against through the institution’s actions against him, namely not giving him the opportunity to become employed at the institution. The Court stated, with reference to the judgments of von Colson and Kamann, as well as Paquay (judgment of the 10 April 1984 in Case C-14/83, von Colson and Kamann, ECR 1984, p. 1891, Swedish special issue, vol. 7, p. 577 and judgment of the 11 October 2007 in Case C-460/06, Paquay, ECR 2007, p. I-8511, respectively) that neither in Article 39 EC nor in the provisions in the regulation as to freedom of movement for employees is it prescribed that the member states, or such organisations as the institution at issue, have to take any defined measures upon the violation of the prohibition against discrimination, but rather, they are given the freedom to choose, depending upon the different situations that can arise, between different suitable solutions in order to achieve the objectives of these provisions. According to the Court, it is the duty of the referring court, against the background of the national legislation concerning tort liability, to determine the compensation that the plaintiff in the national case has the right to demand for injuries arising in the event he is subject to discrimination (paragraphs 50–52).

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With respect to the retroactive effect of the judgments of the European Court of Justice, the Court in the judgment of the 5 March 1996 in the joined cases C-46/93 and C-48/93, Brasserie du pêcheur and Factortame, ECR 1996, p. I-1029, pronounced that a member state’s liability for damages cannot be limited to only include those injuries arising after a violation of the treaty in question has been established by court judgment. This would namely entail that the right to damages according to the Community’s legal system would be jeopardized. This would also be in conflict with the principle of effectiveness, according to the European Court of Justice, in the event damages were made dependent upon a requirement that the Court previously had established such a violation of EC law (paragraphs 94 and 95). In those cases in which the European Court of Justice intended to limit the retroactive effect of its decisions, such has been stated in the decision. As a main principle, consequently, it may be deemed that the European Court of Justice’s decisions have retroactive effect. The interpretation of an EC legal rule as recognized in a judgment by the European Court of Justice is consequently normally to be considered applicable to legal relationships also with respect to the period prior to the judgment. The Labour Court now turns to its assessment of the Company’s claim for damages. Can liability be imposed on the Labour Unions for damages due to the industrial actions taken in order to compel the execution of a collective agreement in conflict with Article 49 EC and the posting of workers directive? The Company has alleged two grounds for its damage claims that the Company argues are cumulative, in other words, the Company wishes that both grounds be tried by the Labour Court and used as the basis for the damage assessment. The first ground concerns the circumstance that taking industrial actions, in order to enforce such contract demands as those at issue in this case, against a company from another EU-member state posting workers in Sweden, is in violation of the EC-treaty regulations as to freedom of movement. According to the Company’s second ground, liability for damages stems from the industrial actions that were unlawful, as the Company was already bound by collective agreements and the objective of the industrial actions was for Byggnad’s collective agreement to displace these collective agreements, and that according to EC law, the rule in the third paragraph of § 42 of the Co-Determination Act must be disregarded as it is discriminatory on the basis of nationality according to the European Court of Justice. The Labour Unions have objected, alleging that damage liability does not exist under any of these grounds. The Labour Court first addresses the question of whether damage liability exists according to the first ground alleged by the Company, as well as the statutory basis for damages in such an event that is applicable. The Court, after having

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addressed the Company’s second ground for damages, will determine below if and to what degree potentially applicable tort regulations in such a case entail that the Company’s claims for damages can be granted. With respect to the first of the Company’s grounds, the Court answers first the question of whether the Labour Unions can be held liable for a violation of the treaty. Can the Labour Unions be held liable for a violation of the treaty? The Company briefly is of the following view. The judgment by the European Court of Justice in the Laval case entails that the European Court of Justice has granted Article 49 EC horizontal direct effect in the present case. This can be seen particularly from paragraph 98 of the judgment where the European Court of Justice determines that Article 49 EC is also to be applied to certain non-state regulations that have the purpose of regulating in a collective manner the provision of services. The European Court of Justice finds that the Swedish governmental authorities have entrusted the social partners with setting wages for domestic companies through collective agreements. The judgment by the European Court of Justice entails that the defendants have complete responsibility for their actions. Nothing in the European Court of Justice’s judgment indicates that there should be liability for the Swedish state in this case. The Labour Unions have primarily objected in this respect with the following. Article 49 of the EC-treaty does not have horizontal direct effect in the meaning that it entails that an individual, in this case the Company, can allege that the defendants’ concrete actions in the form of a blockade constitute a violation of Article 49 EC in the relationship between the Company and the Labour Unions. This can be seen from how the European Court of Justice expressed its opinion inter alia in paragraphs 96 and 99 in the Laval judgment. It is the right to take industrial actions that was the object and not the concrete actions. It can certainly be seen from the previous case law of the European Court of Justice that Article 49 EC includes non-public bodies such as, for example, sports associations, where they conduct regulatory or norm-giving operations, but it cannot be seen that the concrete actions of associations, such as, for example, the Labour Unions, are encompassed by the horizontal direct effect. In addition, the European Court of Justice, when answering the first issue, has not only referred to Article 49 in the EC-treaty but also to Article 3 in the posting of workers directive, which results in that the judgment must be seen as being directed to the member states. The Labour Court makes the following assessment.

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The Labour Court in its request for a preliminary ruling has not posed any question to the European Court of Justice concerning the potential liability of the Labour Unions for damages. The issue then is whether the general principles for damage liability that have been developed by the European Court of Justice in its case law can give sufficient guidance. In order for damage liability to come into question, according to the view of the Labour Court and in accordance with that upon which the parties appear to be in agreement, it is first required that the EC legal provisions that the Labour Unions have breached have horizontal direct effect in the relationship between the Company and the Labour Unions. The Labour Court therefore tries this question first. The European Court of Justice in its preliminary ruling has established that Article 49 EC is directly applicable to the present situation, and that it gives the Company rights that it can invoke before the courts and which the national courts are to protect, in other words, that this provision here has direct effect. In addition, the European Court of Justice has established that Article 49 is to be observed even when it is a question of non-public regulations that have the purpose of regulating the provision of services in a collective manner, as even associations and organisations that are not regulated by public law – such as the Labour Unions –when they exercise their legal autonomy, could be able to prevent the free movement of services. According to the Company, the first fundamental prerequisite for the Labour Unions’ damage liability exists therewith, namely that Article 49 EC in this case has horizontal direct effect in the relationship between the Labour Unions and the Company. The Labour Unions do not share this view but rather argue that the European Court of Justice’s statement in the Laval judgment is to be interpreted so that it is not the Labour Unions’ concrete actions, but rather their right to take industrial actions that was the object, as well as that which was in conflict with the treaty. Consequently, according to this view, only the Swedish state, whose legislation allows the action in conflict with EC law, can be held liable for damages, but not the Labour Unions following valid national regulations. The European Court of Justice states in its answer to the first question, which the European Court of Justice reformulated in the manner as can be seen from the introduction to this judgment, that Article 49 EC and Article 3 in the posting of workers directive constitute impediments for that a labour union “is given the opportunity” to take industrial actions in a situation as the one in the case at issue. According to the view of the Labour Court, this choice of words could potentionally be interpreted as that the European Court of Justice is primarily expressing an opinion as to the Swedish regulations and not to the concrete actions by the Labour Unions. The European Court of Justice also states, as

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the Labour Unions have noted, in paragraph 96 as to the circumstance that the Labour Unions “may” take industrial action and in paragraph 99 that this “right” which they have been given to take industrial actions constitutes a restriction in the freedom to provide services in the meaning intended by Article 49 EC. There is reason, however, according to the view of the Labour Court, to more closely examine several different language versions of this answer to the first question in the Laval judgment prior to drawing any definite conclusion from the above-mentioned choice of words. According to the French language version of the judgment, the answer to the first question is that EC law is to be interpreted so that it constitutes an impediment for a Labour Union “puisse tenter de contraindre... un prestataire de services”. In the German language version, it is stated that EC law prevents that a labour union “versuchen kann... einen... Dienstleister dazu zu zwingen”. In the English language version, given here in its entirety, there exists however no correspondence to the words “kan försöka [can attempt]” or “ges möjlighet att försöka [is given the possibility to attempt]” to compel or encourage. Here it is stated that EC law impedes that labour unions “attempt to force”, through industrial actions, the foreign service provider to enter into negotiations and conclude a collective agreement: 1. Article 49 EC 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 labour 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 (italics added). The Danish language version has the same content. It is also restated here. The italicization in both language versions is that by the Labour Court. 1) Artikel 49 EF og artikel 3 i Europa-Parlamentet og Rådets direktiv 96/71/EF af 16. december 1996 om udstationering af arbejdstagere som led i udveksling af tjenesteydelser skal fortolkes således, at de er til hinder for, at en fagforening

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i en medlemsstat, hvor arbejds- og ansættelsesvilkårene på de områder, der er nævnt i direktivets artikel 3, stk. 1, første afsnit, litra a)-g), er fastsat i lovgivningen, bortset fra bestemmelser om mindsteløn, gennem kollektive kampskridt i form af en blokade af byggepladser, som det er tilfældet i hovedsagen, forsøger at få en tjenesteyder, der har hjemsted i en anden medlemsstat, til at indlede forhandlinger om lønniveauet til de udstationerede arbejdstagere samt at tiltræde en kollektiv overenskomst, hvis bestemmelser på visse af de nævnte områder fastsætter mere fordelagtige betingelser end dem, der følger af den relevante lovgivning, mens andre vedrører områder, der ikke er nævnt i direktivets artikel 3 (italics added). According to the view of the Labour Court, that now stated demonstrates that the portion of the judgment at issue cannot be seen as having the content that the Labour Unions argue, namely that it is only the actual right to take industrial actions – the national regulations permitting the industrial action – that was the object and not the concrete actions of the unions. Neither can the Labour Court find that the European Court of Justice’s manner of expressing itself in paragraphs 96 and 99 can be given the interpretation that the Labour Unions allege when read in context. The European Court of Justice reemphasizes in paragraph 98 that Article 49 EC is applicable even where it is a question of “non public regulations, that have the purpose of in a collective manner regulating the provision of services”, as the removal between the member states of impediments to the freedom to provide services would be jeopardized if the removal of state impediments could be counteracted by impediments following from associations and organisations not regulated by public law exercising their legal autonomy. It can be seen from the case law of the European Court of Justice, according to the view of the Labour Court, that with respect to non-public bodies, it is not only their regulatory or norm-giving operations that are encompassed by EC law, but also their concrete actions. As mentioned above, the Court’s statements take aim at situations where the organisations “exercise their legal autonomy”. According to the view of the Labour Court, there is no doubt that the taking of industrial actions entails such an exercise. This can also be seen in general from the statements by the European Court of Justice in its Viking Line judgment. That the European Court of Justice includes non-public bodies exercising their legal autonomy within the application of Article 49 EC consequently demonstrates, according to the view of the Labour Court, that the Company’s rights are not only applicable as against the state but also as against such private law associations, such as the Labour Unions, when taking industrial actions in such a situation as in the case at hand.

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This conclusion also receives support from statements made in the legal expert opinions submitted in this case, in part by Doctor of Laws Jörgen Hettne, cited by the Company, and in part by Professor Torbjörn Andersson, cited by the Labour Unions. Dr. Hettne states that it is obvious that Article 49 EC has legal effect between the parties in the case, and that it purports to give rights to the one of the parties, as the European Court of Justice declared that the industrial actions taken in this dispute were not compatible with Article 49 EC and violated the Company’s right to provide services in Sweden. Prof. Andersson, despite the fact that he finds that “certain questions can be raised”, makes the assessment that Article 49 EC has direct effect to the extent it creates rights for individuals and obligations for individual associations, organisations, etc., and that these obligations not only concern the norm-giving regulations such associations decide and apply, but also the concrete actions they take. That now stated entails in accordance with the view of the Labour Court that Article 49 EC in the actual situation has horizontal direct effect between the Labour Unions and the Company, and that consequently the conditions exist for the Company to be able to plead successfully in court directly against the Labour Unions based on the violation of the treaty alleged. That the European Court of Justice in its judgment not only refers to Article 49 EC but also to Article 3 in the posting of workers directive leads, in accordance with the view of the Labour Court, to no other assessment. Should the remedy for the violation of the treaty be damages? The Labour Unions are of the understanding that even if the Labour Court were to find that Article 49 EC has horizontal direct effect, this does not automatically mean that the violations at issue must be compensated for by damages. According to them, it would also be in violation of fundamental requirements as to legal certainty to allow individual legal subjects to bear the economic risks and take the economic consequences for the type of mistake now at hand. The Company maintains that Article 10 EC requires that the member states provide effective sanctions for violations of EC legal provisions that have been given direct effect, and therefore, it is self evident that damages should be awarded. The Labour Court makes the following assessment as to this issue. The starting basis for the Labour Court’s assessment is the above-described duty of loyalty, according to which a violation of EC law should result in effective sanctions in order to deter such violations. The member states are to insure that the suitable effect of EC legal provisions is not jeopardized. It may also be considered established that there is a general legal principle within EC law

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that damages are also to be able to be awarded between private parties upon a violation of a treaty provision that has horizontal direct effect. That this principle is not only applicable within the area of competition law but also ought to be applicable with respect to violations against other treaty provisions can be seen from the judgment in the case, Raccanelli. There is no explicit support, however, in the case law of the European Court of Justice for the proposition that an individual is to pay damages on an EC law basis to another individual upon a violation specifically of Article 49 EC. As accounted for above, the European Court of Justice includes non-public associations of the type such as the Labour Unions, attorney bar associations and sport associations in the circle encompassed by Article 49 EC, which is natural against the background of that these types of associations fulfill important societal interests, have authority and influence as well as conduct norm-giving operations. It can, therefore, when it comes to violations of EC legal regulations applicable with respect to both the state and individual subjects, be seen as odd to make a distinction between damage claims depending upon whether the violator is a part of the state or happens to be independent of the state. The Swedish labour unions enjoy a large degree of self-regulation and considerable authority when it comes to taking actions in order to compel employers to sign collective agreements. They can be seen as having exercised that which the European Court of Justice terms “their legal autonomy” when they took the industrial actions and sympathy actions at issue, respectively, in order to compel the Company to commence negotiations as to wages and the execution of a collective agreement, in conflict with Article 49 EC. It appears against this background that liability for damages consequently should be able to be imposed on the Labour Unions, assuming that the remaining criteria for such liability are fulfilled. As previously mentioned, damage liability for the state can arise on an EC law basis in accordance with established case law under the condition that three criteria are fulfilled, namely that the rule which was violated is intended to create rights for an individual, that the violation is sufficiently clear, and that there is a direct causality between the violation and the harm. If these criteria are applied to the situation now at hand, it can be asserted that the first criterion, against the background of that which the Labour Court has concluded above, is fulfilled, and it may be considered evident that there is such causality as is required. That which remains then is the requirement as to that the violation is sufficiently clear. The European Court of Justice has stated in the judgment in the cases Brasserie du pêcheur and Factortame, with respect to the member states’ liability for legal provisions or national court judgments that are in violation of EC law, that a violation of Community law is sufficiently clear when a member state has obviously and seriously misjudged the boundaries

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for its discretionary assessment. Among other circumstances that can then be taken into consideration are the intentional or unintentional character of the commissioned treaty violation or the harm caused, the excusable or inexcusable character of a potential misconception of the law, or that a stance taken by a Community institution could have contributed to the failure, the adoption or the maintenance of the regulations or of a national court judgment that is in conflict with Community law. Without taking a stance as to the question of whether that stated above can be completely applied in the present situation, the Labour Court finds that the actions of the Labour Unions at issue, the industrial actions, in accordance with the European Court of Justice’s preliminary ruling, constituted a serious violation of the treaty, as they were in conflict with a fundamental principle in the treaty, the freedom to provide services. Even if the right to take industrial actions has also been recognized by the European Community as a fundamental right, it was found that the actual industrial actions, despite their objective of protecting workers, are not acceptable as they were not proportionate. The Labour Court finds that the stance of the European Court of Justice in these issues entails in this case that there is a violation of EC law that is sufficiently clear. The requisites for damage liability exist therewith. Whether the imposition of liability for damages on the Swedish state can even be contemplated is a question that ought not affect the Labour Court’s assessment. It can, however, be added here that the European Court of Justice stated that EC law does not constitute any impediment that a legal subject other than a member state can incur liability for damages in addition to the member state’s own liability for damages for injuries that were caused by an individual through measures that this legal subject had taken in conflict with EC law (see the judgment in the case Soumen valtio and Lehtinen, paragraphs 97-99). In summary and against the background of that stated above, the Labour Court makes the assessment that the suitable effect of EC law would be jeopardized unless the Labour Unions could be ordered to pay compensation as to the Company for the injuries that the Company can prove it has suffered on the basis of that the Labour Unions, in conflict with EC law, took the concrete industrial actions. Which damage liability regulations are then applicable? EC law does not, as mentioned earlier, designate any specific procedural or tort law regulations that are to be applied in the event of a violation of EC law. There is an absence, as mentioned initially, of regulations in Swedish law that are directly applicable in situations such as the case at hand. The Labour Court consequently must, against the background of the Swedish legislation, after setting aside conflicting Swedish law or reconstructing such, determine the type of compensation that the Company has the right to claim.

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In accordance with EC law, it is the duty of every member state to establish in its national legal system criteria rendering it possible to determine an amount of damages on terms and conditions that may not, among other things, be less favorable than those concerning similar claims for damages based on national law, and they may not in any event be such that in practice it becomes impossibly or unreasonably difficult to be awarded damages. The Company has claimed compensation for the economic harm it has suffered as a consequence of the unlawful industrial actions, and also exemplary damages. With respect to the national legal provisions that could be applicable for the determination of the damages, the Company refers in part to the provision as to compensation for pure economic loss in § 2:2 of the Tort Liability Act, in part to the regulations concerning damages in §§ 54 and 55 of the Co-Determination Act, which according to the Company are to be applied analogously. The Labour Unions have stated that the provision in § 2:2 of the Tort Liability Act in itself may be considered to give room for economic damages in this case, while on the other hand, according to their understanding, specific legal support for exemplary damages on the basis of a violation of a treaty is absent, and that such damages already for this reason cannot come into question. The Labour Court notes that both parties to this case refer, with respect to the Company’s claim for economic damages, to the Tort Liability Act. According to the wording of § 2:2 of this Act, a party who causes pure economic loss through a criminal act is to compensate the harm. This provision is considered not to be understood as a “principle of restriction” in the sense that it constitutes an impediment against imposing liability for pure economic loss in certain other cases, as developed in the case law, where the tortious act does not constitute a crime (see e.g. NJA 2005 p. 608). The legal expert opinions submitted in this case also lend support to the understanding that § 2:2 of the Tort Liability Act does not impede compensation for pure economic loss in a case such as the one now at hand. The rule must, however, be reinterpreted in order to be able to be applied as a basis for economic damages for the present violation of EC law. Non-pecuniary damages – compensation for a violation of integrity – can in accordance with § 2:3 of the Tort Liability Act be awarded if an individual has been seriously aggrieved on the basis of a crime that encompasses an attack against that person, or his or her freedom, peace or honor. This regulation, that likewise in accordance with its wording assumes criminal conduct, must also be reinterpreted in order to be able to be applied as a basis for exemplary damages for the now at hand violation of EC law. The provisions in the Tort Liability Act concerning such forms of damages as claimed in this case are consequently not directly applicable. According to the view of the Labour Court, it is then more reasonable to instead seek guidance

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in the damage provisions of the Co-Determination Act concerning exactly the situation where a party has taken an industrial action against another that is unlawful according to the Act. The Labour Court therefore leaves the Tort Liability Act and turns to more closely investigating whether the CoDetermination Act’s provisions can be applied with the assessment of all the damage claims based on the violations. It follows from § 54 of the Co-Determination Act that the party who is in violation of the Act is to compensate the harm that has arisen. Herewith is intended both economic and non-pecuniary harm. Section 55 of the same act prescribes that with the assessment of and to what extent harm has arisen for a party, consideration is also to be given to that party’s interest of that the provisions in the Act are followed, and to other circumstances of other than a pure economic significance. According to § 60 of the Co-Determination Act, damage awards can be lowered or entirely nullified, in other words, be reduced, if it is fair. It follows from § 61 of the Co-Determination Act that where several parties are liable for the injuries, the liability for damages is to be distributed between them according to that which is fair taking into consideration the circumstances. Consequently, the Swedish lawmaker chose economic and exemplary damages in the Co-Determination Act as remedies in those cases in which industrial actions have been taken in conflict with the provisions of the Co-Determination Act concerning the industrial peace. These provisions, however, are not directly applicable, as in the present case it is a question of a violation of the EC-treaty that is the basis for the right to damages. The issue then is whether the regulations can be applied analogously. When it comes to economic compensation, the European Court of Justice has noted that it must be adequate in the sense that it, in accordance with applicable national regulations, provides complete compensation for the actual harm that has been caused by the violation of EC law that has occurred, see judgment of the 2 August 1993 in Case C-271/91, Marshall, ECR 1993, p. I-4367, Swedish special issue, p. I-315. Economic harm, among other things, pure economic loss, as recently stated, can be compensated with the application of § 54 of the CoDetermination Act. The Labour Court finds that the Company’s claim as to economic damages by the Labour Unions on the basis now at hand ought to be suitably assessed with an analogous application of the regulations concerning damages in the Co-Determination Act. The Labour Court in a subsequent section will address whether the circumstances are such that the Company can be granted its claim. This Court thereafter has to take a stance as to whether the provisions in the CoDetermination Act are to be applied analogously also with respect to the Company’s claim for exemplary damages on the now given basis.

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The Labour Unions are of the opinion that there is no room to award exemplary damages with reference to that an EC law provision has been violated. They have herewith referred to the European Court of Justice’s judgment in the case Suomen valtio and Lehtinen, paragraph 88, stating that damages for a violation of Community law are not intended to function as “a deterrent or a sanction”, but rather have the purpose of that an individual should be able to receive compensation for injuries they have suffered on the basis of any violations of EC law. According to the Company, EC law requirements of effective sanctions entail that even exemplary damages are to be awarded for violations against Article 49 EC. The Labour Court makes the following assessment. The member states enjoy a large degree of freedom when it comes to the choices of sanctions available for violations of EC law, and therefore it is not selfevident that the Labour Unions should be able to be sanctioned with liability to pay exemplary damages for the violation of the treaty at issue. The Labour Court has recently found that the regulations concerning damages in the CoDetermination Act can be applied analogously for sanctions against a violation of the treaty in the form of compensation for pure economic loss. These legal provisions, including the regulations concerning the allocation of damage liability between several parties liable for damages and as to reductions, ought to not entail any limitations that should be in conflict with the EC legal principle of effectiveness. Under such circumstances, it should be viewed as sufficient that the Company has the possibility to have the claim as to compensation for the economic harm it has suffered tried with the application of these legal provisions. However, according to the opinion of the Labour Court, there is significant support, despite this, for applying the Co-Determination Act’s legal provisions as to exemplary damages analogously in this case. Such support can be found primarily in the above-mentioned principles of equivalence and effectiveness in EC law. The principle of equivalence entails that national damage liability regulations may not discriminate EC law based claims in comparison with comparable claims based on domestic law. This is also clearly established in the judgment in the case Suomen valtio and Lehtinen. The statement in the judgment that “a member state’s liability for damages based on EC law is not intended to function as a deterrent or sanction” can according to the opinion of the Labour Court therefore not be given the meaning that the Labour Unions argue. Immediately after this statement, the European Court of Justice also finds that it follows from the established case law that when the requirements for a EC law based right to

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damages are fulfilled, it is the obligation of the member states to compensate the harm caused within the framework for the national tort legislation, as well as that the requisites that then are determined as regards damages may not be less favorable than those regarding similar national claims for damages. The European Court of Justice has also expressed its opinion as to the type of sanction that exemplary damages can be seen to constitute. For example, the Court in the judgment in the cases Brasserie du pêcheur and Factortame has noted that damages of “an exemplary character” may not be excluded within the framework for a claim that has been presented in a legal proceeding and that is based on Community law if such damages can be awarded within the framework for similar claims presented in a legal proceeding based on national law. In the judgment in the case Manfredi v. Lloyd, which concerned competition law, the following is stated (paragraph 99): Therefore, first, in accordance with the principle of equivalence, if it is possible to award specific damages, such as exemplary or punitive damages, in domestic actions similar to actions founded on the Community competition rules, it must also be possible to award such damages in actions founded on the latter type of case. The Labour Court finds support in the case, AD 2002 no. 45, for the proposition that exemplary damages can be awarded in the event of a violation of a treaty through an analogous application of national regulations. According to the judgment in that case, a county council was ordered, with an analogous application of § 25 of the Equal Treatment Act, to pay exemplary damages to a woman who was found to have been discriminated against in the appointment of an employment position as midwife. The Labour Court in the judgment stated the following: “In the Equal Treatment Act, the Swedish lawmaker has chosen damages as a remedy for cases of violations of the prohibition against sex discrimination. Against the background of the above mentioned principle of solidarity according to the EC-treaty, the Labour Court finds that the damage provisions in § 25 of the Equal Treatment Act must be seen as being analogously applicable with a stated violation of such articles in the equal treatment directive that have direct effect.” The principle of solidarity mentioned in that statement is that which in this judgment is referred to as the duty of loyalty. The Labour Unions allege that the situation in the 2002 case is not comparable to the present case, among other things,because at the point of time for the discrimination there already existed a clear EC case law in the question and that the deficiencies in the Swedish Equal Treatment Act rather depended upon a mistake. According to the opinion of the Labour Court, these circumstances have no decisive significance for the assessment of the question of whether an analogous application is to be made in a case such as the one now at hand. Even

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in the present case, it is a question of violations of provisions in EC law that have direct effect and the existence of Swedish regulations that allow room for a proceeding in conflict with EC law. The Labour Court in summary makes the following assessment. Exemplary damages are somewhat typical for Swedish labour law and can be awarded in situations where industrial actions in the form, for example, of a blockade, have been taken in conflict with the regulations in the Co-Determination Act. With the support of the EC legal principle of equivalence, such damages ought therefore to be able to be awarded even for the unlawful industrial actions now at hand. Against this background, and taking into consideration the duty of loyalty stemming from the EC-treaty, the Labour Court finds that overwhelming reasons speak for that the provisions concerning damages in the Co-Determination Act ought to be applied analogously also with respect to the claim for exemplary damages for the violations of Article 49 in the EC-treaty at issue here. The Labour Court returns below to the question of whether an application of the damage liability provisions in the Co-Determination Act entails that the Labour Unions should be ordered to pay exemplary damages, and in such a case, whether any damages should be lowered or nullified entirely. The Labour Court now turns to the Company’s other basis for its claim for damages. Can damage liability be imposed on the Labour Unions according to the CoDetermination Act on the basis that the industrial actions were taken in order to displace collective agreements the Company was already bound by? According to the Company’s second basis for its claim for damages, damage liability can be imposed on the Labour Unions because the provision in the CoDetermination Act rendering the industrial actions lawful is discriminatory according to the European Court of Justice, and therefore, cannot be applied. According to this basis, it is not assumed that the demand for a collective agreement is unlawful, but rather that which is decisive is that the Company was already bound by Latvian collective agreements, which would be displaced by Byggnad’s collective agreement if the Labour Unions were conceded their demand that the Company sign this agreement. The Labour Unions have alleged that they followed the provision in the third paragraph of § 42 of the Co-Determination Act, and that which made the industrial action unlawful was not the Co-Determination Act, but rather the EC treaty. Therefore, damages cannot be awarded according to their view through a direct application of the Co-Determination Act. They have also argued that as it was the legislation that was erroneous, that the Labour Unions are not responsible for any harm, but rather the Swedish state is.

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The provisions of the Co-Determination Act concerning the industrial peace and lex Britannia Chapter Two of the Instrument of Government contains a catalogue of fundamental freedoms and rights of citizens. According to Article 17 of this Chapter, the labour unions and employer organisations have the right to take industrial action if nothing to the contrary follows from law or agreement. There are regulations limiting the right to take industrial action in the CoDetermination Act. It can be seen from § 41 of the Co-Determination Act that the duty to maintain the industrial peace is applicable between parties who are bound by collective agreement as against each other. It is forbidden to take industrial action, among other things, in order to achieve alterations in a collective agreement. In the event an industrial action is unlawful, any sympathy actions taken to support the party taking an unlawful industrial action are also unlawful (first paragraph point 4 of § 41 of the same Act). The first and second sentences in the first paragraph of § 42 state, inter alia, that employer and employee organisations may not arrange, or in any other manner bring about, unlawful industrial actions, or through support or in any other manner assist unlawful industrial actions. In the Britannia case (AD 1989 no. 120), the Labour Court made a pronouncement as to the content of these regulations. Through the judgment, the Labour Court established that the prohibition was also applicable when industrial action was taken in Sweden for the purpose of forcing a nullification or amendment of an existing collective agreement between foreign parties as to a foreign work place, if the industrial actions according to the there applicable foreign law were unlawful in the relationship between the parties to the contract. According to this judgment, this was applicable even if no industrial action was actually taken against the targeted counterparty to the collective agreement. With lex Britannia, which came into force the 1st of July 1991, the lawmaker intended to limit the scope of application of the principle established in the Britannia case. Lex Britannia consists of three regulations that have been enacted in the Co-Determination Act, namely § 25a, § 31a and the third paragraph of § 42. The third paragraph of § 42 of the Co-Determination Act states that the provisions included in the first and second sentences in the first paragraph are only applicable when an organisation takes measures based on employment conditions to which the Co-Determination Act is directly applicable. The prohibition against industrial actions is applicable consequently only when the conditions of employment have such a tie to the Swedish labour market that the Co-Determination Act is directly applicable. Industrial actions consequently are not prohibited according to the first paragraph of § 42 of the Co-Determination

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Act in those cases in which a foreign employer conducts temporary operations in this country and an overall assessment demonstrates that the ties in Sweden are so weak that the Co-Determination Act cannot be viewed as directly applicable to the conditions of employment. The circumstances in the case at hand It can be seen from the investigation in this case that the Company was bound by two collective agreements with the Latvian Building Workers’ Union – a tie-in agreement regulating the terms and conditions of employment and containing provisions as to monthly wages, and a contract entailing that the tie-in agreement would be applicable to all Company workers posted outside of Latvia, regardless of labour union membership. The latter agreement also entails that the Latvian Building Workers’ Union was given the exclusive right to represent Company workers posted outside of Latvia, and that the Company agreed to not enter into other collective agreements with respect to the employment terms and conditions of the posted employees. The Labour Court found in its decision dated the 29 April 2005, no. 49/05, that the investigation presented in the case demonstrated that it was the Local Branch’s intent at the time of the eruption of the dispute to demand that the Company apply the employment terms and conditions in Byggnad’s collective agreement as well as a wage level of SEK 145 per hour. According to the Court, it could be ruled out that such an application as to the Company employees would be compatible with a simultaneous application of the terms and conditions of employment in the Latvian collective agreements. With such a relationship, and against the background that none of the Labour Unions had any members who were affected by the demands, it was viewed as established, according to the view of the Labour Court, that the objective with taking the industrial actions was for the Company to enter into a collective agreement with the Local Branch that would replace the existing collective agreements between the Company and the Latvian Building Workers’ Union, or in other words, nullify the Latvian agreements. It may be deemed proven that Latvian law entails that industrial actions for the purpose of achieving a nullification or alteration of a valid collective agreement are unlawful. Can damages be imposed directly under the provisions in the Co-Determination Act? The European Court of Justice has established in the Laval judgment that Articles 49 and 50 EC constitute impediments in this case as to applying the third paragraph of § 42 of the Co-Determination Act. In addition, the European

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Court of Justice has found that regulations, pursuant to which consideration is not taken as to whether a company from another member state is already bound by a collective agreement in its resident country, regardless of the content of that agreement, are discriminatory according to EC law. When it comes to national regulations in violation of Community law, the European Court of Justice has established in the judgments in the cases Simmenthal and Alonso (judgment of the 9 March 1978 in case 106/77, Simmenthal, ECR 1978, p. 629, Swedish special issue, vol. 4, p. 75 as well as judgment of the 7 September 2006 in Case C-81/05, Alonso, ECR 2006, p. I-7569) that a national court must disregard national regulations that are incompatible with EC law, without the court needing to request or wait for the national lawmaker to repeal such. From the judgment in the case Factortame (judgment of the 19 June 1990 in Case C-213/89, Factortame, ECR 1990, p. I-2433, Swedish special issue 1990 p. 435), it can be seen that any national legislation that can have as a consequence a weakening of the effect of Community law is incompatible with the requirements following from the character of Community law. It follows furthermore from the judgment that a national court may not apply a regulation that weakens the functional effect of Community law. The Labour Court makes the following assessment. The case law of the European Court of Justice consequently entails that the Labour Court is prevented from applying the third paragraph of § 42 of the Co-Determination Act, taking into consideration that the European Court of Justice has found that the provision is in conflict with Community law. A natural consequence of disregarding the provision in the third paragraph of § 42, according to the view of the Labour Court, is that the first paragraph in the aforementioned provision is to be applied. The application of this provision, in light of the case law of the Labour Court (AD 1989 no. 120), entails that Byggnads and the Local Branch have taken industrial actions in conflict with the prohibition as stated in the provision, and that the Swedish Electrician’s Union has taken sympathy actions in conflict with the first paragraph point 4 of § 41 of the Co-Determination Act, despite the fact that the duty to maintain the industrial peace existed. Hereof it follows, according to the Labour Court’s understanding, that the provisions regarding damage liability in the Co-Determination Act are to be applied and the Court consequently does not share the view of the Labour Unions that liability for damages cannot be based directly on the act. Section 54 of the Co-Determination Act prescribes that employers, employees and organisations that are in violation of this act, or of a collective agreement, are to compensate for the harm that has arisen. It consequently follows explicitly from the provision that it is the Labour Unions that are to be responsible for any eventual harm.

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The Labour Court now turns to an assessment of whether the application of the provisions concerning damages in the Co-Determination Act entails that the Labour Unions are to pay damages. Are the Labour Unions liable to pay economic damages to the Company? The Labour Court, with respect to the Company’s first ground for damages, has made the assessment that the Company’s claim as to economic damages is to be tried with an analogous application of the regulations concerning damages in the Co-Determination Act. With respect to the second ground for damages, the Court has found that these regulations are to be applied directly as the rule in the third paragraph of § 42 of the same Act is to be disregarded as discriminatory on the basis of nationality in conflict with the treaty. A fundamental prerequisite in general in order for the Labour Unions to be sanctioned to pay economic damages, however, is that the Company can demonstrate that it has suffered economic damages. The requirement of proven economic damages in order to receive such compensation, according to the opinion of the Labour Court, cannot be viewed as diminishing EC law’s effectiveness or discriminating against EC legal claims. The Labour Court chooses to first examine the question of whether the Company has demonstrated that it has suffered economic damages. The Company maintains that it lacks the ability to present complete evidence as to the harm, or that such can only occur with great difficulties. According to the Company, the Court therefore ought to estimate the harm to a fair amount in accordance with § 35:5 of the Code of Judicial Procedure. According to the Labour Unions, the Company has not proven that it has suffered any economic harm, and the conditions for applying the aforementioned rule reducing the burden of proof are absent according to their view. The Company, with respect to the petitioned compensation, states the following: Because of the industrial actions taken against the Company, it was forced to cease posting workers to Baltic, and Baltic was forced to terminate its ongoing construction projects. If the Company had not been prevented, due to the industrial actions, from fulfilling the posting of workers, the Company ought to have been able to make a profit comparable to at least five percent of the contract sums for Baltic’s projects, in an amount up to twenty-five million Swedish crowns with respect to the construction project in Vaxholm and SEK 3.4 million on the unpaid portion of the construction project in Djursholm, a combined total of SEK 28.4 million. A lost profit as to five percent of the contract amounts in the construction industry is not an abnormal level. The Company therefore requests that the Court, based on § 35:5 of the Code of Judicial Procedure, estimate the Company’s economic harm as five percent of SEK 28.4 million, which becomes SEK 1 420 000.

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The Company in this aspect cites the witness testimony of the Regional Head for the construction company, JM, Johan Sahlberg, and Fredrik Carlsson at Grant Thornton Sweden AB. The Company furthermore cites an investigation by Grant Thornton Sweden AB and excerpts from the trustee’s report in the Baltic bankruptcy. The Labour Court finds that the evidence the Company cites is based on Baltic’s contract amounts with respect to the two at issue construction projects, as well as that which is viewed as a reasonable profit margin within the construction industry. The Company has not given any reasons for why the Court should base its judgment on Baltic’s contract amounts and losses with the assessment of the harm the Company has suffered. As the information concerns Baltic, in other words, a separate company, according to the Labour Court’s understanding, it cannot without additional information be used as a basis for an assessment of the harm the Company has been caused, nor function as a starting point for a calculation of the profit margin. The Labour Unions have also objected that the profit margin within the construction industry cannot be used as a basis for an estimation of damages as the Company was a staffing agency, and not a construction company. The Labour Court finds that the investigation the Company has presented concerns the profit margin of companies conducting construction operations. The Company has certainly stated that it did not only conduct staffing operations, but that other tasks, such as building and construction project operations, were also included in its commission. According to the Company, these issues were discussed in connection with the negotiations as to signing the collective agreements, and Byggnad’s collective agreement was then considered applicable in the choice between the staffing collective agreement and Byggnad’s collective agreement. That which the Company now has stated, does not, according to the view of the Labour Court, lead to that the Company’s operations can be equated with the given construction company’s operations. No additional investigation by the Company has been presented. The Labour Court therefore finds that it is not possible to use the given profit margin as a basis for an estimation of the harm the Company has suffered. Taking into consideration that now stated, the Labour Court finds that proof based on the evidence as submitted by the Company that it has suffered harm in an amount up to the petitioned amount is absent in this investigation. The issue then becomes whether the requisites for applying the rule in § 35:5 of the Code of Judicial Procedure are fulfilled. According to § 35:5 of the Code of Judicial Procedure, where it is a question of an arisen harm and complete evidence cannot at all, or only with difficulty,

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be presented, the court may estimate the harm at a fair amount. Such a fair estimation may also be made if the evidence can be assumed to entail costs and inconveniences that are not in a reasonable proportion to the amount of the loss and the claimed damages concern a lesser amount. The regulation in § 35:5 focuses on cases in which it is difficult to determine the scope of the amount of damages, but it is clear that the plaintiff suffered harm, see Committee Report 1926:32 p. 261 and Heuman, BEVISBÖRDA OCH BEVISKRAV I TVISTEMÅL, 2005, p. 292. According to the opinion of the Labour Court, it may be viewed as evident that the Company has suffered harm as a consequence of the unlawful industrial actions. The rule concerning a lesser burden of proof that is in question with the assessment of the economic damages as claimed by the Company is the one found in the first sentence in the above-mentioned provision. The rule in the second sentence is only applicable, as can be seen from the wording of the statute, when the claimed damages concern a lesser amount. The limit as to the amount is not defined, but it is intended to be approximately one-half of the price base amount, see legislative bill, 1987/88:1, Department Report JuU 1987/88:14 as well as Fitger, RÄTTEGÅNGSBALKEN, pp. 35:61–35:63. The rule in the first sentence of § 35:5 consequently entails that a lessening of the burden of proof can be permitted in the event complete evidence concerning a harm cannot at all, or only with difficulty, be presented. According to that which can be seen from the legislative preparatory works (see NJA II 1943 p. 449), this encompasses those cases where, taking into consideration the nature of the harm, an investigation regarding the scope of the damages cannot be presented, as well as those cases where the extent can be investigated, but due to the circumstances, evidence concerning the evaluation of the damage cannot be presented or would be united with all too great difficulties. It can be seen furthermore from the legislative preparatory works that a party is not released from the obligation to present an investigation that can reasonably be brought. It can be seen from the case, NJA 2006 p. 367, that the injured party has the burden of proof for those circumstances that are decisive for the assessment as to fairness that the Court is to make. The Company has alleged that it cannot report calculated revenues and costs with respect to the period after year-end 2004, as such calculations only would be based on hypothetical assumptions as the Company, due to the industrial actions, was forced to terminate its ongoing construction projects. Furthermore, according to the Company, a period has now passed after the harms arose, making the calculation of lost profits for the years 2004 and 2005 more difficult,

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as well as the fact that the Company in addition nowadays conducts an entirely different type of operations. On this basis, and also because those persons who constituted the Company’s management during the fall of 2004 are no longer with the Company, it is difficult to obtain proof of the actual harm according to the Company. According to the understanding of the Labour Court, that certain difficulties exist for the Company to precisely determine the amount of the loss and present complete evidence as to the harm is natural. The Company, however, had filed the case already in December 2004 with the claims that the industrial actions should be declared unlawful and be terminated as well as claims for exemplary damages. The Company must have already then had strong reason to gather any evidence then available, even if the claim as to economic damages came to be presented later on during the litigation. Against this background, the Company has not cited support for assuming that the possibility did not present itself as to presenting adequate evidence that in any event would be able to give a base for an estimation with the support of § 35:5 of the Code of Judicial Procedure (compare NJA 2005 p. 180). The Company consequently has not produced the investigation that reasonably could have been brought. Therewith the requisites for applying § 35:5 of the Code of Judicial Procedure are not fulfilled. The Company’s claim as to compensation for economic damages shall therefore be denied. Should the Labour Unions be ordered to pay exemplary damages to the Company? The European Court of Justice has established that EC law constituted an impediment against the industrial actions of the Labour Unions in two aspects; with respect to the content of the contract demands posed, and as to the specific treatment of the Company in its capacity as a foreign legal subject. The industrial actions of the Labour Unions are therewith, in both these aspects, in conflict with the EC-treaty regulations concerning freedom of movement. As already seen, the Labour Court has found with respect to the first violation that the CoDetermination Act’s damage liability regulations as to exemplary damages are to be applied analogously. With respect to the second violation, according to the Court, these regulations are directly applicable. The Labour Unions maintain, in the event the Labour Court would come to this conclusion, that damage liability according to the Co-Determination Act requires the existence of negligence by the tortfeasor, and that they have not been negligent in such a manner that liability for damages is to come into question. According to the Company’s view, the Co-Determination Act does not impose any requirements as to negligence in order for damage liability to be found. In

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the event such a requirement should be viewed as existing, the Labour Unions according to the Company’s view have been grossly negligent. The Labour Court first tries the Labour Unions’ objection as to the requirement of negligence. Does the Co-Determination Act require negligence in order for damage liability to be imposed? The actual provisions of §§ 54 and 55 of the Co-Determination Act do not state that damage liability assumes intent or negligence. According to the wording of the Act, the party in violation of the Act is to compensate for the harm that has arisen, if nothing to the contrary follows from that stated in the subsequent paragraphs. An explicit limitation of the liability for damages with respect to subjective requisites, to only include situations in which a party lacks reason for its stance, in contrast can be found in § 57 of the Co-Determination Act, regulating the liability of labour organisations to pay damages for, among other things, an incorrectly invoked right of precedence with respect to the interpretation of a collective agreement. By the term “lacks reason”, according to the case law of the Labour Court, may be understood as including in part cases in which it was a question of entirely irrelevant objectives, in part cases of qualified misjudgements as to existing circumstances or the state of the law. The legislative preparatory works to the Co-Determination Act state that the absence of intent can be a factor of considerable significance with the assessment as to damages (legislative bill 1975/76:105 attachment 1 p. 302 f. and Department Report InU 1975/76:45 p. 49). In contrast, no statements can be found as to whether any subjective requisites need to be fulfilled in order for damage liability in general to come into question. As to the interpretation of collective agreements, claims as to exemplary damages for a breach of a collective agreement in certain of the older cases have been denied where employer parties could not be said to have lacked reasons for their stance (see AD 1976 no. 134 with there-in given references). There are also cases concerning unintentional violations of collective agreements in which the Labour Court considered whether the employer, in its application of the provisions in a collective agreement, handled the issues “in a manner that could be expected with a normal, careful management of the system of regulations of that actual type” and consequently not awarded exemplary damages for breaches of collective agreements other than where the error in application “went beyond the boundary for that which can be seen as excusable” (see AD 1987 no. 40, compare AD 2009 no. 76).

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In accordance with the view of the Labour Court, there is no support in the Court’s case law for the assertion that negligence is a prerequisite in order for damages in general to be able to come into question. As can already be seen from the wording of the statute, it is sufficient that a violation of the act has arisen for damage liability to be imposed. With the application of §§ 54 and 55 of the CoDetermination Act, the Court often simply finds that violations against the Act or collective agreements exist, and that exemplary damages are therefore to be paid (see, for example, AD 2006 no. 10 and AD 2008 no. 5 with respect to liability for damages because of unlawful industrial actions). It is a separate issue that the tortfeasor’s degree of negligence or intent, as well as other circumstances, is regularly taken into consideration with the determination of the level of exemplary damages, and with an assessment as to fairness in accordance with § 60 of the Co-Determination Act regarding whether damages should be lowered or entirely nullified. It can also be noted here that it follows from the case law of the European Court of Justice that national damage liability regulations may not render liability for damages dependent upon whether the bodies found to have committed the violation acted intentionally or negligently, if there exists a clear violation of EC law (see the judgment in the joined cases, Brasserie du pêcheur and Factortame). The determination of exemplary damages A remaining question then is whether the exemplary damages in this case are to be entirely nullified, and if not, at what amount the damages should be set. In the event damage liability is found, the Labour Unions maintain that a reduction to a zero amount should be made on the basis of the absence of negligence on their part. They furthermore in summary argue the following: The state of the law did not indicate that the industrial actions would be unlawful. The Labour Court in its case law in a large number of cases has lowered damages on the basis of such circumstance that the state of the law was not clear. They could not have possibly foreseen the outcome of the case before the European Court of Justice. According to them, there was no reason to assume that the posting of workers directive would be interpreted as a norm-giving directive that would prevent better terms and conditions than the minimum conditions, and that in conflict with its wording, could affect the right to take industrial action. They furthermore have followed the explicit legal regulation in the third paragraph of § 42 of the Co-Determination Act constituting a part of lex Britannia, and whose compatibility with EC law was treated thoroughly in different legislative preparatory works in which the conclusion was drawn that lex Britannia did not conflict with EC law.

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The Company, who finds that any reason for a reduction is absent, briefly states the following: The Labour Unions acted grossly negligent by demanding farreaching contractual terms and taking industrial actions, despite the fact that the Company in its objection based on the existence of the duty to maintain the industrial peace argued that the contract demands were unlawful and that the industrial actions would be in conflict with EC law. Lex Britannia was based on a questionable discrimination of foreign legal subjects, whose compatibility with international law since its inception has been put into question. The Labour Unions disregarded the “warnings” that the Company presented in its objection concerning the existence of the duty to maintain the industrial peace. The Labour Unions had alternative courses of action available, for example, limiting the contract demands clearly to minimum wages or canceling the industrial actions awaiting a preliminary ruling from the European Court of Justice. The Labour Court makes the following assessment. The Labour Court, as noted previously, has to take into consideration the principle of effectiveness, in other words, the requirement that EC law is given functional effect in all the member states. This requirement entails, inter alia, that with the application of the national law concerning damages, the principle of legal certainty can be taken into consideration, but that the requisites that are in place for the right to damages may not be less favorable than those concerning similar national claims for damages, nor be formulated so that it in practice becomes impossibly or unreasonably difficult to receive damages. The Labour Court consequently has to take into consideration that now stated with the application of the provisions in the Co-Determination Act as to damages. It follows from the main rule as stated in § 54 of the Co-Determination Act that an organisation that is in violation of the Act is to compensate for the harm that has arisen, and § 55 of the same act states that with the assessment of whether, and to what extent, harm has arisen to a party, consideration is also to be taken to the party’s interest in that the regulations of the Act, or of a collective agreement, are observed, and to other circumstances of other than a pure economic significance. According to the first paragraph of § 60 of the Co- Determination Act, which is applicable to both exemplary and economic damages, an award of damages can be lowered or entirely nullified if fair. According to the legislative preparatory works to the Co-Determination Act, exemplary damages are to be at such a level that the respect for the regulations is maintained. A reduction of exemplary damages therefore is not to come into question in conscious and/or flagrant cases. According to the legislative preparatory works to the provision, the regulations concerning a reduction of an award of damages ought to be invoked when the violation appears as more excusable, or in any event, less blameworthy, for example, if it was justified to raise doubts as to the existence of an obligation according to the Act or where

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the employer faced a more difficult assessment in the choice between different courses of action (see legislative bill 1975/76:105, attachment 1, p. 424.). An assessment of the facts as a whole and of all the influencing circumstances in the individual case is to be made. As the Labour Court has previously stated, the industrial actions at issue were not in conflict with applicable national regulations. They constituted, however, clear violations of EC law. The industrial actions were underway during a relatively long period, and were not terminated before the construction project was terminated and the posted workers had left the country. It is obvious that the state of the law with respect to the issues raised in the case was not clarified until and with the European Court of Justice’s judgment. As mentioned earlier, however, the European Court of Justice in the Laval judgment has not limited the judgment’s effect in time. The judgment may therefore be seen as having retroactive effect, and consequently, applicable to the violations at issue taken prior to the judgment. The European Court of Justice, in the cases Brasserie du pêcheur and Factortame, has stated that a member state’s liability for damages cannot be limited to only include those harms that have arisen after a judgment has been issued by the Court in which a violation of the treaty in the question has been established. This would namely entail that the right to an award of damages according to the Community’s legal system would be jeopardized. According to the European Court of Justice, this would also be in conflict with the principle of effectiveness, where an award of damages is made dependent upon the requirement of that the court previously had established such a violation of EC law. The rights for an individual that follow from EC legal provisions having direct effect in the member states’ national legal systems cannot be made dependent, according to the European Court of Justice, upon that the Court has issued a judgment with respect to eventual treaty violations (paragraphs 94 and 95). Even if the state of the law was not established, there was reason according to the view of the Labour Court for the Labour Unions to consider whether the industrial actions notwithstanding were consistent with EC law. The Court considers herewith particularly the circumstance that the Company in its bjections based on the existence of the duty to maintain the industrial peace xtensively stated in the grounds for its stance that the industrial actions were unlawful according to EC law. The objections cannot be seen as having been presented in bad faith, but rather just the opposite, to have been well founded. The Labour Court has maintained that high demands must be placed on the labour market organisations when it comes investigating, with exactitude and care, whether a planned industrial action is not prevented by an eventual arising duty to maintain the industrial peace (see AD 1977 no. 150; compare AD 2008 no. 5). The same view ought to be applied, according to the view of the Labour

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Court, when it comes to those impediments that EC law can potentially lay down. The question furthermore is whether it ought to be of any significance that the Labour Court at a subsequent stage, when the industrial actions already had been taken, in its interlocutory decision did not find that there was probable reason for that the industrial actions were unlawful. In its decision, this Court stated that based on the then existing investigation, it could not draw any sufficiently certain conclusions as to the relationship of the industrial actions to the EC legal regulations. The Court’s majority denied the Company’s claims and the consequences of that decision were that the industrial actions could continue. According to the Labour Unions, this circumstance ought to also be weighed in with the assessment now being made. The Labour Court’s interlocutory decision entailed, however, that the Labour Court did not with any high degree of certainty express itself in the question as to the permissiveness of industrial actions. It ought not therefore to be attributed any significance in this context. According to the opinion of the Labour Court, any contributory negligence by the Company to the harm that the industrial actions caused cannot be viewed as existing. The Labour Court finds, after an assessment of the facts as a whole and of the circumstances in the case, that the circumstances in connection with the taking of the industrial actions by the Labour Unions were not such that the organisations can be released from the liability of paying exemplary damages to the Company. The Labour Court now finally has to determine in what amount the exemplary damages are to be awarded. The Company has petitioned that the Labour Court order Byggnads and the Local Branch to pay exemplary damages of SEK 500 000 each, as well as that the Swedish Electrician’s Union pay SEK 350 000 in exemplary damages to the Company, as well as interest. No amount has been attested as reasonable in itself, however the claims for interest have been attested. The Labour Court determines that exemplary damages are to be set at SEK 200 000 to be paid by Byggnads and the Local Branch, respectively, as well as at SEK 150 000 to be paid by the Swedish Electrician’s Union. The request for a preliminary ruling As seen from the Court’s reasoning, the Labour Court has found that the content of the European Court of Justice’s preliminary ruling in this case, together with the general principles as to sanctions for violations of EC law that have been established in the case law of the European Court of Justice, provide sufficient

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guidance with the assessment of the issues of damages now at hand. According to the view of the Labour Court, there consequently is no need to obtain a preliminary ruling from the European Court of Justice. Summary The Company petitioned that the Labour Court declare that the industrial actions that the Labour Unions took against the Company are unlawful and are to be terminated. As the European Court of Justice in its preliminary ruling determined that the industrial actions violated EC law and the Labour Unions have accepted that they were unlawful, it is not of considerable significance for the Company to receive a declaratory judgment as to the lawfulness of the industrial actions according to the Labour Court’s assessment. The Labour Court has also found that all of the industrial actions may be seen as having ceased, albeit that with respect to Byggnads’ industrial actions, this occurred in a formless manner. That the European Court of Justice in its preliminary ruling found that the industrial actions were unlawful has been thereafter the basis for the Labour Court’s assessment as to the Company’s claims for damages. With respect to the first of the Company’s grounds for its claim for damages, referring to the content of the contract demands, the Labour Court first finds that the Labour Unions can be held liable for the violations of Article 49 EC at issue, as that article may be seen as having horizontal direct effect between the Labour Unions and the Company. The Court, in addition, has found that the consequences of a violation of the treaty is to be an award of damages, and that the provisions in the Co-Determination Act as to exemplary and economic damages can be applied analogously. With respect to the Company’s second ground related to the circumstance that the Company was already bound by collective agreements, the Labour Court has found that the provision in the third paragraph of § 42 of the Co-Determination Act entailing that the industrial actions, despite being bound by a collective agreement, were lawful, are discriminatory in conflict with the treaty according to the European Court of Justice’s preliminary ruling and therefore is not to be applied. A natural consequence of the recently mentioned rule not being applied is that the industrial actions, with a direct application of the other regulations in the Co-Determination Act and in light of the case law of the Labour Court, were unlawful, and that the Act’s damage liability regulations are to be applied. The Labour Court thereafter has tried whether the Company’s claims for damages can be granted with an application of the provisions in the CoDetermination Act and by observing the EC legal duty of loyalty, principle of effectiveness and principle of proportionality. With respect to the Company’s claim as to economic damages, the Court finds that it may certainly be viewed

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as evident that the Company has suffered economic harm as a consequence of the industrial actions, but that the Company has not been able to prove that it has suffered economic harm to the amount claimed. Neither has the Court found that the requisites necessary in order to apply the specific rule reducing the burden of proof in § 35:5 of the Code of Judicial Procedure are fulfilled. The claim as to economic damages therefore has been denied. With respect to the claim for exemplary damages, the Labour Court has first determined that the Co-Determination Act does not place any requirements of negligence in order for damage liability in itself to exist, and thereafter has set exemplary damages to be paid by Byggnads and the Local Branch, respectively, at SEK 200 000 and by the Swedish Electrician’s Union at SEK 150 000. The Labour Court finally finds no reason to obtain a preliminary ruling from the European Court of Justice as to the issue of damages. The trial costs and legal fees The Labour Unions have requested that the Labour Court, based on § 5:2 of the Labour Disputes Act, order each party to bear its own trial costs and legal fees. They argue that they, following an explicit Swedish legal rule and thereto having had the support of the Labour Court’s interlocutory decision, may be seen as having had fair reason to have the dispute tried. The Company’s view is that there is no reason to order that each party bear its own trial costs and legal fees, but rather, according to its view, the main rule in the Code of Judicial Procedure as to the losing party’s responsibility for costs and fees should be applied. The Company argues that it would be in conflict with the requirement that EC law be given functional effect in the event an injured party does not receive its trial costs and legal fees compensated. Even in this question the Labour Court is obligated to take into consideration the EC legal principles of equivalence and effectiveness. The Labour Court makes the following assessment. According to the first paragraph of § 5:2 of the Labour Disputes Act, the trial costs and legal fees in a labour dispute can be set off between the parties, in other words, each party may be ordered to bear its costs, if the party that lost the case had fair reason to have the dispute tried. This provision constitutes an exception from the main rule in § 18:1 of the Code of Judicial Procedure, that the losing party is to compensate the opposing party his or her trial costs and legal fees. According to the first paragraph of § 5:3 of the Labour Disputes Act, this provision in the Code of Judicial Procedure is also applicable in a labour dispute.

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The background to the specific set-off provision in the Labour Disputes Act is that the main rule as to the liability for trial costs and legal fees according to the Code of Judicial Procedure was considered to affect all too strongly an individual party’s choice as to litigating labour disputes. At times, the rule could have a result that appeared altogether too harsh against the losing party (see legislative bill 1974:77 p. 124). The intent with the rule is that it should be applicable both to legal and to evidentiary issues that are uncertain (see, inter alia, AD 1981 no. 46). Fair reason to have the dispute tried can be that both parties, when they consist of organisations, have a mutual interest in an authoritative interpretation of the state of the law, regardless of outcome. It can also be a question of an outcome that is the result of circumstances that previously had been unknown to the losing party or that the state of the law was difficult to assess. It can be noted that it can be seen from the case law of the Labour Court that it is relatively unusual that the circumstances are such that a set-off in accordance with the now mentioned provision is allowed. This is particularly true with respect to cases involving other than collective agreement disputes. The circumstances in the present case are without doubt special, such as that a preliminary ruling has been obtained in order to receive guidance with the assessment of the lawfulness of the industrial actions in accordance with EC law. According to the view of the Labour Court, the situation, however, is not in any decisive manner different from when the Labour Court, absent such a preliminary ruling, decides a dispute after a typical assessment of evidentiary and legal issues that can be so complicated and hard as to make any prediction as to the outcome difficult. Against this background, and taking into consideration the Labour Court’s above described case law, as well as particularly the circumstance that on one party’s side there was no organisation, the Court makes the assessment that the circumstances in this case are not such that the set-off rule ought to be applied. It can also be noted here that with respect to the Company’s petition for a declaratory judgment, which was not tried on its merits but rather dismissed, the set-off rule is not applicable (see AD 1995 no. 131). The allocation of the trial costs and legal fees consequently ought to occur according to the provisions in § 18:4 of the Code of Judicial Procedure, which contains the rules as to how the liability for trial costs and legal fees is to be allocated when a case contains several claims and the parties win certain of these. As the Company’s petition for a declaratory judgment was dismissed, the Company is to be considered the losing party in this issue in accordance with § 18:5 of the Code of Judicial Procedure. The Company in addition has completely lost its claim as to economic damages, but has won its claim as to exemplary damages.

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It can first be ascertained that the fundamental issue at dispute in the case that incurred the majority of the costs, namely the compatibility of the industrial actions with EC law, has had significance for both the claim for a declaratory judgment as well as the petition for an executory judgment and that the Company substantively won this issue. The costs for the part of the investigation concerning the question of whether Byggnads and the Local Branch terminated the industrial actions, which only had significance for the petition for a declaratory judgment, may be viewed as minor in this context. The Company, however, has also entirely lost its claim as to economic damages. This circumstance ought naturally have significance for the allocation of the trial costs and legal fees, even if the investigation in this respect has not been particularly extensive. The Company consequently to a certain extent ought to have reduced compensation for its trial costs and legal fees. The Company petitions for compensation in a total amount of SEK 3 051 444, of which SEK 160 739 constitutes expenses for expert legal opinions, travel costs, costs for witnesses etc., which costs, taking into consideration the scope of the case, in themselves may be viewed as reasonable. With respect to the outcome in the case, the Labour Court finds that the Company ought to receive compensation of a combined total of SEK 2 129 739. Of that amount, SEK 2 000 000 is for fees and the remaining part compensation for expenses. With respect to the expenses, deductions have been made for such costs that are related to the Company’s claim as to economic damages. JUDGMENT 1. The Labour Court dismisses the petition filed by Laval un Partneri Ltd. for a declaratory judgment. 2. The Labour Court denies the claims made by Laval un Partneri Ltd. as to economic damages. 3. The Labour Court denies the request that the Labour Court obtain a preliminary ruling from the European Court of Justice in the question as to the liability of the Labour Unions for damages. 4. The Labour Court orders Svenska Byggnadsarbetareförbundet to pay exemplary damages to Laval un Partneri Ltd. of two hundred thousand Swedish crowns (SEK 200 000) as well as interest in accordance with § 6 of the Interest Act on SEK 150 000 from 9 December 2004 as well as on SEK 50 000 from 15 June 2008 until payment is made. 5. The Labour Court orders Svenska Byggnadsarbetareförbundet, Local Branch 1, to pay exemplary damages to Laval un Partneri Ltd. of two hundred thousand

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Swedish crowns (SEK 200 000) as well as interest in accordance with § 6 of the Interest Act from 9 December 2004 until payment is made. 6. The Labour Court orders Svenska Elektrikerförbundet to pay exemplary damages to Laval un Partneri Ltd. of one hundred fifty thousand Swedish Crowns (SEK 150 000) as well as interest in accordance with § 6 of the Interest Act from 8 December 2004 until payment is made. 7. Svenska Byggnadsarbetareförbundet, Local Branch 1, and Svenska the Swedish Electrician’s Union by one-third each are to compensate Laval un Partneri Ltd. for trial costs and legal fees of two million one hundred twenty nine thousand seven hundred thirty nine Swedish crowns (SEK 2 129 739), of which SEK 2 000 000 constitutes attorneys’ fees, as well as interest in accordance with § 6 of the Interest Act on the first named amount from the day of this judgment until payment is made. Members of the Judging Panel: Inga Åkerlund, Sören Öman (dissenting and concurring), Kurt Eriksson (dissenting and concurring), Jan Nordin, Anders Hagman, Lennart Olovsson (dissenting and concurring) and Kjell Eriksson. Secretary: Kristina Andersson

Attachment 1 to the Judgment in Case A 268/04 Opinion of Judging Panel Member Sören Öman, concurring in part and dissenting in part I am in agreement with the majority as far as concerns the assessment and conclusion with respect to the Company’s petition for a declaratory judgment. As does the majority, I find that there are no explicit Swedish statutory provisions that would, even after an interpretation consistent with the treaties, give the Company the right to damages from the organisations based on the industrial actions in violation of the treaties, and neither does there exist support for such a right to damages in the Swedish case law interpreting domestic law. The liability of the Labour Unions for damages must therefore in my opinion be solely based on that required in accordance with EC law. On the other hand, I am not convinced by that which the majority has stated as to what is required in accordance with EC law in the question of damage liability between private parties in the event of a violation of a treaty of the type at issue here. I find, for reasons stated below, that it is not necessary to take a stance as to whether EC law requires that damage liability should exist in a case such as this. If EC law does require such, this requirement according to my view cannot

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entail more than that the damage liability regulations existing in the Act (1975:580) on Co-Determination in the Workplace (the “Co-Determination Act”) should, taking into consideration the EC legal duty of loyalty, principle of effectiveness and the principle of proportionality, be applied in a manner comparable as when a Swedish labour union has taken an industrial action unlawfully according to the Act against a Swedish employer. As does the majority, and for the reasons the majority has stated, I find that the Company has not demonstrated in the case that it has suffered any economic harm and that the regulations in § 35:5 of the Code of Judicial Procedure cannot be applied. I also consequently come to the conclusion that the Company’s claim as to compensation for economic harm should be denied. In the issue as to the claimed exemplary damages, I make the following assessment. As does the majority, I find that it is evident that the state of the law as to the issues at hand in the case was not clarified until and with the judgment of the European Court of Justice. I also find that the Swedish lawmaker has enacted explicit statutory provisions that directly have the purpose of allowing such industrial actions against foreign companies as those at issue in the case that are violations of the treaties (legislative bill 1990/91:162) and that the State, as a consequence of the judgment of the European Court of Justice, has now commenced legislative changes in order to cure the demonstrated deficiencies in the Swedish legislation (committee mandate 2008:38, committee report 2008:123 and legislative bill 2009/10:48). According to my opinion, therefore, the circumstances are such that an application of the provisions regarding damage liability in the Co-Determination Act entails that no exemplary damages should be awarded, in other words, any eventual exemplary damages should be entirely nullified. I would have applied these regulations in the same manner whether it had been a question of a Swedish instead of a Latvian company, and regardless of whether it had not been an EC law but rather a domestic superior norm, for example, a provision in a constitutional act, that entailed that damage liability in itself existed. In the previous case law of Labour Court, exemplary damages for violations against the regulations in the Co-Determination Act have not been awarded where the Court clarified a legal status that had earlier been unclear (see, for example, AD 1979 no. 118, AD 1980 no. 72 and AD 1981 no. 8 as well as AD 1979 no. 149, AD 1980 no. 34 and AD 1981 no. 125). I find that such a typical application of the provisions regarding damage liability in the Co-Determination Act is also compatible with the EC legal duty of loyalty, the principle of effectiveness and the principle of proportionality. The following circumstances are of significance according to my view in addition to that which has already been stated as to the actions of the Swedish lawmaker.

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Private parties who are affected by industrial actions that are violations of the treaties have the possibility to very quickly – in several days or one week – petition a court for an order that the industrial actions are to cease. Such orders are routinely followed in the Swedish labour market. A private party who has been affected by industrial actions that are violations of the treaties can, in the event of a sufficiently clear violation of the treaty, as a consequence thereof be harmed, and any proven or fairly estimated economic harm is to be compensated by the State, alternatively possibly by the party who has taken, caused or supported the industrial action. A party who is subjected to industrial actions that are violations of the treaties, such as the Company, consequently has effective possibilities with the court’s assistance to receive a quick cessation of the industrial actions, and in addition, receive all economic harm compensated. As far as known, no comparable industrial actions that are violations of the treaties have been commenced on the Swedish labour market after the judgment of the European Court of Justice in the preliminary ruling. My conclusion consequently is that even the Company’s claim as to exemplary damages should be denied. When it comes to the Company’s claim as to trial costs and legal fees, taking into consideration the conclusion the majority reached in the matter, I come to the same conclusion as the majority. Attachment 2 to the Judgment in Case A 268/04 Opinion of Judging Panel Member Kurt Eriksson, concurring in part and dissenting in part I dissent when it comes to the amount awarded of exemplary damages for the following reasons. The majority has found that the Labour Unions are obligated to pay exemplary damages to Laval for a violation of 49 EC and for a violation of the Britannia principle in the Co-Determination Act. I agree with the majority that exemplary damages should be awarded for a violation of the Britannia principle, but not for a violation of the treaty. The EC-treaty is directed primarily to the member states. It therefore is not a given that statements made in judgments by the European Court of Justice as to the member states’ liability for damages as against private parties in the event of a violation of a treaty by the state can directly be transferred to the situation

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in the case concerning damage liability between private parties in the event of a violation of a treaty. As is the majority, I am of the opinion that Laval is entitled to compensation for proven economic harm, which ought to be completely sufficient in order for EC law to receive effect in accordance with the duty of loyalty - or principle of solidarity. Exemplary damages present similarities with damages “of an exemplary nature”. The judgment in the cases, Brasserie du pêcheur and Factortame, concerned member state violations of Community law. A question in the case concerned damages “of an exemplary nature” in accordance with English law. That type of damages could be awarded when it had been established that the concerned public governmental authorities had acted in a manner that is excessively invasive, arbitrary or in violation of a treaty or constitution. As such an action can give rise to or aggravate a violation of Community law, the granting of damages “of an exemplary nature” may not be excluded according to the European Court of Justice within the framework for a claim based on Community law when such damages can be awarded within the framework for similar claims that are based on the national law. The reasoning is approximately the same in the judgment in the case Manfredi v. Lloyd. If specific damages can be awarded in a case according to the national law, it must be possible to do so in similar cases where the case is brought based on the Community’s competition regulations. The case concerned consequently competition law and where the applicable articles in the treaty directly are directed towards companies. The national court’s question concerned whether 81 EC entails that a court, when it finds that the compensable amount of damages according to the national law is lower than the economic advantages for a company violating 81 EC, is to award ex officio any third party who has suffered harm an increased award of damages as sanctions against that company. The issues in both judgments concern specific situations. The one concerned proceedings that most closely can be described as misuse of governmental authority, while the other concerned insufficient national damage liability regulations in order to prosecute disloyal competition. Certainly the European Court of Justice’s statements in the cases are more of a general character, but despite this, it is highly doubtful that these can lead to the conclusion that the EC legal principle of equivalence truly requires that the Co-Determination Act’s regulations concerning exemplary damages be applied analogously to a violation of 49 EC. I am of the view that such is not the case. This means that exemplary damages are only to be awarded for a violation of the Britannia principle. Normally, in a proceeding that simultaneously constitutes a violation of two laws, for example a dismissal in violation of the act concerning employment protection and the act as to employee representatives, the employer is ordered to pay increased exemplary damages, however, not double. The increased damages as set by the majority for the Labour Unions should therefore be reduced by one third. Outvoted in this respect, I am as to the remaining issues in agreement with the majority.

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Attachment 3 to the Judgment in Case A 268/04 Opinion of Judging Panel Member Lennart Olovsson, dissenting in part and concurring in part I agree with that which Member Sören Öman has stated in his dissenting and concurring opinion except with respect to the trial costs and legal fees. It can be seen from the first paragraph of § 5:2 of the Labour Disputes Act that the court can order that each party bear its costs when the losing party with respect to the nature of the case has had fair reason to have the dispute tried by a court. A reason, inter alia, for this provision according to the legislative preparatory works is that certain cases have great interest beyond that of the individual case. It appears obvious to me that the outcome of this case is of great interest for the entirety of the Swedish labour market. Even if this provision has the greatest significance in collective agreement disputes, from the legislative preparatory works it can also be seen that it can be applied in other cases. By way of example is mentioned where the outcome in a case depended on circumstances that from the beginning were unknown to the losing party or where the state of the law was very difficult to assess. Similar to the Court’s majority, I find that the Swedish lawmaker enacted explicit statutory provisions that are directly for the purpose of allowing such industrial actions as at issue in this case. This dispute, in addition, has been the object of assessment by the Labour Court previously in the interlocutory decision issued in December, 2004. The Court then found that the Company’s assertion that the industrial actions were unlawful was not probable. It is also particularly unusual that Swedish labour legislation is in direct conflict with EC law. That EC law has shown itself to have a content that Sweden’s Government and Parliament did not realize must be seen as entailing that the state of the law was very difficult to assess even for private parties. I find that the situation in this case is a clear example of when a party has had fair reason to have the dispute tried and that each party therefore ought to bear its own trial costs and legal fees.

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Index age, equality law 120–1, 124, 127, 155 Amsterdam Treaty see under equality law anti-discriminatory law see equality law Aristotle 114, 125, 154 Arrowsmith, S 95–6, 97, 98, 99 Atkinson, J 157–8 BALPA see British Airline Pilots’ Association (BALPA) case bargaining see collective bargaining Barnard, C 22, 155, 164, 177, 179 Beveridge system 2 British Airline Pilots’ Association (BALPA) case 16–17, 60–1 Christensen, A 13, 116 CLS see under core labour collective action, right to 5–6, 57–75 BALPA case 16–17, 60–1 basic issues 57–8 collective bargaining 65 Community Charter of the Fundamental Social Rights of Workers 67 ECJ 69–71 EU Charter of Fundamental Rights 68 European Convention on Human Rights and Fundamental Freedoms 63 European Court of Human Rights 63–6 European Social Charter 61–3 freedom of association 57, 58, 60, 63 ILO Conventions Nos 87 and 88 58–9 supervisory bodies 59–60 legal systems 57–8, 72–5 convergence 72–3 divergence 73–4 summary 74–5 posting of workers see posting of workers, Laval quartet proportionality 67, 71, 74 strike, right to 57, 60, 61, 62, 63–5, 66, 67, 69, 72, 73, 74 ibid Treaty on the European Union 68–9 collective bargaining public procurement see under public procurement right to 65 Collins, H 22, 154

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Community Charter of the Fundamental Social Rights of Workers 15, 124–5 collective action, right to 67 ILO and 38–9, 40 comparative labour law developments 153–6 contractual protection and employment protection 162–8 core labour rights, flexicurity, equal treatment 177–8 Standards (CLS) 30, 31, 32 De Vos, M 24–5, 181 Decent Work objectives 30, 32 Declaration on Fundamental Principles and Rights at Work 30 direct/indirect discrimination equality law 126–9 flexicurity, equal treatment 170–1, 179 parental leave 141–3 disability, equality law 120–1, 124, 127, 155 Dunlop, JT 20 environmental protection 97, 98 equal pay 116 equal treatment principle 116, 187 equality law 8–9, 23, 113–36 Amsterdam Treaty 114, 118–19 basic issues 113–15, 125–6 burden of proof, reversal 129 comparative labour law developments 153–6 comprehensive 113, 120, 155–6 concept evolution 127–8 direct/indirect effect 126–9 equal pay 116 equal treatment principle 116, 187 EU Charter of Fundamental Rights 124–5 formal equality 113, 114–15, 154 gender equality 122, 124–5 historical background 116–17 Lisbon Treaty 122–4, 131, 132, 133 market hegemony 132–3 non-instrumental practice 130 normative change 115–16 origins 115–17 positive action 129–30 post-Amsterdam 119–22, 131 pre-Amsterdam 117–18 religion/belief/disability/age/sexual orientation 120–1, 124, 127, 155

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sexual discrimination 118, 119–20, 121–2, 128, 130, 155 stages 113–14, 153–4 substantive equality 113, 114–15, 120 summary 135–6 Third Way approach 133 transformative 113, 120, 134–5 EU Charter of Fundamental Rights collective action, right to 68 ILO and 40 EU labour law see under labour law European Convention on Human Rights and Fundamental Freedoms 63 European Court of Human Rights 63–6 European Social Charter 61–3 flexicurity, equal treatment 11–12, 24, 153–81 basic issues 153, 178–9 comparative labour law developments 153–6 contractual protection and employment protection 162–8 core labour rights 177–8 definitions 157–60 direct/indirect discrimination 170–1, 179 employability 167–8, 181 employees, notions of 174, 175–6 fixed-term contracts 165–7, 168–9, 170, 179–80 flexible firm 157–8 flexible workers 169–70, 180 globalisation 181 legal discourse 156–7, 160 non-discrimination principle 168–73, 179– 80 numerical/functional/financial flexibility 158, 161–2 open-ended contracts 162–4 part-time workers 170, 172, 179 peripheral/external groups 157–8 personal scope of labour law 174–8, 181 priorities 160–1 summary 178–81 temporary agency workers 50, 168, 169, 171–3 see also national sickness insurance system (Sweden), flexicurity Fredman, S 132–3, 134 fundamental rights 15–25 BALPA case 16–17, 60–1 EU Charter of Fundamental Rights 15, 124–5 Laval quartet 6–7, 15–20, 77–88 multi-level industrial relations framework 20–5 German Pension Case see under public procurement globalisation flexicurity 24–5, 181

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ILO 29–31 Hall, P 21 Hepple, B 22, 113–20 ibid, 153–4, 179, 180, 181 ILO acquis see International Labour Organisation (ILO) acquis individualised/family-based rights, tension 184 industrial action see strike, right to industrial relations, multi-level framework 20–5 International Labour Organisation (ILO) acquis 3–5, 27–55 Charter see under Community Charter of the Fundamental Social Rights of Workers collective action see collective action, right to, ILO Conventions/Recommendations 28–9, 39–40 Core Labour Standards (CLS) 30, 31, 32 Decent Work objectives 30, 32 Declaration on Fundamental Principles and Rights at Work 30 EU Charter see under EU Charter of Fundamental Rights EU labour law 27–8 contradicted by ILO norms 52–3 Conventions adopted 41–3 as interpretative guidance 51–2 unadopted 44–8 maternity leave 49 occupational health and safety 41–3 requirements, fulfilment 48–51 temporary agencies 50 working/employment conditions 50 EU legal obligations 34–40 basic issues 34–5 Community Charter see under Community Charter of the Fundamental Social Rights of Workers EU Charter see under EU Charter of Fundamental Rights general principles 37–40, 54–5 membership prerequisite 35 Social Chapter (TFEU) 37 summary 53–5 EU relationship 31–40 policy statements 32–3 ratifications 33–4 globalisation 29–31 importance 28–31 mandate/purpose 28–9 membership 29 tripartite 28 occupational health and safety 41–3 posting of workers, Laval quartet 82–3 Social Chapter (TFEU) 37 temporary agencies see under temporary agency workers working/employment conditions 50

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279

just distribution pattern 184, 196–7

occupational health and safety 41–3

Kenner, J 176–7, 181 Kunzlik, P 95–6, 97, 98, 99

parental benefit, free movement of families and 12–14, 24, 183–97 basic issues 183–4 childbirth benefits 188–90 EU norms and 188 families moving from Sweden 193–4 moving to Sweden 191–3 working/living in different member states 194–5 family benefits 188–90 individualised/family-based rights, tension 184 just distribution pattern 184, 196–7 market-functional pattern 184 maternal/paternity benefits 189 migrants, assimilation of benefits/income/ facts/events 187–8 movement and social benefits, right to 185–6 normative patterns in normative field 13, 184, 196–7 protection of established position, pattern 184, 196 social security coordination 186–8 summary 195–7 Swedish parental benefit 190–1 parental leave, pregnancy/maternity 9–11, 137–52 background 137 basic issues 138 direct/indirect discrimination 141–3 less favourable treatment (national law) comparitor 144–6 exemption rule 146–7, 151 prohibition 143–4 maternity leave EU labour law 49 related discrimination 139–40, 142–3 pregnancy discrimination comparator requirement 140–1 direct/indirect discrimination 141–3 strict prohibition 138–40 Swedish Parental Leave Act EU/national law interaction 147–8, 151–2 legislative approach 148–51 posting of workers, Laval quartet 6–7, 15–20, 77–88 basic issues 77, 84–5 cases 77, 79–80 collective action, right to 87–8 Directive 77–8 enforcement 87 EU law amendments 83–4 European Court of Human Rights 81–2 ILO Committee of Experts 82–3 Member States 80–1 minimum protection principle 85–6

labour law comparative developments see under flexicurity, equal treatment EU 3 see also International Labour Organisation (ILO), EU labour law multi-level industrial relations framework 20–5 public procurement see public procurement, labour law Swedish 2 Laval quartet 6–7, 15–20, 77–88 Lisbon Treaty 122–4, 131, 132, 133 Maduro, AG 134 maternity leave see parental leave, pregnancy/ maternity migrants, assimilation of benefits/income/facts/ events 187–8 multi-level governance 20–5 multi-level industrial relations framework 20–5 national sickness insurance system (Sweden) 14–15, 24, 199–226 background 204–6 basic issues 203–4 changes 199–200 early retirement 200–1, 207–8 flexicurity early retirement/sickness insurance 200–1 effect of reforms 221–6 moving between national systems 203 see also flexicurity, equal treatment invalidity, concepts 203 Public Employment Agency 221, 224–6 reforms (2008) background 202–3, 204–6, 208–9 debate, post-2006 212–13 debate, pre-2006 211–12 effects 211, 219–20 intent 209–10 point of entry 218–19 residual insurance 222–3 social insurance, risk of losing 216–18 White Paper, 2006 213–14 work capacity assessment 214–16 sickness, definitions 205, 210, 221–2, 223 social insurance 202 unemployment insurance 205–6 Nordic legal family 1–2 normative patterns in a normative field 13, 184, 196–7 Numhauser-Henning, A 154, 168, 170, 181

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280

Index

public procurement 106–8 Prechal, S 169 pregnancy see parental leave, pregnancy/ maternity procurement see public procurement proportionality collective action 67, 71, 74 public procurement 97–8 protection of established position, pattern 184, 196 public procurement 7–8, 89–112 collective bargaining 108–12 basic issues 108 German Pension Case 8, 108–11 ruling consequences 111–12 competence limitations 95–7 contract award 93–4 drawing up 94 Directives 90–1 EU framework 94–9 economic efficiency 96 eligibility 93 environmental protection 97, 98 EU framework 94–9 labour law 89–90, 99–112 basic issues 89–90, 99–100 collective bargaining see collective bargaining above posting of workers 106–8 summary 112 transfer of undertakings see transfer of undertakings below Lisbon Treaty implications 98–9 local/regional autonomy 99 posting of workers 106–8 procedure rules 91–4 proportionality 97–8 revaluation of public services 99 social market economy 99 subject matter 92 tendering conditions 92 threshold values 99 transfer of undertakings 100–6 basic requirement 100–1 contractor changes 102–3 definition issues 101–2 foreign elements 103 grounds for 104–6

sickness insurance system see national sickness insurance system (Sweden) Social Chapter (TFEU) 37 social dimension 2–3 social inclusion 3, 22, 111, 155, 180, 181 social market economy 99 social security coordination 186–8 Swedish system 2 see also national sickness insurance system (Sweden), reforms (2008) Soskice, D 21 strike, right to see under collective action, right to Supiot, A 174–5 Sweden labour law 2 national sickness insurance system see national sickness insurance system (Sweden) parental benefit see under parental benefit, free movement of families parental leave see under parental leave, pregnancy/maternity Syrpis, P 133 temporary agency workers 168, 169, 171–3 ILO 50 Third Way approach 133 transfer of undertakings see under public procurement Wilthagen, T 158, 159

religion/belief, equality law 120–1, 124, 127, 155 Schiek, D 133, 154 Sciarra, S 174 sexual discrimination 118, 119–20, 121–2, 128, 130, 155 sexual orientation, equality law 120–1, 124, 127, 155

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