sou · GWB3123 · 2008-12-15 00:00:00 — This constraint applies within the scope of the agreement. An employer has an obligation in rela- tion to the contracting employee organization to apply the agree- ment in relation to its workers. Posting from other EEA countries We have tried to establish a picture for what kinds of operations posting occurs and the scope of such posting. It has not been easy to information but, according to ByggnadsTPF2FPT, there were about 120 posting undertakings in the sector during the autumn of 2008, with a total of about 1,050 workers. ElektrikernaTPF3FPT has estimated the number of posted electricians during the autumn of 2008 to be just over 280 workers. According to , every year they conclude 30 to 50 collective agreements with underta- kings from other countries that post workers to . estimates that the said undertakings on average post 30 people per undertaking to over a period of 3 to 6 months. 2TP PT (Workers Union). 3TP PT (The Swedish Electricians Union). 4TP PT Industrifacket (Swedish Industrial Workers and Metalworkers Union). The case in the Labour Court The dispute in the case in the Labour Court originated from industrial action in the form of a blockade which had been taken at a site in in . The reason for this industrial action was that and its section Bygg- ettanTPF5FPT had demanded a collective agreement with the Latvian undertaking LavalTPF6FPT, which had posted workers to . As no collective agreement was established, industrial action was extended in early by sympathy actions on the part of Elektrikerna. A few days later instituted proceedings in the Labour Court against , Byggettan and Elektrikerna. On , the Labour Court rejected an interim application by for the industrial action to be declared unlaw- ful and on , the Labour Court decided to obtain a preliminary ruling from Court of . The two questions referred for interpretation subsequently pre- sented by the Labour Court in were answered by Court of by the judgment on . By the judgment, Court of stated that Community law does not allow the kind of requirement for an agreement involved in this case (in conjunction with the industrial action referred to) in circumstances where the Posting of Workers Directive had been implemented in the way it had in Swe- den. Court of also explained that the provi- sions contained in are directly discriminatory in relation to providers of services from other Member States. After the judgment, the Labour Court has resumed its processing of the case, but it has not yet been determined. Which countrys law should apply? The problems the inquiry has had to analyse emanate from issues relating to which countrys law should apply regarding the terms and conditions of employment when an employer from one EEA country posts workers to another EEA country in order to per- form a service. Should these conditions be governed by the provi- 5TP PT , Section 1. 6TP PT un . sions in the country where the employer is established, or should they be governed by the provisions in the host country? A worker from one EEA country who goes to another EEA country in conjunction with the employer providing services there does not have the same right to equal treatment according to Community law as a person who is seeking or has employment in the other EEA country or goes to start or to conduct activities as a business operator there. The reason for this is that the person who is to perform such a service will only stay temporarily in the coun- try where the service is to be performed and that the link to the country concerned will be neither strong nor permanent. As regards the question of freedom to provide services, it is instead the undertakings that are to be treated equally. An under- taking from another EEA country may basically not be treated worse than undertakings that are established in the country where the service is to be performed. According to the , it is not permitted to have impe- diments to the provision of services in the common market. This applies to both discriminatory and non-discriminatory impedi- ments. It is only in exceptional cases that a of the EU may have rules that make it more difficult for a party providing services from other Member States to perform services than it is for the nationals providing services. If the host country also prefers to apply its own system of rules for posted workers, such provisions may in practice impede undertakings from other countries from performing services in that country. Such non-discriminatory impediments are only acceptable if certain preconditions are satisfied. Among other things, it is required that they are justified for overriding reason of public interest. Examples of such interests are the need to protect posted workers and to counteract unfair competition. The Convention contains international private law provi- sions determining which countrys law is to apply when an employ- ment relationship has links to different countries. The point of departure is that an employment relationship should basically be regulated by the law in the country of origin and not by that of the host country. The Posting of Workers DirectiveTPF7FPT Through the Posting of Workers Directive that was adopted in 1996, the provisions that would otherwise apply according to the Convention have been modified to some extent at EU level. One of the aims of the Posting of Workers Directive is to promote free movement. In order to counteract the difficulties that diffe- rences in pay between EEA countries may result in, the provisions have been written so that they will guarantee the posted workers reasonable conditions in the host country and so that they will be a protection for the host countrys workers against unfair pay com- petition from undertakings from other EEA countries where the pay is lower. Through the Posting of Workers Directive, the Member States are under an obligation to make some of their existing provisions for the protection of workers also applicable to posted workers from other EU countries who are temporarily engaged in their ter- ritory. According to the Posting of Workers Directive, the legislation of Member States should be coordinated so that a nucleus of man- datory rules providing minimum protection can be established. When an employer from one EEA country posts workers for tem- porary work in another EEA country, the workers terms and con- ditions of employment must lie within the framework of the hard core of the host countrys system of labour law rules. Article 3 (1) of the Posting of Workers Directive states which terms and conditions of employment of the host country are to apply. These are conditions determined by law, regulation or admi- nistrative provision and/or collective agreements which have been declared universally applicable relating to certain operations (buil- ding operations) in the following areas: a)maximum work periods and minimum rest periods; b)minimum paid annual holidays; c)the minimum rates of pay, including overtime rates; this point does not apply to supplementary occupational retirement pen- sion schemes; 7TP PT Directive 96/71/EC of Parliament and of the Council of concerning the posting of workers in the framework of the provision of services. d)the conditions of hiring-out of workers, in particular the supply of workers by temporary employment undertakings; e)health, safety and hygiene at work; f)protective measures with regard to the terms and conditions of employment of pregnant women or women who have recently given birth, of children and of young people; g)equality of treatment between men and women and other provi- sions on non-discrimination. If a does not have a system for declaring collective agreements or arbitration awards to be universally applicable, that State may instead, subject to certain preconditions, according to Article 3 (8), second paragraph of the Directive, base itself on: -collective agreements which are generally applicable to all simi- lar undertakings in the geographical area and in the profession or industry concerned, and/or -collective agreements which have been concluded by the most representative employers and labour organizations at national level and which are applied throughout national territory. Article 3 (10) of the Directive states that the Directive shall not preclude the application of terms and conditions of employment on matters other than those referred to in the hard core in the case of public policy provisions. It is also stated that the Directive shall not preclude the application of terms and conditions of employment laid down in collective agreements which have been declared universally applicable within operations other than buil- ding operations. Member States shall, according to the Directive, designate liai- son offices that are to provide information about which terms and conditions of employment will apply to a posting. The liaison office shall cooperate with corresponding offices in other Member States. Finally, it ought to be mentioned that a posted worker must be able to institute proceedings in the country of posting if the employer does not comply with the host countrys terms and con- ditions of employment. The Posting of Workers ActTPF8FPT In , the Posting of Workers Directive was implemented in 1999 through the Posting of Workers Act. According to the Pos- ting of Workers Act, employers from other countries must apply the legislation applicable in in the areas specified in the hard core of the Directive in relation to posted workers, except as regards minimum rates of pay. does not have any statutory provisions on minimum rates of pay, nor any system for declaring collective agreements to be universally applicable. The issue of implementation of the provi- sions of the Directive on minimum rates of pay was considered extensively in the travaux préparatoires for the Posting of Workers Act. The question of how the provisions on holidays and work periods contained in collective agreements were to be made appli- cable to posted workers was the subject of deliberations. As the legislator upon the passing of the Posting of Workers Act assumed that the Posting of Workers Directive was a mini- mum directive and that Community law also allowed the trade unions to continue to have the right to take industrial action in order to establish customary collective agreements with posting employers from other EEA countries, no provisions were introdu- ced in the Posting of Workers Act regarding minimum rates of pay. were there any provisions included in the Act based on the conditions under the collective agreements regarding holidays, work periods, etc. The rules with which foreign employers were compelled to comply were only such rules contained in legislation regarding work periods, holidays, etc. that applied in within the areas specified in Article 3.1 of the Posting of Workers Directive. The right to take industrial action in is constitutionally protected by Chapter 2, Article 17 of the Instrument of Govern- ment. Restrictions to this right can be made by an act of law or agreement. Section 41 of the Employment (Co-Determination in the Workplace) Act prescribes that an employer and employee who are 8TP PT Posting of Workers Act (1999:678). bound by a collective agreement may not initiate or participate in a stoppage of work (lockout or strike), blockade, boycott or other industrial action comparable therewith if the action is in breach of a provision on mandatory social truce (labour-stability obligation) in the collective agreement or where the action has as its aim certain objectives specified in the Section. Such industrial action is unlaw- ful according to Section 41, second paragraph. It follows further from Section 42, first paragraph of the Employment (Co-Determination in the Workplace) Act, that an employers organization or an employee organization may not organize or in any other induce unlawful collective action. may such an organization, through support or otherwise, par- ticipate in unlawful industrial action. Consequently, mandatory social truce applies in relationships bound by collective agreements and under the case law established in the Labour Court. For example through the case (Labour Court Report – AD 1989 no. 120), it is in principle prohi- bited to take industrial action for the purpose of circumventing a collective agreement already in existence. The consists of three provisions that were intro- duced into the Employment (Co-Determination in the Workplace) Act on 1 1991. These provisions mean that: -the scope of Section 42 of the Employment (Co-Determination in the Workplace) Act is limited so that the prohibition for employers and employee organizations to organize or support an unlawful industrial action does not apply to industrial action other than such as is aimed at working conditions to which the Employment (Co-Determination in the Workplace) Act is directly applicable; -a collective agreement that is invalid under foreign law as a con- sequence of it having been entered into following industrial action is, notwithstanding this, valid in if the industrial action was in compliance with the Employment (Co-Determi- nation in the Workplace) Act (Section 25 a); -a subsequent collective agreement shall have precedence over an earlier collective agreement concluded to which the Employ- ment (Co-Determination in the Workplace) Act is not directly applicable (Section 31 a). When was introduced, it was intended that trade unions in would work to ensure that all employers, both domestic and foreign, apply rates of pay and other terms and con- ditions of employment that were in line with normal conditions in the Swedish labour market and that they would thereby be able to combat unfair pay competition. The aim was also to facilitate international solidarity actions within the merchant navy. In the judgment, Court of laid down that it is not compatible with Community law for a to allow industrial action under such circumstances as applied in the Labour Courts case, nor for a to have provisions of such effect as . In the judgment, Court of states that the Community legislature adopted the Posting of Workers Directive with a view to laying down the terms and conditions of employ- ment governing the employment relationship upon postings (para. As regards rates of pay, the Court concluded that has not made use of the possibility provided for in Articles 3 (1) and 3 (8) of the Posting of Workers Directive to implement the Direc- tive in that respect (para. According to the Court, the Direc- tive does not preclude another method than the methods provided in the Directive being used to determine terms and conditions of employment (para. However, if the remuneration that a pos- ting employer shall pay is to be determined by a collective agree- ment, there are requirements for predictability and transparency for the agreement that the employee organization wishes the employer to conclude (para. According to the Court, a cannot on the basis of the Posting of Workers Directive demand that a foreign service undertaking applies conditions that go beyond the level prescribed by Member States mandatory rules within the hard core referred to the Directive (para. can a on the basis of the Posting of Workers Directive demand that terms and condi- tions of employment, beyond those stated in Article 3 (1) (the hard core) or in the case of public policy according to Article 3 (10), shall be applicable to posted workers. The social partners are not bodies governed by public law. They consequently cannot avail themselves of Article 3 (10) by citing grounds of public policy in order to maintain that industrial action intended to force an application of a collective agreement complies with Community law (para. Court of has stated that industrial action constitutes a fundamental right. However, this does not mean that such action falls outside the scope of Community law under Article 49 of the on the freedom to provide services (paras. 95 to 96). Article 49 can be referred to by an undertaking against a trade union in this situation (paras. 97 to 98). According to Court of , the right to take industrial action in the way that was done in relation to represents a restriction on the freedom to provide services accor- ding to Article 49 of the on the freedom to provide ser- vices (para. However, such a restriction may be allowed if the industrial action aims to provide the workers in the host such protection against social dumping that the action cons- titutes an overriding reason of public interest (para. In principle, an industrial action aimed at guaranteeing posted workers a certain level of terms and conditions of employment is deemed to have the purpose of protecting workers (para. However, industrial action with the aim of establishing a collec- tive agreement where the conditions lie outside the hard core of the minimum protection contained in the Posting of Workers Directive, or where the conditions for minimum rates of pay are not sufficiently precise and accessible, cannot be deemed to be jus- tified with reference to the protection of workers (paras. 108 and 110), as the employers obligations in these respects are coordina- ted within the provisions of the Posting of Workers Directive. As regards , the Court finds that the rules accor- ding to which consideration is not given to whether an undertaking from another already is bound by an agreement in its country of origin, regardless of the content of such agreement, are discriminatory according to Community law. Such discrimination may be justified only on grounds of public policy, public security or public health – grounds that do not exist in this case (paras. 116 to 119). Some conclusions from the judgment The first question referred The question that, according to the Court, was to be answered was whether the Articles of the Treaty or Posting of Workers Directive in question, in a where the Directive has been implemented in the way it was in , preclude a trade union being allowed to take industrial action in order to attempt to force a provider of services from another to commence negotiations regarding rates of pay and sign a collective agreement containing more favourable rules than those resulting from the statutory rules referred in the Posting of Workers Act and which in addition also contain conditions in areas that are not specified in Article 3 of the Posting of Workers Directive at all. The preliminary ruling of Court of in this connection has an interpretation of the Posting of Workers Direc- tive as its point of departure. The Court commences by explaining the purpose of the Directive as having been to coordinate which existing national rules on worker protection in the host country are to be extended and also applied in relation to workers who have been posted from another . According to the Court, it is only basically such conditions and requirements as specified in the hard core of the Posting of Wor- kers Directive, contained in Article 3 (1), that can be forced through in relation to employers from other Member States. For it to be possible to force posting employers to apply kinds of conditions other than those included in the hard core, it is required that the conditions are subject to public policy. Condi- tions that only follow from a collective agreement in the host State cannot be deemed to be covered by public policy. This is justified by the Court through the social partners not being bodies gover- ned by public law. In the hard core of the Posting of Workers Directive, as far as it relates to all of the areas except minimum rates of pay, has been implemented through reference to the legislation appli- cable in the respective area. There are no provisions contained in the Posting of Workers Act regarding extension of conditions of collective agreements. In such a situation, the Court concludes that it is not allowed to force through demands by reference to the Posting of Workers Directive for a collective agreement that contains conditions better than the minimum level prescribed by the respective law. As regards minimum rates of pay, the Court concludes that the Posting of Workers Directive does not actually exclude a choosing another method for extending conditions than one of the methods specified in the Posting of Workers Directive. Such an alternative method must, however, be compatible with the 49 on the freedom to perform services. The above forms the point of departure for Court of consideration of the Swedish system with industrial action to force through collective agreement conditions. This con- sideration is conducted in relation to the 49 as regards the freedom to provide services. Here Court of concluded that the kind of industrial action in question in this case constituted a restriction on the freedom to perform services according to the Treaty. The consideration by the Court in relation to Article 49 on the freedom to provide services was conducted on the basis of earlier practice regarding what may comprise acceptable restrictions of the rights under the Treaty where there is an overriding reason of pub- lic interest. This consideration led to the conclusion that a system that allows industrial action to force through such collective agreement as was in question in the case, that is to say the agreement, cannot be deemed to be compatible with the EC Tre- aty. This was justified by the collective agreement containing: first, conditions that lay outside the hard core of the Posting of Wor- kers Directive without being covered by public policy; and second, conditions where, although they lay within the hard core of the Directive, the level of protection for the posted workers exceeded the minimum level according to the legislation that is referred to in Section 5 of the Posting of Workers Act. As regards minimum rates of pay, the Court concluded that the collective agreement anticipated negotiations before a minimum rate of pay could be determined, and it did not contain any suffici- ently predictable minimum rate of pay. A system, such as the Swe- dish system, to force through a requirement for pay was considered under such circumstances not to be compatible with the EC Treatys freedom to perform services. However, it is important to emphasise that the position adopted by the Court is made on the basis of how the Posting of Workers Directive is implemented in , that is to say where the Pos- ting of Workers Act does not contain any special rules regarding the extension of conditions under collective agreements. The second question referred In its answer regarding the second question referred, relating to , the Court found that rules according to which, in contrast to the rules applicable for Swedish undertakings, account was not taken whether an undertaking from another is already bound by an agreement in its home country, regardless of the content of the agreement, are discriminatory according to Community law. Such discrimination may, according to Article 46 of the Treaty, be justified only on grounds of public policy, public security or public health. According to Court of , there were no such grounds in this case. was thereby found to be in contravention of the EC Treatys Article 49. The consequences of the judgment Regarding the possibility of through a collective agreement deman- ding conditions that lie outside the Posting of Workers Directives hard core or conditions that contain provisions regarding a higher level of protection than the legislation referred to in Section 5 of the Posting of Workers Act, the judgment of Court of goes against the view on the meaning of the Directive propounded by, among others, the Swedish organizations on the employee side.