European Labour Law
1. Subject and purpose
The term European labour law describes the rules of labour law in the primary and secondary law of the European Union. There is no complete and unified labour law existing at the European level, but rather a multitude of individual regulations which stand alongside or above the body of labour law in the Member States.
European labour law can be distinguished from international labour law (employment contracts, individual (PIL)), that law being based on multinational agreements such as the Universal Declaration of Human Rights (1948), the European Convention on Human Rights (1950), the European Social Charter (1961), the International Covenant on Economic, Social and Cultural Rights (1966), the International Covenant on Civil and Political Rights (1966), the Community Charter of the Fundamental Social Rights of Workers (1989), the Charter of Fundamental Rights of the European Union (2000) and the labour norms promulgated by the International Labour Organization (ILO).
The purpose of European labour law is codified in part and to some extent can be derived through interpretation. The main aims of European labour law, as they are laid down in Art 151 TFEU/136 EC, include, inter alia, the promotion of employment, the improvement of living and working conditions, proper social protection and the combat of exclusion.
2. Evolution of European Labour Law
European labour law is continually gaining importance and now comprises all essential fields of regulation. This development is due to the European legislature’s efforts to standardize and unify the law.
Initially, the European Union was an economic community without a social or labour policy. The foundation of the European Economic Community (EEC) in 1957 primarily pursued economic aims such as the establishment of a common market. During the economic boom and managed capitalism witnessed in the 1960s, labour law emphasized the free movement of workers (Art 48 EEC (Art 45 TFEU/39 EC)) as well as the freedom of establishment and the free movement of services (Arts 52 and 59 EEC (Arts 49 and 56 TFEU/43 and 49 EC)), these freedoms constituting basic prerequisites for freedom of competition and the mobility of labour within the common market. Regulations could also be found on equal treatment for men and women regarding pay, Art 119 EEC (Art 157 TFEU/141 EC).
During the 1970s and 1980s, European legislation stalled. However, in response to the oil crisis, recession and large-scale unemployment of that time, the European Community introduced a number of minimum protections for workers. A social objective of European policy emerged, as was displayed by the implementation of the Social Action Programme in 1974. Thus, the first directives concerned mass layoffs (collective redundancy), the safeguarding of employees’ rights in the event of transfer of undertakings and the protection of employees in the event of their employer’s insolvency. During the 1980s, improvements in safety and health at work as well as equal treatment of men and women in matters of employment and occupation were addressed. The commitment of the European Community to social policy gathered pace.
Originally, European labour legislation required a unanimous vote, which hindered its early development. The Single European Act of 1986 departed from the requirement of unanimity and increased the use of qualified majority voting. In 1989 the Community Charter of the Fundamental Social Rights of Workers was adopted in Strasbourg, a clear indication of the direction that most Member States wanted to see European social policy follow. The Charter was the legal basis for further directives, eg directives on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship and on certain aspects of the organization of working time.
The Maastricht Treaty of 1992 led to the foundation of the European Union and included an explicit commitment of the Member States to the promotion of social progress. The Treaty and its Social Policy Agreement established new competences and hitherto unknown forms of labour law legislation, in particular the social dialogue, according to which the European Commission must consult the European Social Partners prior to the submission of proposals in the field of social policy (Art 154 TFEU/138 EC) (consultation and agreements between management and work-force). This gave management and labour a pivotal role in the process of law-making in the social field. According to Art 153(3) TFEU/137(3) EC, a Member State can leave the implementation of directives based on Art 153(2) TFEU/137(2) EC to the national Social Partners upon their common application. On the European level, the Social Partners can conclude social policy agreements which are then implemented by the European Council with the required majority. The framework agreement directives on parental leave (Dir 96/34), fixed-term work (Dir 99/70) and part-time work (Dir 97/81) were implemented in this fashion. Both trade unions and employers’ associations are represented by their own organizations at the European level (ETUC, CEEP and UNICE).
With the Amsterdam Treaty of 1997, the Maastricht Social Policy Agreement was incorporated into the chapter titled ‘Social Provisions’ (Arts 136–145) of the new EC Treaty (now Arts 151–161 TFEU). The Amsterdam Treaty created the European Social Model (ESM), which pursued the promotion of new forms of European governance, a new economic and social agenda and a better quality of life. Thereafter, the ESM with its European Employment Strategy (EES) emerged as the new force in setting the policy agenda. Since then, numerous regulations touching upon all areas of labour law have been passed, and European labour law has established itself as an autonomous subject of European legislation alongside other traditional legal areas such as antitrust law and trade law.
The Treaty of Nice (2001) brought few innovations from a labour law perspective. The Treaty of Lisbon (2007) aims at giving the EU a new, streamlined structure. The Treaty also made the Union’s bill of rights, the Charter of Fundamental Rights, legally binding.
3. Structure and content
The constitutive sources of European labour law are primary and secondary law, case law and legislation initiated by the Social Partners.
Primary law comprises the founding treaties, especially the Treaty Establishing the European Union and the protocols. Other prominent examples of primary law are the fundamental freedoms: Arts 45 and 157 TFEU/39 and 141 EC regulate the freedom of movement and the principle of equal pay for men and women and have direct and binding effect in the Member States. The same holds true for the freedom of establishment and the free movement of services, Arts 49 and 56 TFEU/43 and 49 EC, whose implementation is one of the essential aims of the Union. The European Court of Justice (ECJ) has developed principles of Union law which can be classified as part of the primary law and have direct effect, such as the principle of proportionality (ECJ Case C-241/95 – Accrington Beef  ECR I-6699), the equality principle (ECJ Case C-81/05 – Alonso  ECR I-7569; ECJ Case C-25/02 – Rinke  ECR I-8349) and the interdiction of the abuse of rights (ECJ Case C-367/96 – Kefalas  ECR I-2843). With their particular links to labour law, of principal importance are the right of free choice of employer (ECJ Joined Cases C-132/91, 138/91, 139/91 – Katsikas  ECR I-6577), the freedom of association, both positive and negative, (ECJ Case C-499/04 – Werhof  ECR I-2397) and industrial action (ECJ Case C-438/05 – Viking Line  ECR I-10779, ECJ Case C-341/05 – Laval  ECR I-11767).
Secondary law is derived from primary law and is accordingly subordinate; its validity is determined by primary law. As European labour law is driven by the principle of conferral (Art 5 TEU/5(1) EC), the EU has no competences by right and, thus, is only responsible if empowered by the European treaties.
The basis of labour law legislation is formed by Arts 151 ff TFEU/136 ff EC, which provide for competences regarding working environment, working conditions, social security, co-determination, equal opportunities for men and women, protection of workers on the termination of their employment contract as well as the information and consultation of employees. According to Art 153(5) TFEU/137(5) EC, pay, the right of association, the right to strike and the right to impose lock-outs are exempted and therefore left to the Member States. Thus, the competences in the field of collective labour law are very restricted.
At the same time, the Union has to comply with the principle of subsidiarity (Art 5(3) TEU/5(2) EC) and is only allowed to take action if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Union.
Secondary law contains both directives and regulations. The latter, having direct and binding effect in national law, are rare in the area of European labour law (eg Reg 1612/68). By contrast, directives—much better adapted for respecting the autonomy of Member States and accommodating national characteristics—are far more common in respect of labour law.
Beyond the inherent obligation to transpose enacted directives into national law, the ECJ has facilitated the proper implementation of directives through the principle of indirect effect, requiring courts in Member States to interpret existing legislation as much as possible so as to give effect to EU law. Accordingly, pursuant to the principle of loyalty (Art 4(3) TEU/10 EC), Member States are obliged to interpret national law consistent with European law, ie they must align their interpretation with the wording and intention of the respective directive (ECJ Case 91/92 – Faccini Dori  ECR I-3325). This requires a purposive interpretation not only of statutes passed with the aim of implementing a directive, but also of those which preceded the relevant Union measure (ECJ Case C-106/98 – Marleasing  ECR I-4135).
However, of particular importance for European labour law is the phenomenon of an exceptional direct effect of directives, meaning that they can in some circumstances have immediate effect in Member States even if implementing legislation has not yet been passed or is incorrect. The doctrine of direct effect, which was developed by the ECJ, requires that a directive which has not yet been (sufficiently) implemented is unambiguous, unconditional and does not require further implementation (ECJ Case 9/70 – Grad/Finanzamt Traunstein  ECR 825).
In general, directives can at most have a vertical direct effect (relation: Member State – citizen) and not a horizontal effect (relation: citizen – citizen) (ECJ Case 152/84 – Marshall  ECR 723; ECJ Case C-91/92 – Faccini Dori  ECR I-3325). The absence of a horizontal direct effect has been corrected to some extent by the doctrine of state liability: in the case of a Member State failing to fulfil its obligation to take all measures necessary to achieve the result prescribed by a directive, the state can be held liable to compensate a person who has suffered loss and damage due to the breach of the state’s obligation (ECJ Case C-6/90 – Francovich  ECR I-5357), provided that the directive was intended to confer rights on individuals. Somewhat divergent from this principle is the ECJ decision in the Mangold case (ECJ Case C-144/04 – Mangold  ECR I-9981); here the Court de facto postulated a direct horizontal effect by classifying the principle of non-discrimination on the grounds of age as a general principle of Union law—even before expiration of the period prescribed for transposition of the directive into national law.
The focus of existing European labour legislation is found in (1) the free movement of workers, (2) equal treatment (non-discrimination), (3) the individual employment relationship and (4) collective labour relations. These fields of regulation are reflected in numerous directives, eg equal pay for men and women (Dir 75/117), equal treatment between persons irrespective of racial or ethnic origin (Dir 2000/43), the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses (Dir 2001/23), collective redundancies (Dir 98/59), fixed-term or part-time work (Dirs 91/383, 97/81, 99/70), the posting of workers (Dir 96/71/EC), the employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship (Dir 91/533), working time (Dir 2003/88), protection of individuals with regard to the processing of personal data (Dir 95/46), the establishment of a European Works Council (Dir 94/45), and the statute for a European company with regard to the involvement of employees (Dir 2001/86; co-determination).
Another source of labour law is European case law. The ECJ (Arts 251 ff TFEU/221 ff EC) can be regarded as the ‘motor of integration’ for European labour law and has already authored various guiding judgments. As an example, ECJ decisions gave new direction to the jurisprudence of German labour courts concerning the transfer of undertakings (ECJ Case C-392/92 – Christel Schmidt  ECR I-1311; ECJ Case C-13/95 – Ayse Süzen  ECR I-1259; ECJ Case C-340/01 – Abler  ECR I-14023; ECJ Case C-232/04 – Güney-Görres  ECR I-11237). The same holds for the law of working time. In this field, the national regulations had to be reformed in order to comply with the parameters set by the ECJ, especially concerning on-call duty and emergency service (ECJ Case C-303/98 – Simap  ECR 7963; ECJ Case C-151/02 – Jäger  ECR I-8389; ECJ Case C-397/01 – Pfeiffer  ECR I-8835).
Furthermore, if it finds that a decision on the question is necessary in order to give a judgment, a national court can request the ECJ to issue a ruling as final arbiter on the interpretation of the treaties or a directive (Art 267 TFEU/234 EC). In that case, the ECJ decision is binding on the national court. If the ECJ regards national labour law as incompatible with European law, it can declare its inapplicability.
4. Convergence of laws
Hitherto, European labour law does not comprise one universal law, but instead a large variety of selected and fragmentary rules. The obligation to implement directives into national law often generates rather divergent national rules and can have very different effects on the respective national laws. For example, the safeguarding of employees’ rights in the event of a transfer of an undertaking—as prescribed by European law—has a much stronger impact in Germany with its rigid protection against dismissal than in many other Member States. Several concepts of law, such as ‘employee’, ‘employer’ or ‘undertaking’, vary among the Member States because there are no generally accepted definitions.
However, there are few blank spots left on the European map of labour law rules. Corresponding to the evolution of the European Union from a mere economic community into a social community, European labour law has established itself as an independent field of law. This development was (and still is) accompanied by a steady shift of competences from the Member States to the European Union.
European regulations account for the continuous convergence and harmonization of the core areas of labour law in the Member States, although the process of implementation often masks the European origin of national rules. During the last few years, the number of directives has increased to such an extent that the Member States are nowadays bound on virtually all key questions of labour and social policy. Meanwhile, even the ECJ pronounces basic principles that are applicable to national labour laws. Thus, European labour law has an effect not only on national labour law, but also on individual employment relationships inclusive of their content and shape. The density of regulation contributes to a steady standardization of laws. By and large, due to the multitude of European rules in diverse fields of law and legal rank, it has become harder to grasp the legal and practical synergy of these rules and their significance for national labour law.
The Europeanization of labour law progresses inexorably; national labour law is increasingly determined by European parameters. This development is not appreciated by all Member States. The interference of the ECJ in state law is observed very critically, especially in academic literature. Some reproach the ECJ with ultra vires actions or at least a ‘benign neglect’ of national law; of late, some have even alleged a ‘bad streak’ of ill-advised ECJ decisions. In fact, several ECJ rulings in the recent past have entailed substantial interventions in national labour law.
Another matter of controversy among European academics, trade unions and employers’ associations was the Commission’s green paper ‘Modernising labour law to meet the challenges of the 21st century’ (COM(2006) 708 of 22 November 2006), which aimed at further advancing European labour law by considering both the employers’ interest in flexibility as well as the employees’ interest in security (‘flexicurity’). Its goal of incorporating non-standard employment contracts and atypical employment into the scope of protection was a highly contentious issue. Subsequently, further work on the green paper has been deferred by the Commission. Due to the significant differences in social protection afforded by the individual Member States, the implementation of ‘minimum standards’ in European labour law is currently not feasible. Nonetheless, a conceivable first step could be the uniform definition of fundamental labour law principles such as ‘employee’.
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