European court rules on workers’ rights


European court rules on workers’ rights

By Nikki Tait, Law Courts correspondent

Published: May 23 2007 11:16 | Last updated: May 23 2007 11:16

Workers’ rights – such as the right to strike and bargain collectively – do not automatically trump the principle of freedom of establishment for employers, senior officials at Europe’s top court ruled on Wednesday morning.

But in two closely-watched but finely-nuanced opinions released by the European Court of Justice, the advisers went on to say that unions could also take collective action – such as a blockade – to persuade a company based elsewhere in the EU to pay foreign workers in line with domestic rates.

Such action, however, would have to be "motivated by public interest objectives" and carried out in a "proportionate manner".

And unions could also take collective action to dissuade a company from relocating within the EU, although there were limits on how far such action could go. It would not be permissible, for example, to block – or threaten to block – a company which had already relocated from offering its services in other member countries.

The opinions came as the court considered for the first time two landmark cases which pit workers’ rights under EU law against the so-called principle of "freedom of establishment" for employers, allowing them to run businesses from wherever they wish within the EU.

This clash over core European legal principles stems largely from the EU’s recent enlargement to admit new members. It highlights tensions between the older EU states, where wage rates are higher and workers’ rights more entrenched, and newer East European member countries offering pools of cheap labour.

One of the two cases under consideration, for example, stems from efforts by Viking Line, a Finnish shipping company, to prevent strike action or boycotts by a unionised workforce which was opposed to management’s plan to reflag a loss-making ferry as an Estonian vessel so that it could be manned by a cheaper Estonian crew.

The other involves a Latvian construction company which won a contract to refurbish a school in Sweden. It sought to use Latvian workers to carry out the work at wage rates lower than those usually seen in the Swedish building sector, and negotiations to secure a collective agreement with local unions failed. The result was a union blockade.

Such was the significance of the cases, that they drew interventions from more than a dozen European governments, including both new and older EU members, all of which made submissions to the court.

On Wednesday, both the senior legal advisors who gave the preliminary opinions in the cases acknowleged that the issues were extremely different. Advocate-General Poiares Maduro, who dealt with the Viking case, described it as "of high legal complexity and great socio-political sensitivity".

"Sometimes when the questions are complicated, the answers are simple. This is not one of those occasions," he said.

Preliminary opinions are not binding on the court itself, although the ECJ does follow the recommendations of Advocate-Generals in about 70 per cent of cases.

The ECJ is now expected to issue a final ruling in the matter in several months’ time, and the two cases will then be referred back to the domestic courts for implementation.

There was no immediate response from unions involved. But Richard Ashworth, a Conservative MEP, claimed that the Swedish decision amounted to "free markets, but only when it suits you".

"The court must not allow trade union blockade to dictate the terms of the EU single market", he said.  

Copyright The Financial Times Limited 2007

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