The Monti II Regulation: reversing ECJ Decisions? Professor Tonia Novitz University of Bristol

The ECJ decisions: Viking, Laval… Recent ECJ (now CJEU) cases (alongside others decided subsequently) raise the question: WHAT HAPPENS WHEN WORKERS’ RIGHTS TO COLLECTIVE ACTION AFFECT EMPLOYERS’ FREE MOVEMENT RIGHTS UNDER EU LAW? Do labour rights (as human rights) prevail? Or do employers’ economic freedoms prevail? These cases show how a union (or unions) can be held liable for breach of employers’ free movement rights under EU law. See the impact not only of damages (the ultimate result of the Laval litigation in Sweden – approx. EURO 55,000), but the ‘chilling effect’ of injunctions in the UK (BALPA). Note that Art. 153(5) TFEU excludes the right to strike from the legislative ‘social policy’ competence of the EU.

What is the answer post-the ECJ decisions? The right to take collective action is a legitimate exception to EU free movement (under inter alia Art. 28 of the EU Charter of Fundamental Rights) BUT That exception does not apply to industrial action taken to determine terms and conditions of ‘posted workers’, which can only be determined by the setting of minimum terms and conditions in line with the provisions in the Posted Workers’ Directive 96/71/EC: Laval – unless the action is to address ‘social dumping’ – meaning? That exception can only be applied in respect of freedom of establishment (and we assume other free movement rights of the employer) if the collective action is capable of ‘protection of workers’ AND is ‘proportionate’. This enables the Court to determine what is in workers’ interests, e.g. protection of jobs or terms and conditions – they cannot collectively determine this themselves cf. Convention No. 87, Article 3. In terms of what is ‘proportionate’, the union must show that it ‘did not have other means at its disposal that were less restrictive in order to bring to a successful conclusion the collective negotiations…’ and that if it did have such means that they were ‘exhausted’ before initiating the action.

Reactions to the ECJ decisions Concerns as to ‘chilling effect’ by trade union movement, see the BALPA case and ILO Committee on Freedom of Association criticism of the EU/UK approach: ‘the doctrine that is being articulated in these ECJ judgements is likely to have a significant restrictive effect on the exercise of the right to strike in practice’ (2010) Commission in Work Programme 2010 (March 2010) said wanted to present a legislative proposal with regard to the Posted Workers’ Directive to improve its implementation On 19 March 2010 the European Social Partners (ETUC, CEEP, BusinessEurope and UEAPME) published a report on their joint work relating to the ECJ case law. They differ on treatment of the PWD and the scope of revision needed. Both later (in May 2010) welcomed the Monti Report… which as we shall see, is rather ambiguous.

The Monti Report 2010 In 2009, Mario Monti, the former Competition Commissioner (and currently Prime Minister of Italy since November 2011) was requested by the President of the European Commission Barroso) to draft a report in ‘A New Strategy for the Single Market’. Barroso’s letter, commissioning the report, asked that he ‘look at how the market and the social dimensions of an integrated European economy can be mutually strengthened’… The Monti Report was issued on 9 May 2010, which identifies the three following needs: - for a stronger internal market - for a general and shared consensus on the single market and - for better regulation of the market In this context, he sees ‘transnational labour migration’ within the EU as vital and wishes to counter obstacles to full development of free movement of labour: linguistic, cultural, family-based, administrative etc. He accepts that the Viking and Laval case law 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’ (p. 68). His proposals are aimed at seeking balance….

Reform of the PWD Reform of the Posted Workers’ Directive: (p. 70) - reduce ‘the space for ambiguities in the interpretation and implementation’ - facilitate access to information, strengthen cooperation between national administrations and better sanction abuses - intensify ‘the fight against “letter box companies” - strengthen ‘posted workers’ access to legal remedies against abuses of their rights in the host countries’ Sarah Clarkson to discuss further …

‘Protecting the rights of workers, rejecting protectionism’ This is the ‘balance’ proposed by Monti (at pp.70-72) which is to have two components: 1. a provision to guarantee the right to strike modelled on Art. 2 of Council Regulation (EC) No. 2679/98 (Monti I Regulation) 2. a mechanism for the informal solutions of labour disputes concerning application of the Posted Workers’ Directive 2006/123 Problems with these solutions: A differently worded provision for protection of labour rights was included in the Services Directive. Monti refers to Art. 1(6), but surely what is relevant is Art. 1(7): ‘This Directive does not affect the exercise of fundamental rights as recognised in the Member States and by Community law. Nor does it affect the right to negotiate, conclude and enforce collective agreements and to take industrial action in accordance with national law and practices which respect Community law.’ This places the right to strike subject to Community law… will this have the rebalancing effect that Monti intends? What role would the ‘informal solutions of disputes’ mechanism have on the issue of ‘proportionality’ in terms of the union’s ability to take lawful industrial action? How could this be reconciled with Art. 153(5) TFEU?

The draft Monti II Regulation Art. 2: equating fundamental social rights and economic freedoms (1)‘The exercise of the fundamental right to take collective action… should fully respect the economic freedoms enshrined in the Treaty… and conversely, the exercise of these economic freedoms shall fully respect fundamental social rights. No primacy exists between the two.’ Cf. ECHR (as to be discussed by John Hendy) and issue of uncertainty: injunctions and chilling effects (2) enshrines principle of ‘proportionality’: ‘In specific circumstances, the exercise of the right to take collective action may have to be reconciled with the requirements relating to the rights and economic freedoms enshrined in the Treaty, in particular the freedom of establishment and to provide services cross border, in accordance with the principle of proportionality.’ (No Albany immunity for free movement… note restrictive interpretation of ‘proportionality’ in Viking NOT corrected here.) (3) ‘When cross-border elements are lacking or theoretical…’ a presumption arises that economic freedoms are not relevant and that therefore collective action is lawful under EU law – but presumption ‘is rebuttable’ – HOW? Problem of injunctions…

Supplementary aspects of draft Monti II Art. 3: National courts to assess objectives and ‘proportionality’ Art. 4: Alternative dispute resolutions to be decided by national member states, as otherwise a violation of Art. 153(5) TFEU (as admitted by Commission in introduction to draft) Art. 5: Alert mechanism (1) onus on Member States to ‘immediately inform and notify other Member States and the Commission (2) Member State concerned ‘shall take all necessary and proportionate measures to remedy the situation and inform the Commission of its actions…’ (3) Member State concerned is to ‘respond as soon as possible to all requests for information from the Commission and other Member States concerning the nature of the threat or obstacle and the action which it has taken or proposes to take … (4) The Commission may propose additional measures if necessary… Can Art. 3 and Art. 5 be reconciled? Antagonistic to collective action?!

Monti II – as at March 2012 There is ongoing dispute over the terms of a Monti II Regulation. The release date for both Monti II and the revised PWD has repeatedly been put back, with ILO representatives speaking to the European Parliament last week. The date for formal publication is now 17 March 2012… The final text should be available to discuss on 21 March…