The European Labour Authority: a Brand New EU Agency in Bratislava

Bartłomiej Bednarowicz, PhD Researcher at the Faculty of Law of the University of Antwerp

Background

On Thursday, the Council decided that Bratislava will host the headquarters of a brand new EU agency: the European Labour Authority (ELA). The idea for the ELA was spelt out by President Juncker already in September 2017 in his annual State of the Union address. Juncker viewed ELA’s main mission to ensure EU labour mobility in a simple and effective manner and to strengthen fairness and trust in the internal market. Interestingly, the proposal to establish the ELA rolled out of the European Pillar of Social Rights (EPSR) and was presented as a part of the Social Fairness Package, together with a proposal for a Directive on transparent and predictable working conditions in the EU (adopted by the Council on the very same day as the Regulation establishing the ELA; see discussion of the Directive here), a proposal for a Council Recommendation for access to social protection for workers and the self-employed and a Commission Communication on the monitoring on the implementation of the EPSR.

In a speedy manner, in March 2018 the Commission put forward a legislative proposal to establish the European Labour Agency and on Valentine’s Day in 2019, the Commission, the European Parliament and the Council reached a provisional agreement and changed the name from Agency to Authority. Finally, in June 2019, the Council adopted the proposal for a Regulation and selected Slovakia to host the Authority. The ELA is to start its operations in October 2019 already in Brussels and is expected to reach its full operational capacity in Bratislava by 2024. [Update: the Regulation was published in the EU Official Journal in July 2019]

Competences

Pursuant to the Regulation establishing the ELA, the main objective of the Authority is to assist the Member States and the Commission in their effective application and enforcement of EU law related to labour mobility across the EU and the coordination of social security systems. The ELA has the mandate to act only within the scope of selected EU acts in the framework of: posting of workers, free movement of workers, social security coordination, social aspects of road transport and cooperation between the Member States to tackle undeclared work. This catalogue remains closed but can be extended on a basis of any future acts that confer tasks on the Authority. More importantly, to maintain its mandate, the ELA is to neither affect any rights or obligations of individuals or employers that are granted by either EU or national laws, nor the mandate of national authorities responsible for enforcement in these fields.

Furthermore, in order to attain its primary objective, the ELA has been fitted with some additional tasks. Firstly, it is to facilitate access to information on rights and obligations regarding labour mobility across the EU as well as to relevant services. Secondly, it is to promote and enhance cooperation between the Member States in the enforcement of relevant EU law across the Union, including facilitating concerted and joint inspections. Thirdly, it is to mediate and help to look for a solution in cases of cross-border disputes between the Member States. Finally, it is to support cooperation in tackling undeclared work.

Organisation and the seat selection

The European Labour Authority will have a permanent structure comprising of a Management Board (including representatives of the Member States, Commission, European Parliament and social partners), an Executive Director and a Stakeholder Group with purely advisory functions (including representatives of the Commission and social partners). On top of that, the Authority aims at being made up of around 140 staff members, some of them seconded from the Member States. In addition, there will be one national liaison officer seconded from each Member State who will facilitate the cooperation and exchange of information between the Authority and her Member State. The Executive Director, on the other hand, will be appointed for a five-year term by the Management Board from a list of candidates proposed by the Commission, following an open and transparent selection procedure including a hearing before the European Parliament. Finally, the Commission is willing to secure approximately €50 million for the Authority’s annual budget.

As for its seat, 4 Member States competed in the selection process: Slovakia, Cyprus, Bulgaria and Latvia. The Council, in a rather transparent way, steered the selection process and published on its website all the offers prepared by the governments. Then, the European Commission assessed the offers based on the geographical balance, accessibility of the location, availability of the proposed premises and overall city’s readiness to accommodate the needs of international staff. At the Council meeting convoked on 13 June 2019, 23 Member States voted in favour of the Regulation establishing the Authority with its seat in Bratislava, 3 voted against (Austria, Hungary and Sweden) and 2 abstained (Czechia and Poland). Admittedly, it will be the very first EU agency to be located in Slovakia that advertised itself with a rather dull slogan ‘ELA in Slovakia, a good idea’. At least, the ELA’s staff will enjoy the state-of-the-art L12 building at the ‘Eurovea City’ in Bratislava and a stunning view on the Danube river.

Comments

An idea for a (pan)-European labour inspectorate has been considered for a long time as simply ‘the wishful thinking’ of some social partners, especially workers organisations. It also has never really attracted a lot of attention, as the Commission feared scoring an own goal due to a lack of the Member States’ support to set up such an agency in the first place. However, the Juncker Commission has finally put the social rights back at the EU agenda and proposed a rather breakthrough initiative in a dazzling form of the European Pillar of Social Rights. The Commission has already delivered quite plenty on the Pillar and mainstreamed many fruitful debates surrounding the social aspects of employment that under the years of austerity and flexicurity have been put aside. The Authority indeed emanates from the EPSR and aligns well with the accompanying proposals presented by the Commission within a broad framework of European Union cross-border employment and the Social Fairness Package.

The potential of the Authority cannot be surely underestimated. Its main advantages can be summarised in three aspects. Firstly, in the field of legal issues of international employment, it will provide the national authorities with some valid operational and technical support, mostly to exchange information, develop some best practices, carry out inspections and also to settle any disputes. Bridging the information and cooperation gap between the Member States is indeed a noble objective and quite a desired one as well. In practice, it is often the case that national authorities are unable to facilitate dialogue with each other and exchange information due to the complex and lengthy internal procedures and the language barrier. Having national liaison officers from all Member States designated to be at the ELA’s disposal will definitely plug that gap and speed things up. Moreover, some national authorities might not have even dreamed of an ability of concerted and joint inspections, which is now a powerful tool in the ELA’s arsenal, subject however, to reaching an agreement between the Authority and the concerned Member State(s).

Secondly, what the enforcement of EU employment and social security law often lacked at national level, were synergies with the already existing EU agencies that would allow to rely on their expertise in areas such as health and safety at work, the management of an undertaking that is being restructured, skills forecasting or tackling undeclared work. Therefore, it is the ELA’s task to facilitate it all to untap the available potential and to strengthen the enforcement levels.

Finally, the Authority will simplify cooperation by integrating a number of existing committees and networks amongst the Member States which will hopefully lead to eliminating fragmentation in that area.

On the other hand, the Authority will definitely not serve as a panacea for all the flaws in the system. The role it will play mostly depends on how active the ELA with its Executive Director decides to be. There is a considerable room to be claimed by the Authority with some space for manoeuvre, but there are some open-ended questions as well. Sceptics and pragmatics may wonder how willing some of the national authorities will be to cooperate within the ELA’s network and agree to, for example, conduct inspections on their territory, which can expose the flaws of their own systems on an EU scale. It is also unsure whether the Member States known for a rather lenient approach towards social security laws will deem it in their best interest to assist ELA with the fight against fraud and abuse on their territories, as no such obligation arises. For them, it could mean the end of their competitive advantage of providing a legal framework for cheaper labour through foxy constructions such as letterbox companies.

Examples from the field of social security coordination and the experience with the Administrative Commission, a body comprising of government representatives, capable of reviewing cases of social fraud between the Member States, do not necessarily instil optimism. The number of successful outcomes of such cases is rather scarce and some national authorities are giving up on the Administrative Commission and often try to take matters in their own hands. Essentially, they reach out on their behalf to the institutions in the other Member States mostly without any tangible end-effects. Moreover, the Authority’s tasks might overlap with those of the Administrative Commission, which was a major point of discussion during the negotiations about the ELA. The exact tasks division, despite indicated as ‘without prejudice’, might prove to be more problematic to delineate and can lead to duplication and competence battles. It is also doubtful how effective the Authority can really be and police the EU labour mobility market consisting of approximately 17 million EU-movers with rather modest resources of 140 staff.

To conclude, as for now, the Authority has baby teeth. It will be up to its adopted strategy, action plans and frankly, leadership to make sure that it will eventually get real teeth. The ELA has definitely promising potential but it remains to be seen how it will be utilised and how big of a dossier can it claim and handle. The expectations are high so we should all give the European Labour Authority a big leap of faith and wait for its very first results.

Barnard & Peers: chapter 20

Photo credit: www.landererova12.sk

You can teach a new court Mangold tricks – the horizontal effect of the Charter right to paid annual leave

Filippo Fontanelli, Senior Lecturer in International Economic Law, University of Edinburgh

On 6 November 2018, the Court of Justice of the European Union (the Court) delivered three judgments relating to paid annual leave. Some of its remarks transcend the specific topic, and touch on constitutional matters: the impact of the EU Charter of Fundamental Rights on private parties, the allocation of competences between the EU and the Member States, and the application of EU secondary law.

These cases teach a couple of lessons, and raise a wider point. The lessons are useful: first, alongside the right to non-discrimination and effective judicial protection, the right to annual paid leave in the Charter has direct effect not only in vertical disputes (ie disputes between the individual and the State), but also in horizontal disputes (ie disputes between individuals), even though EU Directives dealing with the same issue still do not in themselves have such horizontal direct effect.  Second, the Charter sometimes binds State acts in a decisive manner. This occurs rarely and, curiously, so far exclusively in disputes between individuals, when the domestic law transposing a directive is not in good order.

The wider point concerns the Charter’s application to domestic measures. In these cases, EU secondary law could not displace domestic measures, because Germany had not transposed a directive correctly. The directive’s mere existence, however, warranted the Charter’s application, and in turn enabled domestic courts to disregard German law and enforce the right to annual paid leave.

The now familiar combo “unimplemented directive plus Charter right” seems a Munchhausen trick. To justify the practice, one should go back to the Mangold case (in which the CJEU ruled that, prior to the Charter having binding force, the general principles of EU law meant that the right to non-discrimination could apply between private parties even if a Member State had not implemented a Directive), and perhaps look deeper into the difference between direct applicability and direct effect, or between a norm’s application and its scope of application. After looking back and looking in-depth, it is still difficult to see precisely how the Charter applied.

The judgments

In cases C-619/16 and C-684/16 Kreuziger and Max Planck, the facts were comparable. Messrs Kreuziger and Shimizu, respectively employed by the Land of Berlin and the Max Planck Institute, had failed to take the entire period of paid annual leave to which they were entitled. After their employment ended, the former employers denied their request to receive payment in lieu of leave. German law appeared to authorise the employers’ position that a failure to request paid annual leave automatically entailed its lapse upon termination.

The Court disposed of the Kreuziger case quickly, due to the dispute’s vertical nature (the employer was a German Land). Article 7 of Directive 2003/88 (the working time Directive) clearly confers the right to paid annual leave and, accordingly, payment in lieu for the leave not taken; the Court recently ruled on this issue in Bollacke. The Court dusted off the direct effect spiel. Since “provisions of a directive that are unconditional and sufficiently precise may be relied upon by individuals, in particular against a Member State and all the organs of its administration” [21], individuals can invoke the Directive and the judges must set aside domestic law if need be. The automatic lapse of this right upon termination of employment, without any safeguard to make sure that the employee could exercise it beforehand, violated EU law.

The reasoning of the Max Planck ruling extended further, since the main proceedings concerned a dispute between private parties. The reasoning of Kreuziger was copy-pasted: Article 7 of the Directive precludes an automatic lapse of the right to paid leave triggered by a mere failure to exercise it [40]. National courts must arrive, to the extent possible, at an interpretation of domestic law consistent with the Directive.

Failing all attempts at consistent interpretation, Mr Shimizu could not rely on the Directive alone, since “Max Planck had to be considered an individual” [65], and directives normally lack horizontal direct effect [68]. The Court thus turned to Article 31(2) of the Charter on the right to annual paid leave, noting that it entailed a clear, enforceable right, withstanding only derogations in compliance with Article 52(1) of the Charter [73]. Article 31(2) of the Charter needing no implementing act to operate, it could warrant disapplication of contrary domestic law:

74           The right to a period of paid annual leave, affirmed for every worker by Article 31(2) of the Charter, is thus, as regards its very existence, both mandatory and unconditional in nature, the unconditional nature not needing to be given concrete expression by the provisions of EU or national law, which are only required to specify the exact duration of annual leave and, where appropriate, certain conditions for the exercise of that right. It follows that that provision is sufficient in itself to confer on workers a right that they may actually rely on in disputes between them and their employer in a field covered by EU law and therefore falling within the scope of the Charter.

75           Article 31(2) of the Charter therefore entails, in particular, as regards the situations falling within the scope thereof, that the national court must disapply national legislation negating the principle [that the right to paid leave and/or payment in lieu cannot lapse automatically].

The last hurdle for the direct invocability of Article 31(2) of the Charter in German courts was the dispute’s horizontal nature. The Court recycled from its own case-law the bold suggestion that Article 51(1) of the Charter, which sets out who is bound by the Charter, is ambiguous in this respect and does not preclude individuals from relying on the Charter against each other:

76           … although Article 51(1) of the Charter states that the provisions thereof are addressed to the institutions, bodies, offices and agencies of the European Union … and to the Member States only when they are implementing EU law, Article 51(1) does not, however, address the question whether those individuals may, where appropriate, be directly required to comply with certain provisions of the Charter and cannot, accordingly, be interpreted as meaning that it would systematically preclude such a possibility.

Notably, the Court distinguishes Article 27 of the Charter on workers’ consultation (at issue in AMS) from Article 31(2) on annual leave, because the former Charter Article refers to national and EU law limits and the latter Charter Article does not. If this is the test for whether Charter provisions can have horizontal direct effect, it should be noted that most of the Charter provisions on social rights refer to national and EU limits – but most of the other provisions of the Charter do not.

73      By providing, in mandatory terms, that ‘every worker’ has ‘the right’ ‘to an annual period of paid leave’ — like, for example, Article 27 of the Charter which led to the judgment of 15 January 2014, Association de médiation sociale (C‑176/12, EU:C:2014:2) — without referring in particular in that regard to the ‘cases’ and ‘conditions provided for by Union law and national laws and practices’, Article 31(2) of the Charter, reflects the essential principle of EU social law from which there may be derogations only in compliance with the strict conditions laid down in Article 52(1) of the Charter and, in particular, the fundamental right to paid annual leave.

The Joined Cases C-596/16 and C-570/16 (Wuppertal v Bauer; Willmeroth v Broßonn) largely replicated the reasoning of the Max Planck and Kreuziger cases. Only, in the underlying disputes, it was rather the employees’ heirs seeking payment in lieu, on behalf of the deceased workers. According to the referring judge, German law provided that the right to unpaid annual leave, necessarily turned into payment in lieu upon the workers’ death, would not become part of their estates.

Building on prior case law (discussed here), the Court, besides noting the importance of the right under Article 7 of the Directive, stated that it should accrue, after the death, to the worker’s estate:

48      … from a financial perspective, the right to paid annual leave acquired by a worker is purely pecuniary in nature and, as such, is therefore intended to become part of the relevant person’s assets, as a result of which the latter’s death cannot retrospectively deprive his estate and, accordingly, those to whom it is to be transferred by way of inheritance, from the effective enjoyment of the financial aspect of the right to paid annual leave.

With respect to horizontal disputes (like the Willmeroth v Broßonn controversy, whereas Bauer was a public employee), the reasoning of the Court was identical to that used in the Max Planck case [87-91]. Article 31(2) of the Charter can be invoked in disputes between individuals, possibly leading to the setting aside of domestic norms like those at issue in the main proceedings.

The Charter’s effect on domestic measures

The Charter has many functions. It guides the interpretation of EU law and serves as standard of legality of EU acts. It does not enlarge the competences of the EU at the expense of the member states, but binds their action when they act as agents of the EU. In this residual scenario, delimited by the sibylline “implement[ation of] EU law” notion of Article 51(1) of the Charter, the Charter should serve as standard of EU-legality of national measures. In other words, the Charter can preclude some national measures.

The Charter applying to state measures falling “within the scope of EU law,” (a formula sanctified in Fransson [21], and unsurpassably frustrating), the following circumstances can arise:

a)      EU law does not apply to the matter, so neither does the Charter;

b)      EU law applies to the matter, and precludes the domestic measure. The Charter applies too: it might also preclude the domestic measure (“double preclusion”) or not;

c)       EU law applies to the domestic measure, but does not preclude it. The Charter applies too, and likewise does not preclude it;

d)      EU law applies to the domestic measure, without precluding it. The Charter, which also applies, precludes the domestic measure.

In the scenarios a), b) and c), the Charter is irrelevant to the ultimate determination of EU-legality.

Only in scenario d) does the Charter show its teeth, doing its standard of review job fully. Exclusively in this scenario, an otherwise EU law-compliant measure can breach the Charter and, accordingly, might be set aside by domestic judges. To this day, scenario d) has never occurred in its garden variety. Never has been the case that, for instance, a national measure that justifiably restricts one fundamental freedom (and falls therefore under the scope of Treaty law, without being precluded thereby) was found to breach the Charter. This unlikely coincidence warrants a deeper analysis (but not here), because it suggests that the Court is discreetly keeping the Charter in a locked drawer, lest member states react like the German Constitutional Court reacted after Fransson. A low-profile use of the Charter – one that essentially emptied it of its post-Lisbon potential – is what the Court’s record shows in the last 9 full years.

However, there is a hybrid category of cases, halfway between scenarios b) (double preclusion) and d) above. The paid annual leave rulings of 6 November 2018 belong in this atypical group, insofar as they relate to horizontal disputes. As far as their bearing on vertical disputes, they are squarely b)-type rulings: the measures are precluded by the Directive, and the breach of the Charter is just redundant.

The discussion below, instead, focuses only on the horizontal dimension of these rulings.

Did the Directive apply?

That the Directive applied must be assumed – otherwise the Charter would not have applied at all. Yet, the Directive could not apply to determine the outcome of the underlying dispute, for lack of horizontal direct effect. Can it be said that the Directive applied, and precluded the national measures, but was ineffective? The (ineffective) application of the Directive to the underlying scenario would then warrant the (very effective) application of the Charter. The Charter alone would warrant the disapplication of the German norms that breached both the ineffective Directive and the effective Charter.

The easier construction – that the Directive, lacking horizontal direct effect, could not apply – is untenable. Admitting that the Directive did not apply contradicts the notion that the German law fell within the “scope” of EU law, and would rule out the relevance of the Charter tout court. Some finer reasoning must support the Court’s decision. I suggest a couple of unnoticed distinctions that might help.

Direct application is not the same as direct effect: This is an all-time favourite for mid-term exams, so why not give this distinction a day in Court? Perhaps, the Directive did apply somehow (direct applicability), but could not be relied upon in domestic proceedings (lack of horizontal direct effect). This would explain the triggering of Article 51(1) of the Charter, but also the impossibility to use the Directive to solve the disputes between Mr Shimizu and Mrs Broßonn and their employers. Certainly the Directive applied, somehow. As soon as the transposition period expired, it deployed its legal obligatory effects and, even regarding horizontal disputes, triggered immediately Germany’s responsibility for failure to transpose correctly, which individuals can invoke to seek compensation without recourse to any implementing measure.

On the lack of direct effect, there is no real mystery: Article 7 of the Directive creates a precise and unconditional right, capable of invocation in domestic proceedings, so the direct effect checklist is in order. However, it can only work in vertical disputes. This distinction between direct applicability and direct effect could justify the Court’s truncated use of the Directive (sort-of applying to bring the Charter in under Article 51(1) of the Charter; not-really applying in its own right).

Scope of application is not the same as application: This is a contrived distinction, but it might operate in the background of these rulings. The Directive effectively cannot apply in domestic proceedings. However, the German law falls under the “scope” of the Directive, in a somewhat more abstract sense, as if applicable and applied were distinguishable. To accept that EU law reaches further than the circumstances to which it can actually apply is a head-scratcher. Yet, that is what the Court prescribed: domestic law must be set aside for intruding in an area that the Directive could not operate (the direct regulation of duties between private parties) but it nevertheless occupied – somehow. In the wake of Kücükdeveci (an earlier judgment on discrimination in employment), I noted the risk:

… it is necessary to evaluate the implications of Kücükdeveci: if the general principle of non-discrimination has a wider scope than the measures codifying it (the Directive), it follows that it can be invoked in a series of disputes that, despite concerning EU-regulated matters, fall outside the scope of the Directive.

Putting lipstick on Mangold

The distinctions above are nowhere mentioned in the rulings. So, if the Directive could not operate in domestic proceedings, how did the Court justify German law falling under the scope of EU law? This week’s rulings proffer only minimal reasons, but summon precedents to convey the idea that this apparent misalignment is nothing to worry about. From Bauer:

53           Since the national legislation at issue in the main proceedings is an implementation of Directive 2003/88, it follows that Article 31(2) of the Charter is intended to apply to the cases in the main proceedings (see, by analogy, judgment of 15 January 2014, Association de médiation sociale, C‑176/12, EU:C:2014:2, paragraph 43).

If one goes down the rabbit hole of cross-citations, however, Mangold awaits on the bottom. In terms of legal reasoning, it does not get any more controversial than Mangold. The judgment exasperated the former president of the German Constitutional Court and drafter of the Charter, who penned an op-ed wishing the Court of Justice to “Stop.” Ultimately, Mangold was criticised for encroaching into the Member States’ competence.

There are, in fact, a series of cases in which the Court prescribed the horizontal direct effect of a fundamental right, using a directive as a trampoline. Mangold was the first case, and Kücükdeveci followed. Dansk Industri (discussed here), also on discrimination on grounds of age, pulled the same trick, this time using the Charter rather than a general principle of law. AMS (discussed here) replicated the reasoning with respect to the workers’ right to consultation and information in the Charter, accepted its applicability but concluded that the Charter’s norm was not self-executing and stopped short of confirming its horizontal direct effect.

Egenberger (discussed here), very recently, asserted the horizontal effect of the right to non-discrimination on grounds of religion and the right of effective access to justice. In IR (discussed here), the Court consolidated Egenberger, and wisely recalled that non-discrimination is essentially a general principle: if the AMS explanation why the Charter applies to individuals were not compelling, the unwritten source might apply more liberally and come to the rescue just like in the good Mangold days:

69           Before the entry into force of the Treaty of Lisbon, which conferred on the Charter the same legal status as the treaties, that principle derived from the common constitutional traditions of the Member States. The prohibition of all discrimination on grounds of religion or belief, now enshrined in Article 21 of the Charter, is therefore a mandatory general principle of EU law and is sufficient in itself to confer on individuals a right that they may actually rely on in disputes between them in a field covered by EU law.

Conclusion

In all the cases mentioned, individuals could not rely on the directives in domestic proceedings. Yet, each directive somewhat marked the “scope” or “cover[age]” of EU law and let the fundamental right finish the work (unless some ingrained deficiency made it non self-executing, as in AMS). The simple annotation that the German law “is an implementation of [the] Directive” sanded over the uncomfortable truth: if the Directive was insufficient to set aside the norms of German law, perhaps these norms of German law lay outside the scope of EU law, and the Charter should not have found its way in the proceedings.

A sceptical reader might wonder what “a field covered by EU law” means, and wonder whether the Charter spilled over from the EU-law scope comfort zone. An optimist one can celebrate the expansive force of social rights. Horizontal application of fundamental rights translates into the creation of EU-based fundamental duties, and lets us catch a glimpse of solidarity in the making.

Barnard & Peers: chapter 9, chapter 20, chapter 6

Photo credit: PureTravel

(Re)constructing the employment law hierarchy of norms: The Charter will not, should not and need not apply?

Niall O’Connor, Lecturer in Law, University of Essex

The Charter and Brexit

During the Brexit referendum campaign, it was Boris Johnson who led the way in deriding the Charter’s influence over British law. In the Telegraph article in which he first threw his support behind Brexit, Johnson wrote ‘[u]nder the 55-clause “Charter of Fundamental Human Rights”, including such peculiar entitlements as the right to found a school, or the right to “pursue a freely chosen occupation” anywhere in the EU, or the right to start a business (…) These are not fundamental rights as we normally understand them, and the mind boggles, as to how they will be enforced’.

For some eurosceptics, such as Johnson, the Charter is an unacceptably powerful weapon in the EU Court’s (CJEU) arsenal, capable of over-riding national sovereignty. Any law student could point out the inaccuracy of Johnson’s perception of the Charter. Indeed, anyone could highlight the inconsistency between raising fears of the Charter’s influence while simultaneously sneering at the difficulties associated with enforcing its admittedly rather nebulous provisions. Nonetheless, the mischaracterisation of the Charter and indeed the role of the CJEU more generally has gained traction and has, to an extent hamstrung the Brexit negotiations from the outset. Particular suspicion has been directed at the Charter’s Solidarity Title (Title IV).

The Solidarity Title

Title IV of the Charter contains a number of fundamental Employment Rights, including article 27 on information and consultation, article 28 which grants workers the right to collective bargaining, article 30 which provides for the right not to be dismissed unfairly and article 31 on the right to fair and just working conditions, Collectively, these rights will be referred to as the ‘Employment Rights’, that is to say those rights that have a particularly close connection to the contract of employment rather than the broader notion of ‘social’ or ‘labour’ rights. The Charter has been praised for its inclusion of social and economic rights alongside more traditional civil and political rights, but it has always been open to question whether the Charter’s Employment Rights are, or should be, considered human rights in the first place. 

Space precludes a more in-depth analysis of the human rights pedigree of social rights but the most obvious answer to this question is that the Charter’s Employment Rights are included in a fundamental human rights document and must therefore be human rights. (See for further detail, Virginia Mantouvalou, ‘Are Labour Rights Human Rights?’ (2012) 3 ELLJ 151.) This assertion is strengthened if we look to the Charter’s Explanations, which act as interpretative guidance. We can see that a number of the Employment Rights derive from earlier fundamental rights texts such as the European Social Charter (ESC) of the Council of Europe, the European Convention on Human Rights (ECHR), International Labour Organization (ILO) Conventions, the International Covenant on Economic, Social and Cultural Rights (ICESCR) and the UN Declaration of Human Rights (UNDHR). It would seem, then, that the Employment Rights have long been considered rights worthy of international protection.

In addition, many of the arguments levelled at the justiciability of social rights generally do not apply to the Charter’s Employment Rights specifically. First, none of the four Employment Rights necessarily entail any state expenditure and do not, therefore, involve the distribution of resources, although there are likely to be costs involved for employers (including in the public sector). Second, the four rights considered have largely been fleshed out in legislation and so in this respect cannot be criticised as being vague, abstract standards. In any event, article 1 of the Charter which protects human dignity is said in the Explanations to constitute ‘the real basis of fundamental rights’. It is clear that human dignity is the value underpinning all of the Charter’s rights, including the Employment Rights.

British antipathy to the Employment Rights has a long pedigree. It has been thought that the UK had achieved an opt-out from the Charter but this notion was dispelled by the courts (NS judgment). Catherine Barnard has suggested that there is only one true UK opt-out from the Charter. (‘The Opt-Out for the UK and Poland from the Charter of Fundamental Rights: Triumph of Rhetoric over Reality?’ in Stefan Griller and Jacques Ziller (eds), The Lisbon Treaty: EU Constitutionalism without a Constitutional Treaty (Springer 2008).) This is to be found in article 1(2) of Protocol 30 which provides that ‘[i]n particular, and for the avoidance of doubt, nothing in Title IV (…) creates justiciable right applicable to (…) the United Kingdom except in so far as (…) the United Kingdom has provided for such rights in its national law’. This provision serves the role of ‘making sure that if any of the provisions of Title IV are in fact classed as rights they are not justiciable in respect of the UK’.

In other words, if any of the provisions in Title IV are found to be ‘rights’ as opposed to ‘principles’ then they will not be directly justiciable in UK courts. To a large extent, even this provision may not have been necessary. Article 52(5) of the Charter already provides that the principles (which the Employment Rights are presumed to be) only lead to rights to the extent that they are implemented in EU or UK law. Article 52(1) further emphasises the rights/principles distinction, providing that rights must be ‘respected’, whereas principles must merely be ‘observed’. (See further Case C-176/12 AMS (discussed here), the opinion in Case C-282/10 Dominguez; and Case C-356/12 Glatzel).

The right has viewed the Employment Rights with suspicion, fearing that they would ‘provide the basis for a judicial assault upon the UK’s (neo-) liberal employment legislation’. (Michael Dougan, ‘The Treaty of Lisbon 2007: Winning Minds, Not Hearts’ (2008) CMLRev 617,666.) Labour lawyers and trade unionists, on the other hand, have tended to be more supportive, indeed the Labour party’s shadow Brexit minister, Keir Starmer continues to insist that the Charter should be preserved post-Brexit, with one of his six red lines for supporting the final deal being the defence of rights and preventing a race to the bottom. A consideration of the effects of the constitutionalisation of Employment Rights in the Charter shows that both views may have been somewhat misconceived.

The Consequences of Constitutionalisation

The most concrete expression of the constitutionalisation of the Employment Rights can be seen in their use as both a standard of review and as a tool of interpretation. Human rights as general principles have been used to interpret EU law from the earliest days of the Union’s existence (see Stauder). It is unsurprising, then, that it is in the interpretation of EU law that the Charter’s impact has been most keenly felt.

First, it should be noted that the CJEU has long adopted a purposive or teleological approach to interpreting EU employment legislation. A good example is the Working Time Directive (WTD). The purpose of that Directive is to lay down minimum requirements intended to improve living and working conditions. The CJEU has consistently held that the Directive must be interpreted broadly and purposively as any other interpretation would frustrate the objectives of the legislation (see Jaeger). Thus, the purposive approach was adopted long before the introduction of the Charter with its recognition in article 31 that limited working time and paid annual leave are fundamental human rights.

Since the Charter’s adoption, the CJEU continues to adopt this purposive approach, referring to the recitals and the objectives of the legislation but now simply adding the Charter into the teleological mix. (See my article, ‘Interpreting Employment Legislation through a Fundamental Rights Lens: What’s the Purpose?’ (2017) 8 ELLJ.) For example, in one recent judgment (ANGED), the CJEU starts by reaffirming that paid leave is a ‘particularly important principle of European social law’. It then notes, almost in passing, that the right is also found in the Charter. It then moves on to look at the objectives of the legislation to find that the Directive must be interpreted broadly. In other words, the effect of the inclusion of paid leave in the Charter is merely confirmatory of the conclusion the CJEU would have arrived at using existing purposive methods of interpretation.

Human rights as general principles of EU law have also long been used as a ground for reviewing not only the legality of EU acts, but also Member State acts falling within the scope of EU law. This role has now been taken up by the Charter. As there is no case law on the matter, the potential for the Employment Rights to act as a standard of review of EU legislation must be largely speculative, although the equality field provides a useful example of the Charter’s potential. In Test-Achats, articles 21 and 23 of the Charter on non-discrimination and equality were relied on to strike down EU legislation permitting difference of treatment between men and women in calculating insurance premiums. It might be that the granting of constitutional status to the Employment Rights may also have the effect of limiting the ability of the Union to adopt legislation derogating from those rights. For example, article 31 may prevent further derogation from the Working Time Directive. (In relation to article 27 see Peter Herzfeld Olsson, ‘Possible Shielding Effects of Article 27 on Worker’s Rights to Information and Consultation in the EU Charter of Fundamental Rights’ (2016) 32 International Journal of Comparative Labour Law and Industrial Relations 251.)

The Employment Rights have already been used as a standard of review of national legislation, although it is somewhat difficult to separate issues of review and interpretation. In many cases the CJEU is first asked to interpret EU legislation or the Charter before then considering the compatibility of national legislation with that interpretation. The CJEU does not have the competence to review national law directly.

Article 30 has been a weak standard of review of national law, with the CJEU usually finding that the issue is outside the scope of EU law and so the Charter is of no application (For instance, see Case C-117/14 Poclava). Article 27 has served litigants little better (see AMS, where the ECJ ruled that this Article had limited legal effect). Article 28 has been confined to considering whether rules set down in collective agreements could be reviewed for compatibility with EU law (Case C-297/10 Hennigs).

Article 31 is the Employment Right that has been most frequently invoked in the review of national legislation, although this may be a reflection of the fact that the WTD (which is stated in the Explanations to be a source of article 31) has been the subject of the most litigation. In King, the question for the CJEU was whether a worker who had been afforded a right to paid leave only part way through the employment relationship (if at all) lost that right if he did not take steps to invoke it. The UK Working Time Regulations stipulated that employees must take their paid annual leave in the relevant year or it is extinguished. AG Tanchev concluded that ‘in the light of the considerable normative weight of the right to paid annual under EU, international and Member State law, requiring a worker rather than an employer, to take steps to create an adequate facility for the exercise of paid annual leave would unlawfully make the existence of the right subject to a pre-condition’.

Overall, the influence of the Charter’s Employment Rights has represented an exercise in continuity. The extent of the Charter’s added value appears to be that the CJEU is more comfortable in relying on a written human rights text. To this extent, the CJEU has been emboldened in that its long-held approach to treating the provisions of employment legislation (most notably the concept of paid annual leave) as important social rights has now essentially been codified in the Charter, although there is a certain irony in a return to textualism to bolster a purposive approach. More democratically legitimate it may be, revolutionary it is not. (The same cannot be said of article 16 which provides for the freedom to conduct a business which has been used to radically disrupt existing approaches to the interpretation of the Transfer of Undertakings Directive. See Case C-426/11 Alemo-Herron.) Does employment law really have anything to lose, then, in the Brexit process?

The Effect on the Employment Law Hierarchy

Traditionally, the relationship between EU law and national law has not strictly been viewed as hierarchical. Rather, the interaction between the CJEU and domestic courts has been seen as one of cooperation rather than confrontation. With the enactment of the Charter, a new constitutional dimension has been added. Most civil law countries are used to conceiving of the employment relationship as consisting of a clear hierarchy of sources. This has not been true of the common law. It really makes no difference in what order the sources of labour law in the UK are discussed and the hierarchy at national level, to the extent that one can be said to exist, is capable of evolution or indeed inversion. It is useful, then, to bear in mind that there are currently a number of confused hierarchies in UK employment law (1) between EU law and domestic law and (2) within domestic law itself.

The EU-domestic hierarchy (1) can rather crudely be characterised as follows: (A) The Charter, as a constitutional human rights document sits at the pinnacle of the hierarchy of norms; (B) general EU law comes next as it must comply with the Charter but can also be used as a standard against which national law must comply; (C) this is followed by domestic law. The hierarchy at domestic level (2) (with a focus here on legislation and the common law) has never been clear and may now be in a double state of flux due to the Charter and Brexit. At domestic level (where the legislation is outside the scope of EU law), the classification of the Employment Rights as fundamental human rights in the Charter appears to have made very little difference.

The relationship between the common law and employment legislation has always been intimate. We need only think of the fact that access to protective legislation usually depends on classification as a worker or an employee, the tests for which derive from the common law. The common law has at times, therefore, had the effect of impeding access to employee-protective measures (Tanton [1999] EWCA Civ 949). By and large, this has been an entirely domestic matter, with little consideration given to the human rights nature of legislation outside the scope of EU law.

Article 30 for example, provides that the right not to be unfairly dismissed is a human right, yet the EU has not adopted comprehensive legislation governing this right. This has meant that in the context of unfair dismissal, the UK courts have been free to adopt a largely employer-friendly approach. Indeed, contrary to the CJEU’s purposive approach in the employment field, common law judges tend to exaggerate contract law tests when applied to employment legislation. (Steven Anderman, ‘The Interpretation of Protective Employment Statutes and Contracts of Employment’ (2000) 29 ILJ 223.)

In certain circumstances, however, the common law has been malleable to legislative intervention, leading to an absorption of social rights standards. A particularly good example is the common law implied term of mutual trust and confidence. It was the need to come to a definition of the constructive dismissal concept that led the courts to develop this implied term in order to modify the notion of repudiatory breach found in commercial contracts (Malik [1997] UKHL 23).

Overall then, the fact that certain pieces of domestic legislation (outside the scope of EU law) have fundamental rights implications has largely been irrelevant to the domestic hierarchy of norms. Sometimes the common law impedes social legislation, sometimes it facilitates it. What, then, are the implications of Brexit for these already unstable hierarchies?

The EU Withdrawal Bill

The UK Government has made it clear that, in its opinion, there can be no real Brexit without removing the UK from the somewhat ambiguously termed ‘direct jurisdiction’ of the CJEU although there are currently ongoing attempts from both the Labour party and a number of Conservative backbenchers to ensure that the Charter is codified in UK law. Just two weeks ago, the Government was forced to postpone consideration of the Charter’s future role. In any event, it will fall on the UK courts to take on the full range of tasks associated with the interpretation and application of (former) EU employment legislation. Clause 2(1) of the Bill provides that EU-derived legislation applicable before Brexit will continue to have effect in UK law. Clause 5(1) makes clear, however, that the principle of supremacy of EU law will no longer strictly apply, although it will, according to clause 5(2) continue to govern the ‘interpretation, disapplication or quashing of any enactment or rule of law passed or made before exit day’.

This may have continued significance for the ability of litigants to enforce their EU-derived employment rights. In Benkharbouche, workers at the embassies of Sudan and Libya were found to be entitled to have their EU-derived employment law (discrimination and working time) claims heard in a UK Employment Tribunal despite the presence of an apparent conflict with the State Immunity Act 1978. Preventing reliance on these EU rights would breach article 47 of the Charter, which guarantees access to justice. (The Charter issues were discussed more fully in the Court of Appeal ruling, discussed here).

This judgment should also remind us of the protection that will continue to be provided by article 6 of the ECHR, the Convention right to a fair trial. Lord Sumption held that ‘a conflict between EU law and English domestic law must be resolved in favour of the former, and the latter must be disapplied; whereas the remedy in the case of inconsistency with article 6 of the Human Rights Convention is a declaration of incompatibility.’ (para 78)

Echoes of this judgment could also be seen in Unison, in which the Supreme Court quashed the order introducing Employment Tribunal Fees. That judgment starts by noting that many of the rights which are enforceable before Employment Tribunals are EU-derived rights which thus engages article 47 of the Charter. That judgment is also significant for the Court’s exploration of alternative avenues to human rights protection, notably the right to access justice at common law.

The effect of clause 5(2) is to create a new category of ‘retained EU law’ that must, somehow, fit into the existing hierarchy of norms. For employment law purposes, this may not an immediate issue. Much of the existing EU employment acquis has already been implemented in domestic legislation. However, there still remain serious doubts as to the precise status of post-Brexit CJEU case law (clause 6 retains that court’s pre-Brexit case law, with more flexibility to amend that case law) and whether this can be applied or departed from by the domestic courts. Lady Hale, the newly appointed President of the Supreme Court has called for clarification in this area. Most importantly, for our purposes, the Bill is clear that the Charter will not apply.

The Charter Will Not, Should Not and Need Not Apply?

Will Not?

Clause 5(4) of the Bill provides that ‘the Charter of Fundamental Rights is not part of domestic law on or after exit day’. This presents some major practical difficulties. First, it is often impossible to pinpoint precisely the influence of the Charter in CJEU decisions. Sometimes, the Charter is front and centre in employment law decisions. In others, it is barely mentioned (if at all). In earlier cases, the CJEU may simply have been reticent in its use of the Charter, recognising the sensitive nature of social rights and grappling (as it continues to do) with the distinction between rights and principles.

 Despite the somewhat sceptical view of the Charter’s influence in this field of law outlined above, it may well be that CJEU is simply not being explicit in its use of the Charter, relying instead on existing interpretative methods, but with an eye to Charter for guidance. In any case, the Charter and employment legislation enjoy a symbiotic relationship. It has been noted that the Explanations act as interpretative guidance. The explanations to the Employment Rights refer to existing EU employment legislation. Therefore, employment legislation must be interpreted in light of the Charter which must itself be interpreted in light of that very legislation. Decoding this cycle may prove an impossible task.

Should Not?

It has been argued that incorporating the Charter into domestic law post-Brexit would be undemocratic. This is because the interpretation of the Charter rights is entirely a matter of the CJEU. Eduardo Gill-Pedro argues in a recent blog that the CJEU interprets the Charter in the light of the objectives of the Union. Once the UK leaves the Union it will no longer share those objectives and so it would be undemocratic to rely on the Charter.

I would argue that the Charter does not merely serve as an overarching political guide to the future direction of the Union. Certainly, in the employment context it has a less ambitious remit, steering as it does, the interpretation and review of employment legislation. If the Government is committed to preserving the existing employment law acquis it should have nothing to fear from retaining the Charter. In any case, stripped of its constitutional status into the future, the Charter may prove little threat to the amendment or repeal of domestic employment legislation save to the extent that the supremacy principle continues to apply on a limited basis. There would, therefore, be no ‘intrusion’ of external values into the legislative process.

Need not?

Finally, it could be argued that whether the Charter applies or not really makes very little practical difference. First, as was noted at the start of this blog, the effect of the Charter’s Employment Rights, largely dismissed as mere ‘principles’ has been somewhat disappointing. Second, and more significantly, the Repeal Bill itself which at clause 5(5) preserves fundamental rights that exist autonomously of the Charter and ‘references to the Charter in any case law are, so far as necessary for this purpose, to be read as if they were references to any corresponding retained fundamental rights or principles’.

It is clear, then, the Charter will continue to play a role in the guise of those provisions that are already reflected in the general principles of EU law (although Schedule 1 to the Withdrawal Bill will limit the legal effect of those general principles). In many areas, but notably the equality field, it was the general principles that opened the way to the application of fundamental rights in employment law, although I accept that the adoption of the Charter had an emboldening effect even prior to its granting of full legal effect. (Compare Case C-144/04 Mangold and Case C-555/07 Kücükdeveci) Although, admittedly the status of the Employment Rights as general principles remains unclear and the Withdrawal Bill makes it clear in any event that the general principles cannot act as a standard of review for retained EU law.

Separating the role of the Charter and the general principles will in any case be difficult. We need only look to Norway to see how the general principles can have an effect on those not formally bound by the Charter. The European Free Trade Association (EFTA) Court has from the outset referred to judgments of the CJEU. The ‘homogeneity’ principle has had a profound impact, leading the EFTA Court to apply CJEU decisions that post-date the EEA Agreement. (Carl Baudenbacher, ‘The Relationship Between the EFTA Court and the Court of Justice of the European Union’ in Carl Baudenbacher (ed), The Handbook on EEA Law (Springer 2016) 179, 184.)

This principle governs the relationship between the European Economic Area (EEA) Agreement and EU law. Article 6 of the EEA Agreement provides that ‘[w]ithout prejudice to future developments of case-law, the provisions of this Agreement, in so far as they are identical in substance to corresponding rules of [the EU Treaties] and to acts adopted in application of [those Treaties], shall, in their implementation and application, be interpreted in conformity with the relevant rulings of the [CJEU] given prior to the date of signature of this Agreement’. The EFTA Court has held that ‘the objective of establishing a dynamic and homogenous European Economic Area can only be achieved if EFTA and EU citizens, as well as economic operators enjoy, relying on EEA law, the same rights in both the EU and EFTA pillars of the EEA’. (Case E-18/11 Irish Bank Resolution Corporation v Kaupping para 122.) The homogeneity principle extends to fundamental rights, with the Court referring to judgments of the ECtHR and CJEU as well as AG Opinions in fundamental rights cases (Case E-2/03 Asgeirsson and Others para 23; Case E-8/97 TV 1000 para 26).

Conclusion

The instincts of both labour lawyers and Charter sceptics may have been wrong. Far from representing a Trojan horse, bringing in its wake alien social rights to disrupt the common law’s traditional flexibility, the Charter’s Solidarity Title has proven to be rather a damp squib, except of course that it has actually had the effect of promoting the development of a countervailing business freedom found in article 16. In AGET Iraklis, for example, the CJEU held that article 16 is closely related to the four economic freedoms contained in the EU Treaties and can be used to defeat competing employment rights. (See also Alemo-Herron)

And yet, it is possible that we labour lawyers simply expected too much from a document that was explicitly adopted to codify the existing, cautious and piecemeal approach to fundamental employment rights. And yet still, it is possible to be too sceptical. The reality is that the Charter’s Employment Rights do have the potential to act as a bulwark against legislation that might undermine the rights of workers – in particular against any attempt to lower the standard of protection for employment rights below the level established by retained EU law.

The Charter’s use as a standard of review is perhaps its most powerful function and yet, at least in the employment field, this function has yet to be fully tested. It may be that we are leaving the Charter party before it has even got started. There is no doubt that the hierarchy of employment law norms is now in a state of flux and we do not know where the pieces may fall. What we do know is that, if the UK government gets its way, the Charter will not be among them. Without the Charter, the human rights landscape in the employment field will be somewhat impoverished. Left at the mercy of the common law, it is likely that UK employment legislation will travel in an altogether more deregulatory direction.

Barnard and Peers: chapter 9, chapter 20

Photo credit: Sky News

From Austerity Back to Legitimacy? The European Pillar of Social Rights: A Policy Brief

How Juncker can make ‘The European Pillar of Social Rights’ deliver a powerful message that the EU is an area of dignity, autonomy and social justice

Claire Kilpatrick (EUI), Elise Muir (Veni Fellow, Maastricht) and Sacha Garben (College of Europe, Bruges)

Since the financial crisis began and the EU's response to it included wider austerity in a number of countries, there have been doubts among many citizens that the EU is still committed to prosperity and rising living and working standards. The recently announced ‘European Pillar of Social Rights’ is an attempt to address this concern. In our view, the Pillar must include binding and high-profile pledges - on minimum wage and minimum income - in order to address citizens' concerns and for the EU to move on from austerity back to legitimacy.

The ‘European Pillar of Social Rights’ is a Commission policy initiative launched in March 2016. Our analysis reflects on the policy process and proposals to date. It explains why a High-Level Conference on the Pillar held in late January 2017 is the most important staging-post to date. We make proposals for orienting the Pillar initiative towards delivering dignity, autonomy and social justice in the EU and evaluate the constitutional implications, especially in terms of EU competence, of the commitments to introduce EU measures on minimum pay and income, and to restrict the Pillar to the euro-area states. The Pillar initiative seems likely to feed into the Commission White Paper on the Future of Europe launched in March 2017 which will be followed by a series of reflection papers of which the first mentioned is developing the social dimension of Europe. Accordingly it is an important new policy juncture for Social Europe which deserves analysis and input.

The Pillar is an open process with impressive civil society and EU institutional participation.

The High Level Conference organised by the Commission on 23 January 2017 on the European Pillar of Social Rights showed it attracts as much attention as it is mysterious. Numerous stakeholders alongside at least ten Commissioners, including President Juncker and Vice-President Dombrovskis, representatives of various EU institutions including President Tajani of the European Parliament and government ministers converged on Brussels to voice their opinions on the European Pillar of Social Rights.

The many interventions left little doubt that the precise legal shape and policy content of the Juncker Pillar remains undetermined and thus open for discussion. Hence, rather than reading the Pillar consultation document with its draft list of ‘principles’ as a quasi-finalised text with just its legal status and scope to be determined, the Pillar consultation is best seen as providing a vehicle for a wide range of proposals on resetting Social Europe.

Seen as such a process, the Pillar consultation has been a success. Over 16,000 individuals and organisations filled in the questionnaire issued as part of the Consultation and around 200 written contributions were submitted to the Commission. In Autumn 2016, national consultation events were held across the EU Member States. The very substantial NGO and union presence at the High-Level Consultation testifies to civil society engagement and investment in the Pillar consultation. Amongst these, the Social Policy Platform deserves to be highlighted. By bringing together since 1995 over 30 different social NGOs, including Age Platform Europe, PICUM (Platform for International Cooperation on Undocumented Migrants), EAPN (European Anti-Poverty Network), Housing Europe, ILGA-Europe, European Youth Forum and the European Disability Forum, it had an added legitimacy and voice in the process. It disseminated well-defined proposals for the Pillar. In light of Juncker’s announcement in his closing speech, it produced the most resonant proposal of a minimum income directive and a proposal on minimum pay via the European Semester.

The frames of discussion failed to give EU social rights and values their central place in the Pillar.

The European Pillar of Social Rights initiative comes after a decade which has altered perceptions of the EU as a benign or mildly positive force for social justice in Europe.  Sovereign debt and EMU governance are one important reason for this shift. Another relates to concerns triggered by free movement after the 2004 and 2007 enlargements. Political developments make it vital for the EU to use the Pillar to reassert the pursuit of social justice as a central part of its mission. Yet the urgency and importance of recentring the EU’s social justice roles and responsibilities was not fully acknowledged by many actors at the High-Level Consultation. There is a risk of doing too little.

Getting the frames of analysis right is crucial to guide the Pillar and the decisions and actions on its implementation. The frames or narratives which were very present during the High-Level Consultation were:

Social Europe was desirable provided EMU debt and deficit limits were respected;

Social Europe, the EMU and the internal market can or do happily co-exist;

Social Investment is the guiding frame for the Pillar of Social Rights and is not incompatible with social rights as human rights;

Adapting to new technologies and work platforms is the main priority for Social Europe.

In our view, these frames should not be those guiding the Pillar process or its implementation. Instead it is vital to make it explicit that the driving force for legal and policy change is the desire to protect the dignity and autonomy of individuals as well as social justice.

Dignity recognises the equal and intrinsic worth of every human being while autonomy requires political institutions not to deprive individuals of valuable options in areas of fundamental importance in their lives. In the absence of such an explicit message in the Pillar, or if the message is blurred by economic arguments in support for change, or made subject to economic conditions, or wishing away hard choices between the economic and the social, or attributing Social Europe’s malaise to new technologies and platforms, the message and its delivery will be imperilled. 

Protection of individuals and their dignity and autonomy has a firm EU law basis bolstered by national constitutional and international human rights law. Dignity is the foundational principle of the EU Charter of Fundamental Rights and many of the rights it contains are specifications of those foundational commitments. Hence ,for example, the Charter ‘recognises and respects the right to social and housing assistance so as to ensure a decent existence for all those who lack sufficient resources’ (Article 34(3)) and ‘the right to working conditions which respect his or her health, safety and dignity’ (Article 31). Most closely related to the value of autonomy in Social Europe are the EU Charter commitments to the right to engage in work and pursue a freely chosen occupation as well as the freedoms of association (Article 15), expression, information and consultation (Articles 11 and 27), to collectively bargain and take collective action (Article 28).

Beyond the EU Charter and human and constitutional rights’ commitments, the EU’s social justice and progress objectives feature prominently in the Treaties: in the TFEU’s preamble as the resolve to ensure the ‘social progress of their States by common action to eliminate the barriers which divide Europe’. Article 3 TEU conceptualises the EU as ‘a social market economy’ aiming at full employment and social progress, and provides that it ‘shall combat social exclusion and discrimination, and shall promote social justice and protection’. These objectives shall furthermore be mainstreamed across all EU policies, in accordance with Article 9 TFEU, which provides that ‘in defining and implementing its policies and activities, the Union shall take into account requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion’.

A European Pillar of Social Rights must be founded on these values and be concerned with their promotion and guarantee in a changed EU membership and EMU context.

The EU constitutional implications of a Eurozone pillar and minimum income and pay guarantees

The Commission President made a twofold announcement: an initial focus of the Pillar on the Eurozone and a dual guarantee for minimum pay and income.

We strongly endorse the proposals to focus on minimum pay and income for those living and working in Europe. These proposals not only address the preoccupation that the EU has threatened these protection floors, they also enshrine the values of dignity and autonomy in the EU. Yet to properly realise those values requires minimum pay and income instruments to apply to all EU Member States, not simply Euro area states. Sovereign debt arrangements applied to three non-euro area states and concerns that enlargement threatens the social floor are not confined to euro area states either. Minimum pay and minimum income are social guarantees of a fundamental nature that should apply across the EU. Indeed the social acquis, other than the brief opt-out by the UK between Maastricht and Amsterdam, has always applied to all those living and working in Europe and should continue to do so.

Moreover, to make them tangible, these EU minimum income and pay guarantees must be enshrined in visible and effective instruments. In both cases, our preference would be for legally binding Directives which should be complemented with soft law commitments in the European Semester and programme commitments in sovereign debt loan states.

This raises questions of EU competence to adopt such legally binding measures.

For minimum income, we agree with the Social Policy Platform that Article 153(1)(h) TFEU which allows for binding measures to be adopted using the ordinary legislative procedure for the integration of persons excluded from the labour market is appropriate.

It is widely assumed that it is impossible for the EU to adopt a minimum pay directive because Article 153(5) TFEU states that the social policy legal base ‘shall not apply to pay’. However, the Commission may have in mind a creative literal reading of the combination between Article 153(5) and Article 352 TFEU (the ‘residual powers’ clause of the Treaties). Article 153(5) TFEU could be read as excluding only the adoption of a minimum pay directive under the Social Policy Title of the Treaty without excluding other possible legal bases.

Article 352 TFEU would then be examined as a potential legal basis for a minimum pay directive. Article 352 can be used ‘where the Treaties have not provided the necessary powers’ but cannot be used to harmonise Member States’ laws or regulations ‘where the Treaties exclude such harmonisation’. However, this harmonisation exclusion could be read as applying only in those cases where the Treaties clearly in terms outlaws harmonisation such as in the areas of vocational training (Article 166 TFEU) and culture (Article 167 TFEU) (each allowing legislative measures to be adopted ‘excluding any harmonisation of the laws and regulations of the Member States’). It therefore would not apply to Article 153(5) TFEU. Following this interpretation, a minimum pay directive could be adopted if it achieved the unanimous Member State support required under Article 352 TFEU. It remains to be seen if such a line of reasoning would be accepted by the EU legislator.

The question could be raised whether the internal market legal basis of Article 115 TFEU could be used for the adoption of a minimum pay directive (Article 114 TFEU cannot be used, since Article 114(2) TFEU prevents reliance on Article 114(1) to protect the rights and interests of employed persons). There is an argument that such a measure, even if it would retain certain differences in minimum pay levels among EU Member States, would help reduce distortions in competition. Not only would it facilitate the application of the Posting of Workers Directive in the area of cross-border service provision, having a certain minimum pay level in all Member States could more generally help limit competition on wages. Whether the expected reduction in distorted competition would be sufficient to fulfil the conditions for use of the internal market legal basis is an open question, and would depend in part on at what (relative) level the wage would be set and whether this significantly decreases current differences in pay among the Member States.

However, even if this would be accepted as possible in legal terms, there are several reasons why Article 115 TFEU would not be the advisable course of action. If the directive is about achieving genuinely social objectives, the use of an internal market legal basis is unwise, as the Court is then more likely to interpret the measure in a market-friendly way in case of a conflict between ‘the social’ and ‘the market’ (which is arguably what happened in the case of the Posting of Workers Directive, as well as the Collective Redundancies Directive).  And as Article 115 TFEU requires unanimity as much as Article 352 TFEU, there is little strategic advantage in using it either.

Subsidiarity concerns will evidently be addressed by setting pay and income levels appropriate to each state. EU respect for the Council of Europe and commitment to social rights can be underlined by using that body’s European Social Charter commitments and elaboration of the right to a fair remuneration (Article 4(1)) and to social assistance (Article 13) as base-lines.

The former provision requires States ‘to recognise the right of workers to a remuneration such as will give them a decent standard of living’, and the European Committee of Social Rights has ruled that the lowest net wage must be above a minimum threshold, set at 50% of the net average wage, while state conformity will be assumed above 60% of the net average wage. The latter provision deems assistance appropriate where the monthly amount paid to a person living alone is not manifestly below the poverty threshold (50% of median equivalised income as established by Eurostat).

If it is decided necessary for transitional or political reasons to proceed with the nineteen euro area states or some other subset of EU Member States, this opens a further set of questions about the legal basis of measures for minimum pay and income as the legal bases indicated are for all Member States. Although the Lisbon Treaty added a new legal basis, Article 136 TFEU, for measures addressed only to euro area states, we do not consider this a suitable basis for minimum income and pay legislative proposals for two reasons. The first is that, although used (questionably) to create measures providing for EMU sanctions for euro area states (see C. Kilpatrick, ‘The New Economic Component of EMU: A Lawful and Effective Design?’ EUI Working Paper, ADEMU Horizon 2020 Project Series, 2016), its centre of gravity lies in strengthening coordination and surveillance under the European Semester. The second is that legislative proposals for minimum pay and income, based on dignity, autonomy and social justice, should not be grounded in a macro- economic competence.

What then are the alternatives for legislative measures on minimum pay and income covering only some EU Member States? One possibility is enhanced co-operation, a process whereby some Member States adopt EU law without unwilling Member States (see Article 20 TEU and Articles 326-334 TFEU). This can be used only as a last resort where the Council has established that the objective sought cannot be achieved within a reasonable period by the EU as a whole and hence could provide an alternative avenue for minimum income and pay proposals should EU-wide agreement prove unattainable.

Another possibility is ‘going outside’ the Treaties via an international agreement on these matters between only the participating euro area states or those states and other willing participants. The former was the model used in the sovereign debt crisis to set up the European Stability Mechanism in 2012 and its predecessor, the European Financial Stability Fund in 2010. The latter was the path chosen for the Fiscal Compact Treaty of 2012. However, such parallel integration however raises important legitimacy concerns: see S. Garben, ‘Restating the Problem of Competence Creep, Tackling Harmonization by Stealth and Reinstating the Legislator’, in: S. Garben and I. Govaere (eds.), The Division of Competences in the EU Legal Order: Reflections on the Past, the Present and the Future (2017, Hart Publishing).

This is not to deny Mr Juncker’s welcome recognition that the constraints imposed in the context of EU macro-economic governance justify special attention to socializing the European Semester. It is also certainly the case that EU legislative commitments can usefully be complemented by action in the European Semester. We make proposals to do so in the next section. 

Beyond the Juncker announcement: the Pillar needs to strengthen, broaden the social acquis and socialize the European Semester

At the time of the 60th anniversary of the Treaty of Rome, it may be recalled that the TFEU enables the adoption of EU legislation on a fairly broad set of social questions. For instance, Article 153 TFEU allows for the adoption of legislation on workers’ health and safety, working conditions or information and consultation of workers. A whole body of social legislation has been adopted at EU level and begs for modernisation. As mentioned in this note already, the Charter of Fundamental Rights of the European Union - that has the same legal value as EU primary law since the entry into force of the Lisbon Treaty - also contains a set of provisions on solidarity that have so far been little used.

Curiously, the ability for the EU to intervene through legally binding instruments had been subject to little attention during the High Level Conference. One could hence fear that the Commission will shy away from making hard law proposals. We would thus like to underline the importance of anchoring the Pillar in EU social policy and giving expression to the social provisions contained in the Charter. This is necessary to ensure that the Pillar indeed enhances the protection of the dignity and autonomy of individuals across Europe.

We have already made suggestions elsewhere to broaden and consolidate the EU social acquis (see S. Garben, C. Kilpatrick and E. Muir, Towards a European Pillar of Social Rights: Upgrading the Social Acquis, College of Europe Policy Brief #1.17). We suggested the adoption of (1) a Directive for the Protection of Dependent Workers, ensuring the application of the existing EU social and labour law measures to all dependent workers (2) a Protection against Precarious Work Directive, (3) a Directive for the Enforcement of Workers’ Rights.  We also called for (4) a Declaration safeguarding the integrity of the social acquis as an EU floor for worker protection.

A further re-centring of EU competences in the social field could lead to the re-adoption of Directives such as the Collective Redundancies Directive and the Directive on the Transfer of Undertakings on social legal bases. Indeed, these Directives remain abnormally grounded in EU internal market competences. It would be naïve to ignore the possibility of tensions between the economic and the social dimensions of these instruments, as illustrated by the recent AGET case before the CJEU (freedom of establishment v. domestic rules protecting against collective redundancies). The social nature of these legislative instruments ought thus to be consolidated. The assertion of such an autonomous mandate for social rights would allow to better articulate economic and social concerns in cases of tensions.

In the meanwhile, existing tools of economic governance could be re-adjusted to make more space for genuine social priorities. In that sense, the social platform wisely suggested to use the infrastructures of the European Semester to counter the current trend pushing Member States to readjust wages downwards. The Commission could indeed support the introduction of references to adequate minimum wages in the Annual Growth Survey as well as in the Country Specific Recommendations and keep track of the development of wage levels. This would give more bite to the employment policy prong of the European Semester.

To that effect, it is important that Country Specific Recommendations continue to be adopted on the dual legal bases of Articles 121(2) (economic policy) and 148(4) TFUE (employment policy). Key players at European level are thus not only those in charge of economic and financial affairs but also those responsible for employment and social policy who are more likely to ensure that due attention is paid to employment and social concerns indeed. Mark Dawson has usefully observed that the involvement of the latest category of actors could be further enhanced in the Macroeconomic Imbalance Procedure (MIP; see M. Dawson, ‘The European Semester: Displacing Social Policy in the New ‘New Governance’’ in C. Kilpatrick (ed.) The Displacement of Social Europe (forthcoming). On file with the author).

Indeed, to the extent that this procedure does result in suggesting - if not imposing – changes in domestic social and employment policies as part of the Country Specific Recommendations, the decision-making process leading to their adoption shall be adjusted. This should allow for a stronger involvement of actors specialised in the field such as the Council configuration on Employment, Social Policy, Health and Consumer Affairs. For instance, see the Report from the Council Employment Committee and Social Protection Committee on ‘Assessment of the 2016 Country-specific Recommendations (CSRs) and the implementation of the 2015 CSRs’ on labour market aspects (p 10) and on social protection and inclusion (p 21).

Now, the Juncker Commission may be considering reserving, or enhancing, the emphasis on minimum pay (and income) in recommendations specific to Euro area members. Although we would regret a focus on Eurozone members only, if this approach was adopted it would be all the more so important to refer to Article 148 TFEU (employment policy) as a legal base besides Articles 136 (Eurozone) and 121(2) TFEU (economic policy) in order to ensure adequate representation of social players and interests.

Conclusion

The most concrete elements of information received during the Conference are unquestionably the announcements made by Commission President Juncker. Let us be clear, sending a message that the EU guarantees (directly or indirectly) minimum income and wages would be most welcome; and giving flesh to such guarantees through tools available in the context of EU economic governance is understandable. This however should be framed with appropriate conceptual and legal tools placing individual protection at the core of the process and, to that effect, it ought to be backed up with a solid effort to modernise the EU social acquis.

In that sense, it is to be hoped – as hinted at by President Juncker himself - that the initiative for the European Pillar of Social Rights will live up to the standards of the ambitious social agenda called for by Commission President Delors in the late 1990s. It may be recalled that this had resulted in the Proclamation by 11 out of the 12 Member states of the Community Charter of Fundamental Social Rights and came with a strong impulse for the adoption of new legislation (point 28 of that Charter). In the new EMU and enlargement context, the legislative focus should be on providing an updated and more comprehensive EU floor of social rights and should be accompanied by proposals to socialise the European Semester both in its process and its substance.

Barnard & Peers: chapter 20

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