CIPD - EU employment policy

Subjects

Revised March 2008

This factsheet gives introductory guidance. It:

explains how employment policy is addressed by the EU Treaties
describes how proposed policy measures become EU law
includes the CIPD viewpoint.

How does the EU affect UK employment law?

The EU has a significant impact on UK employment law and employee rights. In recent years, HR practitioners in the UK have had to manage major changes to UK employment rights due to the implementation of laws emanating from Europe, and this trend looks set to continue.

EU Directives include laws on:

collective redundancies
transfer of undertakings (TUPE)
data protection
discrimination (gender, racial and ethnic origin, disability, age, religion/belief and sexual orientation)
employee rights in the event of employer insolvency at work
equal pay
health and safety
information and consultation (both national level and European Works Councils as well as consultation in the event of collective redundancies, mergers and takeovers)
protection of 'atypical' workers (for example part-time, fixed-term and teleworkers)
protection of pregnant workers
protection of young workers
rights of workers transferred within the EU and to the EU from third countries (sometimes referred to as the ‘posted workers’ directive)
rights of temporary agency workers (currently a legislative proposal)
working time (a proposed amendment is currently under consideration)
proposals for law on the provision of services in the EU.

What are the EU Treaties, and what do they say about employment matters?

The EU Treaties set out the EU's competencies in all policy areas, one of which is employment and social policy. Significantly, the draft EU constitutional treaty incorporates a Charter of Fundamental Rights which would have workplace relevance, but this draft treaty has been shelved for the time being following negative votes in France and the Netherlands.

The EU has a long-standing commitment to improved working conditions, although the scope and legislative procedures enabling EU intervention have widened considerably through amendments to the EU Treaties in the 1980s and 1990s. The last amendment to the EU Treaties was the Treaty of Nice which came into force in February 2003.

The current Treaties include the following employment commitments:

EU Member States to work towards development of a coordinated strategy for employment. National employment policies must be consistent with the EU's broad economic guidelines.
The EU is to contribute to a high level of employment throughout the EU by encouraging cooperation between Member States and, if necessary, complementing their action.
The EU publishes a joint annual report on the employment situation in the EU and guidelines that Member States shall take into account in their employment policies. National reports are drawn up and specific recommendations are made to Member States. In 2000, EU heads of government pledged to create the world's most dynamic and competitive economy by 2010, and agreed ambitious labour market goals that are enshrined in the Lisbon Strategy¹. The annual national employment reports identify reforms that particular Member States should take in order to improve their labour market performance and employment record, consistent with the Lisbon Strategy.
An EU Advisory Committee to support these initiatives, in particular labour market and employment policy coordination between Member States, with members appointed by EU Member States.
The EU to propose initiatives to develop the exchange of information and best practice on the basis of comparative analysis and promotion of innovative approaches (these measures will not be subject to laws and regulations).

In addition, the Treaties include the following commitments to workplace matters:

A commitment to improved living and working conditions with a view to harmonisation, proper social protection; dialogue between management and labour; the development of human resources with a view to lasting high employment; and combating exclusion. EU measures should respect the need to maintain economic competitiveness.
The EU will 'support and complement' Member States in the following areas:
- improvement of the working environment and protection of worker health and safety
- working conditions (this term is not defined but the issues that might be included are potentially very wide-ranging)
- social security and social protection of workers
- protection of workers when their employment contract is terminated
- information and consultation of workers
- representation and defence of the interests of workers and employers (including co-decision)
- conditions of employment for third-country nationals legally residing in the EU
- integration of persons excluded from the labour market and combating social exclusion
- equality between men and women with regard to labour market opportunities and treatment at work
- modernisation of social protection systems.
To achieve the above objectives, the EU is allowed to encourage cooperation between the EU Member States, and to propose EU legislation that will establish legal minimum requirements that must be implemented into national laws. The EU should avoid imposing administrative, financial and legal constraints on small and medium-sized enterprises.
A unanimous decision of the Council of Ministers is required only on those EU legislative proposals that concern social protection and social security, protection of workers' interests where their employment contract is terminated, and conditions of employment for third country nationals legally resident in the EU. All other policy issues defined under Article 137 are decided by co-decision between the European Commission, European Parliament and the Council of Ministers. Co-decision means that the European Parliament has a much more influential role in EU law making, and that no one Member State can veto legislation.
The EU has a longstanding commitment to equal pay for equal work or work of equal value. 'Pay' is defined as the ordinary basic or minimum wage, whether cash or in kind, which the worker receives directly or indirectly from his employer. Member States are also allowed to pursue positive action measures; the Treaty permits them to adopt measures to make it easier for the under-represented sex to pursue a vocational activity or to prevent or compensate for disadvantages in professional careers.
The Treaty of Amsterdam, which entered into force in May 1999, adopted an important new provision enabling the EU to propose legislation to combat discrimination based on gender, racial and ethnic origin, religion, belief, disability, age or sexual orientation. Legislative proposals based on this Treaty provision must be unanimously agreed by the Council of Ministers. Two anti-discrimination directives (one on racial and ethnic origin, and one on religion, belief, disability, age and sexual orientation) were agreed in 2000.

Who are the EU social partners, and can they bargain?

The EU social partners are:

European Trade Union Confederation (ETUC) - the confederal organisation representing trade unions, and which includes the British TUC
Union of Industrial and Employers' Confederations of Europe (UNICE) - the confederal organisation representing leading national employer organisations, and which includes the CBI
European Centre of Enterprises with Public Participation (CEEP) - which represents public sector organisations.

The European Commission is also encouraging dialogue at sectoral level; some sectoral social partners have already concluded agreements on workplace issues, and a growing number of these organisations have indicated their willingness to engage in EU social dialogue (eg the retailing and chemical sectors). The trend to involve sectoral organisations is of particular relevance to companies, especially where they are not directly involved in such sectoral discussions and must rely on European professional employer associations to represent diverse interests. The EU’s legislative procedures give a substantial law-making role to social partners as well as the implementation of EU laws at country level.

The following procedures define the social partners' involvement in EU law making:

The European Commission to submit proposals in the social policy field to the EU social partners and to invite their views over a six-week period. If the European Commission subsequently considers that EU action is advisable, it will again consult the EU social partners, over another six-week period, on the content of the envisaged proposal. The EU social partners are required to submit an opinion to the European Commission, and indicate their willingness to negotiate a European-level agreement; if they agree to commence negotiations, the social partners have nine months to complete their discussions and either conclude an agreement, or decline to agree. The social partners can agree to extend their discussions beyond nine months. If no agreement results, the European Commission retains its full legislative rights and can propose draft EU legislation without further consultation of the social partners. Examples to date of EU-level agreements are parental leave and leave for family reasons, the protection of fixed-term workers, the protection of part-time workers, the protection of teleworkers, and workplace stress.
EU social partners’ agreements can be implemented either by EU directive and national implementing laws, or by social partners at national level. If agreements are implemented by means of an EU directive, the EU Council of Ministers must agree the social partners’ text, by qualified majority vote, which prevents one Member State from blocking agreement. The Council is prohibited from amending the content of the social partners agreement.

When should EU Member States implement directives?

EU directives specify an implementation date by which time the directive must be transposed into the national law of each EU Member State. Normally, implementation is set for a specific date between two and three years after agreement of a directive. Directives are often formulated in fairly general terms (albeit setting minimum legal requirements to be achieved), and this leaves Member States room for manoeuvre in implementing the provisions. The European Court of Justice (ECJ) has ruled that during the period given for implementation of EU directives, Member States cannot introduce policy measures or laws which run counter to a particular directive. In other words, the implementation period is to be used for approximating national laws rather than deviating from EU law.

What happens when Member States fail to implement EU laws?

If a Member State fails to transpose a directive into national law in time, or does so inadequately or incorrectly, the European Commission may bring legal action against that country. Ffor example, the European Commission launched in July 2004 proceedings against a number of EU Member States for late and/or inadequate implementation of the directives on race and ethnic origin, age, sexual orientation, religion/belief and disability. To date, ECJ judgments have had a significant impact in the employment protection field, particularly in the area of transfer of undertakings, equal treatment and pay. Importantly, ECJ judgments handed down regarding the laws of one Member State may also have implications for the law of another Member State.

Where a Member State repeatedly fails to implement an ECJ judgment, the European Commission can recommend that the Member State pay a daily fine until its national law is amended.

How can we find out what the EU will cover next?

The European Commission publishes an annual work programme listing all policy initiatives planned for that particular year. Regarding employment policy, the European Commission also published in 2005 a Social Agenda which set out a number of employment initiatives that the EU intends to address over the coming five years. Initiatives listed include:

managing company restructuring through social dialogue
a voluntary framework for transborder collective bargaining
addressing the demographic challenges facing the EU
more initiatives on equality
a review of current EU labour law.

Many of these issues will have important implications for employers. Both the annual work programme and Social Agenda can be seen via the website links given at the end of this factsheet.

In November 2006, the European Commission published a Green Paper² which:

asks how labour law – whether at national or EU level – can support the Lisbon Strategy
puts forward a 'flexicurity' agenda intended to help ease labour market transitions
discusses the ambiguities about employee status and claims that two in five members of the EU15 workforce are in 'non-standard' forms of work
focuses on labour market segmentation – 'insiders' and 'outsiders' - and asks what minimum guarantees could be provided for those on less stable contracts
refers to issues about temporary agency workers and the scope for modifying EU legislation to provide greater flexibility on working time.

The paper is intended to provoke debate on good practice, with the emphasis on guidance and enforcement, and does not put forward specific proposals for new legislation.

The CIPD viewpoint

The EU exercises a significant influence on employment regulation in the UK. Under the Treaties establishing areas of competence on workplace issues, the European Commission has a wide remit to seek to co-ordinate national policies on labour market matters and to initiate workplace regulation. Over the last 20 years or so, the Member States have agreed extensions to the EU’s involvement on employment matters, particularly through the provisions for EU social dialogue, and the use of majority voting and the co-decision procedure for agreeing legislative proposals. The EU’s current priorities are reflected in its annual work programme and other publications such as the Social Agenda published in 2005; these policy statements indicate the issues on which further EU initiatives may be expected. Following the accession in 2004 of 10 new member states from eastern and central Europe and deepening economic problems for the EU, there would appear to be some agreement to review the scale of regulation flowing from Brussels.

Useful contacts

References

Growth and jobs: working together for Europe's future. [online]. Europa. Available at: http://europa.eu.int/growthandjobs/index_en.htm
EUROPEAN COMMISSION. (2006) Modernising labour law to meet the challenges of the 21st century. COM (2006) 708. Brussels: The Commission. Available at: http://ec.europa.eu/employment_social/labour_law/
green_paper_en.htm

EU employment policy