European Industrial Relations Dictionay - The legal framework

Employment and industrial relations in the EU are shaped by legal norms based on EU law. They define, on the one hand, the rights and obligations of employers and their organisations and, on the other, those of employees and trade unions. These rights and obligations may be contained in a variety of EU legal measures: regulations, directives and decisions. Increasingly, EU legal norms are also shaped by agreements that the parties voluntarily enter into and by soft law mechanisms.

Fundamental principles of EU law

Access to the judicial process is a general principle of EU law. The role of fundamental rights in the EU legal order is also important; for example, the European Court of Justice (ECJ) has held equality between women and men to be a fundamental principle of EU law and has upheld the justiciability of the principle of equal pay proclaimed in Article 157TFEU, thereby enabling this fundamental right to be enforced before national courts. The issue of justiciability and enforcement of EU law for long remained an open question with regard to the much wider range of fundamental rights of labour contained within the Community Charter of the Fundamental Social Rights of Workers, as adopted by the European Parliament in 2007. With the entry into force of the Treaty of Lisbon on 1 December 2009 the justiciability of the EU Charter’s fundamental individual and collective rights is one option open to the ECJ in order to strengthen enforcement of EU norms in the field of employment and industrial relations. It is part of the constant evolution of doctrine by the ECJ faced with Euro-litigation strategies: the use of EU law in litigation in order to achieve objectives in the employment and industrial relations fields.

Application of EU law within Member States

Individual workers, their representatives or trade unions may rely on EU law to claim individual employment or collective labour rights before national labour courts or tribunals in a Member State. The doctrine of supremacy of EU law means that EU law prevails over national regulations governing employment and industrial relations in the Member States. All Member States are obliged to ensure that their national law on employment and industrial relations is consistent with EU law and there is state liability to compensate individuals who suffer as a consequence of certain violations of EU law by Member States – for example, failing to implement a directive on time.

The application of EU labour law is promoted by the ECJ which insists that national labour laws must be consistent with EU laws on employment and industrial relations. The ECJ has developed a doctrine of the indirect effect of EU directives, which requires national courts, in cases involving rules of national law on employment and industrial relations, wherever possible, to interpret these consistently with EU law. ECJ rulings have established that EU laws may have a direct vertical or horizontal effect. In cases where the EU legal norm is clear and applicable, claims may be made to national courts and these are known as direct effect claims. Vertical direct effect applies in cases where there has been inadequate implementation of directives and where the EU legal norms that confer rights on individuals permit the pursuance of claims made against the Member State, public authorities or any other emanations of the state, for example, where public employers exist. Indeed, national authorities acting as public employers may not adopt measures that conflict with EU law.

The ECJ has declared that Treaty provisions that confer clear, precise and unconditional rights on individuals have both vertical and horizontal direct effects. For example, individuals may enforce rights under Article 157 TFEU (the right to equal pay for equal work) or Article 45 TFEU (the right to free movement of workers) by complaining to their national courts, in cases where these rights are violated either by public authorities or even by private employers. However, the ECJ has been unwilling to attribute horizontal direct effect to directives.

Enforcing legal rights

The enforcement of Union labour law on employment and industrial relations may be channelled through industrial relations mechanisms, judicial enforcement of EU law and judicial cooperation in the EU between national courts and the ECJ in Luxembourg. This has produced an EU judicial system, with the ECJ at its apex, handing down decisions on the interpretation of EU law which bind the courts of all the Member States.

EU law on employment may be implemented and enforced through industrial relations mechanisms – principally through collective agreements. Article 153(3) TFEU provides that a Member State may authorise management and labour to conclude collective agreements implementing directives. Further, many EU labour law directives allow the social partners to negotiate derogations to EU norms through collective agreements at different levels: national, regional or company level. European collective agreements negotiated through the European social dialogue are sources of EU norms on employment and industrial relations. The adoption of transnational framework agreements which have lacked a legally binding and effective enforcement mechanism have led to the European Commission proposal for an optional legal framework.

Enforcement of EU rights in the employment and industrial relations fields has also encountered procedural obstacles. These appear as obstacles to access to the judicial process itself. But there are also procedural obstacles that reveal themselves in the course of judicial proceedings aiming to enforce EU law. For example, the burden of proof in complaints of discrimination is shifted from the complainant to the respondent, where facts indicate that the complainant has been subjected to less favourable treatment.

Administrative enforcement of EU law is the responsibility of the European Commission. The Commission, as ‘guardian of the Treaties’, may take action (Article 258 TFEU) against Member State violations of EU law, or where Member States fail to take all appropriate measures to ensure fulfilment of their obligations under EU law (Article 4 (3) TEU), including those relating to employment and industrial relations. The Commission can initiate a procedure that may culminate in a decision of the European Court of Justice that both condemns the Member State and includes financial penalties (Article 260 TFEU).

Referring cases to the ECJ

Direct complaints can be made to the ECJ where EU institutions violate EU law (Article 263 TFEU). Article 263 TFEU makes a distinction between complaints directly to the ECJ by ‘privileged’ and ‘non-privileged’ applicants. ‘Privileged’ applicants may include a Member State, the European Parliament, the Council or the Commission. ‘Non-privileged’ applicants could include employees, employers and trade unions.

National labour courts may also refer disputes involving employment and industrial relations to the ECJ in Luxembourg, using the preliminary reference procedure. Article 267 TFEU allows for such references where the issue before the national court or tribunal raises a question of interpretation of European law, including provisions of the Treaty or labour law directives. Claims can be pursued by individuals, both with respect to an existing legal norm or to administrative actions in the Member State. However, the ECJ has been very strict in relation to access by individuals to judicial review of acts of the EU institutions and has refused to accept that collective organisations representing their members qualify as entitled to bring complaints directly to the ECJ, although they may bring claims on their own behalf. However, although direct complaints may not be possible, Article 37 of the Statute of the ECJ grants rights to third parties to intervene in proceedings where complaints have been brought by others and where they can show a justifiable interest. There is a debate over whether the European social partners should be treated as ‘privileged’ applicants, given their constitutional status in the European social dialogue or whether they should have to establish an interest in each case in order to intervene and thereby be treated like all other ‘non-privileged’ applicants.

Remedies

EU law on employment and industrial relations determines the framework of rights and obligations of employees and employers. However, the remedies available, when these EU rights and obligations are enforced, are those remedies which national courts apply when dealing with violations of national labour laws. To ensure that EU law is effectively enforced, however, the ECJ requires that the sanctions for breach of EU labour law are no less severe than those applied to breaches of national laws.

If damage is suffered as a result of breaches of EU law, the compensation awarded must be adequate and be an effective deterrent of employer violations. Claims for compensation for damage sustained, when individual rights guaranteed by EU law have been violated, are most common in the case of discrimination and equal treatment. In such cases, the ECJ has emphasised the need for adequate compensation so that the EU rights are effectively protected. The issue of the adequacy of compensation provided by national law for the enforcement of EU law arises also in the context of collective rights in the field of industrial relations.

In all cases, the procedures available for claiming remedies should not impose time limits that render it impossible to secure effective enforcement.

Soft law mechanisms

Finally, in some areas of employment and industrial relations, the EU has chosen measures of soft law, for example, codes of conduct and international/European framework agreements to achieve its objectives. Member States still have to take account of requirements imposed on them. National authorities, including courts, must also take account of and have regard to non-binding recommendations. In the specific case of the European Employment Strategy, the open method of coordination (OMC), elaborated in Article 148 TFEU, specifies the requirements on Member States with regard to the formulation of their national employment and labour market policies.