ESA approves Norwegian measures against social dumping

Since the EU enlargement in 2004, the Norwegian government has introduced a number of measures to combat low-wage competition in the Norwegian labour market and to ensure that the wages and working conditions of foreign workers match standards in Norwegian working life. Several of the measures, which have been introduced under the General Application Act, have been assessed and approved by the European Free Trade Association (EFTA) Surveillance Authority (ESA).

Compliance with the European Economic Area (EEA) Agreement by the members of the European Free Trade Association (EFTA), Norway, Iceland and Lichtenstein is monitored by the EFTA Surveillance Authority (ESA). In this respect, ESA serves the same function as the European Commission towards EU Member States.

Since the enlargement of the European Union in 2004, the Norwegian government has introduced a number of measures to:

• combat low-wage competition in the Norwegian labour market;

• ensure that the wages and working conditions of foreign workers are in line with ordinary standards in Norwegian working life.

Several of these measures have been subject to assessment by ESA.

ESA approves Norwegian control measures

In March 2011 ESA concluded that several key measures introduced to prevent social dumping are not in conflict with the EEA Agreement. The measures are all linked to the Norwegian mechanism for making collective agreements generally applicable, that is, the act relating to the general application of collective agreements (The General Application Act).

Purchasers of services have a duty to inform their suppliers of their obligations arising from the relevant regulation adopted under the General Application Act. In addition, suppliers of services must ensure that pay and working conditions provided by their subcontractors comply with the applicable regulation. This duty to check wages and working conditions can be fulfilled in various ways such as:

• providing information about the relevant regulation;

• making it a contractual obligation between the parties;

• making random inspection of documents on wages and working conditions.

In addition, employee representatives can request information about pay and working conditions at organisations performing work covered by regulations adopted under the Act.

Suppliers of services and contractors (who contract out parts of their contractual obligations) are jointly and severally liable for the payment of wages, overtime pay and accrued but unpaid holiday pay, as laid down in general applicable collective agreements (NO0705019I, NO0902039I). These regulations supplement the overall supervisory responsibility of the Norwegian Labour Inspection Authority (Arbeidstilsynet) in this area.

ESA is of the opinion that the measures are in line with the Posting of Workers Directive (96/71/EC), which establishes conditions for employees working temporarily in another EEA member state. According to the directive, member states must take appropriate measures to ensure that businesses posting workers in another member state comply with established minimum criteria. ESA viewed the measures introduced by the Norwegian government as being appropriate to ensure compliance with the directive.

ESA also considered whether the right of access of shop stewards to information about subcontractors’ pay and working conditions constituted a restriction on the free movement of services. It concluded that it does not hinder or make the provision of services less attractive and therefore does not constitute a restriction on the free movement of services.

Commentary

Several measures introduced by the Norwegian government in recent years to combat social dumping have been subject to examination by ESA. One reason for this is that ESA expressed a wish to look into new regulations. However, a number of the measures have also been submitted to ESA as part of appeals from the employer side in Norway (NO0908049I). So far ESA has approved the General Application Act.

However, ESA has initiated a formal infringement procedure against Norway about to a regulation that requires contracting authorities to incorporate a special clause into their contracts committing contractors to monitor how well their subcontractors respect collective agreements or normal wage and working conditions. As a result the Ministry of Labour has taken the initiative to amend this regulation.

Another EU legislative issue that remains unresolved is whether the decision to make parts of the collective agreement for the ship and offshore building industry generally applicable is in line with the EEA agreement (NO1003019I). The Norwegian Court of Appeal (Borgarting lagmannsrett) has asked the EFTA Court for a preliminary ruling in connection with a lawsuit filed by nine shipyards against the Norwegian state.

Kristin Alsos, Fafo