UNICE opens door to negotiations on rights of fixed-term contract workers

In December 1997, the European employers' organisation, UNICE, declared its willingness to enter into negotiations with ETUC and CEEP - under the procedures of the Maastricht social policy Agreement - on the rights of workers on fixed-term contracts. This issue was excluded from the 1997 negotiations on part-time work at the request of UNICE, as different issues were seen to pertain to different forms of "atypical employment". We outline the chequered history of Commission attempts to legislate on temporary and fixed-term contracts - whose use has grown significantly across the EU during the 1990s - and examine current provisions in the Member States, as well as the positions of the EU social partners.

In December 1997, the Union of Industrial and Employers' Confederations of Europe (UNICE) declared its willingness to enter into negotiations with the European Centre of Enterprises with Public Participation and of Enterprises of General Economic Interest (CEEP) and the European Trade Union Confederation (ETUC) on the rights of workers on fixed-term contracts. These negotiations would be held under the procedures set out in the Maastricht social policy Agreement. This move follows the successful conclusion of similar negotiations on parental leave in December 1995 (TN9801201S) and on part-time work in June 1997 (EU9706131F). From the outset of the latter negotiations, UNICE had rejected the trade unions' desire to negotiate on all forms of "atypical employment", because of what it perceived to be the very different issues pertaining to part-time and to fixed-term employment. Regulation of fixed-term employment currently varies significantly between Member States, particularly in relation to the possible maximum duration of such contracts and the restrictions pertaining to their use. These are the issues which will be of particular concern to the trade union side, now that ETUC has agreed in March 1998 a mandate to enter into negotiations.

Background

Temporary and fixed-term employment now makes up some 12% of EU employment, with figures steadily rising during the 1990s. This form of employment is particularly prevalent in Spain, Portugal and Finland, and affects women more than men (12.5% and 11% respectively in 1996). The European Commission has long been concerned that such employees suffer from lower employment protection and in-work benefits than their counterparts on open-ended contracts. It is argued that the absence of safeguards at the European level could lead to "social dumping". The Commission has therefore been keen to legislate for equal rights for this group of so-called "atypical employees" since the early 1980s.

A draft Directive on temporary work was issued in 1982, but failed to find approval in the Council of Ministers. The 1989 Social Charter and accompanying Action Programme revived the debate in the light of the increasing numbers of "atypical" employees. Two draft Directives, based respectively on Article 100 and Article 100a of the Treaty were issued in 1990, aimed at achieving equal access for part-time and temporary workers to social and employment protection as well as in-house training and occupational benefits. In addition, companies were to be obliged to make explicit reasons for using temporary employees; and employee representatives were to be consulted prior to the recruitment of part-time staff. A third draft Directive, based on Article 118a, covered the health and safety of temporary workers, including a right to information about the health and safety hazards present in the workplace, and was adopted with few problems in 1991.

As a result of the incompatibility of the draft Directives based on Articles 100 and 100a with existing regulation in a number of Member States, and the perceived abuse (in the eyes of the UK Government in particular) by the Commission of a Treaty article allowing for qualified majority voting (100a), these draft Directives failed to gain legislative approval. There were attempts to revive these Directives in 1993-4 which failed, mainly as a result of UK government resistance.

In the light of the provisions of the Maastricht Treaty and the Essen employment strategy, the Commission's approach changed. While the Directives of the 1980s and early 1990s aimed at regulating and restricting employers' use of "atypical employment", these forms of employment were now coming to be perceived as opportunities for the creation of new employment opportunities. They were seen to respond both to the need of employers for greater flexibility, and the desire of employees to reconcile work and family life while retaining employment security at the same time.

In 1995, the Commission launched consultations on "flexibility in working time and security for workers" under the social policy Agreement annexed to the Maastricht Treaty (excluding the UK). After two rounds of consultations, it was decided to go ahead with negotiations on part-time work only, as UNICE perceived the issues involved to be too dissimilar to deal with all forms of atypical work at the same time. The negotiations on part-time work were successfully concluded in June 1997 and a Directive implementing the social partners' agreement was passed by the Council of Ministers in December 1997 (EU9712175N).

Current provisions for workers on temporary and fixed-term contracts in the EU

The table below gives figures for the level of temporary and fixed-term working in the EU (plus Norway) and briefly outlines the regulation of these forms of employment - the information does not include temporary agency work. It shows that the proportion of employees on temporary and fixed-term contracts is currently particularly high in Spain, Portugal and Finland, with an EU average of around 12%. Regulations pertaining to these forms of employment vary significantly between Member States, particularly in relation to the possible maximum duration of such contracts and their renewability.

Temporary and fixed-term work in the European Union (and Norway)
Country Temporary workers as % of labour force* Limits on use - eg objective reasons or no limits Maximum length including renewals Employment rights compared with"permanent"staff **
Austria 3% men, 4% women No limits except if contract terminated before due date. Two consecutive terms. Pay must bear link to full-time rate. Other rights same as permanent staff except statutory holiday, severance and sick pay.
Belgium 5.1% By law defined term/task or replacement (CA gives circumstances). Two years for temporary replacement. Same rights as permanent staff (pay, terms).
Denmark 11.9% No limits. No limits. By CA, same as permanent staff.
Finland 13.5% By law, temporary replacement, trainees or special nature of business/task. Two consecutive terms. Same as permanent staff since covered by CA applying to company.
France 10.2% By law, defined/temporary task - temporary replacement, workload, seasonal work, job creation/ training. Maximum 24 months exceptionally, renewable twice. By law, same as permanent staff in terms of pay rates, leave (or pay option) plus severance bonus.
Germany*** 9.5% Before 1985, use "with material reason". Post 1985, also "without material reason"', including new recruits or completion of training 18 months maximum for contract without material reason, renewable with material reason .By law same as permanent staff. Covered by CA.
Greece 14.7% By law, if justified by nature of work. No limits. By law, same as permanent staff in terms of pay and leave.
Ireland 8.3% No limits. No limits. No statutory guarantee of equal rights with permanent staff.
Italy 5.4% By law, in circumstances inherent in work - eg temporary replacement or special task. One renewal for no longer than first term. 24 months maximum for training contracts. By law same as permanent staff.
Luxembourg 3.3% By law, nine sets of circumstances, including youth jobs/training. Maximum two years including renewals, renewable twice. By law same as permanent staff.
Netherlands 7.7% By law, specific term/task, temporary replacement. No limits. By law same as permanent staff.
Norway 9%-10% By law has to be justified by nature of task (eg temporary replacement, trainee). Within limits. Same as permanent staff, except where linked to length of service beyond contract term.
Portugal 16.5% By law, wide circumstances including new activity and first jobs. Maximum term of three years including renewals (two for new activities), renewable twice. By law same as permanent staff.
Spain 32.2% By law, special task, workload, temporary replacement, new activity or job creation. Time limits on some contracts. Same as permanent staff. Case law rules temporary workers must be covered by CA.
Sweden 11.5% By law for fixed time/task - temporary replacement, workload, prior to military service, post-retirement or probationary employment. Time limits on some contracts, renewable up to a certain limit. Same as permanent staff. Under CAs, staff on contracts of under three months may be entitled to holiday pay, and not leave.
UK 5.3% No limits. No limits. No statutory guarantee of equal rights with permanent staff.

Source: Report from the ETUCE colloquium on equal opportunities, 1995.

* Figures from OECD Employment Outlook July 1993.

** This excludes probationary periods, termination arrangements and benefits linked to service, where special provisions often apply.

*** Figure refers to the former West Germany.

CA = collective agreement. Table excludes temporary agency work.

Current social partner positions

Following UNICE's announcement of its willingness to enter into negotiations on the rights of workers on fixed-term contracts under the social policy Agreement, the ETUC executive committee decided on a mandate for such negotiations on 5/6 March 1998. Prior to making a decision, ETUC sought clarity on UNICE's position in relation to the initiation on negotiations on information and consultation rights at national level (EU9711160N). UNICE had asked the Commission for an extension to the deadline by which to give its response on this matter, and a decision is now expected in March (see below). ETUC deputy general secretary, Jean Lapeyre, said that ETUC will be pressing for the negotiations to cover issues such as the maximum duration of fixed-term contracts, limits on their extension and the provision of equal rights for fixed-term employees.

Commentary

The regulation of temporary and fixed-term employment relationships has been on the EU legislative agenda for over 15 years and autonomous negotiations between the social partners on this matter now appear the best chance for breaking the impasse. ETUC is keen to commerce negotiations on this issue and on national information and consultation at the same time. However, UNICE has argued that it sees these two issues as being unrelated. The ETUC executive committee decided on a mandate for both sets of negotiations on 5 March 1998. UNICE is currently undertaking written consultations with its members on negotiations on national information and consultation and will formulate a decision on this portfolio by 15 March. ETUC has stated that it would call upon the Commission to initiate legislation in the field of information and consultation at national level should UNICE decline the invitation to negotiate on this subject. On the whole it seems unlikely that the possibility of negotiations on fixed-term employment will be scuppered by the decision on how to take forward the activities in relation to national information and consultation. (Tina Weber, ECOTEC Research and Consulting Ltd)

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