Court rules in favour of extension of shipbuilding collective agreement

In January 2010, the Oslo city court ruled that the decision to extend the collective agreement for the shipbuilding industry was lawful. The petition had been filed against the Norwegian state by nine shipbuilding yards claiming that the decision to extend the collective agreement was in conflict with the European Economic Area agreement. Employers are pursuing the matter at the Court of Appeal; they believe that no lawful grounds were given for extending the agreement.

Tariff Board extends agreement

Since the enlargement of the European Union in 2004, the Norwegian Tariff Board (Tariffnemnda) – which is the governmental body vested with the authority to decide on extensions of collective agreements – has made several rulings in favour of extension to ensure that foreign workers are paid in accordance with the relevant collective agreements (NO0612029I, NO0509103F, NO0411103F). In October 2008, the sectoral collective agreement in the field of engineering was extended for the shipyard industry (NO0808019I). The reason behind the demand of the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) for an extension of this agreement was indications suggesting that foreign workers in the shipyard industry were subject to wages and working conditions that were inferior to those of their Norwegian counterparts.

Employers criticise decision

The Tariff Board decided to extend provisions in the collective agreement regulating pay, working time, travel expenses, and food and lodging. However, the board’s decision was made against the vote of the member from the Confederation of Norwegian Enterprise (Næringslivets Hovedorganisasjon, NHO), representing the employer’s interests in the case, and it met with criticism from the owner-side of the industry. They argued that the decision did not comply with the provisions of the Act relating to the general application of wage agreements, known as the General Application Act (53Kb PDF) (Allmenngjøringsloven).

Furthermore, in the opinion of the employers, the decision to extend provisions that ensured higher standards than the minimum standards established in the legal framework was in breach of the European Economic Area (EEA) agreement, which is binding on the European Free Trade Association (EFTA). EFTA extends the EU internal market to its members Norway, Iceland and Liechtenstein. Moreover, the Tariff Board decision was also believed to contravene EU Directive 96/71/EC concerning the posting of workers in the framework of the provision of services.

Nine shipyards decided to bring civil action against the Norwegian state, claiming the decision to be invalid. The action was supported by NHO, while LO sided with and provided judicial support to the Norwegian state. The oral hearing in the case came shortly after the EFTA Surveillance Authority (ESA) had rejected a complaint by Norwegian Technology (Norsk Teknologi) – a sectoral federation of NHO – claiming that the General Application Act was in conflict with the EEA agreement (NO0908049I).

Decision ruled lawful

The Oslo city court ruled that the decision by the Tariff Board was lawful both under national law and under the EEA agreement. The extension of provisions regarding pay, working time as well as food and lodging were not considered to be in conflict with the posted workers directive, nor were they deemed to contravene the freedom to provide services as established in the EEA agreement. Both the question related to working time and that concerning pay had already been approved by the ESA through its rejection of the complaint put forward by Norwegian Technology. However, there was some controversy surrounding the question on food and accommodation, and the extent to which these provisions were in line with the posted workers directive’s regulation on minimum wages. The city court concluded that the Tariff Board had not committed any procedural errors that made the decision invalid.

Commentary

The social partners’ responses to the judgement were hardly surprising. LO claimed that the ruling came as no surprise, and that they never doubted the direction of the court’s ruling. NHO, on the other hand, still insists that the administrative provision providing for an extension of the agreement is unlawful and has decided to make an appeal to the Court of Appeal. In NHO’s opinion, no lawful grounds were given for extending the collective agreement. The condition under which the Tariff Board may allow for an extension is that evidence is made available to prove that foreign workers are subject to wages and working conditions that are inferior to those of their Norwegian counterparts.

NHO referred to the fact that the government – as recently as in the national budget of 2009 – held that the measures introduced to combat social dumping had already had an effect. The extension of the collective agreement must therefore, in the opinion of NHO, be seen as unnecessary. Many of the shipbuilding yards, according to NHO, felt that the decision of the Tariff Board to extend the agreement implicitly accused them of treating their employees badly.

The date of the Court of Appeal hearing has not yet been set. One of the first issues to be decided by the court will be whether it should ask the EFTA court for a preliminary ruling. This is one of the demands put forward by the shipbuilding yards and NHO.

Kristin Alsos, Fafo

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