The Norwegian Government has won the latest round in a case concerning the legality of extending collective agreements in the country’s shipbuilding industries. In May 2012, the Borgarting Lagmannsrett, Norway’s court of appeal in Oslo, ruled that the decision to extend an agreement on payment for overnight stays was not violating EU law, and was therefore valid. The shipyards are still determined to overturn the ruling, and have now appealed the case to the Supreme Court.
Nine shipyards, supported by the Confederation of Norwegian Enterprise (NHO), took legal action against the Norwegian state over the extension of collective agreements for shipyards and offshore yards.
The agreements stipulated that foreign service providers should be obliged to pay compensation to workers who have to make overnight stays away from home, and that they should pay expenses for travel, board and lodging. The shipyards argue that the decision was in breach of Norway’s obligations under the European Economic Area (EEA) agreement.
The lower court ruled in favour of the government, but the ruling was then taken to the appeal court (NO1003019I). An advisory opinion from the Court of Justice of the European Free Trade Association States (EFTA Court) was mainly in favour of the shipyards, arguing that the demands were in breach of the Posting of Workers Directive (96/71/EC) (NO1202029I).
The Norwegian Appeal Court ruled that paying overnight compensation as well as expenses for board and lodging was in keeping with the Posting of Workers Directive and the Treaty’s rules regarding the freedom of services.
The court inferred that the overnight compensation rule constituted a form of minimum wage that may be levied on foreign service providers in accordance with the Posting of Workers Directive. The provision constituted, admittedly, a restriction on the freedom to provide services, but in the court’s opinion it was justified on grounds of social protection of workers. The provision included both domestic and foreign workers, and the court therefore argued that it was not discriminatory.
The EFTA court assumed that compensation for travel, cost and/or accommodation may only be introduced if there is a threat to public order – in other words, a genuine and sufficiently serious threat affecting fundamental interests of society. The EFTA was of the opinion that the information placed before the court did not provide evidence that this was case.
The appeal court, however, did not give much weight to this statement since the question had not been subjected to proper court procedure in the EFTA court. The appeal court had, in other words, more information than the EFTA court in this matter.
The court assumed that if no compensation of expenses was given it would lead to a substantial wage gap between Norwegian and foreign workers. As a consequence it would put a strain on the whole system of pay formation in the country, including the collective bargaining system, as well as union density in Norway.
On the basis of a total evaluation the court concluded that the general application of this provision could be justified on the grounds of public order, and was not in violation of the EEA agreement.
The Norwegian Government and the workers won through on all counts in the appeal court, and the ruling was, not unexpectedly, welcomed by the trade unions. The President of the Norwegian Confederation of Trade Unions (LO), Roar Flåthen, said this was an important ruling for the extension mechanism in Norwegian working life and the Norwegian model of wage formation.
The NHO and the shipyards concerned expressed disappointment and surprise, and have appealed the decision to the Supreme Court. They argue that the Oslo appeal court did not sufficiently take into account the EFTA court’s advisory statement.
Kristin Alsos, Fafo