Commission presents Green Paper on modernising labour law

The European Commission’s Green Paper on modernising labour law analyses current trends in new work organisation patterns and contractual regulations, and identifies key challenges for a reform initiative. Among the issues highlighted are a ‘flexicurity’ agenda, the role of social dialogue in the reform process, the increasing use of non-standard contracts and compliance with employment rights. At the presentation of the Green Paper, the Commission also launched a public consultation on the issue. So far, the social partners have given a mixed response to the Green Paper.

On 22 November 2006, the European Commission presented the Green Paper Modernising labour law to meet the challenges of the 21st century (77Kb PDF), which had been announced in the Social Agenda 2005–2010 (2.3Mb PDF) and in the Communication on Restructuring and employment (262Kb PDF). At the presentation of the Green Paper, the Commission also launched a public consultation on the need to review current labour law systems, addressed to Member States, social partners and other stakeholders (IP/06/1604 (17Kb PDF)). The consultation will run until 31 March 2007 and will complement a Commission communication on flexicurity announced for June 2007.

Main issues highlighted


The Green Paper examines the role of a modernisation of labour law in advancing a ‘flexicurity’ agenda of increased labour flexibility combined with adequate employment security (EU0701059I). It discusses developments in labour markets, technologies and work organisation, and the increasing emergence of a wide variety of non-standard employment contracts, regardless of whether they are explicitly covered by EU and national legislation.

Role of social dialogue

The Green Paper assesses the role of social dialogue at Member State and EU level in modernising labour law. Improving the quality of work and safeguarding working conditions is a matter for national legislation, while at EU level the social acquis (EU body of law) supports and complements the actions of the Member States. Social dialogue at national, sectoral and company level demonstrates how workplace rules can be adapted to changing economic realities and be applied to new categories of workers, such as temporary agency workers. The Green Paper points to a new role for collective agreements, which no longer merely supplement working conditions already defined by law but serve as important tools in adjusting legal principles to specific economic or sectoral circumstances.

Non-standard employment

The primary focus of the Green Paper is on individual labour law. It outlines the key priorities for a meaningful labour law reform, its contributions to flexibility, employment security, preventing segmentation of the labour market, and improving the regulations affecting small and medium-sized enterprises (SMEs). The proportion of non-standard employment contracts and self-employment has increased from 36% in 2001 to almost 40% of the EU25 workforce in 2005. Moreover, the document highlights a strong gender and intergenerational dimension as women, older and also younger workers are disproportionately represented in non-standard employment.

The boundaries between labour and commercial law have become less clear with the emergence of diverse forms of non-standard work. The Green Paper discusses illegal practices of ‘disguised employment’, which is understood as a misclassification of self-employment in the context of unclear legal definitions of the status of self-employment. The paper distinguishes ‘disguised employment’ from the concept of ‘economically dependent work’, which covers situations falling between the two established concepts of subordinate employment and independent self-employment (see EIRO study on economically dependent workers).

Compliance with employment rights

Other issues concern the responsibility of the various parties in multiple employment relationships to comply with employment rights. These problems relate in particular to temporary agency work and to work involving extended chains of subcontracting. Several Member States have sought to address the problems of workers in such situations by making principal contractors responsible for the obligations of their subcontractors.

In light of the deadlock in the revision of the working time directive at the Employment, Social Policy, Health and Consumer Affairs Council (EPSCO) on 7 November 2006 (EU0612019I), one issue concerns the priorities of working time matters that need to be tackled and ways of achieving greater flexibility for both employers and employees, while ensuring high standards of protection in respect of workers’ health and safety.

In the context of mobility of workers, the definition of the term ‘worker’ is discussed. Most EU labour law legislation leaves the definition of ‘worker’ to the Member States. However, the variations in the definitions used in different directives question the consistent application of EU labour law. Difficulties have emerged particularly in the implementation of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services and of Council Directive 2001/23/EC on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses. These complications are also of concern in the case of ‘frontier workers’, who live in one Member State and work in another, and in the context of the transnational operation of businesses and services.

Undeclared work is seen as a particularly worrying and enduring feature of today’s labour markets, often associated with cross-border labour movement. It is considered to be the main factor contributing to ‘social dumping’ and to be responsible for both the exploitation of workers and the distortion of competition. The Green Paper emphasises that the problem was identified by the European social partners as an integral part of the balance between flexibility and security, and is a key issue for action in their work programme for 2006–2008 (EU0605019I).

Discussion at EPSCO

On 1 December 2006, the Employment Council held a preliminary exchange of views on the Green Paper (15487/06 (Presse 330) (354Kb PDF)). The council emphasised the need to consider specific features of national labour markets while preserving minimum standards at European level. Several issues received particular attention, namely the:

  • importance of a meaningful social dialogue;
  • prevention of market fragmentation, reduction of workers’ rights and lack of job security;
  • need to deal with the situation of the economically dependent worker;
  • effective enforcement of labour law, including combating undeclared work;
  • better reconciliation of work and family life, and initiatives to remove disincentives to the participation of women in the labour market;
  • need to combat all forms of discrimination in the labour market.

The Green Paper was also on the agenda at the informal EPSCO meeting on 18–19 January 2007 (MEMO/07/21; press release 19 January 2007).

Reaction of social partners

The Industrial and Employers’ Confederation of Europe (Union des Industries des pays de la Communauté européenne, UNICE) and the European Association of Craft, Small and Medium-sized Enterprises (Union Européenne de l’artisanat et des petites et moyennes enterprises, UEAPME) emphasise that the competence to modernise labour law rests primarily with national actors (see UEAPME’s press release (183Kb PDF) of 22 November 2006). UNICE strongly opposes suggestions of an EU-wide definition of ‘worker’ and rejects the focus on preservation of existing employment. In its view, modernising labour law must be part of the flexicurity debate based on a sound analysis and should encompass both flexibility and security. UEAPME considers that the Green Paper presents a balanced analysis of the key policy challenges ahead and is based on a reasonable approach towards new forms of work. UEAPME welcomes the fact that SME-related questions are addressed and that the document examines the ways in which labour law affects small businesses. The wording on self-employment, for example, recognises the importance of encouraging entrepreneurship.

In its press release (39Kb PDF) of 24 November 2006, the European Centre of Enterprises with Public Participation and of Enterprises of General Economic Interest (CEEP) restates that the questions posed in the Green Paper go in the right direction but the instrument and procedures used are not appropriate. CEEP recognises that a developed framework of flexicurity requires intervention from different actors including the state, social security institutions, and education and training providers. However, in the opinion of CEEP, 80% of the questions addressed fall within the direct remit of the social partners, who should therefore have been properly and separately consulted.

In a press release on 12 October 2006, the European Trade Union Confederation (ETUC) had called on the Commission to avoid any further delay in the publication of the long-awaited Green Paper on labour law, and to resist pressure from the European employer organisation UNICE. In its press release of 22 November 2006, ETUC underlines that all relevant stakeholders at EU level need to engage in an urgent debate on how to adapt labour law and social policy to align with the modern world of work, while providing for fair and decent working conditions and labour standards for all workers. ETUC recalls that the European Commission consulted the European social partners six years ago on the need to review systems of labour law (see first stage of consultation (in French, 1.03Mb PDF) and second stage of consultation (147Kb PDF), EU0007259N), and emphasises that in the meantime several Member States have made labour law reforms leading to a two-tier labour market with growing insecurity for the most vulnerable group of workers. As the Green Paper only addresses some relevant issues, ETUC states that it will make proposals on working time, temporary agency work, European Works Councils, information and consultation and restructuring.


The Green Paper highlights the importance of defining the term ‘worker’ in the application of EU labour law but remains undecided on the role of the Member States and the EU in modernising these laws. The almost exclusive focus on non-standard employment is puzzling as standard employment relationships are also affected by organisational, technological or legal developments. Moreover, the lack of a precise definition of part-time work is problematic. A reduction of normal working hours does not necessarily lead to a precarious form of employment contract. On the other hand, marginal employment hardly features in the analysis.

The analysis is inconsistent in its attempt to quantify non-standard employment. For example, it provides statistical data on fixed-term, part-time and temporary agency contracts, as well as self-employment. However, in the further description and in the consultation questions, some of these forms of non-standard employment are not mentioned again. Conversely, other atypical forms of work such as disguised employment, economically dependent work or undeclared work are not included in the statistical analysis.

The Green Paper has introduced new categories in the debate on flexicurity such as ‘extended chains of subcontracting’ as an additional form of ‘multiple employment relationship’. More research seems to be required to understand the impact of such developments.

Anni Weiler, AWWW GmbH ArbeitsWelt – Working World

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