Norway: Solution to long-standing dispute on coverage of posted workers expected soon

A dispute over whether posted workers in the Norwegian shipbuilding industry are covered by the industry’s collective agreement has been a major issue between the social partners for the past 10 years. At this juncture, the government is confident the two sides will come to an agreement soon.

Norwegian collective agreement process

There is no statutory minimum wage in Norway; wages and working conditions are normally agreed by trade unions and employer organisations, with the government taking no part in the talks. As a result of the huge increase in the number of migrants wanting to work in Norway after the 2004 EU enlargement, it was suggested to include a provision in collective agreements to allow their extension mechanisms to cover all workers, in order to avoid social dumping. However, this provision is inoperative.

Social partners play a key role when collective agreements are extended. The Tariff Board is the public tripartite body responsible for extending collective agreements; the main social partner organisations, the Norwegian Confederation of Trade Unions (LO) and the largest employer association, the Confederation of Norwegian Enterprise (NHO) are represented on it, along with three experts. In order to apply the extension, a claim must be submitted by an employee or employer organisation that is party to the agreement.

Extension of the industry collective agreement to the shipbuilding industry

The industry collective agreement was extended for the shipbuilding industry in 2008, covering all workers in the sector, including those posted to Norway. The disagreement has been whether the costs incurred for travel, board and lodging should be part of the extension, or whether this practice breaches the provisions stipulated in the European Economic Agreement (EEA), which gives Norway access to the single market.

NHO, and its affiliate the Federation of Norwegian Industries (Norsk Industri), brought an action against the Tariff Board and thus the Norwegian state in 2009.

At the first court hearing, at Oslo District Court, they lost, but appealed against the decision. When the European Free Trade Association (EFTA) court was asked for advice by the appeal court, it supported the view of NHO/Norsk Industri and stated that ‘to instruct foreign contractors to pay the costs incurred for travel, board and lodging for posted workers’, as stated in the extended collective agreement was 'an infringement/violation of the EEA agreement’. In the interpretation of the judgment on the facts of the case, however, the appeal court decided that the decision made by the Tariff Board was valid.

NHO then took the case to the Supreme Court, which concluded in 2013 that ‘posted workers are entitled to all the provisions of the collective agreement’. The ruling was perceived as a clear win for the State and (LO), which had supported the government position.

However, NHO and Norsk Industri then complained to the EFTA surveillance authority (ESA) which monitors compliance with the EEA agreement. At the same time, ESA received a similar complaint from a Polish employer.

In October 2016, ESA sent a letter of formal notice to the Norwegian government stating that it would start a formal process as it considered the provisions regarding the application of the travelling, board and lodging expenses to represent a breach of EEA law.

Recent developments

Government awaits outcome of process

In January 2017, the Norwegian government replied to ESA, stressing its confidence in the social partners’ willingness to come to an agreement (PDF):

The solution must be established by the social partners, in conformity with the Norwegian system of wage formation … key organisations in the social partnership are demonstrating their willingness to find solutions that also take the objections raised by ESA into account … Based on the feedback from the social partners regarding the ongoing efforts and upcoming negotiations in the context of the next wage settlement round, the government is confident that this process will be successful and produce adequate compromises.

The solution implies that ESA would agree to postpone its decision until the next bargaining round on Norwegian wages in 2018. The first step to an agreement would be setting up a joint committee, representing the two sides of the industry: the Norwegian United Federation of Trade Unions (Fellesforbundet) and Norsk Industri. This would report back to the government by 1 May 2017, aiming for a preliminary report no later than 31 March.

ESA reacted rapidly, and the media reported on 25 January that ESA had agreed to this and was looking forward to the result of the negotiation between the parties. However, ESA  demanded to be informed of progress by 10 April 2017 at the latest.

Mixed reactions from the social partners

The social partners have, however, reacted somewhat differently to the government’s reply to ESA. While the head of Fellesforbundet welcomed the Ministry of Labour’s commitment to a solution according to the Norwegian model of social dialogue and wage setting, the head of Norsk Industri just ‘took a note of it’.

It remains to be seen if the social partners can find a solution to this issue. A difference in opinion on the employers’ side might make the process more difficult; while Norsk Industri maintains that Norway needs more time to implement the ESA interpretation, another NHO affiliate, the Federation of Norwegian Construction Industries (BNL) argues that the future of the Norwegian construction industry depends on the application of the ruling from the Supreme Court in order to maintain decent working conditions in the sector.

As for the unions, LO has vigorously supported the ruling. It has been a significant supporter of the EEA agreement, despite opposition to it from several of its affiliated unions.

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