Energy sector hit by strikes over use of foreign workers

In late January and early February 2009, contract workers at an oil refinery owned by the petroleum group Total took strike action in protest at the employment of Italian and Portuguese workers on a construction project. Sympathy strikes took place at power plants around the United Kingdom. Although subsequently settled, the dispute raises sensitive issues concerning the use of foreign labour and the application of European Union law in the UK.

On 28 January 2009, contract workers at the Lindsey Oil Refinery (LOR) in Lincolnshire in the east of England owned by the French-based multinational Total began unofficial industrial action in protest at the use of foreign labour on a construction project at the site. The dispute rapidly escalated. Sympathy protests took place at power plants around the UK and the dispute received a high media profile.

Background

The dispute centred on the subcontracting of a construction project to expand the refinery’s capacity to IREM, an Italian engineering company, which planned to use its own permanent workforce, consisting of Italian and Portuguese workers, to carry out the work.

Hundreds of contract workers at the refinery staged strike action in protest at the use of foreign labour and alleged ‘discrimination’ against UK workers. Contract workers at other UK power plants also staged walk-outs, reflecting the high level of feeling about this issue across the sector. The trade union Unite stated that the dispute was symptomatic of the wider problem of ‘UK workers being excluded from important engineering and construction projects’. However, Total insisted that no discrimination against British contactors or British workers had occurred, and that the contract had been awarded following a fair and competitive tender process.

While some suggestion was made that the pay received by IREM staff undercut that of UK contract workers in the sector, Total emphasised that foreign workers employed by IREM were not paid less than equivalent British workers operating under industry agreements. Engineering construction is one of the few sectors of the UK economy that still has a national agreement setting out industry-wide terms and conditions.

Settlement of the dispute

In the first week of February 2009, talks facilitated by the Advisory, Conciliation and Arbitration Service (Acas) led to proposals for ending the dispute. After an initial offer was rejected by the Lindsey refinery’s contract workers, an improved offer was accepted on 5 February, under which some 100 new construction jobs at the site would be open to UK workers. The strikers subsequently returned to work.

Unite stated that the outcome ‘establishes the principle of fair access for UK workers on British construction projects’ and urged other construction companies ‘to level the playing field for UK workers’. Protests are continuing over the use of foreign workers on construction projects at other UK power plants.

Wider implications

The dispute raised a number of issues concerning the application of EU law in the UK.

The posting of workers between EU Member States is governed by the Directive 96/71/EC concerning the posting of workers in the framework of the provision of services. This directive guarantees workers posted by their employer to work in another country a minimum set of employment rights. In pay terms, construction workers posted to the UK are guaranteed the statutory national minimum wage only (UK0306106T): they are not subject to collectively-agreed terms, as these are not universally applicable and do not have legal force, unlike in some other EU Member States.

UK trade unions have called for the directive to be amended to curb the use of cheaper posted workers, thus preventing social dumping. Furthermore, Members of the European Parliament (MEPs) from the UK, Germany and Italy have, in a joint written declaration (45Kb MS Word doc), called for changes to the directive, as did the European Trade Union Confederation (ETUC).

The dispute has also refocused attention on the implications of recent judgements by the European Court of Justice (ECJ) in the Viking (127Kb PDF) (EU0706029I, EU0605029I), Laval (137Kb PDF) (EU0801019I, SE0801019I, SE0706029I) and Rüffert (99Kb PDF) (EU0805029I) cases. The ECJ essentially ruled that the EU principles governing the free movement of goods and services, the freedom of establishment and the freedom to provide cross-border services should not be impeded by industrial action aiming to ensure that posted workers receive collectively-agreed terms and conditions and the inclusion of collectively-agreed terms in procurement contracts.

Commentary

The employment of foreign workers in the UK is clearly a sensitive topic at present, and one that is particularly resonant in the current economic downturn. At issue is whether the operation of EU principles governing freedom of movement and freedom to provide services are detrimental to the employment opportunities and terms and conditions of host-country workers. Trade unions are likely to push the UK government to revise its implementation of the posted workers directive, notably to underpin collectively agreed pay rates for construction workers. However, the government is unlikely to make any pronouncement until the publication, expected in mid February, of a report it has commissioned from Acas on the facts surrounding this dispute.

Andrea Broughton, Institute for Employment Studies

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