The protection of temporary agency workers according to the CJEU: The AKT judgment

 

 

Alejandra Victoria García Sánchez *

Research and Documentation Department of the Court of Justice of the EU (The opinions expressed in this blog post are solely those of the author)

Last week the Grand Chamber of the Court of Justice of the European Union (CJEU) issued its first ruling on Directive 2008/104/EC on temporary agency work, the judgment in AKT, Case C-533/13. The following blog post sets out the legal context of the Directive, the main points of the judgment and an analysis of the judgment, comparing it to case law on related legislation and commenting on the main issues that it raises.

Legal context of the on temporary agency work Directive

Temporary agency work is regulated by Directive 2008/104, which was adopted under the legal basis provided by Article 153, paragraph 2, of the TFEU. Two other forms of so-called ‘atypical work’, part-time work and fixed-term work, are regulated by Framework Agreements negotiated by the social partners (these Agreements are annexed to Directives 97/81/EC and 1999/70/EC respectively).  The recitals of the Framework Agreement on fixed-term work stated an intention to adopt a similar Agreement on temporary agency work; however, the failure of the social partners to reach such an Agreement led the EU legislators to adopt a Directive instead. The Commission reported on the transposition of the Directive by Member States in 2014.

Field of application of the Directive

The CJEU had previously clarified in its judgment in Della Roccathat fixed-term workers placed by a temporary work agency at the disposition of a user enterprise are not covered by the Framework Agreement on fixed-term work but by the Directive on temporary agency work (paragraph 36).

In order to determine whether a worker is protected by the Framework Agreement or by the Directive, the type of employer prevails over the type of contract that binds that employer to the employee.

The facts and the judgment of the CJEU in AKT

In the AKT judgment, the CJEU clarified the scope of the obligations stated in Article 4(1) of the temporary agency work Directive, entitled “Review of restrictions or prohibitions”. This provision states that “prohibitions or restrictions on the use of temporary agency work shall be justified only on grounds of general interest relating in particular to the protection of temporary agency workers, the requirements of health and safety at work or the need to ensure that the labour market functions properly and abuses are prevented”. Article 4(2) states that Member States shall review restrictions that are not based on general interest grounds.

The undertaking SAF has been employing temporary agency workers for several years. The AKT, a trade union, contended before Finnish courts that SAF was employing temporary agency workers to perform the same tasks as its own workers and required SAF and Öljytuote ry, an employers’ association, to pay a penalty provided by Finnish law punishing improper use of temporary agency workers. The defendants contended that the Finnish provision establishing a penalty for improper use of temporary agency work is contrary to Article 4(1) of Directive 2008/104, since that limitation is not justified on the grounds of general interest. The national court doubted whether Article 4(1) of the Directive obliges national authorities, including the courts, to not enforce or not apply national provisions containing prohibitions or restrictions that are not justified on grounds of general interest.

The CJEU analysed Article 4(1) “in its context”. It highlighted that paragraphs 2, 3 and 5 of the same Article require the Member States to review and verify whether the limitations laid down by their laws are compatible with Article 4(1), that they notify the Commission of the review and that the Member States remain free to either remove or adapt the restrictions and limitations laid down by their laws (paras 26-30). The CJEU stated that the tasks indicated in Article 4 are to be performed by the competent authorities of the Member States, and not by national courts. Furthermore, the CJEU concluded that Article 4(1) does not require the adoption of specific legislation (para.31).

The case law on the part-time work Framework Agreement

It is interesting to compare the treatment of Article 4(1) of the temporary agency work Directive with the case law on the similar provision of the part-time work Framework Agreement.

The latter  Agreement contains a provision that is similar to Articles 4(1) and 4(2) of Directive 2008/104: Clause 5(1)(a) of the Framework Agreement imposes an obligation on Member States to “identify and review obstacles of a legal or administrative nature which may limit the opportunities for part-time work and, where appropriate, eliminate them”.

Clause 4 of the part-time work Framework Agreement, which states the principle of non-discrimination of part-time workers in respect of employment conditions, has been considered by the CJEU as articulating a principle of European Union social law which cannot be interpreted restrictively (Case C-395/08, Bruno e.a., para. 32).

In Case C-395/08, Bruno e.a, paras. 80-81, the CJEU reached the conclusion that, where national legislation is found by a national court to be incompatible with Clause 4, i.e., it discriminates against part-time workers, discouraging the workers from pursuing their occupational activity on such a basis, Clauses 1 and 5(1) of the agreement would have to be interpreted as also precluding such legislation.

An example of a measure that has been found to infringe Clause 5 was identified in case C-55/07, Michaeler a.o., where Italian national law required employers to notify part-time work contracts 30 days after their conclusion, with the possibility to impose fines in case of lack of notification. The measure was found by the CJEU to dissuade employers from using part-time work contracts and thus, to be precluded by Clause 5(1)(a) (paras. 28-20).

This case law provides guidance on the issue of when a measure should be eliminated according to Clause 5(1)(a) and can be applied by analogy to Article 4(1) of the Directive in order to clarify the causes why a Member State is entitled to restrict or prohibit the use of temporary agency work and when is it required to withdraw a restriction or prohibition.  However, this was not at issue in the AKT judgment. The issue is not whenbut who should withdraw an unjustified restriction upon temporary agency work. According to the above mentioned case law, under Clause 5(1)(a), both the Member States and the national courts can perform the task of eliminating unjustified restrictions. This mechanism ensures that, if restrictions persist, a national court can solve the problem by eliminating the obstacles, contributing to the achievement of the objectives of the Agreement.

 Comments

In the AKT judgment, the CJEU entrusted solely the governments of the Member States with the task of complying with the objective of article 4(1). Thus, the case law regarding Clause 5(1)(a) cannot be used by analogy, as it could have been expected, in order to interpret who should review or eliminate a measure not compatible with article 4 of the Directive, since, as it has been interpreted by the CJEU, only the Member States’ competent authorities have the power to review or eliminate national provisions in order to decide when and how to comply with the objectives of the Directive.

The CJEU in this judgment interpreted Article 4(1) in “its context”; however, the “context” was limited to the other paragraphs of Article 4. It is true that looking at those provisions, only governments and social partners (if such restrictions or prohibitions are laid down by collective agreements, according to Article 4(3)) can proceed according to Article 4(1). However, the CJEU did not mention the objective of the Directive settled in Article 2. The Directive aims at recognising temporary work agencies as employers, while taking into account the need to establish a suitable framework for the use of temporary agency work with a view to contributing effectively to the creation of jobs and to the development of flexible forms of working. Thus, from the point of view of social policy, the rationale behind the adoption of the Directive seems clear: to stabilise the situation of temporary work agencies and to settle their legal status as employers, limiting the use of their temporary workers only on grounds of basic work standards such as health, safety or prevention of abuses, which are basic principles of social policy applied in many other fields of labour law. Once this policy step has been taken, from the point of view of legal consistency, the objective of the Directive being clear, the combination of Articles 2 and 4(1) of the Directive should lead to the empowerment of national courts to not apply national laws that restrict temporary agency work further than necessary, which are contrary to EU law (as is the case with Clause 5(1) of the part-term work Agreement).

The exclusion of the competences of the national courts to not apply measures that run counter to Article 4(1) might thus be paradoxical, since, the unjustified restrictions that have not been modified or derogated from by the “competent authorities” will have to be applied by national judges, even if they consider them to be contrary to the Directive.

However, this judgment has been welcomed by trade unions, since it has been considered that it “guarantees the social partners’ autonomy in regulating the use of temporary agency work through collective agreements”. Their joy should be limited, as we should not forget that Article 4(3) states that the review referred to in paragraph 2 may be carried out by the social partners who have negotiated the relevant agreement. Furthermore, the Directive is still clearly in favor of recognising that temporary agency work is a form of employment that should be protected, and only limited on the basis of fundamental work standards. The fact that national courts are not entitled to set aside unjustified restrictions (according to the CJEU) does not mean that the Directive’s objective has changed, but it does mean that the achievement of that objective is delayed and more difficult to reach, since the political will of governments and social partners might not be focused on these aims.

Barnard & Peers: chapter 20

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Agency workers: Are they sufficiently protected by EU law?

Steve Peers

'Atypical' workers (those workers who do not have a full-time permanent contract) are often in a very vulnerable position in the labour market, and so are possibly subject to exploitation. The use of such forms of employment might also undercut other workers. On the other hand, on some occasions such employment does suit the needs of both workers and employers, and constitutes an important form of job creation. To strike a balance between these two principles, the EU has adopted measures to regulate three specific categories of atypical workers: agency workers, part-time workers and fixed term workers.

The rules governing agency workers are set out in a Directive adopted in 2008, which Member States had to apply by December 2011. Today, the Commission released its report on the application of this Directive. To what extent is the Directive achieving its parallel objectives of ensuring that agency workers are protected, while also encouraging job creation?

Basic issues

First of all, the Directive does not apply to employers who are not conducting 'economic activities' (the Commission interprets this to mean employers not selling their service for remuneration). Also, Member States may exclude from its scope those workers in a special job creation scheme. The Commission reports that most Member States do not apply these exceptions; those which do have correctly applied them.

As for the definitions in the Directive, only one Member State has specified that the temporary work agency must be considered the employer. This is definitely the correct interpretation of the Directive, so it is unfortunate that no more Member States have made this clarification.

Worker protection

The key rule as regards employee protection is the principle of equal treatment for working conditions. Here the Commission has some doubts about some Member States' rules requiring a 'comparable employee', whereas the Directive refers to the 'same job'. But this form of transposition is surely fine as long as employers and (if necessary) courts recognise that a worker doing the same job in the user undertaking is always a comparable employee.

However, there are derogations as regards equal treatment. First of all, temporary workers might not be entitled to equal pay if they are paid by agency between assignments, and have a permanent contract with the agency. Only five Member States use this derogation. In several cases, workers are entitled to only half of their previous pay (subject to the national minimum wage as a floor). The Commission raises some doubts about this, but says only that it will hold further discussions.

Secondly, temporary workers can receive equal treatment pursuant to a collective agreement, if that agreement 'respect[s] the overall protection' of temporary workers. Ten Member States apply this rule, and the Commission does not believe there is any problem with its application. While it might generally be assumed that unions can defend the interests of workers, it is possible in principle that in some cases they have prioritised the interests of permanent workers instead, or are in a weak bargaining position and so have accepted terms that do not respect temporary workers' protection.

Thirdly, in States where collective agreements are not generally applicable, there can be a derogation from the principle of equal treatment, provided again that 'the overall protection' of temporary workers is respected. This might include a qualifying period, and might specify that employer pensions are not included within the scope of the equal treatment rule. Only the UK and Malta apply this rule. The UK provides for a 12-week waiting period, while Malta disapplies equal treatment for the first 4 weeks (if the assignment is longer than 14 weeks). Both Member States exclude employer pensions from the equal treatment rule.

The derogations are subject to the requirement that there must be national measures to prevent their 'misuse', and in particular to prevent successive assignments being used to circumvent them. As the Commission points out, this is a particular risk where there is a qualifying period for obtaining equal treatment. While the EU's fixed-term work Directive restricts the successive use of fixed-term contracts, the CJEU has ruled in the Della Rocca case that this Directive does not apply at all to temporary workers. So the question of what constitutes misuse must be defined from scratch. It is unfortunate that the drafters of the agency work Directive did not simply apply the fixed-term work Directive rules, in order to provide for some legal certainty. The Commission does not comment further on the rules used to prevent misuse, or on the Member States' use of the third derogation.

Job creation

The Directive requires Member States to review existing barriers to agency work, and states that such restrictions can only be justified in the general interest, in particular as regards health and safety, protection of abuse, worker protection and functioning of the labour market. According to the Commission, while Member States have reviewed their national law, few have changed it, justifying their existing restrictions on one of the grounds set out in the Directive.

However, it could be argued that the interests of worker protection and protection of abuse are already addressed in the Directive, and the issue of health and safety is already addressed by separate legislation (referred to in the report) which allows Member States to prohibit temporary workers from certain jobs on health and safety grounds. Some Member States have banned temporary workers from being used as 'scabs' to replace striking workers; this possibility is clearly authorised by the preamble to the Directive.

Other issues

The Commission finds no problem with Member States' application of the rules on workers' representatives, access to employment and dismisses the arguments of industry that the Directive imposes too many cost requirements for them.

Overall, the Commission concludes that there is no need to revise the Directive, and states its intention to hold further discussions about its correct interpretation. It should be noted that there is one case pending before the CJEU about this Directive: the AKT case, which asks the Court to clarify whether certain national barriers to the use of agency work can be justified. Furthermore, in its judgment in Michaeler, the CJEU held that national rules restricting part-time work breached the EU's part-time workers Directive, and had to be set aside by the national court. That judgment could obviously be relevant by analogy.

Comments

The Commission clearly does not wish to upset anyone by proposing the amendment of this Directive, or even as regards its application. It dismisses the objections of its critics rather summarily also. This is a classic case where a thorough 'impact assessment' needed to take place, not (as is usually the case) before legislation is proposed, but in order to determine the actual impact in practice. How much have workers benefited from this Directive, and at what cost to employers? Have jobs been created or lost?

Also, the Commission could usefully have more clearly indicated its view as to the correct interpretation of the Directive, for instance in a guidance document. It's hard to work out what the Commission actually thinks, besides discerning an unwillingness to disagree with anyone.  As noted above, there are good reasons to think that some national restrictions on the use of agency work might be open to challenge, and that some Member States are not sufficiently complying with the minimum requirements for agency workers' protection. The Commission's approach to the Directive in its report does not really help to clarify these matters.


Barnard & Peers, chapter 20

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