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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Fixed-term workers: protection against unfair dismissal and abuse

Steve Peers

The growth of atypical forms of work in recent years has increasingly been addressed by EU measures, in particular the social partners agreements on part-time and fixed-term work, followed by a more recent Directive on agency work. The fixed-term work rules have led to much litigation before the Court of Justice of the European Union (CJEU). However, before today the Court had not yet had a chance to address fully the key issue of the relationship between these rules and national law on unfair dismissal. Furthermore, the Court had not addressed the particular issues facing university researchers.

The fixed-term work agreement has two key provisions: a requirement to ensure equal treatment between fixed-term workers and comparable permanent workers, and a restriction on the abuse of fixed-term work contracts. The latter rule requires Member States to put in place some effective system to control such abuse, for instance by limiting the total number or duration of such contracts, or by providing for objective reasons for renewal of those contracts. Member States can also take other measures, such as providing for damages actions, but there is no obligation to ensure that fixed-term contracts must be converted into permanent contracts.

Two judgments today have addressed the application of each of these rules. First of all, in the case of Nierodzik, a fixed term worker whose contract was terminated early by her employer, the CJEU ruled that rules concerning notice periods are 'employment conditions' for the purposes of the fixed - term work agreement, and so are therefore covered by the equal treatment rule. Assuming that Ms Nierodzik could be compared to a permanent worker working for the same employer (it was left to the national court to decide this), she was therefore entitled to equal treatment as regards the notice period for the termination of the contract (in this case meaning one month notice instead of two weeks).

However, the agreement provides for a possible justification of unequal treatment. The Polish government argued that the temporary nature of the contract was a justification, but the CJEU rejected this argument, in line with prior case-law. The Court also rejected a bizarre argument that fixed - term contracts promote stable employment. Obviously, they do just the reverse.

In the second case, Marquez Samohano, the question arose whether the frequent renewal of a lecturer's fixed term contract constituted an abuse. The CJEU ruled that it did not, because national law restricted such renewals to the case of specialists, along with further conditions. However, the national court still had to decide whether the use of fixed term contracts was in fact substituting for permanent needs of the employer.

Comments

The Nierodzik judgment makes a significant contribution to ensuring stability of employment for workers with fixed term contracts. While it does not extinguish the fundamental distinction between the two forms of contract, it does mean that during the term of the fixed term contract, the worker in principle has the same protection against dismissal as a permanent worker. Logically this rule should equally apply to the rules on other aspects of dismissal, such as the grounds and procedures for dismissal, the calculation of damages for unfair dismissal, and the calculation of redundancy payments.

In practice, fixed term workers will often receive modest protection in the event of early termination of the contract, due to the short period of their employment.  However, it is arguable that if their contract has been renewed, the entire period of the successive contracts must count for the purpose of applying the equal treatment rule.

On that point, the Marquez Samoharo judgment makes it easier to justify the renewal of such contracts. This is dubious on the facts of that case, where the renewal of the contract for four years - such frequent renewals being common in the academic world - surely suggests that the renewal was indeed an indication that the fixed term contract was actually a means of satisfying the employer's permanent needs. It would have been better if the CJEU had given some indication of the factors which the national courts have to take into account when considering this issue, perhaps by analogy with the equal pay case-law.


Barnard & Peers: chapter 20

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Is the UK's restriction on EU workers' access to benefits legal - and if not, should it be?

Steve Peers

Today the UK government has announced a new threshold for determining whether an EU citizen from another Member State is actually a 'worker' or not, for the purposes of claiming benefits. Are these rules compatible with EU law on the free movement of workers? And if not, should EU law be changed so that they are?

According to the new UK rules, to obtain 'worker' status, citizens from other Member States will have to earn £150/week for at least three months. If they manage this, then they will have access to child benefit, child tax credit, job-seekers' allowance and housing benefit. If not, then they will not be automatically denied benefits; rather their position will be subject to a case-by-case analysis.

Is this a violation of EU law? In a series of cases dating from the 1980s, the Court of Justice of the European Union (CJEU) clarifed the meaning of 'worker' for the purposes of the EU Treaties, which provide for the free movement of workers. This case law clarified that a person must be considered to be a 'worker' even if he or she works part-time, as long as the work is 'genuine and effective' and not 'marginal or ancillary'. In particular, an EU citizen claiming top-up benefits might still be considered a 'worker' (Kempf). However, there is no hard-and-fast rule in this case law determining what it takes to be an EU worker.

At first sight, the new UK rules appear to set such a hard-and-fast rule, which conflicts with the case law of the CJEU. It is certain, in light of its prior case law, that the CJEU would hold that at least some people earning an average of less than £150/week for three months were workers. It is even more certain that the CJEU would condemn the rule if it requires the worker to earn more than that amount every week for that period, rather than an average - but it is not clear if the rule goes that far.

 However, the new British rule is not as strict as that. Instead, it appears to create (at most) a rebuttable presumption that the persons earning less than that amount are not workers. Its compatibility with the free movement of workers therefore depends largely on how it is actually applied to individual situations, which might in part depend on the policy guidance which will presumably be issued by the government to the civil servants who apply it. The crucial point should be how exactly the presumption (is that is what it will be) can be rebutted.

So the answer to the first question posed above is: It depends on how the law is applied in practice. That's not a very satisfactory answer, perhaps, but it is often the only honest answer to a legal question. Having said that, it might still be worth challenging the new rules for their compatibility with EU law, via the national courts and by means of complaints to the Commission, to obtain some further clarification of the EU definition of 'worker'.

Should the EU rules on benefits for EU citizens be changed?

This brings us to the second question: Should the rules be changed? Of course, this is a political question, but it has a legal context. Since the rules are closely related to the interpretation of the concept of 'worker', a term set out in the EU Treaties, it would take a treaty amendment to change them. Such a treaty amendment would need the approval of all 28 Member States (or perhaps 29, if Alex Salmond's dreams come true).

In the normal course of events, it is unlikely that all Member States would agree to a Treaty change that would negatively affect their citizens who have moved to other Member States and taken up low-paid work. However, it is just about conceivable that they would be willing to negotiate a limited clarification on workers' access to benefits in the context of a UK bid to renegotiate the terms of its UK membership. Perhaps this change could even apply across the board, to all Member States: it would probably be welcome in some other Member States, and it might even increase public support for further EU enlargement.

It might be argued that any restriction on the established rights of EU workers is unthinkable. But consider the alternative: if the UK were asking to renegotiate its EU membership, that would mean that a Conservative government had won a majority (or very close to a majority) in the 2015 UK general election. That government would be demanding a change in the UK's EU obligations, otherwise it would lead the UK out of the EU. And that would, of course, remove any rights for EU citizens at all in the UK - subject to whatever (doubtless more limited) rights were agreed as part of the UK's hypothetical future association agreement with the EU. Moreover, a modest restriction on the benefits which low-paid workers could receive would be much a less significant restriction on free movement rights than the demand of some critics of EU membership - that the UK should be able to set a quota on the numbers of EU citizens moving to the country. Could it be time to think the unthinkable?


Barnard & Peers: chapter 13

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When does the EU Charter of Rights apply to private parties?

Steve Peers

The Court of Justice of the European Union (CJEU) has today further clarified the circumstances in which the EU's Charter of Rights can be invoked against private parties.

In Association de Mediation Sociale (AMS), trade unions challenged a private employer's refusal to establish worker consultation pursuant to an EU Directive. The employer had acted consistently with French law, which had implemented the EU Directive but allowed exclusions for apprentices and other forms of special employment contract.

The judgment

First of all, the CJEU ruled that the French law breaches the Directive, which does not provide for the exclusion of such categories of employee from its scope. But how can this breach of EU law be remedied, on the facts of this case? The Court states that while the relevant rule in the Directive is precise enough to have direct effect, Directives (following well-known and long-established case law) cannot be invoked against private parties.

Also, the CJEU confirms prior case law which states that the principle of indirect effect (as it is usually called), ie the requirement for national courts to interpret national law to be consistent with EU Directives, meets its limits where (as in this case) there is an unambiguous contradiction between the national law and the relevant EU Directive.

Towards the end of the judgment, the Court mentions the long-established prospect of suing a Member State for damages for its failure to implement a Directive correctly. However, on the facts of this case, it's hard to see how that remedy could work well. Perhaps the union or an employee could argue that if worker consultation had been established, it could have persuaded the employer not to make redundancies (for instance). But really what the unions seek to achieve here is to have worker consultation established in the first place.

So this brings us to the heart of the matter: does the EU Charter of Fundamental Rights affect the issue? Article 27 of the Charter states that:

'Workers or their representatives must, at the appropriate levels, be guaranteed information and consultation in good time in the cases and under the conditions provided for by Union law and national laws and practices.’

Previously, in the judgment in Kucukdeveci, building on its prior judgment in Mangold, the CJEU had stated that employees could invoke the principle of non-discrimination on grounds of age against private employers, and this principle is set out in the Charter (Article 21(1)). Can Article 27 of the Charter also been invoked against private employers?

No it can't. According to the Court, it's 'clear from the wording of Article 27 of the Charter that, for this article to be fully effective, it must be given more specific expression in European Union or national law'. More precisely, 'It is not possible to infer from that Article or the explanations to it' that the rule in the Directive is a 'directly applicable' rule which addresses a prohibition to Member States from excluding categories of employees when implementing the relevant Directive.

The CJEU distinguishes its prior judgment in Kucukdeveci, on the grounds that the principle of non-discrimination on grounds of age laid down in the Charter 'is sufficient in itself to confer on individuals an individual right which they may invoke as such.' Finally, the Court states that the Charter Article and the Directive cannot be combined to require that the national law breaching the Directive has to be set aside, because 'that [Charter] article by itself does not suffice to confer on individuals a right which they may invoke as such', so 'it could not be otherwise if it is considered in conjunction with that directive'.

Comments

The Court's judgment has clarified some key points. The old argument that the Charter can never apply to private parties at all, since Article 51 of the Charter (which sets out its scope) states that it is addressed to EU institutions and other EU bodies, plus the Member States only when they implement EU law - and so implicitly not to private parties - has surely been rejected by the Court here. While the Court does not reject this argument expressly, its judgment obviously assumes that the Charter can apply to private parties in some cases, otherwise why distinguish between Articles 21(1) and 27 of the Charter? The key point is that the underlying challenge here (as in Kucukdeveci) is to a law adopted by a Member State which breaches an EU obligation, so the Charter still applies to the dispute even on a narrow interpretation of Article 51.

The Court has also expressly rejected the argument - which was a reasonable extrapolation of its judgments in Mangold and Kucukdeveci - that somehow the legal effect of a Directive could be 'supercharged' when combined with a relevant provision of the Charter. Rather, the Court makes clear that the Charter Article must be judged separately.

Most importantly, we now have a test for determining whether Charter provisions can apply against private parties - whether the Charter provision requires 'more specific expression' in national or EU law on the one hand, or on the other hand whether the Charter Article is 'sufficient in itself to confer on individuals an individual right which they may invoke as such'.

The Court elaborates upon the first test, but not the second. It seems that Article 27 requires 'more specific expression' because neither that Article nor the explanations concerning it indicate that the key clause in the worker consultation Directive is a directly applicable prohibition against excluding categories of employees from that Directive.

With great respect, the Court's explanation cannot be taken literally. After all, the Charter and the explanations to it make few references to EU legislation, and none of those references indicate that the key rules in the legislation concerned are directly applicable. Most importantly, neither Article 21(1) of the Charter nor the explanations to it make any reference to the framework employment equality Directive (Directive 2000/78); and yet the Court confirms that Article 21(1) can be invoked in litigation brought against private parties.

Perhaps the key point is that Article 27 refers to the 'conditions' of national or EU law. Several other Charter provisions refer to national or EU law, but without using the word 'conditions' (for instance, Articles 28 and 30, concerning trade union rights and unfair dismissal). Some key provisions do not refer to national or EU law at all: for instance, Article 31, on the right to 'fair and just working conditions', including regulation of working time.

Also, there's a dog that didn't bark in this judgment. Article 52(5) of the Charter sets out a distinction between the legal effect of 'rights' on the one hand, and 'principles' on the other. This distinction is the subject of much academic literature, and was extensively discussed in the Advocate-General's opinion, but the Court doesn't mention it. Neither - for obvious reasons - does the Court mention the Protocol limiting the legal effect of the Charter in the UK and Poland. But of course it could arguably be relevant in litigation in those countries which seeks to apply the Charter against employers.

Conclusions

The Court has begun to answer some key questions about the horizontal effect of the Charter. This is an improvement from the most recent judgment on this issue (Case C-282/10 Dominguez), which avoided answering any of them. But the answers in the ASM judgment raise many further questions in turn, which the Court will surely be called upon to resolve in future.


Barnard & Peers: chapter 9, chapter 20

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