Last week’s dispute at the Lindsey oil refinery and the ‘wildcat’ strikes in support of the workers there raise some important employment law issues.
There is no question that European workers have the right to work in the UK in accordance with the principle of free movement of labour enshrined in the EC Treaty. However, the issue raised by this dispute is to what extent they can be employed on different terms and conditions from those that would apply in this country, thereby undercutting local workers.
The EU Posted Workers Directive provides that workers sent from one EU member state to work in another are entitled to the rates of pay, holiday pay and working hours laid down by national law in the country where they are working. This means they would have to be paid at least the national minimum wage in the UK. However, the ‘level playing field’ created by the directive does not normally extend to the terms of local collective agreements over rates of pay, which would not apply to the incoming workers.
A couple of recent judgments at the European Court of Justice (ECJ) have effectively confirmed this position.
In the case of Laval un Partneri Ltd v Svenska Bygnaddsarbetareforbundet (the Swedish construction workers’ union), the ECJ held it was unlawful for trade unions to take collective action to secure terms and conditions for posted workers over and above those required by the directive. It said this would be an unjustified interference with the posting company’s freedom to provide services under Article 49 of the EC Treaty.
In the case of Dirk Rüffert v Land Niedersachsen (the German state of Lower Saxony), a German law requiring public sector contractors and sub-contractors to pay workers the minimum wage laid down by a local collective agreement was seen as an unjustified barrier to the ability of foreign contractors to provide services in Germany. The ECJ has therefore clearly gone down a line that places market forces in relation to pay rates above protectionism for local workers.
The perception in certain quarters in the UK is that the directive serves to undermine the position of British workers. There have been mixed messages from the government as to whether it agrees with this view. Any amendment to the directive will require agreement at European level and a fundamental re-assessment of some of the EU’s principles.
The other facet to this dispute is the wildcat (ie unofficial) strikes taking place in support of the workers at Lindsey. Because such action has not followed properly conducted industrial ballots, the workers in question are technically acting in breach of their employment contracts and could be dismissed by the employer, who would be immune from any resulting unfair dismissal claim.
Furthermore, the relevant union – Unite – has to distance itself from the dispute, otherwise it could be sued by the employers for inducing the workers to breach their contracts. Nonetheless, the workers seemed able to co-ordinate a programme of unofficial action up and down the country, seemingly undaunted by the prospect of dismissal.
Although their position is not currently supported by the courts, they obviously feel they have the political advantage given the current economic climate, and are taking every opportunity to press home that advantage.
Workers from one EU state have the unrestricted right to work in another.
The Posted Workers Directive guarantees them certain minimum statutory rights in the host country.
This does not extend to locally agreed terms. Foreign contractors can pay below locally agreed rates, provided they pay the statutory minimum wage, and do not discriminate by nationality.
Workers on unofficial strike are at risk of dismissal. Employers would be immune from unfair dismissal claims.