European Court of Justice backs companies’ rights to relocate within EU

A landmark ruling by the European Court of Justice (ECJ) has reaffirmed employers’ rights to relocate to another EU country.

The ECJ found that industrial action that stopped an employer moving to another member state could only be justified if it was essential to protecting jobs or working conditions.

Its judgment concerned Finnish ferry operator Viking Line, which replaced the crew on one of its ships with Estonian workers.

The Finnish Seaman’s Union and the International Transport Workers’ Federation took cross-border collective action against Viking, forcing the company to stop the relocation.

The court said that trade unions can in principle take action to prevent employers using cheaper workers from countries with less stringent employment legislation.

But Martin Warren, head of employment law at Eversheds, said the ruling reaffirmed businesses’ fundamental right to relocate all or part of their business wherever they wished to make efficiencies and look after their interests.

“The ruling also confirms that workers affected by such changes may have the right to mount collective action against their employer. However these rights are not unlimited, and must be balanced against the rights of their employer,” he said.

“In short, the ECJ is saying that trade unions do not have a free rein to use collective action to prevent companies from exercising their economic freedoms under EU law, and any action they take must be fully justified.”

Meanwhile, TUC general secretary Brendan Barber said: “We welcome the recognition by the ECJ that the right to take collective action, including the right to strike, is a fundamental right which forms an integral part of the general principles of community law.

“The court has indicated that the right to take industrial action for the protection of workers is a legitimate interest which can justify restrictions on the fundamental freedom of establishment.”

He went on to say the TUC will carefully examine the judgment, and whether it has any implications for unions’ rights to organise industrial action.

The ECJ will rule next week on a similar case in which Swedish unions stopped a Latvian construction firm offering Latvian pay levels on a Swedish site.

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