European Court of Justice Demands Trade Union Law

In 2004, a Latvian construction company, Laval, placed a number of workers on Swedish building sites. The Swedish trade unions demanded Laval to sign a collective agreement with the same conditions that Swedish construction companies usually sign up to. Obviously, Laval refused to sign such agreement arguing that its workers were working under Latvian conditions and therefore the workers were subject to Latvian pay agreements. Furthermore, the Swedish legislation implementing the posted workers Directive was silent on whether collective agreements on wages should be extended to such workers. Consequently, the Swedish trade unions took collective action against the company, forming a blockade of work at all Laval construction sites. The so called “Vaxholm case” was brought by the Latvian company, Laval, which challenged the legality of a collective action in the Swedish courts.

The Arbetsdomstolen, the Swedish Court, referred the matter to the European Court of Justice for a preliminary ruling as the examination of the legality of the collective action raised issues of interpretation of Community law. On 23 May, the ECJ’s Advocate General, Paolo Mengozzi, gave his opinion in this case that is set to clarify several issues in regards to worker rights. The Advocate General supported the Swedish trade unions.

Moreover, he takes the view that when the Swedish Union attempted to oblige Laval to sign a collective agreement in Sweden, it did not breach EU law. Therefore, according to the Advocate General, in cases where the national laws do not provide expressly that collective agreements are of universal application, trade unions cannot be prevented from attempting “by means of collective action in the form of a blockade and solidarity action, to compel a service provider of another Member State to subscribe to the rate of pay determined in accordance with a collective agreement which is applicable in practice to domestic undertakings in the same sector that are in a similar situation and was concluded in the first Member State, to whose territory workers of the other Member State are temporarily posted.” However, the collective action must be motivated “by public-interest objectives, such as the protection of workers and the fight against social dumping, and is not carried out in a manner that is disproportionate to the attainment of those objectives.”[1]

It should be borne in mind that the Advocate General’s opinion is not binding but if the ECJ decide to follow this opinion, such a ruling would have serious implications in the internal market, leading to more protectionist measures. It is well known that ECJ has been taking the view that the EU stands for a community of values, a social and political community and not solely an internal market. According to the EUobserver, Richard Ashworth, MEP, said that “the court must not allow trade union blockades to dictate the terms of the EU single market.” He said “if we are to achieve our goals of more jobs and higher economic growth, we need to encourage competition, not force foreign companies to agree to collective agreements they never actually agreed to.” [2]

The Advocate General refers to the right to collective action, the right to negotiate and conclude collective agreements, recognised as fundamental rights in the EU Charter of Fundamental Rights. At the time, he said that “the Charter of Fundamental Rights, although not binding, is principally intended to reaffirm the rights resulting in particular from those traditions.” More importantly, he considers “that the right to resort to collective action to defend trade union members’ interests is a fundamental right. It is therefore not merely a ‘general principle of labour law’,… but rather a general principle of Community law, within the meaning of Article 6(2) EU. That right must therefore be protected in the Community.” It is clear that this case will have several implications if the Court follows the Advocate General’s opinion.

---- Margarida Vasconcelos of the European Foundation recently reported on this case at the ECJ – the opinion in Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet and others (C-341/05). For a regular subscription to The European Journal, please click here ----

[1] Opinion of Advocate General Mengozzi, Case C 341/05, Laval un Partneri Ltd. V Svenska Byggnadsarbetareförbundet and Others, delivered on 23 May 2007. See: http://curia.europa.eu/jurisp/cgi-bin/form.pl?lang=EN&Submit=Rechercher$docrequire=alldocs&numaff=C-341/05&datefs=&datefe=&nomusuel=&domaine=&mots=&resmax=100

[2] Honor Mahony. ‘EU court upholds trade unions’ rights’, 23 May 2007. See: http://euobserver.com/851/24116