Abstract
Concern has been growing, especially since the Viking and Laval opinions, that business rights are unjustly trumping democracy and labour rights. Those cases reviewed the proportionality of collective action by trade unions on the assumption that strikes infringed business rights to establish and provide services. But the Court of Justice never had submissions on the rights of trade unions to establish and provide services to their members. A plain reading of the Treaty on the Functioning of the European Union compels the conclusion that union freedoms are protected by law. If the Court had turned its attention to those rights, it would have found a union taking collective action cannot violate a business’ right of establishment or service provision, any more than a business can violate rights of another business by fairly outcompeting it. Conflicting rights to establish and provide services cancel each other out. From this perspective, labour rights are not merely overriding interests and human rights. Labour rights form the general principles underpinning the European Union. The explicit acknowledgement of trade union freedoms is desirable in law and to advance the EU’s social and economic aims.
I am very grateful to Zoe Adams, Rüdiger Krause, Andy Morton and Francis Jacobs for comments and discussion. Please email all ideas or criticism to ewan.mcgaughey@kcl.ac.uk.
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Notes
- 1.
e.g. Blair (2000). cf. BBC Newsnight, Interview with Giscard d’Estaing (29 October 2002) BBC Archive.
- 2.
cf. Defrenne v Sabena (No 2) (1976) Case 43/75 referring to what is now TFEU art 157 on equal pay, saying ‘this provision forms part of the social objectives of the community, which is not merely an economic union, but is at the same time intended, by common action, to ensure social progress and seek the constant improvement of the living and working conditions of their people, as is emphasized by the Preamble to the Treaty.’
- 3.
Cross Border Merger Directive 2005/56/EC art 16(2)-(4).
- 4.
Employee Involvement Directive 2001/86/EC arts 3-13 apply.
- 5.
There are arguably implicit legal rights, on a series of grounds, to be consulted and participate. For example, the Charter of Fundamental Rights of the European Union art 27 enshrines the right of ‘consultation’, which while not self-standing, must be used to interpret other legislation. Consultation means a duty to negotiate, and if no outcome is reached, and arguably the unilateral abolition of worker voice by management will be an abuse of rights.
- 6.
- 7.
Van Cleynenbruegel (2018) has also begun this enquiry, developing a compelling argument focusing on receipt of services.
- 8.
e.g. Erzberger v TUI AG (2017) C-566/15, [39] discussed in ‘Good for Governance: Erzberger v TUI AG and the Codetermination Bargains’ (18 April 2017) Oxford Business Law Blog. Überseering BV v Nordic Construction Company Baumanagement GmbH (2002) C-208/00, [92] ‘overriding requirements relating to the general interest, such as the protection of the interests of creditors, minority shareholders, employees and even the taxation authorities, may, in certain circumstances and subject to certain conditions, justify restrictions on freedom of establishment.’
- 9.
This is expressly true of Danish codetermination law and Norwegian law: see Erzberger v TUI AG (2017) C-566/15, discussed in the AG Saugmandsgaard Øe Opinion, [83] fn 58.
- 10.
See the International Covenant on Social, Economic and Cultural Rights 1966 art 8, on the ‘right of everyone to form trade unions’ with ‘No restrictions’ except as prescribed by law, necessary in a democracy, for security, order and to protect rights and freedoms of others. Also: ‘The right to strike, provided that it is exercised in conformity with the laws of the particular country.’
- 11.
Two examples of polite but devastating criticism are found in Deakin (2008) ‘Given the clear wording of the Directive and the wider institutional context of social policy in which it is set, how can the Court’s view in Laval be explained?’ Joerges and Rödl (2009), pp. 15–19. See further Freedland and Prassl (2014) and Davies (2008).
- 12.
This diverted, without justification, from the principle in Defrenne v Sabena (No 2) (1976) Case 43/75 that the European Union ‘is not merely an economic union, but is at the same time intended, by common action, to ensure social progress and seek the constant improvement of the living and working conditions of their people’.
- 13.
Those well acquainted with the background may skip to part 2(2).
- 14.
WTO Agreement, Annex 2, Understanding on rules and procedures governing the settlement of disputes, art 22. The fact that the process of economic retaliation is meant to follow a legal procedure cannot be seen as an adequate functional substitute for actual judicial procedures found, for instance, in EU law.
- 15.
Clayton Act of 1914, 15 USC §17.
- 16.
New State Ice Co v Liebmann, 285 US 262 (1932) per Brandeis J.
- 17.
Spaak Report, Comite Intergouvernemental créé par la conference de Messine. Rapport des chefs de delegation aux ministres des affaires etrangeres (21 April 1956) Unofficial translation by ECSC Information Service (June 1956).
- 18.
New State Ice Co v Liebmann, 285 US 262 (1932) per Brandeis J, ‘It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country. This Court has the power to prevent an experiment.’
- 19.
The ‘social chapter’ of the Treaty of Maastricht 1992 was rejected by the UK government, at that time run by the Conservative Party. When the Labour Party won the 1997 election, it joined the social chapter. The fact that the Conservatives have never been reconciled to labour rights (or financial regulation) explains some of their passion for ‘Brexit’.
- 20.
See also Lecomte (2011).
- 21.
Grossman and Woll (2011).
- 22.
cf. Cook (1879) ch I, 4.
- 23.
cf. Winston Churchill MP, Trade Boards Bill, Hansard HC Debs (28 April 1909) vol 4, col. 388.
- 24.
cf. Hayek (1960) ch 12, The American Contribution: Constitutionalism, 161, applauding how enforced free movement could halt ‘economic control’ for tax, labour rights or public services, which could ‘be effective only if the authority exercising them can also control the movement of men and goods across the frontiers of a territory’.
- 25.
Lindstrom (2012).
- 26.
The French rejected the Constitution by 55% to 45% on a turnout of 69% (29 May 2005). The Dutch rejected the constitution by 61% to 39% on a turnout of 62% (1 June 2005).
- 27.
This is not to suggest that referendums are a necessary part of a ‘fair democratic process’. Referendums may be especially susceptible to manipulation, both in the framing of the question, timing, media focus, or external interference: e.g. Zurchner (1935) on crude, but still familiar strategies.
- 28.
cf. Scharpf (2002).
- 29.
ITWF and Finnish Seamen’s Union v Viking Line ABP and OÜ Viking Line Eesti (2007) C-438/05, [2007] I-10779.
- 30.
See also ITWF v Viking Line ABP [2005] EWCA Civ 1229.
- 31.
Viking (2007) C-438/05, [44] ‘the right to take collective action, including the right to strike, must… be recognised as a fundamental right which forms an integral part of the general principles of Community law’, but ‘the exercise of that right may none the less be subject to certain restrictions… in accordance with Community law and national law and practices.’
- 32.
Viking (2007) C-438/05, [81].
- 33.
Siegel (1964), p. 46, referring to Jules Kolodney, during teacher strikes, ‘In New York, you can’t have true collective bargaining without the implied threat of a strike. If you can’t call a strike you don’t have real collective bargaining, you have ‘collective begging.”
- 34.
Roosevelt (1944).
- 35.
Laval Un Partneri Ltd v Svenska Byggnadsarbetareforbundet (2008) C-319/05, and C-319/06.
- 36.
This is all the more clear given that TFEU art 153(4) which says member states can maintain ‘more stringent protective measures compatible with the Treaties.’ The CJEU, on completely inadequate grounds, dismissed this on the basis that improvement had to be compatible with the Treaties, and therefore (somehow) collective agreements were not good enough.
- 37.
Laval (2008) C-319/05, [110] referring to Arblade.
- 38.
UNITE Press Release, ‘Isle of Grain Power Station: UK workers excluded, EU workers exploited’ (13 March 2009).
- 39.
See RMT v United Kingdom [2014] ECHR 366.
- 40.
Kilpatrick (2009).
- 41.
See the statement in Hansard HC Debs (4 February 2009) col 842, Colin Burgon MP: ‘Does the Prime Minister agree that the threat to British workers does not come from other European workers, but from the workings of the unregulated capitalism…?’ Prime Minister Gordon Brown: ‘an expert review has been set up in the European Union to look at the impact of the Laval, Viking and other judgments, and a group of employers and the work forces are also meeting to review that at the same time. When they reach their conclusions, we will look at what they have to say.’
- 42.
Špidla (4 February 2009).
- 43.
Rome I Regulation (EC) No 593/2008 recital 34 ‘The rule on individual employment contracts should not prejudice the application of the overriding mandatory provisions of the country to which a worker is posted in accordance with Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services.’
- 44.
Rüffert v Land Niedersachsen (2008) C-346/06.
- 45.
Commission v Germany (2010) C-271/08, [52] suggesting that a ‘fair balance’ should be achieved between ‘the level of the retirement pensions of the workers concerned, on the one hand, and attainment of freedom of establishment and of the freedom to provide services, and opening-up to competition at European Union level, on the other (see, by analogy, Case C-112/00 Schmidberger [2003] ECR I-5659, paragraphs 81 and 82).’ See Syrpis (2011).
- 46.
Bundesdruckerei GmbH v Stadt Dortmund (2014) C-549/13, at [34] saying a minimum wage could not be imposed ‘which bears no relation to the cost of living in the Member State in which the services relating to the public contract at issue are performed and for that reason prevents subcontractors established in that Member State from deriving a competitive advantage from the differences between the respective rates of pay, that national legislation goes beyond what is necessary to ensure that the objective of employee protection is attained.’ The court misses the point that any company in another member state, even with lower living costs, is at no competitive disadvantage, because the procuring authority will be paying to cover those costs. Companies then compete on profit margins and quality. Higher procurement wages accelerate growth in low wage countries.
- 47.
Regiopost GmbH & Co KG v Stadt Landau in der Pfalz (2015) C-115/14.
- 48.
Public Procurement Directive 2014/25/EU art 18.
- 49.
Nb the Services Directive 2006/123/EC art 4(1) merely refers back to the Treaty.
- 50.
e.g. Webb and Webb (9th edn 1926) Part II, 160, on mutual insurance.
- 51.
Ewing (2005).
- 52.
In the UK, the Trade Union and Labour Relations (Consolidation) Act 1992 s 146.
- 53.
This is possible because the ‘closed shop’ was abolished in Europe, largely following Young, James and Webster v United Kingdom [1981] ECHR 4, while in the US unions can only collect fees from non-union workers in certain states. This is currently being threatened by the Republican majority on Trump’s Supreme Court. See Janus v AFSCME, _ US _ (2018).
- 54.
Breda (2015).
- 55.
Forth and Bryson (14 July 2012).
- 56.
Gabriel and Schmitz (2014).
- 57.
Geraets-Smits v Stichting Ziekenfonds and Peerbooms v Stichting CZ Groep Zorgverzekeringen (2001) C-157/99, held that health care was a service even though it was partly government funded. See in detail Van Cleynenbruegel (2018).
- 58.
TFEU art 52, which is referred to by analogy from art 62.
- 59.
ICESCR 1966 art 8, ‘No restrictions may be placed on the exercise of this right other than those prescribed by law and which are necessary in a democratic society in the interests of national security or public order or for the protection of the rights and freedoms of others.’
- 60.
It reflects what was already implicit in the Universal Declaration of Human Rights 1948 arts 20–24.
- 61.
TFEU art 56, ‘Within the framework of the provisions set out below, restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended.’
- 62.
TFEU art 49, ‘Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State.’
- 63.
cf. Gebhard v Consiglio dell’Ordine degli Avvocati e Procuratori di Milano (1995) C-55/94, [25] holding that a German lawyer’s right of establishment could be infringed if the duty to register in Italy was applied is a discriminatory or disproportionate manner.
- 64.
Gebhard v Consiglio dell’Ordine degli Avvocati e Procuratori di Milano (1995) C-55/94, [37].
- 65.
Crofter Hand Woven Harris Tweed Co Ltd v Veitch [1941] UKHL 2, per Lord Wright. This understanding directly informed the European Convention on Human Rights 1950 art 11.
- 66.
RMT v UK [2014] ECHR 366, [84] though hesitating to call it an ‘essential element’. It seems EU law could go further.
- 67.
Junk v Kühnel (2005) C-188/03, [43] holding the Collective Redundancies Directive 1998 ‘imposes an obligation to negotiate’.
- 68.
CFREU 2000 art 47 requires that legal rights are effective. This includes the right to strike.
- 69.
Put another way, and in contrast to the ambiguities found in Schmidberger v Austria (2003) C-112/00, the union’s right of protest (to establish a bargaining unit) is accorded an equal weight to the business’ right of establishment.
- 70.
RMT v United Kingdom [2014] ECHR 366, [104].
- 71.
Hrvatski Lijecnicki sindikat v Croatia [2014] ECHR 1337.
- 72.
See McGaughey (2018).
- 73.
Compare Certification of the Constitution of the Republic of South Africa [1996] ZACC 26, [66] ‘Collective bargaining is based on the recognition of the fact that employers enjoy greater social and economic power than individual workers. Workers therefore need to act in concert to provide them collectively with sufficient power to bargain effectively with employers. Workers exercise collective power primarily through the mechanism of strike action. In theory, employers, on the other hand, may exercise power against workers through a range of weapons, such as dismissal, the employment of alternative or replacement labour, the unilateral implementation of new terms and conditions of employment, and the exclusion of workers from the workplace (the last of these being generally called a lockout). The importance of the right to strike for workers has led to it being far more frequently entrenched in constitutions as a fundamental right than is the right to lock out. The argument that it is necessary in order to maintain equality to entrench the right to lock out once the right to strike has been included, cannot be sustained, because the right to strike and the right to lock out are not always and necessarily equivalent.’
- 74.
Kahn-Freund (1976), p. 244, himself paraphrasing Marshall CJ in M’Culloch v Maryland (1819) 4 Wheat 316, 431, ‘The power to tax involves the power to destroy.’
- 75.
This should have already been clear from a consistent interpretation of TFEU art 153(4)–(5).
- 76.
TEU art 3(3), ‘It shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment.’
- 77.
FNV Kunsten Informatie en Media v Staat der Nederlanden (2014) C-413/13.
- 78.
Wouters v Algemene Raad van de Nederlandse Orde van Advocaten (2002) C-309/99, [46]–[49].
- 79.
de Stefano and Aloisi (2018).
- 80.
Universal Declaration of Human Rights art 23. International Covenant on Economic, Social and Cultural Rights 1966 art 8.
- 81.
Topham (10 February 2016).
- 82.
Thompson (2 April 2018).
- 83.
In re Debs 64 Fed 724 (CC Ill 1894), 158 US 564 (1895) Listen to the documentary by Bernie Sanders and Jane Sanders, Eugene V. Debs Documentary (1979) youtube.com.
- 84.
Loewe v Lawlor 208 US 274 (1908).
- 85.
Albany International BV v Stichting Bedrijfspensioenfonds Textielindustrie (1999) C-67/96.
- 86.
Höfner and Elser v Macrotron GmbH (1991) C-41/90.
- 87.
- 88.
See McGaughey (2016), p. 165.
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McGaughey, E. (2019). Unions’ Freedom to Establish and Provide Services. In: Papadopoulos, T. (eds) Cross-Border Mergers. Studies in European Economic Law and Regulation, vol 17. Springer, Cham. https://doi.org/10.1007/978-3-030-22753-1_9
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