UK: New European Measures

This article is based on a paper presented to an Employment Lawyers Association workshop on 3 October 2002. The paper together with others presented to the workshop and other occasional employment papers are available on the Blackstone Chambers website at www.blackstonechambers.com

There are a number of new and proposed European employment measures recently adopted or currently under consideration by the institutions of the European Union and the British government. This article considers the more important of these developments.

This Council Directive originated with a European Commission proposal in November 1998 aimed at "establishing a general framework for informing and consulting employees in the European Community".² A "common position" on the proposal was agreed by the Council in June 2001, and approved by the European Parliament in February 2002³.

The Directive was adopted on 11 March 2002 and published in the Official Journal of the European Communities on 23 March 2002.⁴ Implementation by the member states is due by 23 March 2005.⁵

The UK Department of Trade and Industry issued a consultation paper in July 2002 on issues raised for the UK by the Directive, inviting comments by 11 December 2002.⁶ This is the initial stage of a two-stage consultation procedure on framing UK legislation to implement the Directive. The government has said it will consult at a later stage on specific legislative proposals.

The purpose of the Directive is "to establish a general framework setting out minimum requirements for the right to information and consultation of employees in undertakings or establishments within the Community" (Article 1). Its requirements will apply, according to the choice made by member states, to undertakings employing at least 50 employees in any one member state, or establishments employing at least 20 employees in any one member state. "Undertaking" is a public or private undertaking carrying out an economic activity, whether or not operating for gain. "Establishment" means a unit of business defined in accordance with national law and practice.

The right to information and consultation covers:

• Information on the recent and probable development of the undertaking’s or the establishment’s activities and economic situation;
• Information and consultation on the situation, structure and probable development of employment within the undertaking and on any anticipatory measures envisaged, in particular where there is a threat to employment; and
• Information and consultation on decisions likely to lead to substantial changes in work organisation or in contractual relations.

Consultation, defined as "the exchange of views and establishment of dialogue between the employees’ representatives and the employer", shall take place:

• While ensuring that the timing, method and content are appropriate;
• At the relevant level of management and representation;
• On the basis of information supplied by the employer and the opinion which the employees’ representatives are entitled to formulate;
• In such a way as to enable employees’ representatives to meet with the employer and obtain a response, and the reasons for that response, to any opinion they might formulate; and
• With a view to reaching an agreement on decisions within the scope of the employer’s powers likely to lead to substantial changes in work organisation or in contractual relations.

The first draft Council Regulation on a European Company Statute (ECS) was issued by the European Commission in 1970.⁸ Despite its amendment in 1975, the proposal met with significant opposition within the Council of Ministers, and negotiations finally ground to a halt in 1982. Following its inclusion in the Commission’s 1985 White Paper⁹, the Commission issued a revised draft in 1989¹⁰, removing the employee participation elements from the ECS Regulation and placing them in an accompanying Directive.

This tortuous history continued, through various proposals, most notably the Davignon Report¹¹, to political agreement at the Nice summit in December 2000. The legal basis of the proposal is Article 308, the "catch-all" Article whereby the Council can take appropriate measures to obtain one of the objectives of the Community.

The final versions of the ECS Regulation and the Directive were adopted by the European and Social Policy Council on 8 October 2001, and published in the Official Journal of the European Communities on 10 November 2001.¹²

The ECS is a new legal instrument based on Community law that gives companies the option of forming a European Company (Societas Europaea, SE). A European Company will be able to operate on a Europe-wide basis and be governed by Community law directly applicable in all member states.

Directive 2001/86/EC governs the involvement of employees in the affairs of European Companies, requiring that arrangements for employee involvement must be established in every European Company in accordance with a negotiating procedure or, under certain circumstances, in accordance with the statutory provisions set out in an annex to the Directive (Article 1).

The Directive defines "involvement of employees" as "any mechanism, including information, consultation and participation, through which employees’ representatives may exercise an influence on decisions to be taken within the company" (Article 2(h)). These terms are themselves further defined in Article 2, the definition of consultation in the ECS Directive being somewhat stronger and more specific than that used in the European Works Councils Directive.

The Directive entered into force on 10 November 2001. Member states must adopt the laws, regulations and administrative provisions necessary to comply with the Directive no later than 8 October 2004 (the date that the ECS Regulation comes into force), or ensure by that date at the latest that management and labour introduce the required provisions by way of agreement.

No later than 8 October 2007, the European Commission must, in consultation with the member states and with "management and labour at Community level", review the procedures for applying the Directive, with a view to proposing suitable amendments to the Council where necessary (Article 15).

On 20 March 2002, the European Commission adopted a proposal for a Directive on the working conditions of temporary workers. This followed the failure of the social partners to reach agreement.

The Directive would apply to contracts of employment or employment relationships between a temporary agency (the employer), and a worker who is posted to a user undertaking to work under its supervision.

Temporary agency workers during their employment with the user undertaking are to be treated no less favourably than a comparable worker in that undertaking, unless the difference is objectively justifiable (the non-discrimination principle).

A comparable worker is defined as a worker in the user undertaking in an identical or similar job, taking into account seniority, qualifications and skills. Basic working and employment conditions are defined as conditions relating to:

• the duration of working time, rest periods, night work, paid holidays and public holidays;
• pay;¹⁴
• work done by pregnant women and nursing mothers, children and young people; and
• action taken to combat discrimination on the grounds of sex, race or ethnic origin, religion or beliefs, disabilities, age or sexual orientation.

The government published a consultation paper during summer 2002 on the potential impact of this proposed Directive in the UK.¹⁵ The government is seeking views by 18 October 2002 on:

• The impact of the proposal on the UK labour market as a whole, and on agency workers in particular;
• Any evidence of current problems with temporary agency work in the UK; and
• Views on whether there are any alternatives to regulation that would satisfactorily meet the objectives of the proposed Directive, or any other perceived problems with agency work.

The report of the rapporteur (leke van den Burg) was discussed by the European Parliament’s Social Affairs Committee on 10 September 2002. The vote of that Committee was scheduled for 1 October 2002, with a further vote in plenary session due on 23 October 2002. The proposal is also likely to be discussed at the Social Affairs Council meeting on 7-8 October 2002.¹⁶

The social partners reached a Framework Agreement on fixed term work on 14 January 1999. Directive 1999/70/EC implementing this Framework Agreement was adopted on 28 June 1999. Member states had until 10 July 2001 to implement the Directive or one more year if necessary to take account of special difficulties.

The objects of the Directive are :

• to improve the quality of fixed term work by ensuring the application of the principle of non-discrimination; and
• to establish a framework to prevent abuse arising from the use of successive fixed term employment contracts or relationships.

The UK government has sought to implement the Directive by The Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002.¹⁸ These came into force on 1 October 2002.

The main provisions of the Regulations include the following:

• The Regulations apply generally to employees only, rather than the wider definition of workers;
• A fixed-term employee has the right not to be treated less favourably by their employer than a comparable permanent employee, unless objectively justified. This provision also applies to pay and pensions, which are not covered by the Directive.
• Employees will no longer be able to waive their rights to a redundancy payment on the expiry of their fixed-term contracts.
• The completion of a task contract will count as dismissal for unfair dismissal purposes.
• Fixed-term employees will be considered as permanent employees if they have been employed on successive fixed-term contracts for a period of four years or more without justification on objective grounds (this only applies from 10 July 2002).

The government estimates that 1.1-1.3m people work on fixed-term contracts in the UK, and that 25,000-53,000 employees will benefit from the principle of less favourable treatment.

Complaint of a breach of the rights provided by the Regulations will be to an employment tribunal which will have power to make declarations, order compensation and make recommendations.

The Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 implemented the EC Directive on Part-Time Work. This Directive originated in a Framework Agreement reached between the social partners and establishes the principle of non-discrimination between part-time workers and comparable full-time workers.

Amendments to the Regulations governing part-time workers came into effect on 1 October by means of the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (Amendment) Regulations 2002²⁰. The Amendment Regulations introduce two changes.

The first change relates to fixed-term workers. Previously a fixed-term worker was deemed to be employed under a different contract and so could not be identified as a "comparable worker". This deeming provision has been repealed so that henceforward a fixed-term worker may be a comparable full-time worker for the purpose of the principle of non-discrimination.

Secondly, the Amendment Regulations repeals Regulation 8(8) of the 2000 Regulations which limited the remedies which a tribunal may make, following a finding of less favourable treatment under an occupational pension scheme, to a period of two years prior to the presentation of the complaint. The effect of this change is to bring the Regulations into line with the House of Lords judgment in Preston v Wolverhampton Health Care Trust (No 2).²¹ The amendment extends to treatment under the rules of the scheme as well as in terms of access to the scheme.

The Government published draft Regulations²² on proposed amendments to the Working Time Regulations 1998 with the aim of implementing certain provisions of the Young Workers Directive.²³

The effect includes regulating the working hours of young workers, both generally and particularly in relation to nightwork, and providing for adequate supervision during nightwork. The government invited comments by 6 September 2002.

The union Amicus has complained to the European Commission about the UK’s alleged failure properly to implement the Working Time Directive by means of the Working Time Regulations 1998. The complaints are:

• There is no obligation on employers’ to enforce workers’ rights to rest breaks and holidays (in contrast to working time and nightworking rights).
• There is no obligation on employers to keep records of time worked voluntarily above normal working time.
• Overtime hours on night shift are excluded from the count towards normal hours.

The Commission wrote to the UK government on 21 March, requesting its response by 21 May. The Commission has received the UK government’s response which it is in the process of considering. The commencement of infringement proceedings against the UK is an option open to the Commission.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.