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Democrat May-June 2008 (Number 108)

Report by Brian Denny

EU attacks worker' rights - again

European Court of Justice

The European Court of Justice (ECJ) has once more attacked trade union rights by ruling in the 'Ruffert' case that a public authority in the German state of Lower Saxony could not impose a minimum rate of pay for foreign workers.

The EU institution ruled against a public works contract requiring contractors and sub-contractors from other member states to pay rates in accordance with German collective trade union agreements in the building sector.

The judgment follows on from two ECJ rulings in December, the Viking and Laval (Vaxhalom) cases, which established an employers' right to 'freedom of establishment' which overruled trade union rights to take industrial action.

The court also established its 'right' to decide on the proportionality of any strike action by workers, something which even the UK's anti-union Tory laws could not achieve.

In this new case, a German authority awarded the contract to build a prison to a contractor on the basis that it, and any sub-contractor, paid wages provided for in a collective agreement which applied to building work in the public sector.

However, the contractor engaged a Polish sub-contractor and paid wages at a mere 46.5 per cent of the agreed minimum rate.

The German authority terminated the contract and sought to enforce a penalty clause against the Polish sub-contractor.

The liquidator of the contractor claimed damages arguing that the relevant German principality law was incompatible with the freedom to provide services contained in Article 49 of the EC Treaty.

The main basis of the judgment is the Posted Workers Directive, which effectively removes obstacles to the freedom of firms to provide services abroad.

The Directive sets out the minimum terms and conditions which member states must ensure are applied to workers posted to their territory from another member state.

However, it then sets out criteria for determining whether collective agreements are to be regarded as 'universally applicable'.

The EU court - which would have huge powers if the EU constitution is put in place - ruled that the collective agreement was not universally applicable because it only applied to public sector contracts.

The EU court then went on to say its decision is confirmed by consideration of Article 49 because the relevant collective agreement only covered a limited geographical area and did not apply to private sector contracts.

RMT general secretary Bob Crow said that the whole point of trade unions was to maintain national labour standards and prevent social dumping.

"It seems that the whole point of the European Court of Justice is to prevent trade unions and government bodies, in this case, from defending minimum national standards in the name of 'competition'," he said.

In effect, the ECJ is assisting employers to win competitive advantage by undercutting industry standards and trade union collective agreements in the member states in which they seek to operate.

This mechanism was called the 'country of origin' principle in the controversial EU services directive introduced in 2006. Following huge trade union protests, all mention of the 'country of origin' principle was removed from the directive. However, the ECJ is re-introducing the concept through court judgments.

Calls are growing for the unaccountable court's huge powers to be curtailed to allow national governments to have sovereignty over collective agreements and trade union rights.