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Free Movement of Services versus National Labour Law and Industrial Relations Systems: Understanding the Laval Case from a Swedish and Nordic Perspective

Published online by Cambridge University Press:  27 October 2017

Extract

European integration, the internal market and free movement of persons and services are important aspects of EC labour law and EU industrial relations. As a result of EU enlargement and the emphasis on free movement within the EU, the problems of posting of workers, low-wage competition and social dumping are high on the agenda. This is illustrated by the epochal and much-debated Laval and Viking cases from the European Court of Justice (ECJ).

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Research Article
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Copyright © Centre for European Legal Studies, Faculty of Law, University of Cambridge 2008

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References

1 See Rönnmar, M (ed), EU industrial relations vs national industrial relations. Comparative and interdisciplinary perspectives (The Hague, Kluwer Law International, forthcoming)Google Scholar.

2 See Case C-341/05, Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet [2007] ECR I-11767, the Opinion of AG Mengozzi delivered on 23 May 2007, and Labour Court judgment AD 2005:49. See also Case C-438/05, International Transport Workers’ Federation v Viking Line ABP, judgment of 11 December 2007 and the Opinion of AG Poiares Maduro delivered on 23 May 2007.

3 Cf D Schiek, ‘Transnational collective labour agreements in Europe and at European level—further readings of Article 139 EC’ in Rönnmar (ed), above n 1.

4 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, [1997] OJ L18/1.

5 In 2007, however, there was a dramatic drop in the trade union organisation rate, from 77% to 73% in a single year. This is believed to be the result mainly of a recent reform of the unemployment insurance system by the centre-right government, leading to increased fees to be paid by the employees to the system administered by the trade unions. See Dagens Nyheter, ‘Största tappet sedan 1909 ‘, 5 March 2008, available at <http://www.dn.se/DNet/road/Classic/article/0/jsp/print.jsp?&a=749272> accessed 26 August 2008.

6 There are three central trade union confederations: LO (the Swedish Confederation of Trade Unions), TCO (the Swedish Confederation for Professional Employees) and SACO (the Swedish Confederation of Professional Associations). See Bruun, N, Flodgren, B, Halvorsen, M, Hyden, H and Nielsen, R, The Nordic Labour Relations Model. Labour Law and Trade Unions in the Nordic Countries—Today and Tomorrow (Dartmouth, Aldershot, 1992)Google Scholar; Kjellberg, A, ‘Restoring the Model?’ in Ferner, A and Hyman, R (eds), Changing Industrial Relations in Europe (2nd edn, Oxford, Blackwell, 1998)Google Scholar; Kjellberg, A, ‘Arbetsgivarorganisationer och fackföreningar i ett föränderligt arbetsliv ‘ in von Otter, C (ed), Ute och inne i svenskt arbetsliv. Forskare analyserar och spekulerar om trender i framtidens arbete (Stockholm, Arbetslivsinstitutet, 2003)Google Scholar; and A Numhauser-Henning, ‘Lagstiftning eller självreglering i arbetsrätten? Svaret är både ock ‘ (2001) Svensk Juristtidning 314.

7 With the exception of a small, independent, syndicalism trade union movement with marginal influence on the overall labour market, see Fahlbeck, R, ‘Industrial Relations and Collective Labour Law: Characteristics, Principles and Basic Features’ (2002) 43 Scandinavian Studies in Law 87 Google Scholar.

8 See van Peijpe, T, ‘The Usefulness of Comparative Methods in Studying Trends in Labour Law’ in Wilthagen, T (ed), Advancing Theory in Labour Law and Industrial Relations in a Global Context (Amsterdam, North-Holland, 1998)Google Scholar; Bamber, GJ and Lansbury, RD, ‘An Introduction to International and Comparative Employment Relations’ in Bamber, GJ and Lansbury, RD (eds), International and Comparative Employment Relations. A Study of Industrialised Market Economies rev edn (London, Sage, 1998)Google Scholar.

9 Some basic agreements, mainly regarding cooperation and co-determination, are concluded at national top level, between leading trade union and employer confederations.

10 See Numhauser-Henning, above n 6; Kjellberg, above n 6; Fahlbeck, above n 7; Ahlberg, K and Bruun, N, ‘Sweden: Transition through collective bargaining’ in Blanke, T and Rose, E (guest eds), Collective Bargaining and Wages in Comparative Perspective. Germany, France, The Netherlands, Sweden and the United Kingdom Bulletin of Comparative Labour Relations, Vol 56 (The Hague, Kluwer Law International, 2005)Google Scholar.

11 See Bruun et al, above n 6.

12 See Bruun, N, The Autonomy of the Collective Agreement. Report to the VII European Regional Congress of the International Society for Labour Law and Social Security (Stockholm, 2002)Google Scholar; and European Commission, Industrial Relations in Europe 2006 (Luxembourg, 2006).

13 See Bruun, above n 12; Schiek, D, ‘Autonomous Collective Agreements as a Regulatory Device in European Labour Law: How to Read Article 139 EC’ (2005) 34 Industrial Law Journal 23 CrossRefGoogle Scholar; Norberg, P, Arbetsrätt och konkurrensrätt. En normativ studie av motsättningen mellan marknadsrättsliga värden och sociala värden (Lund, Juristförlaget i Lund, 2002)Google Scholar; Industrial Relations in Europe 2006, above n 12; and Ahlberg, K and Bruun, N, Kollektivavtal i EU. Om allmängiltiga avtal och social dumping (Stockholm, Juristförlaget, 1996)Google Scholar.

14 Cf Laval, above n 2, para 98. See, eg L Maier, ‘Tjänstedirektivet, social dumpning och de nationella arbetsmarknadssystemen ‘ (2005) Europarättslig tidskrift 729; and Eklund, R, ‘The Laval Case. The Swedish Labour Court Decision 2005 No 49’ (2006) 35 Industrial Law Journal 202 CrossRefGoogle Scholar. Cf also Reich, N, ‘Free Movement v Social Rights in an Enlarged Union—the Laval and Viking Cases before the ECJ’ (2007) 9(2) German Law Journal 128 ff Google Scholar; and Sigeman, T, ‘Lavaldomen sätter spärr mot social protektionism’ (2008) No 1 Lag & Avtal 34 ff Google Scholar.

15 See Governmental Bill prop 1975/76:105 bilaga 1, 219 ff; Fahlbeck, above n 7; and Schmidt, F, Eklund, R and Göransson, H, Facklig arbetsrätt (Stockholm, Juristförlaget, 1997) 97 ff & 139Google Scholar.

16 Section 23 of the (1976:580) Co-determination Act (Medbestämmandelagen; hereinafter, ‘MBL’).

17 MBL s 26.

18 MBL s 27.

19 MBL ss 54 & 55.

20 See Bergqvist, O, Lunning, L and Toijer, G, Medbestämmandelagen. Lagtext med kommentarer (Stockholm, Norstedts Juridik, 1997) 310 ff Google Scholar; and Malmberg, J, Anställningsavtalet. Om anställningsförhållandet individuella reglering (Uppsala, Iustus, 1997) 144 ff Google Scholar.

21 According to a survey from 2001, the collective bargaining coverage in Sweden is as high as 90–5%; see Kjellberg, above n 6, 350. Cf AG Mengozzi’s Opinion in Laval, above n 2, para 191.

22 In relation to the trade union having concluded the collective agreement, the employer is obliged to apply the terms and conditions of the collective agreement uniformly to all employees, regardless of trade union membership.

23 See Bergqvist et al, above n 20, 310 ff; Malmberg, above n 20, 144 ff; and Fahlbeck, above n 7. Implementation of EC directives cannot be made exclusively by means of collective agreements. The de facto, almost complete collective bargaining coverage in Sweden does not legally guarantee in a sufficient way the enforcement of individual rights, and supplemen tary legislation is therefore required for the implementation of EC directives. See R Nielsen, ‘Europeanization of Nordic Labour Law’ (2002) Scandinavian Studies in Law 49 ff.

24 See Ahlberg, K, Bruun, N and Malmberg, J, ‘The Vaxholm case from a Swedish and European perspective’ (2006) 12 Transfer 163 ff Google Scholar; Ö Edström, ‘The free movement of services and the right to industrial action in Swedish law—in the light of the Laval case’ in M Rönnmar (ed), above n 1. Cf also the Swedish Government’s plea in the Laval case.

25 See Gustafsson v Sweden (App no 15573/89) (1996) 2 EHRR 409; and J Malmberg, Collective agreements and collective bargaining: analyses of the impact of the European Court of Justice rulings on Laval & Viking, Briefing note (IP/A/EMPL/IC/2008-06) European Parliament’s Committee on Employment and Social Affairs, 2008.

26 1974 Instrument of Government Chapter 2 ss 1 and 17.

27 MBL s 7.

28 MBL s 8.

29 See Bergqvist et al, above n 20, 142 ff; and Schmidt et al, above n 15, 108 ff . The negative side of the freedom of association is protected only by Art 11 of the European Convention on Human Rights. Important cases in this area have been brought before the Swedish Labour Court and the European Court of Human Rights. See, eg Labour Court judgment AD 1998:17, and judgments from the European Court of Human Rights: Gustafsson v Sweden, above n 25; AB Kurt Kellerman v Sweden (App no 41579/98), 26 October 2004; and Evaldsson m fl v Sweden (App no 75252/01), 13 February 2007. See Bergqvist et al, above n 20, 131 ff; and Olsson, P Herzfeld, Facklig föreningsfrihet som mänsklig rättighet (Uppsala, Iustus, 2003)Google Scholar.

30 Cf the (1974:358) Act on Trade Union Representatives.

31 See above n 26.

32 MBL s 41.

33 See Governmental Bill prop. 1975/76:115 bilaga 1 102 ff, and Bergqvist et al, above n 20, 411 ff.

34 MBL s 41(1).

35 See Bergqvist et al, above n 20, 422 ff; and Governmental White Paper SOU 1984: 19, 9 ff.

36 See Governmental Bill prop 1975/76:115 bilaga 1 102 ff; and Bergqvist et al, above n 20, 418 ff . In addition, industrial action may not be taken toward a company which has no employees or which employs only family members of the owner of the company (MBL s 41b); cf Labour Court judgment AD 2008:5. The National Mediation Office mediates in labour disputes and should also promote an effective wage formation process, cf MBL ss 46–53. See Bergqvist et al, above n 20, 411 ff.

37 MBL s 41(1)4p.

38 See Fahlbeck, above n 7; Schmidt et al, above n 15, 97 ff & 139; and Labour Court judgment AD 1998:17.

39 See Bergqvist et al, above n 20, 443 ff; and Governmental Bill prop 1990/91:162. It follows from MBL ss 25a and 31a that a collective agreement that has been entered into after industrial action according to Lex Britannia is always considered to be legally valid in Sweden. Furthermore, the Swedish collective agreement will be applied in Sweden, even if it is entered into after the foreign collective agreement. According to general principles in Swedish law on ‘competing collective agreements’, the first agreement would otherwise apply when it comes to terms and conditions of employment.

40 See Governmental Bill prop 1990/91:162 5; cf also the Swedish Government’s plea in Laval.

41 For a discussion on the Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the international market, [2006] OJ L376/36 (the Services Directive), see, eg Nergaard, U, Nielsen, R and Roseberry, LM (eds), The Services Directive—Consequences for the Welfare State and the European Social Model (Copenhagen, DJØF Publishing, 2008)Google Scholar; C Barnard, ‘Employment rights, free movement under the EC Treaty and the Services Directive’ in Rönnmar (ed), above n 1; and Edström, above n 24.

42 Cf T van Peijpe, ‘If Vaxholm were in Holland. Interest conflicts and EU labour law in a comparative perspective’ in Rönnmar (ed), above n 1; and Sigeman, above n 14. Cf also AG Mengozzi’s Opinion in Laval, above n 2, para 171.

43 Case C-113/89, Rush Portuguesa [1990] ECR I-1417, para 18. Cf also Barnard, C, EC Employment Law 3rd edn (Oxford, Oxford University Press, 2006) 275 ff Google Scholar; and Davies, P, ‘The Posted Workers Directive and the EC Treaty’ (2002) 31 Industrial Law Journal 298 CrossRefGoogle Scholar.

44 See Laval, above n 2, para 57, with reference to Joined Cases C-369 & 376/96, Arblade [1999] ECR I-8453, para 35; and Case C-341/02, Commission v Germany [2005] ECR I-2733, para 24.

45 Art 1.

46 Art 1(3).

47 Art 2(1).

48 Art 2(2).

49 Cf Laval, above n 2, paras 7 and 67.

50 AG Mengozzi in Laval does not, however, find the principle of equal treatment as problematic, above n 2, para 193: ‘Thus, in view of those characteristics as a whole and, in particular, the extent of the coverage of collective agreements in the Swedish building sector and the possibility, deriving from the regime established by the MBL, of compelling domestic employers not affiliated to an employers’ organization to conclude an agreement of that kind by means of the right granted to trade unions to take collective action, the Swedish system appears, by subjecting a foreign service provider to the latter regime, to ensure the equal treatment provided for by Article 3 of Directive 96/71 as between that provider and the domestic undertakings carrying on business in the Swedish building sector which are in a similar situation.’

51 See Governmental Bill prop 1998/99:90; the Swedish Government’s plea in Laval; B Nyström, ‘Stridsåtgärder—en grundläggande rättighet som kan begränsas av den fria rörligheten ‘ (2008) Juridisk Tidskrift (forthcoming); and Malmberg, above n 25.

52 See Laval, above n 2, para 24. Cf also A Kruse, ‘Fackliga stridsåtgärder och den fria rörligheten i EU ‘ (2008) Europarättslig Tidskrift (forthcoming); Nyström, above n 51; and the Swedish Government’s plea in Laval.

53 Cf Laval, above n 2, paras 17–26.

54 Ibid. On Swedish law, pay review and the negative freedom of association, see Evaldsson m fl v Sweden, above n 29.

55 In the dispute, Laval contacted the liaison office in order to obtain information on the terms and conditions which Laval must apply in Sweden. Laval was informed that ‘it was required to apply the provisions to which the law on the posting of workers refers, that it was for management and labour to agree on wage issues, that the minimum requirements under the collective agreements also applied to foreign posted workers, and that, if a foreign employer was having to pay double contributions, the matter could be brought before the courts. In order to ascertain what provisions under the agreements were applicable, Laval had to speak to management and labour in the sector concerned’ (Laval, above n 2, para 35).

56 In which the terms and conditions of employment concerning the matters referred to in Art 3(1), first subparagraph, (a) to (g) of the Posted Workers Directive, save for minimum rates of pay, are contained in legislative provisions.

57 Laval, above n 2, para 53.

58 Ibid, paras 54–5.

59 Ibid, paras 58–60.

60 Ibid, para 61. See Case C-60/03, Wolff and Müller [2004] ECR I-9553, paras 25–7 & 45; and Case C-346/06, Rüffert v Land Niedersachsen, judgment of 3 April 2008. Cf also Malmberg, above n 25; Nyström, above n 51; and Sigeman, above n 14.

61 Laval, above n 2, paras 65–7.

62 Laval, above n 2, para 68. Cf Edström, above n 24; Malmberg, above n 25; and P Norberg, ‘Vaxholmsmålet—har den svenska arbetsrättsliga modellen skadats och i hur storgrad ’ (2008) Europarättslig Tidskrift (forthcoming).

63 Laval, above n 2, para 71.

64 AG Mengozzi came to another conclusion. He stated that it ‘is therefore beyond doubt, in my view, that the right to take collective action granted by Swedish law to trade unions to enable them to impose the wage conditions laid down or governed by Swedish collective agree ments provides a suitable means of attaining the aim of protecting posted workers laid down in Article 3 of Directive 96/71’: Opinion in Laval, above n 2, para 187.

65 Laval, above n 2, para 80.

66 Ibid, para 81. AG Mengozzi took a somewhat different stance, seemingly disagreeing with ECJ. He stated that ‘Directive 96/71, by virtue of Article 3(7) thereof, allows terms and conditions of employment relating to the matters referred to in Article 3(1), which are more favourable for posted workers, to be imposed in the host Member State. As indicated earlier, such conditions must nevertheless be in conformity with Article 49 EC’: Opinion in Laval, above n 2, para 209.

67 Above n 60.

68 Ibid, para 33.

69 Ibid, para 84.

70 See Case C-67/96, Albany International v Stichting Bedrijfspensioenfonds Textielindustrie [1999] ECR I-5751. See further Barnard, earlier in this volume.

71 See above n 2: Laval, para 98; and Viking, paras 33–5 and 65–6. Cf also Barnard, above n 41; and Nyström, above n 51.

72 Viking, above n 2, para 61.

73 See above n 2: Laval, paras 90–1; and Viking, paras 43–4.

74 Laval, above n 2, para 91; cf Case C-112/00, Schmidberger [2003] ECR I-5659; and Case C-36/02, Omega [2004] ECR I-9609.

75 Above n 2: Laval, paras 104–5; Viking, para 79. Cf also Barnard, above n 41; and Kruse, above n 52.

76 Laval, above n 2, paras 99–100.

77 Ibid, para 101. See, inter alia, Case 220/83, Commission v France [1986] ECR 3663; and Case C-398/95, SETTG [1997] ECR I-3091.

78 Laval, above n 2, paras 103 & 107.

79 Ibid, para 108.

80 AG Mengozzi found otherwise in his Opinion. The Directive 96/71/EC on posting of workers and the free movement of services did not prevent trade unions from attempting, by means of industrial action in the form of a blockade and sympathy action, to compel a service provider of another Member State to subscribe to a rate of pay determined in accordance with a collective agreement, which was applicable in practice to domestic undertakings in the same sector that were in a similar situation and which was concluded in the first Member State, to whose territory workers of the other Member State were posted. However, industrial action must be motivated by public interest objectives, such as the protection of workers and the fi ght against social dumping, and must not be performed in a manner disproportionate to the attainment of those objectives. Cf Opinion in Laval, above n 2, paras 307–8.

81 Laval, above n 2, para 114: see, eg Case C-154/89, Commission v France [1991] ECR I-659; Case C-180/89, Commission v Italy ECR I-709; and Case C-198/89, Commission v Greece ECR I-727.

82 Laval, above n 2, para 117.

83 See Governmental White Paper Ds 1994:13.

84 Cf Edström, above n 24; and Malmberg, above n 25.

85 Cf Nyström, above n 51; and Norberg, above n 62.

86 See Direktiv 2008:38 Konsekvenser och åtgärder med anledning av Laval-domen.

87 See Governmental White Paper Ds 1994:13; Nyström, above n 51; and Norberg, above n 62.

88 See Nyström, above n 51; Norberg, above n 62; T Sigeman, above n 14; and Ahlberg et al, above n 24.

89 It should be noted that Art 3(10) provides an opportunity for the Member State to extend the use of extension of collective agreements according to Art 3(8) on the basis of equality of treatment to other activities and lines of business.

90 See Edström, n 24. Cf also Nyström, above n 51; and Malmberg, above n 25.

91 See van Peijpe, above n 42. For a similar proposal for introducing an extension of collective agreements according to Art 3(8) of the Directive, see Norberg, above n 62.

92 See Nyström, above n 51.

93 Cf Malmberg, above n 25; and Norberg, above n 62. Such adjustment of collective agreements in posting of workers situations was suggested as early as 1994 in a Governmental White Paper analysing the compatibility between Lex Britannia and EC law and the four freedoms, see Governmental White Paper Ds 1994:13.

94 See Barnard, above n 41. Cf also van Peijpe, above n 42.

95 Cf Norberg, above n 62; and R Nielsen, ‘EU-domstolens afgørelser om konfliktret i Viking- og Laval-sagerne ‘, AT-online, 12 March 2008.

96 Cf Malmberg, above n 25; Nyström, above n 51; and Sigeman, above n 14.

97 See, eg Nyström, above n 51; and Malmberg, above n 25. Cf also Barnard, n 41.

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