The Purpose Of European Labour Law: Floor Of Rights – Or Ceiling?

Nicola Countouris

The evocative aphorism that ‘on ne tombe pas amoureux d’un grand marché’ perfectly captures the mood of millions of Europeans in 2016. Jacques Delors was crucially aware of the strategic importance of Europe’s ‘social dimension’ in the process of European economic integration. Social rights, and labour rights in particular, talk to the hearts and minds of working men and women as few other rights do. In defining its European labour law ‘code’, enshrined in a range of labour and equality law directives, the EU has undoubtedly also sought to define its own nature and identity.

But what is the purpose of European labour rights? The received wisdom is that EU labour directives are tasked with ‘providing a basic floor of guarantees for workers across Europe’. A ‘floor of rights’ on which national labour law and industrial relation systems can add further layers of protection, if and as they see fit. This received wisdom is consistent with the constitutional and competence set-up enshrined in the Treaties. Article 151 TFEU clearly suggests that the ‘Social Policy’ field is an area of shared competence where ‘The Union and the Member States … shall have as their objectives the promotion of employment, improved living and working conditions, so as to make possible their harmonisation while the improvement is being maintained’. So both the EU and its Member States are meant, jointly, to contribute to the social make-up of Europe’s social market economy, with the EU setting, according to Article 153(2)(b) of the Treaty, ‘minimum requirements for gradual implementation’. These, as noted by the Court at paragraph 17 of its judgment on the Working Time Directive, authorize ‘Member States to adopt more stringent measures than those which form the subject-matter of Community action’.

Aristea Koukiadaki

This understanding of EU labour law is, however, increasingly contested in some quarters. In recent years two key judgments by the CJEU took the opposite, and very problematic, view that provisions contained in some EU directives may actually act simultaneously as both a floor and a ceiling, permitting no national deviations from the EU-set standard, and certainly no ameliorative action at a national level. The interpretation in Rüffert of the Posted Workers Directive as a ‘maximum free movement of services directive‘, rather than a minimum labour law one, raises this kind of concern in an exemplary way. No less troubling is the decision in the ‘Woolworths’ case to impose a unified concept of ‘establishment’ across the 28 member states, to the detriment of more ‘worker friendly’ definitions, on the grounds ‘that the objective of that directive is not only to afford greater protection to workers in the event of collective redundancies, but also to … harmonise the costs which such protective rules entail for EU undertakings’ (para 62 Case C‑80/14). While the Collective Redundancies Directive is an instrument adopted under Article 115 TFEU (the old ‘common market’ harmonization legal base), there is no doubt that it forms a key part of Europe’s Social Acquis and its provisions, and those contained in its national implementation measures, respond to the logic and rationale of the ‘Social Policy’ instruments.

This recent trend fundamentally misunderstands the function and role of EU action in the social policy field. Firstly, it confuses the idea of ‘floor of rights’ as an ‘anti-social dumping’ device with the idea of ‘ceiling of rights’ as a ‘business cost unification’ device. The Opinion of Advocate General Wahl in Case C‑80/14 is emblematic in this respect. At footnote 30 of the Opinion the AG notes (citing Roger Blanpain’s classic treatise on the topic) that ‘Directive 75/129 was adopted in order to prevent pan-European companies from speculating as to where (that is to say, in which Member State) the costs of dismissing workers would be the lowest’. This is clearly a reference to the original ‘anti-social dumping’ rationale of the 1975 Directive. However, in the main body of his Opinion this ‘anti-social dumping’ (and anti ‘race to the bottom’) rationale morphs into a ‘business cost unification’ one or, to use the AG’s words, in an ‘internal market aim’ rationale whose object is ‘to harmonise the costs which such protective rules entail for undertakings in the European Union’ (paragraph 51 of the Opinion). This is, at best overstretching the original rationale of the directive, at worse a logical (and political) non sequitur.

Secondly, it blurs the respective constitutional and competence lines for EU and Member State action in the labour law field. As noted above, the relationship between EU and MSs in the joint regulation of this shared competence area is premised on the EU establishing a floor of rights, and Member States adding onto it, if and to the extent that they see fit. If this is correct, then a maximum harmonization approach could interfere with the national prerogatives protected by the Treaty structure. The claim to uniformity increasingly postulated by the CJEU advances a claim to exclusive competence that is clearly not sustained by the Treaties, which – most explicitly in Article 4 TFEU – correctly identify social policy as a ‘shared competence’ area.

Thirdly, it ignores the specificities of EU action in the social policy field, specificities that arguably make it particularly unsuitable to exhaustive harmonization. Shared competence does not in itself prohibit maximum or exhaustive harmonization and there are numerous shared competence policy areas where the EU has acted with a view to pre-empting more stringent Member State measures. Environmental law is possibly a prime example of a shared competence area that is sometimes regulated exhaustively by the EU on the basis of Article 114 (see for instance the REACH chemicals Regulation). However, EU action in the environmental regulation field is premised on the basis of policy objectives that arguably render the occasional instance of exhaustive harmonization less unpalatable than in the social policy field. Article 191(2) TFEU prescribes that ‘Union policy on the environment shall aim at a high level of protection’, and action under Article 114 TFEU in this field is equally supposed to ‘take as a base a high level of protection’, with the EU promoting a ‘high level of protection and improvement of the quality of the environment’ (Article 3(3) TEU) overall. Even so, the REACH chemicals regulation contains, in Article 129, a clear safeguard clause that allows Member States to adopt (even) higher standards if faced with a serious risk to ‘human health or the environment’.

By contrast, EU action in the social policy field does not aspire to any high standard of protection, seeking instead to ‘guarantee […] adequate social protection’ (Article 9 TFEU), to introduce ‘minimum requirements’ (Article 153(2)(b)). This rather underwhelming and unambitious set of goals in the social policy field is only compatible with a vision of EU action amounting to the establishment of a pan-European social safety net, a floor of rights on which national labour law systems can, and in fact ought, to build their own labour law edifices. Having an exhaustively unified, ‘adequate’ level of social protection across EU MSs for the purposes of assisting the EU’s ‘internal market aim’, as the Woolworths decision seems to imply, is hardly the kind of entelechy that will make the peoples of Europe fall in love with the European integration project again.

It is strategically important that the vision of EU labour law as a ceiling of rights is discarded, and for the alternative idea of EU labour law as a ‘safety net’ to be embraced again. Failing this, there is a risk that the ‘internal market aim’ deployed in the Woolworth’s decision could be rolled out across other social policy instruments adopted under the same legal basis, and indeed metastasize to the rest of EU labour law directives. The Court of Justice will soon be given an opportunity to re-assess its emerging jurisprudence and, possibly, reverse it, in its pending judgment in the AGET Iraklis reference.

Nobody falls in love with a single market. And nobody is going to fall in love with an ‘internal market aim’ that condemns the ‘European social model’ to lukewarm ‘adequacy’.