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Finnish cases in EU Court of Justice could have Nordic consequences

| Text: Kerstin Ahlberg, editor EU & Arbetsrätt

Is the Finnish system of universally applicable collective agreements incompatible with the free movement of services? That is what an advocate-general at the Court of Justice of the European Union suggests in a fresh opinion. The case is only one out of three current ones which could have a major impact on the Nordic countries’ labour markets.

Two of the cases have been sent to the Court of Justice of the European Union from Finnish courts. One centers on which of the collective agreement’s benefits could be included in the minimum rates of pay which a member state asks foreign companies to pay when they post workers there. In essence this covers the same ground as the Norwegian “shipbuilding case” on which Norway’s Supreme Court passed judgement last year. The Efta Court complained that the Supreme Court’s judgement was wrong. 

In Sweden there is also debate over what the concept “minimum rates of pay” in the EU’s posting of workers directive entails. This is evidently an important question for the Nordic countries, because the Danish, Norwegian and Swedish governments have all told the EU Court of Justice how they believe it should be answered.

The case in question deals with 186 electricians from Poland who worked at the construction site of the Olkiluoto nuclear power plant. The Finnish Electrical Workers' Union claims the workers have not been paid in accordance with the Finnish universally applicable collective agreement. Their employer counters that the trade union is demanding too much on behalf of the posted electricians. As a result, the Satakunta district court has asked the EU Court a range of questions about what can be included in the minimum rates of pay. 

Opinion in September

In September the Court's Advocate General presented his opinion. He points out that member states decide the content of the minimum rates of pay and argues that all kinds of allowances could form part of this. As a result it is not desirable to establish a set legal definition which covers all countries. The Advocate General argued that the question of which elements of a collective agreement form part of the minimum rates of pay should instead be decided on a case-by-case basis, in cases involving the posting of workers directive.

But the Advocate General also addresses an issue none of the parties to the case nor the district court have considered. He suggests that the Finnish system with universally applicable collective agreements as such may be incompatible with the freedom of movement of services, because domestic employers, in the words of the Advocate General, can “circumvent” the universally applicable collective agreement by entering their own collective agreement directly with the trade union. 

Of course, the final word has not been said with this. The EU court does not have to support any of the Advocate General’s arguments when it finally passes its judgement. No matter what decision it reaches, however, we can expect a clarification of what Nordic countries can demand from foreign employers. This could also perhaps provide an indication as to who has got the best arguments in the row between the Norwegian Supreme Court and the Efta Court.

Restrictions on temporary agency work

In the other Finnish case the EU Court must decide whether restrictions on the use of temporary agency work found in Finnish collective agreements are justified. They imply that temporary agency work may be used only during periods of temporary increase in work or for limited tasks which cannot be carried out by the company’s own workforce. This, it is not allowed to use agency workers for ordinary activities over longer periods of time.       

The employer’s organisation Öljytuote (the Oil Product Association), which is a party to one of these collective agreements, claims these limitations are in breach of the EU directive on temporary agency work. Öljytuote argues Finnish lawmakers on the whole failed to properly remove restrictions and prohibitions when the directive was implemented. 

There is common Nordic interest in this case too. Norway’s Working Environment Act says temporary agency work may be used only in the same few situations when it is also allowed to use fixed-term employment. Sweden has implemented the temporary agency work directive in much the same way as Finland, and there are also some limitations in collective agreements, although these do not go as far as the Finnish ones.   

If the EU court supports the employers’ side, both Norwegian and Swedish legislation will probably need changing. As a result, both countries’ governments have intervened in this case to defend their national rules.

Swedish industrial action questioned again

The third current case is similar to the much-debated Laval case from a few years back, when the EU court decided Swedish trade unions’ decision to take industrial action was illegal because it restricted the free movement of services. But this time the situation is different; now two Swedish trade unions’ industrial action against a Panama registered vessel is under attack. 

The Norwegian shipping company Fonnship A/S has taken legal action against the Swedish Transport Workers Union and the Swedish Union for Service and Communications Employees (Seko) because they blocked the company’s vessel Sava Star when it called at Swedish ports. The vessel sailed under a Panama flag with a Russian crew, and the aim of the blockades was to make the Norwegian owners sign one of the International Transport Workers’ Federation’s collective agreements on wages and working conditions for the crew on board. Other trade unions in other countries, including Norway and Iceland, had also tried to reach the same kind of agreement during the vessel’s journey through Europe. The Swedish blockade was successful and the company signed the collective agreement to avoid getting stuck in the harbours. Afterwards the company took its case to the Swedish Labour Court (AD) arguing the industrial action had been illegal. On their part, the Transport Workers Union and Seko demanded damages because the company had failed to honour the collective agreement. 

According to the Labour Court, the legality of the industrial action depends on whether the Sava Star transports were covered by the rules of the free movement of services according to the EEA agreement, as the vessel was registered in a non-EU/EEA country. AD failed to reach a conclusion and passed the question on to the EU Court. 

The EU Court’s answer came this summer and implies the vessel’s transports were covered by the free movement of services — under certain conditions. It will now be up to AD to decide whether these conditions have been met. If the answer is yes, AD will also have to take into account what the EU Court said in its Laval judgement. In future it could become considerably more difficult for Nordic unions to contribute to international trade union cooperation aimed at improving wages and working conditions on board vessels under a flag of convenience.


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