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Complicated relationship between EU and Nordic labour law systems

| Text: Kerstin Ahlberg, editor EU & arbetsrätt

The courts have acquired a greater role in the labour law system at the expense of politicians and the social partners. And knowing what the law actually means is becoming so difficult for employers and trade unions that the rule of law is under threat, argue the authors of a new book from the Nordic Council of Ministers.

‘Europe and the Nordic Collective Agreement Model’ is published as a result of a project run by the Council of Nordic Trade Unions (NFS), and the book highlights the challenges facing the Nordic labour law systems when dealing with EU law, the EEA agreement and the European convention on human rights. 

The book’s editor, Professor Jens Kristiansen at the University of Copenhagen, says the labour law systems in the Nordic countries are similar in many ways. There is a high degree of organisation among both employees and employers, collective agreements play an important part in the labour law systems, these  agreements usually completely regulate wages and employment conditions in the trades or occupations they cover and legislation play a limited role compared to most other European countries. These systems are now being affected by some developing general tendencies.

European law increasingly complex

One of these tendencies is that the legal system is becoming increasingly complex. EU law and EEA law, interpreted by the Court of Justice of the European Union and the EFTA Court respectively, are complex enough. At the same time they are increasingly interacting with the European convention on human rights, which is interpreted by a third court;  The European Court of Human Rights in Strasbourg. 

When member states gave the EU competence to adopt rules covering labour and employment conditions, they made it very clear that pay and industrial action should remain national issues. This means the EU cannot introduce a directive covering pay conditions or the right to take industrial action. But in later years we have learned that trade union strike action can constitute an illegal restriction to the right of establishment and the free movement of services. It also turns out that the EU can exhort member states to reform their wage systems within the framework of the integrated guidelines for economic and employment policies. The fact that the Union does not have the power to introduce a directive covering a certain issue, does not stop it from interfering in the same issue according to treaty rules granting the Union the power to act within other areas, Jens Kristiansen points out.

There is also a complicated hierarchy between different types of rules which makes it even harder to predict how far rights and obligations go according to different labour law directives. The directive on the posting of workers, for instance, says it is up to member states to decide what are minimum rates of pay. But the directive is not there only to protect posted workers and prevent social dumping. It is also meant to promote the freedom of movement guaranteed by the treaties. Since the EU treaties, the EEA agreement and the EU Charter of Fundamental Rights are all ranked above directives, it is unclear how much freedom the member states really have. The fact that there are two different law courts does not make things any easier. The EFTA Court and the Court of Justice of the European Union make statements on the same issues but are not always in agreement. 

Change in balance between law and collective agreements

Another tendency is the fact that the legislator has gained a more prominent role in relation to the social partners. The state has the responsibility for making sure  EEA law, EU law and the European Convention are all complied with. This demands some kind of legal framework. That is why there is no doubt that the implementation of different EEA and EU legislation tips the balance in favour of legislation, Jens Kristiansen thinks.

There has not been any more fundamental changes to the division of labour between the social partners and the legislator in the Nordic countries, however. This seems to be down to two things:

Firstly, member states have only given the EU limited powers to adopt rules covering labour law issues. The EU cannot introduce directives on a range of trade union and politically sensitive issues, for instance the right of association and the right to take industrial action, wage conditions, employment protection and occupational pensions.   

Secondly, the social partners and legislators in the Nordic countries have obviously agreed to implement obligations under EU/EEA-rules in a way which interferes as little as possible with the existing division of labour. In all of the countries labour law directives have led to more statutory provisions which cover employment contracts, but not to comprehensive legislation on wage and employment conditions.

A more central role for the courts

One of the most eye-catching tendencies is the fact that courts have gained a more central role in relation to legislators and the social partners. Courts have gained a legislative function, since they have to interpret domestic rules in a way which is consistent with EU/EEA law and the European Convention, while making sure national legislation is in line with the country’s obligations according to these.

Thus the wide political room for manoeuvre usually enjoyed by the legislator and the social partners in the Nordic countries is circumscribed. Both domestic and European courts have decided on a wide range of issues which in a Nordic tradition have traditionally been considered to be purely political. This includes for instance whether state interference in a labour conflict is an unacceptable interference in the freedom of association, whether union-led strike action is compatible with the freedom of movement of services and whether a legal limit for the pensionable age can be considered to be age discrimination.       

 In all three cases the legislator’s political interpretation has been subject to the censorship of the courts, based on vaguely formulated European legal principles. 

A threat to the rule of law?

The increasingly central role of the courts has affected not only the political room for manoeuvre, but also the employees’ and employers’ ability to trust domestic legislation. When the courts interpret laws and collective agreements to make sure they correlate with the country’s European obligations, private organisations may run the risk of having to pay for the fact that national law is not compatible with EU law.

Kristiansen uses the Swedish Laval ruling as an example, where a majority in the Swedish Labour Court seemed to have no qualms about ordering the trade unions to paying considerable damages for acting in a way which was legal according to Swedish legislation. Another example is Danish employers who were ordered to pay damages for terminations of employment which were legal according to Danish legislation, but in breach of the EU law principle of equal treatment which bans age discrimination. 

This has now led to the Supreme Court of Denmark asking the EU Court of Justice what should be given more weight — the principle of equal treatment or the principle of the rule of law — i.e. allowing people to know what counts. The question is written in a neutral language, for sure, but in reality the Supreme Court thinks the EU Court of Justice puts too little weight on the rule of law, says Jens Kristiansen.

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