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Swedish social partners warn against EU directive on employment conditions

| Text: Kerstin Ahlberg, editor EU & Arbetsrätt

Is the EU about to take over member states’ prerogative to regulate employment and working conditions? Yes, this is what may happen if the Commission’s proposal for a directive ‘for more transparent and predictable working conditions in the European Union’ is passed, warn both trade unions and employers in Sweden.

A 1991 EU directive says employers must provide employees with written information about  the essential employment and working conditions, no later than two months after they were hired. The directive says nothing about the content of those terms – only that the employer must provide information about them, whatever they might be.

For European employers, who usually consider employment conditions to be something which is regulated by member states and not on an EU level, this is a relatively harmless directive. 

Three days before Christmas Eve last year, however, the European Commission presented a proposal for a directive ‘on transparent and predictable working conditions in the European Union’, aimed at replacing the 1991 directive. This has led to an outcry from employers. Not only that – in Sweden the trade union confederations LO, TCO and Saco are joining forces with the employers.

The employers’ organisations and the trade unions agree that a directive like the one proposed by the Commission would deal a deadly blow to the tradition of regulating employment and working conditions through collective agreements. It would also be detrimental to the social partners’ autonomy in an area where they now operate freely. 

In the long term, they see the proposal as a first step towards the EU gradually taking over member states’ right of self-determination when it comes to regulating employment and working conditions. The proposed directive is only one of the first initiatives in the Commission’s strategy to realise the so-called European Pillar of Social Rights, which in itself does not have any legally binding rules.

Strengthening the obligation to inform…

The reason the old directive no longer works, according to the Commission, is partly because its rules do not have to be applied to workers on short-term or temporary contracts, and partly because member states themselves decide who they consider to be employees – which again determines whether or not they are covered by the directive.

Meanwhile, a quarter of a century later, the labour market has moved on, and short-term jobs plus completely new, ‘atypical’ forms of employment (e.g. zero hours contracts, seasonal work and platform economy jobs) have become more common. As a result, the directive no longer protects those who might need it the most.

The Commission’s proposed solution comes in three parts. Firstly, the possibility to exclude workers on short-term contracts from the protection offered by the directive will be limited, and it will no longer be up to the member states themselves to define who constitutes an employee.

Secondly, employers must provide employees with more detailed information than they do now, and the information must be provided by the day they start working.

…and introducing substantive rights

Thirdly – and this is where the crucial change comes in – the new directive will also contain a set of substantive minimum rights which will cover all employees within the EU, regardless of their type of employment. In other words, the directive will no longer simply say employees have the right to be informed about their employment conditions – it will also regulate what these conditions are.

  • Probationary periods cannot be longer than six months.
  • So-called exclusivity clauses that prevent employees from working for other employers will as a rule not be allowed.
  • Employees with irregular working hours must be informed about their schedule in plenty time.
  • Employees who have been with the same employer for at least six months will have the right to apply to be moved to a different, more predictable and secure form of employment (if available).
  • If the employer is obliged to provide certain training needed for the employee to carry out his or her job, the training should be provided free of cost for the employee.

However Member states will be able to let the social partners enter into collective agreements establishing other employment conditions, as long as they respect ‘the overall protection of workers’. 

What is the problem?

These are the seemingly modest proposals against which both employers and trade unions in Sweden are forming a united front. Both sides agree the old directive needs to be updated to reflect the reality of today’s labour market. At the same time they oppose the idea that member states no longer will be able to define who is an employee, and they also oppose the introduction of substantive rights into the directive.

The definition of employee, which is key for whether an individual is at all covered by a member state’s labour law, has been developed through case law in Sweden, and as such is continuously adapted to reflect developments in the labour market. If a new definition was introduced on an EU level, not only do you risk unwanted consequences for labour law – it could also influence legal areas where member states have exclusive competence to regulate, for instance when it comes to social security and tax legislation, the social partners argue. 

As for the proposed substantive employment and working conditions, these relate to issues which are covered in collective agreements in the Swedish labour market. This allows the partners to adapt the rules to trade specific conditions and to individual companies. With the relatively detailed rules proposed by the Commission, in future the EU would decide which conditions would apply, and set limits to the social partners’ freedom to adapt collective agreements to suit local conditions.

Because the collective agreements must take into account ‘the overall protection of workers’, the Court of Justice of the European Union would be granted the right to overrule collective agreements and decide, for instance, whether a collective agreement’s scheduling rules give employees at least as much protection as the directive stipulates.

In line with the partners’ shared view, all political parties in the Swedish parliament have agreed that the government should resist any major changes to the Swedish model when negotiating the directive with other member states. It should try to limit changes to the part relating to information.  

In any case, the definition of an employee should still be left to each member state’s own law. If the directive does in the end contain provisions on substantive working conditions, the opportunity to enter into collective agreements laying down other rules should be made absolute, preventing the EU Court from trying whether the agreement’s clauses fulfil the level of protection stipulated in the directive.    

Split trade unions

Swedish trade unions are facing a dilemma since their comrades in the European Trade Union Confederation (ETUC) would very much like to see the Commission’s proposal become reality. ETUC would like to see the directive contain even more substantive rights, for instance rules on minimum wages.

ETUC’s position mirrors the fact that trade unions and collective agreements do not at all enjoy the same strong position in the majority of member states as they do in Sweden and the rest of the Nordic region. These trade unions therefore need the EU’s help to secure decent minimum conditions.

The Nordic countries’ labour market systems do share many characteristics, yet attitudes to the directive might vary even between them. The Danish government has, at the time of writing this, not yet given its position on the proposal, but has underlined that it values the tradition where the social partners regulate employment and working conditions through collective agreements.

Finland, however, is mainly positive to the Commission’s proposal, according to a letter from the government to parliament. The views it has put forward so far have centred on the administrative burden which the proposed rules might impose on companies. 

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