Anna Diamantopoulou
Commissioner
Employment & Social Affairs Directorate
European Commission
Brussels
Belgium
- BY E-MAIL & POST
11th February 2003
Dear Commissioner,
Re: Our Formal Complaints’ Against the United Kingdom
I have before me the Director-General’s letter to the United Kingdom’s Permanent Representative to the European Union, dated 23rd October 2002. I also have before me the United Kingdom’s response of 9th December 2002.
It is patently clear from the letter of 9th December that the United Kingdom authorities have failed to provide any meaningful observations on the two key questions raised by the Director-General, and I shall return to this point later.
It is also patently clear that paragraphs [3] & [4] of the letter of response from the United Kingdom provide unequivocal evidence that the UK is in breach of its obligation to give full effect to the Acquired Rights Directive. UK citizens are thereby denied the protections they are entitled to enjoy in the event of a transfer of their employer.
Paragraph [4] of UK’s letter of response states:
“In the UK, unlike in many other Member States, collective agreements are not generally legally binding on the parties. There is, therefore, no legal requirement on the old employer or the new employer in a transfer to remain bound by the terms of a particular collective agreement, such as the Silver Book mentioned in your letter”.
The United Kingdom’s declared position with regard to the non-binding nature of collective agreements, is of pivotal importance and is central to both of our formal complaints. Indeed, paragraph [4] highlights a clear conflict between National law and Community law; a conflict in which National law is accorded super-ordinate status.
In essence, the non-binding collective agreement provides a National law context that enables the United Kingdom to claim it is removed from the field of application of the Directive. Consequently the Directive and the transposing legislation fails to protect the entitlements of workers in the United Kingdom in the event of a transfer of employer.
Non-binding collective agreements in the United Kingdom therefore mean that all references in Article 3[2] of the Acquired Rights Directive relating to collective agreements, are rendered completely ineffective. The Directive is emasculated by this anomaly of non-binding collective agreements, a situation that applies only to the United Kingdom, and to no other Member State of the European Union.
The Commission’s attention is directed to paragraph 20[ii] of our first complaint, in which the Commission is invited to take appropriate steps to ensure the United Kingdom complies with its obligations. The point that is made in the complaint is now clearly bolstered by the United Kingdom’s response to the Commission.
Viz: “ In the United Kingdom specifically, the legal status of collective agreements as such renders entirely ineffective all those aspects of the ARD that relate to collective agreements, even where such agreements are given legal force through their incorporation in individual contracts of employment. We specifically invite the Commission to consider whether, in permitting such a state of affairs to develop and to continue, the United Kingdom is complying with its obligations under the ARD and with the general duty of co-operation imposed upon it by Article 10 EC (ex Article 5)”.
> From the standpoint of the application of Community law, in the case of Ralton v Havering College, the EAT found that, as collective agreements were not legally binding, they gave no protection to the workers. That fact is evidenced at paragraph [48] of the Judgment, a copy of which is in the possession of the Commission’s services. Paragraph [48] is a clear demonstration of the incorrect application of Community law by the National court.
The United Kingdom’s failure to ensure the full and proper operation of the Directive is a principal reason for the failure of the “test case” of Ralton & others v Havering College. The Commission must therefore make certain that the United Kingdom is no longer able to remove itself from the field of application of the Directive, by submitting that collective agreements have no legal force.
Paragraph 3 of the UK’s letter of response states:
“ My authorities do not, however, accept that there is any shortcoming in the Regulation’s implementation of Article 3[2] of the Directive, regarding the impact of a transfer on collective agreements. Neither did the EAT suggest that there was any such shortcoming.”
Whilst the TUPE Regulations mention collective agreements, when the Regulations are applied in the context of the United Kingdom’s adherence to the National law position that collective agreements are generally presumed not to be binding, the Regulations do not, and cannot make sense. One thing is patently clear; for the TUPE Regulations to operate effectively, collective agreements must be construed as binding in the event of a transfer of employer.
At this juncture, I wish to draw your attention to the European Commission’s National Report: “The Regulation of Working Conditions in Member States of the European Union 1998 [Vol. 2]”.
At page 242 [column 2] of the Report, the effect of non-binding collective agreements on the application of EC law is considered.
The Report refers to a Judgment in Case 165/82 [Commission v United Kingdom] as substantiating a line of argument that collective agreements must be construed as legally binding in the event of a transfer.
The Report States:
1. “In Infringement proceedings in 1984, the UK Government argued that the non-binding nature of collective agreements removed them from the field of application of Article 4[b] of Directive 76/207EC. Mrs. Advocate-General Rozes, favoured the Commission’s position that the Directive was intended to create a legal safeguard against discrimination in agreements, in particular by reason of the requirements of clarity and legal certainty. The European Court of Justice rejected the UK Government’s argument, and held that the Directive covers all collective agreements without distinction as to the nature of the legal effects which they do or do not produce “.
The reference in the report to Infringement proceedings - Case 165/82 - clearly reinforces the fact that, for the effective operation of the Directive, collective agreements must be construed as legally binding on the transferee.
2. “In the United Kingdom, the national legislation transposing the Directive 77/187EC, the Transfer of Undertakings {Protection of Employment} Regulations, appears to preserve the non-enforceability of collective agreements as against the transferee of an undertaking”.
The above statement in the Commission’s National Report, recognises the circumvention of the spirit and purpose of the Directive by virtue of the interaction between the way in which transposition of the Directive has been conducted, and a National law that is in conflict with the Directive’s spirit and purpose. The Report therefore recognises and acknowledges the conflict that is inherent in the claim made by the United Kingdom authorities in the first sentence of paragraph [3] of its letter to the Director-General, but the Commission has until now failed to take any action to rectify the problem.
The reference to the findings of the EAT in the second sentence of paragraph [3] simply highlights the fact that, in the Ralton proceedings, the National court decided the case on a national law basis, even though the employer was conceded to be an emanation of the State and the employees’ were entitled to rely on the Directive itself.
Commissioner, as I am sure you will appreciate, the terms and conditions of millions of workers in the UK are governed by collective agreements. The Commission must therefore act now to ensure that the Directive promulgated by the Commission provides UK citizens with the protections intended.
During the Ralton proceedings, our counsel asked the Court to make a Reference to the European Court of Justice on two key points that required interpretation.
1. To establish a Community law meaning for the term ‘collective agreement’ - because collective agreements in the United Kingdom are presumed not to be legally binding, rendering all those parts of the Acquired Rights Directive, relating to collective agreements, entirely ineffective.
2. To establish a Community law meaning for the term ‘employment relationship’ - the Judge in the national case refused to acknowledge the term ‘employment relationship’, thereby rendering ineffective all references to an ‘employment relationship. in the Acquired Rights Directive.
The Judge in the Ralton proceedings, incredibly, blankly refused requests for a Reference to the European Court of Justice on these key and crucial questions.
It is absolutely clear that the Directive cannot have full and proper effect in circumstances where a transferee employer can simply bring collective agreements to an end on a whim. All that the new employer would be required to do, given the UK’s analysis of the situation, is to give notice that the collective agreement is to be repudiated. The ability of the new employer to simply repudiate a collective agreement in the event of a transfer, clearly ‘defeats the protections’ the Directive is meant to afford employees’.
The Commission must surely agree that the primary purpose of the Acquired Rights Directive is to protect the rights of employees’ in the event of a transfer of employer.
In a situation such as I have described, which the UK authorities have now reinforced by letter, the employee could have his protection wiped out on the whim of a new employer. The employee’s Community law right to continue to enjoy the pre-transfer employment relationship and his rights identified in a collective agreement, including the transfer of bargaining machinery and other employment related mechanisms, could, in the UK’s analysis be brought to an end in ‘one fell swoop’ following a transfer.
It cannot be correct or reasonable to allow the situation I have described to continue. Indeed, in the initial complaint, our counsel questioned whether or not the obligations conferred on Member States by Article [10] EC, were being met by the United Kingdom.
As you will no doubt be aware, under Article [10] EC, Member States must take all appropriate measures, whether general or particular, to ensure the fulfilment of the obligations arising out of the Treaty or resulting from action taken by the institutions of the Community. They must also facilitate the achievement of the Community’s tasks. Moreover, Member States are required to abstain from any measure that could jeopardise the attainment of the objectives of the Treaty.
I very much hope that the Commission will conclude that the UK is in breach of Community law on the matter of non-binding collective agreements, and conclude that lecturers in further education establishments have been discriminated against for the reason that they sought the protection of the Acquired Rights Directive.
The Commission’s letter to the UK asked for the UK’s observations on actions taken against lecturers following the transfer of employer. Those questions did not receive a substantial or meaningful answer.
The questions concerned:
1] The 10-year pay freeze [penalty] levied uniquely against those who sought the protection of the Directive.
2] The 10-year freeze on career/promotion prospects directed uniquely against those who sought the protection of the Directive.
3] The removal by way of Regulation of contractual entitlements to pensions and lump sums from those that sought the protection of the Directive and managed to remain employed on the pre-transfer Silver Book contracts.
Points 1] & 2] turn on the concept of employment relationship, in addition to the collective agreement being regarded as binding. The entitlement to career progression and, at least, cost of living pay increases, are not expressly or overtly contractual issues but represent what one would understand as being connected to the ‘employment relationship’.
We have no doubt that a clear case for Infringement proceedings exists on the matter of the non-binding nature of collective agreements, and we look to the Commission to use its authority to rectify this entirely unacceptable position. Indeed, lecturers’ contractual entitlements to their pension, in the event of redundancy, turns upon the Commission ensuring that such collective agreements are legally binding.
Moreover, there appears to be a clear case of unlawful discrimination against those lecturers who have suffered a 10 year long freeze on their pay and career prospects as a consequence of seeking to uphold their Community law rights. We now look to the Commission to exercise the necessary authority to ensure that UK citizens are not short changed in regard of their Community law rights. Please keep this union fully informed of the date and time on which our complaint will be formally considered as to the action necessary.
Yours sincerely,
David Evans
General-Secretary [LEAF]