EU: Social policy state of play, January 2008

The only item of employment-related legislation adopted since our previous round-up is Directive 2007/30/EC of 20 June 2007 amending Directive 89/391/EEC, its individual Directives and Council Directives 83/477/EEC, 91/383/EEC, 92/29/EEC and 94/33/EC with a view to simplifying and rationalising the reports on practical implementation (published in OJ L165, 27 June 2007). Not included in our table, given its essentially technical content, this Directive rationalises the regular reports that member states are required to make on the practical implementation of a number of health and safety at work Directives.

Two substantive legislative proposals with a direct impact on employment were published in the first half of 2007, both on labour migration to the EU from other countries. These are draft Directives on: a uniform application procedure for migrants wanting to work and live in the EU, and a common set of rights for legally resident immigrant workers; and the admission and residence of highly qualified immigrant workers. Issued as part of the EU's common migration policy, the proposals were discussed at the Justice and Home Affairs Council on 5 December, with agreement that work on them should be taken forward. The same council meeting discussed the draft Directive on sanctions against employers of "illegally staying third-country nationals", proposed in May 2007. All three drafts await formal debate in the council and EP.

Earlier discussions had focused the debate in council over the proposed revision of the Working Time Directive on two key issues:

• taking account of the rulings of the European Court of Justice (ECJ) in the Simap (C-303/98) and Jaeger (C-151/02) cases. These found that on-call work or on-call duty performed by health professionals and other workers, when they are required to be physically present at their places of work, should be regarded as working time; and
• reviewing some aspects of the "opt-out" - the option not to apply the Directive's maximum average weekly working time of 48 hours if a worker agrees to this individually.

During the last attempt to broker a deal on revision of the Directive, made by the Finnish presidency of the second half of 2006, consensus was reached on the on-call work issue. It was agreed that the period during which workers effectively carry out their activity or duties during on-call time - defined as a period during which "the worker has the obligation to be available at the workplace in order to intervene, at the employer's request, to carry out his activity or duties" - should always be regarded as working time. The "inactive part of on-call time" - the period during which the on-call worker is on call within the above definition, but "not required by his employer to effectively carry out his activity or duties" - should not be regarded as working time unless national law or a collective agreement or an agreement between the social partners decides otherwise.

However, no agreement could be reached on the opt-out, and the Finnish efforts failed. The Portuguese presidency has sought consensus over a solution whereby the possibility of the opt-out is maintained, but with safeguards to protect workers' health and safety from working excessive hours. Under this latest proposal:

• the opt-out would be seen as an exception, with a maximum 48-hour week being emphasised as the general rule;
• use of the opt-out would have to be regulated by collective agreements or national legislation;
• employers and employees would have to consider other flexibility provisions - such as a longer reference period when varying weekly working time around an average (the Directive's standard reference period is four months) - before making use of the opt-out;
• member states could not use both a longer reference period and the opt-out;
• employees who refuse to work more than the average working time would be protected from any negative consequences;
• an opt-out agreement signed by a worker at the beginning of an employment contract would be null and void;
• some weekly hours limit would have to be set for workers who agree to an opt-out;
• the national authorities would have to monitor use of the opt-out; and
• use of the opt-out and of longer reference periods would be evaluated by the European Commission, with the possibility of further revision of the Directive in future.

The draft Directive on working conditions for temporary agency workers, initially proposed by the European Commission in 2002, aims to establish a common EU-level legal framework to regulate temporary agency work. Earlier council discussions on the proposal foundered on its central provision: guaranteeing equal treatment in pay and conditions for temporary agency workers when on an assignment at a user company, in relation to workers employed by the user undertaking to do the same job.

The Portuguese presidency's compromise text does not appear to differ greatly from previous versions. It includes the equal treatment principle, along with possible exceptions to this principle and stipulations as to the maximum length of assignments with a user company to which such exceptions can apply. Reportedly, it provides that equal treatment would apply after an agency worker has been on an assignment for six weeks.

The two draft Directives were discussed at the meeting of the Employment, Social Policy, Health and Consumer Affairs Council on 5 December 2007, with the aim of reaching political agreement on common positions. The Portuguese presidency decided to link the debate on the two proposals, on the grounds that "they deal with central aspects of the regulation of contemporary labour markets. Given "the difficulties in finding isolated solutions for each of the files", the presidency decided that "there would be added value in working on a simultaneous and integrated solution, thus allowing member states to find a balance between the two Directives that would be acceptable from the political point of view." The aim of linking the drafts was apparently to induce opponents of the temporary agency work Directive (notably the UK) to soften their stance in return for concessions in relation to the Working Time Directive, especially in terms of largely retaining the opt-out.

According to the Portuguese presidency's conclusions from the December council meeting, its joint approach was "widely accepted by a large majority of member states". The connection between the two drafts, and the specific proposals presented by the presidency, were "considered a solid and viable basis for negotiation towards an agreement in both". At the meeting, the presidency "explored different solutions, within the balanced framework underlying the proposals, to reach an enlarged consensus that would be politically desirable".

However, no agreement was reached at the council. On working time, the opt-out provisions remained contentious, with some countries reportedly amenable to the trade-off with the temporary work Directive offered by the Portuguese presidency, but the UK sticking to its position of retaining the current opt-out in full. On temporary agency work, a large majority of member states were reportedly in favour of the presidency text, but it was opposed by Germany, Ireland, Malta and the UK. As well as equal treatment, there were also unresolved issues relating to the review or removal of existing national prohibitions and restrictions on the use of temporary agency work.

Both proposals are subject to qualified majority voting in council and it seems that a sufficient majority exists to approve them. However, no vote was taken at the December meeting (pushing through measures by qualified majority vote is quite rare, with extensive efforts usually made to find a consensus). According to the presidency, the council agreed that "the best option at this moment was to postpone a decision, in order to further pursue the dialogue".

However, the presidency noted that "a vast majority of member states had spoken in favour of an integrated solution for the Directives, building a global equilibrium between the two, and that many member states had pressing needs to address labour market regulation problems which depend on a solution to these files. Achieving results in the short term is therefore of utmost importance for the EU as a whole."

Therefore, given the "dominant orientation" within the council, the presidency stressed that the "openness to dialogue and consensus intends only to strengthen the conditions for a solution that reflects the position of a clear and strong majority. There is a real margin for political decision in 2008, building on the solid basis for progress that the council has just built. The forthcoming presidencies and the commission might proceed with efforts to achieve a positive and final outcome on both Directives, given the importance of the issues at stake and the specific needs of many member states."

This strongly suggests that the two Directives may be put to the vote in the near future and common positions approved, if necessary against the wishes of the UK and the few other opponents.

Substantial progress was made in the second half of 2007 on the proposed Directive on the portability of supplementary pension rights, issued by the commission in October 2005. The initial proposal focused on three areas: the conditions of acquisition of pension rights; the conditions of preservation of dormant pension rights; and the transferability of acquired rights. The council and the EP both took the view that it was not desirable to include transferability issues in the Directive and the commission bowed to this pressure, issuing an amended proposal in October that focused principally on the acquisition and preservation of rights and enhanced information for workers.

The council debated the amended proposal on 5 December and, according to the presidency, made progress towards reaching political agreement on a common position. However, following "intensive" discussions it was accepted that the required unanimity could not be attained, as one issue remained unresolved. This is the maximum permissible duration of the "vesting period" - the period of active membership of an employment-related pension scheme required in order to trigger entitlement to a supplementary pension. Work on the proposal will continue under the incoming Slovenian presidency.

Under art. 138 of the TEC, before submitting proposals in the social policy field, the European Commission consults the EU-level social partners on the possible direction of Community action. Then, if the commission considers Community action advisable, it consults a second time, on the content of the envisaged proposal. At that stage, the social partners may seek to negotiate a European-level agreement on the issue in question, which may substitute for EU legislation.

The commission has initiated two first-stage consultations since our previous round-up:

As seen above, there was some movement on all the main pending legislative proposals in the employment field in the second half of 2007.

As part of a legislative simplification initiative, the commission is seeking to codify and consolidate in single instruments a number of Directives and their subsequent amendments, although with "no changes of substance". The proposals for codification include the Directives on: protection of employees in the event of the insolvency of their employer (80/987/EEC); protection of workers from the risks related to exposure to asbestos at work (83/477/EEC); and minimum safety and health requirements for the use of work equipment by workers at work (89/655/EEC). As they lack substantive content, these draft Directives are not included in our state-of-play table; since the EP gave all three a first reading without amendment in June 2007, the council has not yet approved them.

There are three high-profile draft employment law Directives currently going through the EU decision-making process - those on temporary agency work, revision of the Working Time Directive, and supplementary pension rights. The pensions draft made steady progress during 2007 and, now that it has been made less ambitious (with the transferability provisions dropped) and a substantial degree of agreement has been reached by the council and EP, adoption seems likely in 2008. There are also clear signs, following the Portuguese presidency's efforts in the second half of 2007, that the more controversial proposals on working time and temporary agency work may finally be put to the vote and approved by the council in 2008. That will not be the end of the story, as the proposals are subject to the co-decision procedure and the EP will have an important say in their final content.

On the specific theme of labour migration - both legal and illegal - from outside the EU, in 2008 the council and EP will start serious debate on the three draft Directives proposed in 2007 and their prospects of adoption will become clearer.