European Union: Social policy state of play

The second half of 2006, under the Finnish EU presidency, saw the adoption of the controversial Directive on services and a Directive consolidating seven existing equality Directives. However, the council again failed to agree on revision of the working time Directive. We review the main developments.

The state-of-play table below contains all the important "live" items of draft social policy legislation of general interest to our readers that are still in the legislative pipeline. It does not include those measures that were adopted prior to our most recent table. It shows only those proposals that have yet to be adopted, or that have been adopted since the previous table. Proposals that have become dormant (defined here as not having been discussed in council, nor subject to any other significant movement, for more than two years) are not included.

For each proposal, the table provides the following information, as at 20 December 2006:

• the full title of the proposal;
• a reference to the issue of the Official Journal of the European Union¹ - the OJ - in which the proposal (and any subsequent revised versions) or adopted text was published. Laws appear in the legislative ("L") series, while other instruments and proposals appear in the communications ("C") series. Where proposals have not appeared in the OJ, the "COM" number of the document is given, where relevant;
• where appropriate, or available, the article of the Treaty establishing the European Community (TEC) on which the proposal is based; and
• where relevant, the dates of the proposal's submission to the council, the opinions issued on the proposal by the European Parliament (EP), the Committee of the Regions (CoR) and the European Economic and Social Committee (EESC), the submission of an amended proposal to the council, and any council decisions or debates, as well as the dates of the formal consultation of the social partners, where relevant. Adopted proposals and formally signed agreements are identified with an asterisk.

Adoption

Directive 2006/54/EC on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast) was adopted on 5 July 2006. With the aim of improving legal clarity and certainty, and to reflect developments in European Court of Justice (ECJ) case law over the past 20 years, the new Directive consolidates in a single instrument (and repeals) seven existing Directives in the equality area: 75/117/EEC on equal pay; 76/207/EEC, as amended by 2002/73/EC, on equal treatment as regards access to employment, vocational training and promotion, and working conditions; 86/378/EEC, as amended by 96/97/EC, on equal treatment in occupational social security schemes; and 98/80/EC, as amended by 98/52/EC, on the burden of proof in cases of discrimination based on sex. The Directive must be implemented by the member states by 15 August 2008.

The Directive on services in the internal market has completed its passage through the decision-making process. The Directive is not specifically in the employment/social field but seeks to remove obstacles to the freedom of establishment for service providers and the free movement of services between member states. However, in its initial form, the proposal caused considerable controversy, notably among trade unions, particularly because of its "country-of-origin" principle, whereby service providers would be subject to the law of their country of origin, rather than that of the country in which they offer services. Opponents feared that this would result in "social dumping", with service providers establishing themselves in countries with low wages and low levels of labour protection and then offering services in high-wage, high-protection member states. Many controversial provisions, including the country-of-origin principle, were removed or watered down during the legislative process, and matters progressed rapidly after the council adopted its common position in July 2006. Following informal contacts among the council, EP and commission, parliament gave the proposal a second reading in November, making three minor procedural amendments, which were accepted by the other institutions. The Directive has been adopted and awaits publication in the OJ. Member states will then have three years to implement it.

Another item of proposed legislation that does not, strictly speaking, fall within the employment/social area but has attracted considerable interest from employers and trade unions, is a draft Regulation on the registration, evaluation, authorisation and restriction of chemicals (REACH). This legislation will require manufacturers and importers to list the substances they produce and any possible dangers. Unions have been particularly concerned about the implications for workers' health and safety, while employers' representatives have been worried about increased costs and a greater administrative burden on companies. After lengthy discussions, the council and EP reached a deal on the proposal that enabled the former to adopt a common position in June 2006, which the latter followed closely at second reading in December. The Regulation now awaits formal signature and adoption. It will come into force progressively from June 2007. The European Trade Union Confederation (ETUC) has welcomed some aspects of the Regulation, but believes that it has been watered down as a result of lobbying by the chemicals industry.

Discussions and amended proposals

The Finnish presidency made a major effort to end the impasse over the draft Directive revising the Directive concerning certain aspects of the organisation of working time (originally adopted in 1993 and now consolidated in Directive 2003/88/EC). With consensus apparently reached among member state governments on most of the proposed amendments to the 1993 Directive - notably relating to on-call working, as well as reference periods, work-life balance and compensatory rest periods - the presidency drafted a compromise on the vexed issue of the individual "opt-out" from the Directive's maximum average weekly working time of 48 hours, and convened a special social affairs council on 7 November with the sole purpose of seeking a political agreement on the draft.

Despite all the Finnish efforts, no agreement could be reached at the council. While 20 member states could support a compromise on the opt-out issue, based on the Finnish proposals, five countries - Cyprus, France, Greece, Italy and Spain - opposed this deal, constituting a blocking minority that was sufficient to prevent it being pushed through under qualified-majority voting. The French government backed an alternative proposal to phase out the opt-out, but this was strongly opposed by the UK and many of the new member states in central and eastern Europe.

There are no signs that the next two presidencies - Germany in the first half of 2007 and Portugal in the second - will seek to break the deadlock on the draft Directive. The commission is reviewing its options (see below), and there have been suggestions that it may withdraw the proposal. One effect of the failure to reach agreement is that the on-call working issue has not been resolved, and the commission now seems prepared to launch infringement proceedings against the 23 member states that it believes - in the light of the ECJ's rulings in the Simap (C-303/98) and Jaeger (C-151/02) cases (European Union: Social policy state of play) - are in breach of the current working time Directive because they do not count on-call time as working time.

The draft Directive on the portability of supplementary pension rights, proposed by the commission in October 2005, was debated at the social affairs council, 30 November to 1 December 2006. This proposal seeks to remove obstacles to labour mobility within the EU and to workers' career and development opportunities stemming from provisions in employment-based supplementary pension schemes. These obstacles relate to: the conditions of acquisition of pension rights; the conditions of preservation of dormant pension rights; and the transferability of acquired rights. The EP is due to give the proposal a first reading in May 2007.

Consultations

On 12 October, the European Commission launched consultations with European-level trade union and employers' organisations, seeking their views on the possible direction of future EU action on improving the reconciliation of work, private and family life. The commission is exploring the idea of acting in areas such as: flexible working time and working arrangements; the new possibilities offered by information technologies; the availability and quality of childcare and care services for the elderly and other dependants; and leave, including paternity leave and leave to care for an elderly parent or a child or other family member with a disability. The consultation represents the first stage of the process laid down in art. 138 of the Treaty establishing the European Community. Before submitting proposals in the social policy field, the commission consults the 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.

Several social partner consultation exercises launched in 2004 and 2005 have not yet moved past the first stage. Notably, there has been something of a hiatus in the consultation processes relating to the prevention of musculoskeletal disorders (started in November 2004) and violence at the workplace (started in January 2005). However, in the latter case, the central EU-level social partners were already considering the issue prior to consultation and have been negotiating a framework agreement on violence and harassment during 2006.

Consultations have reached the second stage in relation to possible action on workplace data protection, restructuring and employment, and review of the European Works Councils (EWCs) Directive. However, in all three cases, nothing notable has happened since the close of the second round of consultations. That was nearly four years ago in the case of data protection (Commission's second consultation on data protection), but an anticipated legislative proposal from the commission (employers did not want to negotiate an agreement on the issue) has yet to appear, and the initiative has now been dropped from our table. It is more than 18 months since the close of the combined second-stage consultations on restructuring and EWCs, which encouraged the social partners to continue their work in these areas and to reach agreement on promoting and monitoring best-practice guidelines. The commission said it would assess the progress made by the social partners in spring 2006. In their new work programme for 2006-08, adopted in March 2006 (European Union: New three-year work programme), the partners agreed to promote and assess their existing joint texts on EWCs and restructuring. The commission appears to sees this commitment to future joint work as sufficient reason to take no further action, for now, on these dossiers (but see below).

A number of recent social partner consultations are not mentioned in the table because of their technical or narrow scope, but several are worthy of note:

• in April 2005, the commission consulted the social partners on the idea of simplifying the reporting mechanisms related to a number of health and safety at work Directives. These require the member states to report regularly on their practical implementation, and the commission wants to rationalise the various reports. The second stage of consultation was held in October-November 2005. With the social partners not wishing to negotiate on the issue, the commission issued a draft Directive on 14 July 2006;
• in February 2006, the commission issued a communication (COM(2006)44 final) on "action at EU level to promote the active inclusion of the people furthest from the labour market". This included a first-stage consultation of the social partners on whether "activation" and labour market access could be the subject of negotiation between them. In their 2006-08 work programme, the social partners have included the possible negotiation of a voluntary framework agreement on the integration of disadvantaged groups on the labour market; and
• in June 2006, the commission launched first-stage consultations of the maritime sector social partners, asking if they would consider entering into negotiations with a view to reaching an agreement on the implementation across the EU of the new International Labour Organization (ILO) maritime labour convention adopted in February 2006 (International: ILO conference adopts new international labour standards). In September, the social partners agreed to open talks on the subject (Social partners: Negotiations on implementing ILO convention).

No progress

There has been no perceptible movement in the second half of 2006 on the draft Directive on working conditions for temporary agency workers; this proposal has not been publicly discussed in council since October 2004. The draft aims to regulate temporary working through agencies and govern the employment terms and conditions of the workers involved. The proposal is complicated and has proved controversial owing to the triangular nature of the employment relationship - involving the worker, the temporary agency and the user company - and the differing incidence and nature of this kind of work across the member states. No compromise has yet been found that is acceptable to all member states. The Finnish government included the draft in its list of priorities for its presidency (European Council: Finnish presidency sets out its priorities), but the item did not surface on any formal council agenda. The future of this proposal is uncertain and it featured on a list, issued by the commission in September 2005 (European Commission: Barroso plans to withdraw legislative proposals), of proposals that may be withdrawn because they are obsolete or have little chance of being adopted. The commission is now seeking fresh views on the issue (see below).

Codification

As part of a current legislative simplification initiative, the European Commission is seeking to codify and consolidate in a single instrument a number of Directives and their subsequent amendments. As this codification may involve "no changes of substance" to the instruments concerned, the EU institutions have agreed that an accelerated procedure may be used for the fast-track adoption of codification instruments. In November 2006, the commission issued proposals for the codification of the Directives on:

• the protection of employees in the event of the insolvency of their employer (80/987/EEC);
• the protection of workers from the risks related to exposure to asbestos at work (83/477/EEC); and
• the minimum safety and health requirements for the use of work equipment by workers at work (89/655/EEC).

Prospects

Germany takes over the EU presidency for six months from January 2007. Current indications are that it will not seek to move forward the two main outstanding draft employment law Directives - those on revising the 1993 Directive on working time and on temporary agency work. The future of both these deadlocked proposals is in considerable doubt, and the commission is seeking views on how to deal with these issues in its new labour law green paper (see below). The other principal pending proposal, on the portability of supplementary pension rights, is less controversial and progress can be expected in 2007 when the EP has given it a second reading (planned for May).

There are now few items of draft employment legislation proceeding through the EU decision-making process, and attention thus turns to the fate of current and recent social partner consultations and the commission's plans. New action following the linked consultations on restructuring and EWCs is not scheduled at present, as the social partners continue their joint work on these themes. However, recent events mean that pressure may be building for the commission to act. A current controversy over job losses planned by the Germany-based automotive group Volkswagen at its plant in Forest/Vorst in Belgium may force the commission's hand, with echoes of the furore about the closure of the Renault factory in Vilvoorde in 1997 (European Employment Review (EER), formerly European Industrial Relations Review, 280 p.5), which arguably led indirectly to the adoption of the Directive on national information and consultation rules in 2002. The commission's "interservice restructuring taskforce" met to discuss the Volkswagen situation on 24 November.

After the 2004 social partner consultation on preventing work-related musculoskeletal disorders, the commission is now considering proposing a Directive that integrates the relevant provisions of Directives 90/269/EEC on the minimum health and safety requirements for the manual handling of loads and 90/270/EEC on the minimum health and safety requirements for work with display screen equipment. The consultation on reconciliation of professional, private and family life will presumably move to the second stage during 2007. The negotiations among the central EU-level social partners on violence and harassment at work seem to be well advanced and an agreement - which would be implemented by the signatories themselves, rather than through an EU Directive - seems possible early in 2007. Social partner talks may also start on a possible framework agreement on either the integration of disadvantaged groups on the labour market or lifelong learning.

The commission's 2007 work programme includes plans to propose three Directives related to labour immigration from outside the EU:

• a general framework Directive on labour immigration. This would seek to promote better integration of economic immigrants in the labour market and establish fair and clear rules and rights for them. The commission believes that a secure legal status for economic immigrants - clearly identifying and recognising their rights "both as workers and as members of the host society"- should protect them from exploitation, therefore increasing their contribution to the EU's economic development and growth;
• a Directive on the conditions of entry and residence of highly skilled workers. This would aim to establish admission procedures capable of responding promptly to fluctuating demand for migrant labour in the labour market, effectively and quickly filling "labour market gaps", also with a view to addressing the consequences of demographic trends in Europe; and
• a Directive on minimum sanctions for the employers of illegally resident third-country nationals. This would seek to help tackle and reduce the employment of illegally staying third-country nationals in order to reduce illegal immigration and prevent exploitation of such workers.

Also mooted for 2007 is a draft Directive amending Directive 2001/23/EC on transfers of undertakings to "clarify and simplify" its application to cross-border operations and possibly introduce other amendments, after consultation of the member states and social partners. A potentially very interesting initiative under consideration is a proposal to "simplify" the various Directives on information and consultation of workers - principally those on national information and consultation (2002/14/EC) and EWCs (94/45/EC), and the employee involvement Directives accompanying the European Company Statute (2001/86/EC) and the Statute for a European Cooperative Society (2003/72/EC). It remains to be seen whether or not this simplification would involve an attempt to harmonise these Directives' varying information and consultation definitions and procedures. The scope of the initiative is to be defined in 2007 in the light of a report on the implementation of Directive 2002/14/EC and further discussions with the member states. The commission also plans to propose a long-awaited Directive enabling the transfer by limited companies of their registered office from one EU member state to another. The proposal will include provisions on what should happen to employee participation rights in the company concerned.

In 2007, the commission will conduct a mid-term review of its current 2005-10 social agenda. Discussions are also likely to continue on its idea of establishing an "optional European framework for transnational collective bargaining", which could provide a channel for negotiating transnational collective agreements, with legally binding effect, at European sector level or within multinational companies (EU: Commission looks at transnational bargaining framework). A second expert seminar on the issue was held in late November, and a formal consultation of the social partners may be the next step.

Finally, the dominant theme of EU social policy in the coming months will remain "flexicurity" - a coordinated approach to the labour market that balances flexibility with employment security. This has increasingly become incorporated in the EU's employment strategy, and the commission is currently drawing up a report aimed at facilitating agreement among the member states by the end of 2007 on a set of common EU-wide principles on the issue (EU: Commission looks at transnational bargaining framework). An idea of what effect the flexicurity approach might have on employment legislation is given by a green paper, entitled Modernising labour law to meet the challenges of the 21st century, issued by the commission in November 2006 (EER 395 p.2). This aims to launch a debate among the member states, the social partners and other "stakeholders" on how (mainly individual) labour laws at EU and national level can help the labour market become more flexible while maximising security for workers - further details are given in the box below. The consultation closes on 31 March. The responses to it, and the commission's subsequent proposals for action, are likely to shape the future of EU social policy for years to come.

1. Copies of the Official Journal may be obtained from: Office for Official Publications of the European Communities, 2 rue Mercier, L-2985 Luxembourg, tel: + 352 499 281, fax: + 352 488573; in the UK from the Stationery Office, International Sales Agency, 51 Nine Elms Lane, London SW8 5DR, tel: +44 (0)20 787 39090, fax: + 44 (0)20 787 38463; or online at http://europa.eu.int/eur-lex/.

Social policy state of play