DISPATCHES

A dispatch is a brief essay, ordinarily not to exceed five printed pages, describing a significant development in national labor law: legislative, judicial, administrative. The importance of the development in domestic context should be explained; the reasons for transnational interest might be suggested.

Proposed dispatches should be submitted to the Journal’s editorial office at law-cllpj@illinois.edu and, if approved, will be posted on the Journal’s website. The titles and authors of Dispatches appearing from one number to the next will be published in the Journal.

 

Dispatch No. 21 - France - "The making of a French legal model of bullying: An empirical analysis of the France Telecom case"

by Gaëlle Deharo* 

February 2020

 

Introduction

On May 6, 2019, the trial of the French company “France Telecom” began. This was the first time for a large CAC 40 index corporation to face criminal charges of “harcèlement moral.” This case is especially important because in the past decade at least 35 employees committed suicide,[1] and 12 people attempted suicide between 2007 and 2010.[2] There could be no doubt that 19 of those tragedies were connected to management practices, since the victims left letters referring directly to the management methods, or committed suicide at the workplace.

This case is extremely important as it pertains to the management system, from the bottom to the top. Seven people appeared before the French criminal court: France Telecom as a legal person, the CEO, the CEO’s number two and the head of human resources were prosecuted for bullying, and three middle managers were prosecuted for complicity in bullying. Even though France has specialized labor courts that make decisions based on special texts and special procedures, this case was brought before the criminal court and thus the criminal judge took on the mission of evaluating the management practices under the law.

It is significant to note that during the hearings the parties argued, on the one hand, the legitimacy of the managerial practices and, on the other hand, the basics of the law. This highlights the large gap between the technical managerial explanations of the accused, and the empathetic humane dimension of all the other parties (victims, relatives, employees, the occupational doctor, trade unionists, etc.).

From a scientific point of view, the trial provides a particularly interesting case for an inter-disciplinary analysis. The suffering of the employees, the explanations provided by the managers, the company’s organizational methods, and also the process by which individuals were broken down were laid bare at the hearings. This is an extraordinary field of research: hours of verbatim evidence are available to the researcher wishing to understand the processes that link law to business administration theory in the legal decision-making process.

From an empirical point of view, the case is all about action plans. On February 14, 2006, the CEO announced an acceleration of the company’s transformation plans, with the aim of implementing a “convergence of jobs.” More specifically, the case was all about the application of two action plans, named “Next” and “Act”, which implemented the entrepreneurial strategy of the reorganization of the company and explicitly provided for the loss of 22,000 jobs. From a managerial point of view, the leaders expected to save the firm in the complex and hostile economic context of global competition, European regulation and financial pressures. The company’s strategy thus responded to purely managerial and dehumanized concerns. Therein lies the problem: focused on the economic goals, the managers tried to adapt the organization to its entrepreneurial needs, regardless of the human beings involved.[3] It has to be noted that French law has a special procedure for mass redundancies, based on social plans. However, in the France Telecom case the company and the executives introduced a policy aimed at destabilizing employees in order to encourage them to quit.[4] This led to death, suicides, suicide attempts, broken families, destroyed employees, and shocks. The prosecutor requested the highest penalty provided by the law: one year’s imprisonment and a fine of €15,000, and a fine of €75,000 for the company. Should such a conviction be handed, the accused will also have to compensate the victims for all their damages.

In these circumstances, the judge was asked to assess not a strategy, but the methods followed to apply a strategy. Thus, the issue is: where does the border between management freedom and legal misconduct lie?

It is the purpose of this study to evaluate the theoretical and practical aspects of the France Telecom case, in particular as this case pertains to measurable impacts of business administration theories in the legal decision-making process. More specifically, the study aims to perform an analysis of the case on the basis of the linguistic formulas used at the hearings, in order to evaluate the role of managerial issues in the legal rationale. The methodology is founded on the points raised by the respective parties, in order to observe the use of business administration in the arguments. The key research question is: does business administration have any possible way to exonerate the accused persons from the liability that may result from their management methods?

The study should therefore determine where the borders of management freedom lie, and where personal dominance over employees begins. Indeed, French jurisprudence has specified that it is not abnormal to feel stress or pressure at work, but that it becomes abnormal as soon as the stress or pressure is too intense or is excessive compared to the tasks of the victim.[5] In other words, the French judge has to enter into the world of the company with their own tools: legal texts, jurisprudence and legal doctrinal studies. However, even in this perspective, 'there is a lack of accuracy in the notion of “harcèlement moral” in French law. In the France Telecom case, the textual gap has been filled by the accused, who argue that management concerns may be effective to exempt them from all liability. This is what the judge has to struggle with (I). Thus, there is a high risk that the application of the law will be governed by management imperatives (II). 

I. The legal definition of bullying in French law

The question of the definition of bullying is not purely academic. It has led to litigation that is significant from both a quantitative and a qualitative point of view. The French governmental website Légifrance,[6] which lists and makes available court decisions, reports 4,246 decisions between 2002 and 2019 devoted to bullying,[7] including 2,965 pronounced by the Cour de cassation, the highest court of the French legal system. Of these cases, 395 were heard in the criminal division and 2,460 in the social division. It is certainly easier to bring harassment proceedings before the civil courts, since the victim then benefits from a much more protective procedure: it is sufficient for him to report evidence suggesting the existence of bullying, and the person prosecuted must then prove his innocence.[8] The present case was brought in the criminal division. Faced with the human tragedy and the difficulty encountered by the victims in acting, it was a union that filed the criminal complaint. This means that all the parties had to demonstrate that the facts matched all the legal requirements, even though we do not know exactly what those requirements are about.[9] The first hypothesis in this study is that the notional ambiguity of bullying under the French rules increases the exposure of both managers[10] and employees to bullying.[11] In this respect, it should be remembered that French criminal law is founded on the logic that an act must qualify as a crime, based on the principle of legality: the existence of a text that makes the action criminal (A), but also the jurisprudential decisions on that text (B). 

A. The legal basis of the definition

Studies on the psychodynamics of work,[12] as well as studies in management, law, and psychology, highlight the essential importance of the employee’s feelings in the definition of bullying.[13] The way people feel about the management methods is very important in the process of describing those methods, but it would not be sufficient to claim that a malaise characterizes bullying.[14] The competitive environment of the employment may justify the fact that people are normally stressed. Thus, the purpose of this part is to identify the tipping point when lawful and legitimate management decisions, possibly felt badly by employees, become unlawful and illegitimate, and characterize the act of bullying.

In the France Telecom case, the accused were prosecuted for bullying because of the brutal management methods. When the case was being argued, the defense attorneys claimed that a criminal judge is not competent to give opinions about management decisions, thus referring to management freedom.

The term “bullying” cannot be easily defined.[15]  It is often used by people to express pain, but the term is basically not professional a term even if it may be applied in an employment context. Nevertheless, as a result of the work of a French psychiatrist, the characterization of “bullying” eventually appeared in the public debate in France.[16] The French legislator suddenly observed that people at work may suffer pain that they cannot make public because they are scared of losing their jobs. It was only in 2002 that the idea of bullying was codified in the Labor and Criminal Codes.[17] Even though the texts are very similar, two different procedures are available for pursuing culprits. The first is a civil procedure, brought before the labor court and only requiring that the victim makes a claim. In return, the defendant has to prove that the situation does not constitute bullying. The other procedure is a criminal one, brought before a criminal court and following criminal procedures.

In the France Telecom case, the procedure started in 2009 with a criminal complaint denouncing the harsh, brutal and pathological management practices. This led to French criminal processes being applied. One of the most important rules in French criminal law is the “principle of legality.” This is specified in article 111-3 of the French Criminal Code: “no one may be punished for a felony or for a misdemeanor whose ingredients are not defined by statute, nor for a petty offence whose ingredients are not defined by a regulation. No one may be punished by a penalty that is not provided for by the statute, if the offence is a felony or a misdemeanor, or by a regulation, if the offence is a petty offence.”[18] The article that follows specifies that criminal legislation is to be construed strictly.[19]

The principle of legality leads to three features being identified: the legal element, the material element and the intention to carry out harassment.

  • 1) Based on the written system, French law requires what is called the “legal element,” which refers to the existence of a text that makes the acts criminal offenses. The text in this case is article 222-33-2 of the French Criminal Code: “harassing another person by repeated conduct which is designed to or which leads to a deterioration of one’s conditions of work liable to harm  their rights and dignity, to damage physical or mental health or compromise career prospects is punished by a year’s imprisonment and a fine of €15,000.”
  • 2) The “material element” is defined by the text. In other words, the judge should refer to the legal requirements for the criminal act, match the legal requirements with the facts, and make a decision. In fact, article 222-33-1 of the French Criminal Code lays out cumulative legal requirements that characterize a situation of bullying in a professional context:[20]
  • - The first legal requirement is unequivocal: bullying is founded on the repetition of acts.[21] However, no explanation is provided by the text: on what kind of acts could bullying be based? In prior decisions, it has been held that the issue should be left for the judges to decide. The court has specified that it is not necessary that acts of the same kind are performed; the acts may be the same, or they may be different. The period of time does not matter either: the acts may take place over a very short period, or over a long one. Finally, the text does not refer to the status of “employee”, meaning that an employee might be prosecuted for the bullying of a manager.
  • - The second legal requirement offers an alternative: either the acts are designed to lead to a deterioration of the working conditions, or such a deterioration is a consequence of the repeated acts. The labor division of the French Cour de cassation[22] has specified that, because of this, there is no intention required to constitute bullying.[23] In other words, if prosecuted on the basis of bullying, a manager cannot usefully argue that there was no intention to carry out any bullying. Likely it would be inefficient to argue that there was no expectation to provoke such consequence.
  • - The third legal requirement specifies the consequences of the deterioration:
  • This deterioration harms the rights and the dignity of the victim, or
  • This deterioration damages the physical or mental health of the employee, or
  • This deterioration compromises the employee’s career prospects. In this case, the proof is quite complicated, since it has to be argued on the basis of speculation about the future.

It has to be remembered that each of these requirements represents a possible effect of the repeated acts, but the act may be characterized as bullying even if none of them occurs.[24]

  • 3) The “intentional element” refers to article 121-3 of the French Penal Code: “there is no felony or misdemeanor in the absence of an intention to commit it.” This means that the French judge could not convict someone without providing proof of an intention to carry out harassment. Therein lies a problem: it would be quite impossible to convict someone in most cases since there would be no explicit intention to carry out bullying. The text would therefore not be effective, and could not lead to a punishment for the bullying of a human being. That is why the criminal division of the French Cour de cassation specified that bullying may be present even if there is no intention, thus creating a special argument for bullying based on the special relationship between management and law in the legal decision-making process.[25]

B. The special relationship between management and law consecrated by French jurisprudence

The magistrate is in charge of the interpretation and application of the rules. That is why the judge is responsible for the definition of the acts that may characterize bullying. The France Telecom case had very particular arguments, since the accused did not refute the acts but tried to justify them as being part of the entrepreneurial context, the management objectives, and the business strategy. Thus, they asserted that all the acts were legitimized by the power to steer the company.

In this regard, this part aims to observe how the judge struggled with employment context in order to comply with the strict interpretation of article 222-33-1.

Under French labor law, the steering power enables the employer to take all the decisions necessary for the smooth running of the enterprise. However, this power is not absolute, and when exercising it the employer must respect the rights of the employees and ensure their safety. Prior decisions of the labor division of the French Cour de cassation established a link between bullying and management practices. According to those decisions, the management practices executed by a manager may constitute bullying, since an employee could identify repeated conduct that was designed to lead to or that led to a deterioration of their conditions of work  and the deterioration was liable to harm rights and dignity, to damage physical or mental health, or to compromise career prospects.[26]

More generally, the French Cour de cassation made a decision on June 15, 2017 in which for the first time it used the terms “managerial harassment” instead of “bullying.”[27] This description was already in use by researchers in management[28] and also in law.[29] The term “managerial harassment” appears more often in the decisions of the courts of appeal than in the decisions of the Cour de cassation. It refers to the application of harsh, brutal or oppressive management practices exceeding the limits of the normal steering power.[30] The prosecutor in the France Telecom case explicitly requested that “managerial harassment” be punished.

Indeed, the prior decisions of the criminal division of the Cour de cassation had already decided that bullying is based on behavior that exceeds the normal performance of rights or freedoms.[31] More specifically, it had been judged that a court of appeal acted properly when it characterized bullying and all its elements (legal, intentional and material) by highlighting facts that exceeded the “normal performance of the steering power” and harmed an employee’s dignity and career prospects.[32] In the same way, bullying is characterized as soon as it is found that the facts of which complaint is made are inherently not exercised under the steering power.[33] By contrast, there is no harassment as soon as the events of which complaint is made can be justified as part of the normal performance of the steering power.[34]

As a result, from the French point of view, “managerial harassment” occurs as soon as a system goes beyond the limits of the steering power, harshly, brutally, and oppressively. The France Telecom case was the first case brought to the court in which it was asked to evaluate a management system defined at the highest level of the firm. Obviously, the aim of all the management practices reported to the criminal court in that case was to reach a quantitative objective of 22,000 redundancies. The investigating judge specified that the case was not about the strategy, but was all about the management practices. In other words, the global strategy may be permissible but the methods may be questionable.

II. The emergence of an impact of management on the legal decision-making process?

French jurisprudence had already opened the path to assessing management methods. Some prior decisions had characterized certain management practices as “unsuitable,”[35] “brutal,” or “maladjusted.”[36] Moreover, the labor division of the Supreme Court enforces a proactive control by the lower courts when they have to check whether the management practices executed by a company could be characterized as bullying.[37] This means that the jurisprudence does not usually require harshly oppressive or degrading treatment: unsuitable management practices may constitute bullying.[38]

As a consequence, this is the question: can accused people, in return, argue that they were performing suitable management practices, and thus prevent a conviction based on bullying? This is the way the defense strategy seems to be designed in the case (A). However, focusing on the management practices within this single organization may lead us to miss the much larger picture: should management practices be taken into account by the judge (B)?    

A. Could suitable management practices exempt the accused from all liability?

The France Telecom case is symptomatic of a change in working relationships in France. In general, the implementation of a managerial type of rationality seems to be essential in the reasoning of both litigants and judges. The literature has highlighted that the choice of whether or not to go to trial, and the definition of judicial strategies, is indeed based on an objective that is no longer exclusively judicial but is also economic. In the case of France Telecom, the influence of  business administration theories on the law seems to be stronger. Pressure was exerted directly on the judge’s reasoning. Managers and a judge have a different understanding of how the business operates. The imposition of the managers’ own operating logic on the judge can be used as a basis for determining liability, so that liability is determined no longer on the basis of legal rules, but on the basis of management principles. Invoked by the defense, good management may become a justification for the behavior of leaders. At first sight, such a development is not to be feared, as the law and management have different fields of action. However, the contemporary evolution of labor relations questions the relationship between the law and managerialism.

The conception of the human being at work appears, in fact, as the paragon of a particularly important evolution in the articulation of the law and business administration. Most often, we observe that the organization is considered as a combination of technical and human factors.[39] The human being must be as efficient as the machine. As a result, under the influence of numerous studies in all areas of management that have highlighted the positive impact of well-being at work on productivity, organizations demand the well-being and even the happiness of their employees: employees are declared to be happy, managers to be benevolent. To achieve this, managers participate in “benevolent management” training, while employees are asked to learn how to manage stress or conflict, how to organize themselves better, and how to manage their work-life balance. There is an emerging demand for well-being and happiness for employees and, conversely, benevolence or empathy for managers.[40]   

From a legal point of view, this evolution raises questions because it tends to shift the focal point of the organization towards the employee: it is no longer the organization that is at fault, but the employee who is “fragile.” A quick observation of the practice of top and middle managers in French companies also sends employees back to their fragility and the poor management of their emotions, as if this were enough to close off definitively the question of the organization’s fault. It is from within this movement that France Telecom’s top management developed its defense strategy.

The defense discourse in this case is no longer only a tool of managerial legitimization, but it is also an argument that tends to exonerate the accused from civil and criminal liability. The exchanges between the lawyer for the civil parties and the former CEO of France Telecom, Didier Lombard, at the beginning of the trial are particularly significant in this regard. “I want to say to those who were my colleagues my deep sorrow for those who did not support the change imposed on the company,” says Didier Lombard. “Our “house”, in 2005, was in peril. Because of its over-indebtedness, the aggressiveness of the competition, technological developments (...) In 2009, France Telecom was doing better. And these results have been achieved thanks to the employees: I want to express my admiration and gratitude to them.” The situation, he says, “may have unintentionally contributed to weakening some, to the point that they perform an irremediable act, which is unbearable to me.” The lawyer asks: “Was there a social crisis at France Telecom?” The CEO’s answer is unequivocal: “No. There were difficulties. The transformations imposed on the company were not pleasant: OK. That’s the way it is. I can’t help it. If I hadn't been there, it would have been the same, maybe worse.”   

This argument is not insignificant. It clearly shows the desire to shift the focus from the law to management: it is not a question of “crisis” or even “bullying”, but a managerial necessity that has been misunderstood by employees. Moreover, Didier Lombard forcefully states that: “it is still how we saved the house.” His number two, Louis-Pierre Wénès, argued in the same vein. His arguments are intended to demonstrate that everything that has been done by the management team was justified by the managerial objectives. Economic success even seems to take precedence over the suffering of employees: “We deny everything that has been done for three years. We got the company out of the rut. I am furious that we are only looking at one side of the situation.[41]

Through managerialism management sciences, the employees’ suffering seems to become understandable and even justifiable: it is no longer the organization that is at fault, but it is the employee who is too fragile and cannot cope with the environment in the company. In this sense, one of the accused noted at the hearing that the people who committed suicide were “fragile.” Moreover, this is an explanation that is very often found in analyses and hearing reports. It must be strongly refuted, as the French psychiatrist Sylvaine Perragin does: there are no fragile people, she says. Burn-out and suicide are not consequences of fragility. People who suffer burn-out or commit suicide are people who are pushed to their physical and psychological limits by the tasks they are asked to achieve and are not given the tool to do those tasks.[42] In other words, suicide and burn-out are founded on the confrontation between a willingness to do the job well and the impossibility of doing the job well.[43] 

The argument of the accused rests on the idea that managerial justification would exonerate them from liability. By modifying the interpretation grid, the objectives become different: it is no longer a question of whether the accused is responsibility, but a question of whether the behavior was justified from a managerial point of view. Should we therefore see in the France Telecom case the emergence of the influence of business administration theories on the judge’s decision-making process?

B. Should the judge take management justification into account?

In reality, the question goes beyond France Telecom’s own framework. At the same time, several other companies were experiencing waves of suicides: Renault, La Post, EDF, and even the French national police.[44] All these organizations have in common that they have undergone a structural change from a public enterprise model to an entrepreneurial model. They also have in common that they are based on a very strong business approach.[45] However, the literature has identified the importance of each of these factors in the definition of bullying.[46] The hypothesis studied here is therefore that there may be a major, dangerous and worrying paradigmatic shift: must the judge assess the management methods by the economic goal they pursue? This was the question asked directly at the France Telecom trial. The hypothesis also questions a certain trivialization of managerial justification. So, to what extent should the judge take into account managerialism?[47] There is a significant discrepancy between the two sets of logic that the judge has to deal with in the France Telecom trial. To his normative logic, the judge must add a managerial dimension, based on the free choice of management methods to govern the smooth running of the company. The definition of management methods is part of the employer’s management power, with which the judge cannot interfere. Nevertheless, when assessing managerial methods, the judge does not enter a lawless territory. Under French law, the employer has many obligations towards his employees. In particular, the employer must provide the means to accomplish the employees’ tasks and ensure physical and mental safety. These obligations are sufficient to give a legal dimension to the choice of management methods. As a result, management methods are not a purely managerial concept but also govern the application of the law of employer liability. Although there is no legal definition of management or direction methods, the Cour de cassation does not hesitate to sanction them if it considers that the managers may be at fault. It is in this context that the judge takes into consideration the “ways of doing” that directly influence well-being and health in the company. 

By relying on the managerial relevance of their choices, the accused attempted to overturn this perspective and balance of logic in the judge’s decision-making process. This way of doing things is not purely French and can be observed, in particular, in large international groups. Under the guise of a social responsibility policy, companies impose happiness as a contractual obligation.

This change of perspective moves the pointer from the fault to the employee. However, it is not the employee who is unfit for happiness or well-being: it is the organization that does not give him the means to have happiness and well-being, by not allowing him to perform his task properly. It is also the judge’s responsibility to ensure that the employer evaluates the consequences of his managerial choices and the impact they may have on employees, in terms of psychosocial risks.

Clearly, management science has an effect on the application of the law. The development of the arguments of the defense highlights the porosity of both dimensions. However, it is above all the risk of a shift in the law under the influence of management that emerges: the assessment of fault would then be subordinated to the lack of managerial relevance of the choice made by the manager ... who is free to choose the same methods. In other words, it is the managerialism that is integrated into the legal interpretation grid, not the other way around. It is by reaffirming the judge’s mission, stating the law and deciding disputes, that a satisfactory balance between law and management science will be achieved.

 

* Gaëlle Deharo holds a doctorate in private law from the Université Paris I Panthéon-Sorbonne (2002) and she obtained her HDR (habilitation to supervise research) from the Université Versailles saint Quentin (2006). she continues her research in a rapidly expanding field: the articulation of law and management.

 

Notes

[1] Adam Nossiter, 35 Employees Committed Suicide. Will Their Bosses Go to Jail?, N.Y. Times (July 9 2019), https://www.nytimes.com/2019/07/09/world/europe/france-telecom-trial.html.

[2] Henry Samuel, France Telecom and Former CEO Stand Trial for ‘Harassment’ after 35 Employees Commit Suicide, The Telegraph (May 6, 2019), https://www.telegraph.co.uk/news/2019/05/06/france-telecom-former-ceo-stand-trial-company-wide-harassment; Angelique Chrisafis, Workplace Bullying Trial that Shocked France Draws to Close, The Guardian (July 8, 2019), https://www.theguardian.com/world/2019/jul/08/france-telecom-workplace-bullying-trial-draws-to-close; Nossiter, supra note 1.

[3] See J. Antonio Ariza-Montes et al., Workplace Bullying Among Managers: A Multifactorial Perspective and Understanding, 11 Int’l J. Envtl. Res. Pub. Health 2657 (2014).

[4] Moreover, many France Telecom workers were officials and could not be fired.

[5] Gaëlle Deharo & Sébastien Point, L’influence de la Recherché en Gestion sur la Qualification Juridique du Stress, 42 Revue Française de Gestion 39, 49 (2016).

[6] www.legifrance.gouv.fr.

[7] Id. (last visited on July 15, 2019).

[8] Code du Travail (Labor Code) art. L1152-1 (Fr.).

[9] See Ståle Einarsen, The Nature and Causes of Bullying at Work, 20 Int. J. of Manpower, 16 (1999); Izabel C. Martins Campos et al., Moral Harassment at Work Model and Inability, 41 Work 2060 (2012).

[10] See generally Emmanuel Abord de Chatillon, Le DRH de Demain Face aux Questions de Santé et Sécurité au Travail, 2 Management & Avenir 157 (2005).

[11] See generally M. Rajalakshmi & S. Gomathi, A Study on the Factors Influencing Workplace Bullying and its Impact on Employee Stress, 6 Mediterranean J. of Soc. Sci. 292 (2015); Mogens Agervold & Eva Gemzøe Mikkelsen, Relationships between Bullying, Psychosocial Work Environment and Individual Stress Reactions, 18 Work & Stress 336 (2004).

[12] See Juliana de Oliveira Barros et al., Précarisation du Travail et Souffrance Psychique: Le Cas du Service Pharmacie de l’Hôpital de l’Université de São Paulo, Brésil, 41 Travailler 143 (2019); Gemma Zontini, Réflexions sur la Dimension de l’Idéal dans les Troubles Psychiques Liés au Travail, 40 Travailler 65 (2018); Markus Hasel, A Question of Context: The Influence of Trust on Leadership Effectiveness during Crisis, 16 M@n@gement 264 (2013); Stewart R. Clegg & Ad van Iterson, The Effects of Liquefying Place, Time, and Organizational Boundaries on Employee Behavior: Lessons of Classical Sociology, 16 M@n@gement 621 (2013); Philip Bonifacio, An Overview of the Psychodynamic Approach, in The Psychodynamic Effect of Police Work: A Psychodynamic Approach 1-22 (1991).

[13] See Agervold & Mikkelsen, supra note 11; Nathan Bowling & Terry A. Beehr, Workplace Harassment From the Victim’s Perspective: A Theoretical Model and Meta-analysis, 91 J. Applied Psychol. 998 (2006); Lisa Bellinghausen & Nicolas G. Vaillant, Les Déterminants du Stress Professionnel Ressenti : Une Estimation par la Méthode des Equations d’Estimation, 195-196 Économie & Prévision 67 (2010).

[14] See Manuelle von Strachwitz, Prendre en Charge des Victimes de Harcèlement Moral, 23 Thérapie Familiale 251 (2002). 

[15] See Einarsen, supra note 9 at 17-20; Guy Notelaers et al., Measuring Exposure to Bullying at Work: The Validity and Advantages of the Latent Class Cluster Approach, 20 Work & Stress 289, 290 (2006); Marvin Claybourn, Relationships Between Moral Disengagement, Work Characteristics and Workplace Harassment, 100 J. Bus. Ethics 283, 283 (2011).

[16] See Marie-France Hirigoyen, Le Harcelement Moral: La Violence Perverse Au Quotidien (1998).

[17] Loi 2002-73 du 17 janvier 2002 de modernisation sociale [Law 2002-73 of January 17, 2002 on Social Modernization], https://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000000408905.

[18] Code pénal [C. pen] [Penal Code] art. 111-3 (Fr.). Official translation of the French Criminal Code available at https://www.legifrance.gouv.fr/Traductions/en-English/Legifrance-translations.

[19]  Code pénal [C. pen] [Penal Code] art. 111-4 (Fr.).

[20] See Cour de cassation [Cass.] [supreme court for judicial matters] crim., Dec. 8, 2009, Bull. crim., No. 09-84.117 (Fr.). All the references to French decisions that follow are available on the website www.legifrance.gouv.fr.

[21] Cour de cassation [Cass.] [supreme court for judicial matters] soc., June 26, 2019,  not published in bulletin, No. 17-20.723 (Fr.) (the judge decided that there was no moral harassment, based on the observation that there was no repetition, only isolated acts).

[22] The French Cour de cassation is the supreme court of France. It is in charge of the proper application of the law by the lower courts. If the law was not applied properly by a lower court, the Cour de cassation quashes the decision of the lower court and sends the case back to another court for judgment.

[23] Loïc Lerouge, La Constitution du Harcèlement Moral au Travail Indépendamment de l'Intention de son Auteur: Note Sous Cass. Soc. 10 Novembre 2009 No. 08-41.497, 28 Petites Affiches 18 (2010).

[24] Cour de cassation [Cass.] [supreme court for judicial matters] crim., Jan. 23, 2018, not published in bulletin, No. 16-87.709 (Fr.).

[25] Cour de cassation [Cass.] [supreme court for judicial matters] crim., Oct. 17, 2017, not published in bulletin, No. 16-86.075 (Fr.).

[26] Cour de cassation [Cass.] [supreme court for judicial matters] soc. (Fr.): Nov. 10, 2009, No. 07-45.321; Feb. 3, 2010, No. 08-44.107; Oct. 27, 2010, No. 09-42.488; Mar. 1, 2011, No. 09-69.616; Oct. 22, 2011, No. 13-18.862; Jan. 19, 2012, No. 10-18.059; June 20, 2012, No. 11-18.408; Jan. 17, 2013, No. 11-24.696; June 19, 2013, No. 12-18.850; June 19, 2013, No. 12-18.851; June 19, 2013, No. 12-18.854; June 19, 2013, No. 12-18.852; July 5, 2014, No. 13-11.038; May 21, 2014, No. 13-16.341. 

[27] See Brigitte Pereira, Du Harcèlement Moral au Harcèlement Managérial: Les Limites de l'Objectivation Légale, 39 Revue Française de Gestion 33 (2013).

[28] See id.

[29] See Fany Lalanne, Les Méthodes de Gestion d'un Supérieur Hiérarchique Peuvent Caractériser un Harcèlement Moral! La Cour de Cassation à l'Aune du Harcèlement "Managérial", La Lettre Juridique No. 374, Lexbase (Dec. 3, 2009); Christophe Radé, Harcèlement Managérial: La Cour de Cassation Plus Stricte?, Éd. Sociale No. 589, Lexbase Hebdo (Nov. 6, 2014); Christophe Radé,  Absence de Caractérisation d’un Harcèlement Moral Managérial à la Suite d’une Gestion Autoritaire et Inappropriée d’une Situation par un Supérieur Hiérarchique, Éd. Sociale No. 589, Lexbase Hebdo (Nov. 6 2014); Christophe Radé, Le Harcèlement Managérial de Nouveau Sanctionné, No. 434, Lexbase Hebdo (Mar. 31, 2011).

[30] Christophe Radé, Harcèlement Managérial: La Cour de Cassation Plus Stricte?, Éd. Sociale No. 589, Lexbase Hebdo (Nov. 6, 2014).

[31] Cour de cassation [Cass.] [supreme court for judicial matters] crim., May. 17, 2018, not published in bulletin, No. 17-83.889 (Fr.).

[32] Cour de cassation [Cass.] [supreme court for judicial matters] crim., June 19, 2018, not published in bulletin, No. 17-82.649 (Fr.).

[33] Cour de cassation [Cass.] [supreme court for judicial matters] crim., Nov. 13, 2018, not published in bulletin, No. 17-85.005 (Fr.); Cour de cassation [Cass.] [supreme court for judicial matters] crim., June 19, 2018, not published in bulletin, No. 17-86.737 (Fr.).

[34] Cour de cassation [Cass.] [supreme court for judicial matters] crim., Feb. 19, 2019, not published in bulletin, No. 18-83.268 (Fr.).

[35] Cour de cassation [Cass.] [supreme court for judicial matters] soc., Sept. 24, 2008, not published in bulletin, No. 06-45.772 (Fr.).

[36] Cour de cassation [Cass.] [supreme court for judicial matters] soc., Mar. 8, 2017, not published in bulletin, No. 15-24.406 (Fr.).

[37] Cour de cassation [Cass.] [supreme court for judicial matters] soc., May 10, 2012, not published in bulletin, No. 11-11.152 (Fr.).

[38] But see Cour de cassation [Cass.] [supreme court for judicial matters] soc., June 1, 2016, not published in bulletin, No. 14-28.870 (Fr.).

[39] See Dieter Zapf, Organisational, Work Group Related and Personal Causes of Mobbing/Bullying at Work, 20 Int’l J. Manpower 70 (1999).

[40] Sylvaine Perragin, Le Salaire de la Peine: Le Business de la Souffrance au Travail 81-89 (2019).

[41] Pascale Robert-Diard, Procès France Telecom: “On n’a Rien vu Venir. C’est Aussi Parce qu’on a Refusé d’Écouter”, Le Monde (June 21, 2019), https://www.lemonde.fr/societe/article/2019/06/21/proces-france-telecom-on-a-pousse-le-ballon-un-peu-trop-loin_5479867_3224.html.

[42]   What Business Life After the France Telecom Affair?, France Culture (July 5, 2019), https://www.franceculture.fr/emissions/linvite-des-matins/quelle-vie-en-entreprise-apres-laffaire-france-telecom.

[43] Claybourn, supra note 15. 

[44] See Annette Bool, L’accroissement des Plaintes pour Harcèlement Moral, est-il Inhérent au NPM?, XX(50) Revue Internationale de Psychosociologie et de Gestion des Comportements Organisationnels 155, 189 (2014).

[45] See Dieter Zapf et al., On the Relationship between Mobbing Factors, and Job Content, Social Work Environment and Health Outcomes, 5 European J. Work and Organizational Psychology 215 (1996).

[46] Elfi Baillien & Hans De Witte, Why is Organizational Change Related to Workplace Bullying? Role Conflict and Job Insecurity as Mediators, 30 Econ. & Indus. Democracy 348, 348-49 (2009); Gregor Bouville & Eric Campoy Une Approche Organisationnelle du Harcèlement Moral, 3 @GRH 53, 55 (2012).

[47] See Claire Bonafons et al., Specificity of the Links between Workplace Harassment and PTSD: Primary Results using Court Decisions, a Pilot Study in France, 82 Int’l Archives of Occupational & Envtl. Health 663 (2009).

 

 

 

 

 

 

 

Dispatch No. 20 - Spain - "Contradictory decisions on the employment status of platform workers in Spain"

by Alberto Barrio* 

January 2020

 

Introduction

In May 2018, a judgement on the employment status of platform workers was issued for the first time in Spain. In the years since then, there have been at least seven other decisions by Spanish social courts of first instance deciding on this issue. In five judgements (concerning the platforms Take Eat Easy, Deliveroo and Glovo) it was concluded that the claimants were employees, while in three others (concerning the platform Glovo) it was maintained that they were self-employed workers. These judgements have alternated with decisions of the labour inspectorate, some of them stating that the riders of these online platforms were employees.

I. Legal framework on employment status in Spain

Two main legal statuses exist under Spanish law: employee (trabajador por cuenta ajena) and self-employed worker (trabajador por cuenta propia). Nevertheless, within the legal status of self-employment, a sub-variety exists, the economically dependent self-employed worker (trabajador autónomo económicamente dependiente), which grants certain rights that ‘regular’ self-employed workers lack. Claims on employment status classification are dealt with by the social courts of first instance, as well as by the labour inspectorate.

An employee under Spanish labour law is an individual who voluntarily performs remunerated work within the limits of the organisation and under the direction of another physical or juridical person.[1] This has been interpreted by the Supreme Court as to mean that an employment relationship requires dependency (indicated, inter alia, by the fact that the work is performed personally and in the times and locations established by the employer) and the performance of work for others’ behalf (indicated by, inter alia, the fact that the results of work is owned by the employer, and that it is the employer who fixes prices and salaries, and who selects clients).[2] Furthermore, there is a presumption of the existence of an employment contract when a person performs a service for another person (and within the sphere of management of that person) in exchange for remuneration.[3]

Self-employed workers, in turn, are defined as those individuals who carry out an economic or professional activity for profit, on a regular personal and direct basis, on their own account and outside the sphere of management and organization of another person, independently of whether or not they employ others.[4]

Economically dependent self-employed workers need to fulfil the abovementioned criteria, but they are also subjected to other requirements. In this regard, this form of work is defined as a self-employed person without employees who own their tools of production and who is financially dependent for at least 75 percent of their earnings on one client.[5] Economically dependent self-employed, unlike ‘regular’ self-employed, are entitled to annual leave, compensation if the main client does not fulfil the contract, coverage under the social court’s jurisdiction (instead of the civil court’s) and to join trade unions and be subjected to collective agreements (although not to participate in strikes), as well as easier access to the benefit for end of activity (similar to the unemployment benefit provided to employees). It is important to note that, however, this legal form is rarely used, with only 10,250 economically dependent self-employed workers registered as of September 2016.[6] This might be, at least in part, the result of burdensome regulation,[7] which requires, inter alia, that the contract is registered in the National Registry of Professional Associations of Self-Employed Workers (Registro Nacional de Asociaciones Profesionales de Trabajadores Autónomos).[8]

II. Judgements concerning the employment status of platform workers in Spain

The first judgment on the employment status of platform workers was handed down on the 29th May 2018 by the 11th social court of first instance of Barcelona, and concerned the dismissal of 20 riders performing work through the delivery platform Take Eat Easy, due to the end of activity of the company operating such platform, Take Eat Easy Spain S.L.[9] While this was the first judgement on the issue, it is important to note that it was preceded by several labour inspectorate decisions (mentioned below).

In the decision, the judge considered proven that the company required workers to use specific materials (backpacks with its logo and mobile phones with its app), as well as to set their working schedule four weeks in advance, and to respect certain standards of politeness. If the workers did not respect these requirements, their contractual relationship with the company could be terminated. Moreover, and unlike in later Spanish cases concerning the employment status of platform workers, the riders using Take Eat Easy were bound by an exclusivity clause with the company and received a minimum remuneration of 200 euros per month independently of the number of deliveries performed.[10] The case does not mention whether the riders were allowed to reject deliveries during an agreed shift of four hours. The judge concluded that the riders performed work under the control and within the sphere of organization of the company. As a result, it ruled that the claimants, most of them contracted as self-employed workers or through the intermediation of the cooperative Factoo (and two of them performing undeclared work) were instead to be considered employees of the company, and thus entitled to severance pay.

Almost simultaneously, on the 1st June 2018, the 6th social court of first instance of Valencia decided in a similar case with the same outcome, this time concerning one rider performing work through the platform Deliveroo.[11] This case addressed the situation of a rider whose contractual relationship was unilaterally terminated by the company operating Deliveroo due to an alleged lack of availability and an excessive rejection of deliveries within agreed shifts. The decision arguably explains in greater detail than the previous one how the conditions to which the rider was subjected pointed towards the existence of the two elements of the employment relationship (namely dependency and performing work for another party).  The existence of dependency of the rider from the platform was based on the fact that the rider was required to select his shifts (subjected to the company’s approval) with at least a week in advance, and would be sanctioned for any changes afterwards; the company (and not the rider) organised the professional activity through its app, which located at all time the rider (who was furthermore required to return to a certain ‘waiting’ place between shifts); that the rider received a minimun remuneration linked to his availability; and that the work was performed personally by the worker.[12] The fact that the rider performs work on behalf of the platform, in turn, was concluded based on the fact that the company operating the platform was the one which provided the main means of production (i.e. the platform itself and the app), established the price of the service (and provided bills on its name), required workers to use its uniform (as it told workers that they were “the image of the company in front of the client”[13]) and agreed on the delivery service with the restaurants. The judge ruled that the claimant must be considered an employee of the platform, and thus receive severance pay. This decision has since then become final, as the company operating the platform withdrew its appeal.[14]

The five judgements on the employment status of platform workers taken afterwards, from September 2018 until April 2019, concerned the company Glovoapp23 S.L., which operates the online platform Glovo. Like the abovementioned online platforms, this platform is used for the performance of delivery services, and the riders who work through it do so by signing a contract for the performance of services as economically dependent self-employed workers (with a working time of 40 hours per week), and by using the company’s app and their own vehicles (bicycle, motorbike or car). It is Glovoapp23 S.L., and not the rider, who operates the platform, who may make agreements with the stores from which products are delivered, who set the prices per delivery, and who collects the payment from and provide invoices to the recipient of the products (i.e. the client), as well as who pays the riders. Moreover, the riders need to select shifts in advance and are penalised (by having their access to delivery offers limited or, even, by the termination of their contract) if they are not available during their shift without permission. The company also provides a set of recommendations on how to acquire the products and how to relate with the clients. However, there are some differences in the conditions offered by Glovoapp23 S.L. compared to those offered by Take Eat Easy S.L. and Roofoods Spain S.L.

First, the company allows for the delivery of not only food, but also a wider range of services related to delivery (i.e. grocery delivery, collect and delivery of packages, and acquisition and delivery of products). As a result, the riders receive a company debit card, with which they may acquire products on the clients’ behalf, to whom they then deliver them. Second, the riders may choose which deliveries to perform among those offered to them or may, in turn, choose to be automatically assigned delivery orders. Third, the riders are not obliged to use materials with Glovo’s logo, but are provided with materials with this logo and are not allowed to use materials with other corporate logos (including their own). Fourth, the riders are rated by the clients, and this has an impact on the number of deliveries they are offered.

On the 3rd September 2018, the 39th social court of first instance of Madrid denied the claim of a rider that Glovoapp23 S.L. had wrongfully dismissed him due to temporary incapacity, based in part in the fact that he was considered to be correctly classified as an economically dependent self-employed worker.[15] The justification of the decision deviates in a few significant ways from the previous cases addressed by the 11th social court of Barcelona and the 6th social court of Valencia. In this regard, the judge considered that the rider was free to establish his own working time and availability, even though it did mention the potential reduction of deliveries offered to the rider if he did not respect the time slots that were previously approved by the platform.

It also considered relevant that the rider could decide the route for each delivery, and that the rider accepted the company’s proposal of changing the rider’s self-employed status to the one of economically dependent self-employed, a few months prior to the claim. In turn, the judge mentioned but did not consider key indicators of the existence of an employment relationship,  the facts that the platform fixed the prices for the service, requires its workers to use its app and provided its riders with debit cards. The decision did not mention the fact that Glovo riders use clothes and transport boxes with the company’s logo, as well as the fact that the riders’ working time is 40 hours per week. Moreover, the judge held that the means of transport (and not the online platform) was the main means of production, and thus that the means of production were provided by the rider.

On the 11th January 2019, in a very similar case, the 17th social court of first instance of Madrid also rejected a claim of wrongful dismissal due to temporary incapacity made by a Glovo rider, again partly based on the fact that the rider was considered to be an economically-dependent self-employed.[16] As in the previous case, the judge considered that it is the rider who provides the main means of production, who has a choice on whether or not to perform work (even though the court mentions that this may potentially produce less future deliveries for the rider), and who assumes the risk of the delivery (although it is not explained why it is considered so).

On the 11th February 2019, nevertheless, the 33rd social court of first instance of Madrid came to the opposite decision, considering that a Glovo rider was an employee.[17] The case considered that the unilateral termination of the rider’s contract within a context of a strike was a wrongful dismissal, as it violated the rider’s rights to freedom of expression and to strike. This judgement is arguably the first Spanish case in which the judge explicitly takes into account the new features of online platforms. In this regard, the judge starts his legal reasoning by analysing how the new information and communication technologies change fundamentally the way remuneration is set and evaluation is performed, as well as where and when work may be performed. The judge then notes that the company operating the platform has at its disposal a significant enough number of riders so that the freedom of the riders to choose their shifts does not have a significant impact on the business as a whole.

In contrast, the judge asserts, the rider could not perform such work without the online platform, which is considered as the main mean of production. Moreover, the judge states that the on-demand character of platform work, which is enabled by new IT tools, are vital to the rider’s capacity to set their working time as an indicator of employment status. Other elements that indicate the existence of an employment relationship which are mentioned, inter alia, are that the recipients of deliveries may not choose a particular rider and, most importantly, that it is Glovo who fixes the price of the service. Moreover, and although the court observed that the rider must assume the risk of not receiving payment for the delivery if the recipient is not satisfied, it also notes that it has not been proven that such a clause was in fact used. Furthermore, the decision refers to a set of international judgements (from the United States, the United Kingdom, France and Australia), as well as to a recommendation by the ILO and a Communication by the European Commission.

Some days after, on the 20th February 2019, the 1st social court of first instance of Gijón concluded that a rider of Glovo must be classified as an employee.[18] The judgment is mainly based on the facts that the platform is the main means of production, that it is the platform (and not the rider) that produces invoices for the service, and that the rider is in fact subordinated to the platform due to the rating system and the use of GPS technology to monitor the performance of the service.

On the 4th April 2019, the 1st social court of first instance of Madrid ruled that a Glovo rider was an employee, and considering the termination of his contract a wrongful dismissal. The decision, notably, reproduces verbatim many of the legal grounds of the decision by the 33th social court of first instance of Madrid.

Finally, on the 21st May 2019, a decision of the 24th social court of first instance of Barcelona rejected the claim of wrongful dismissal made by a Glovo rider, and stated that the rider was in fact correctly classified as an economically self-employed worker.[19] In this regard, the judge concluded that the rider of the platform has the capacity to manage their professional activity, which is inferred from the facts that they decide their own itinerary and working times (and that they may reject orders if they wish to do so), that they provide their own means of transport, and that they receive payment per delivery performed. Two elements, however, may differentiate this case from others. First, the case addresses the situation of a rider who stopped receiving delivery orders because the company considered that he was trying to deceive the app so it would believe that the distance between deliveries was greater than what it was in reality, an allegation which is not considered proven or disproven in the judgement. And, second, the judgement does not mention the parameters used to determine which delivery orders are offered to each rider, something which was covered in more detail by all other previous decision concerning the platform Glovo.

Besides the judicial decisions which have been analysed above, it is also worth noting the numerous labour inspectorate decisions taken across Spain on the employment status of platform workers. While this

contribution does not attempt to provide a comprehensive list of such interventions, some may be highlighted. In this regard, in November 2016 the labour inspectorate stated that riders using the platform Glovo in Barcelona were indeed economically dependent self-employed workers. [20] Nevertheless, later the labour inspectorates in Valencia,[21] Zaragoza[22] and, again, Barcelona,[23] considered that riders using this same platform must be considered employees of the company operating the platform. Furthermore, the labour inspectorates in the cities of Valencia,[24] Madrid[25] and Barcelona[26] have also stated that several of the riders performing work through the platform Deliveroo must be considered employees.

Following an appeal of a decision of the Madrid’s labour inspectorate, the Social Security Treasury (Tesorería General de la Seguridad Social) started a case before the social court of first instance of Madrid number 24 on this issue. The case, which directly involves over 500 riders using the platform Deliveroo, started its hearings on the 31st May 2019.[27] The outcome of this upcoming judgement may serve as a good indicator of the future of the discussion on the employment status of platform workers in Spain.

III. Conclusion

Some tentative conclusions might be drawn concerning both the main aspects highlighted in the abovementioned judgements and the general approach the courts have taken until now towards platform work.

Most cases revolve around the notion of whether the riders are free to set their own availability to work. Those decisions that found riders to be economically dependent self-employed workers considered that the riders were free to manage their working time and work availability, while those which reclassified them as employees stressed the underlying mechanisms restricting in practice their freedom (such as the use of sanctions when a rider rejects an order during a shift). In the same vein, decisions leaning towards self-employed status gave less relevance to the use by the riders of platforms’ uniforms and material than those which found riders to be employees.  Moreover, most decisions finding riders to be economically dependent self-employed workers seem to accept the company’s description of its main activity (i.e. the provision of IT services supporting the performance of deliveries), while the opposite decisions are often linked to considering restoration [SC1] or transport as the platforms’ main business.

Most judgements analysed do not highlight the arguably new nature of platform work. The decision of the 33th social court of first instance of Madrid is striking in this regard, for it not only acknowledges platform work’s new features, but it maintains that they are significantly different from the features of the traditional employment relationship, and that these differences justify a change in the way some indicators of the existence (or lack thereof) of an employment relationship are assessed (most importantly, the workers’ freedom to set their working time). It is now an enigma whether other judgements will follow a similar approach. By reproducing most of its legal arguments, the decision by the 1st social court of first instance of Madrid pointed in that direction. However, the decision of the 24th social court of first instance of Barcelona seemed to favour a more traditional application of the criteria to determine the existence of an employment relationship. Future judgements may provide more information on which path is taken.

*Alberto Barrio, PhD Candidate at the Labour Law and Social Policy Department of Tilburg University

 

Notes

[1] Real Decreto Legislativo 2/2015, de 23 de octubre, por el que se aprueba el texto refundido de la Ley del Estatuto de los Trabajadores, artículo 1(1).
[2] See, inter alia, Tribunal Supremo. Sala de lo Social, Sentencia núm. 902/2017, §3.
[3] Ibid, artículo 8(1).
[4] Ley 20/2007, de 11 de julio, del Estatuto del Trabajo Autónomo, artículo 1(1)
[5] Ibid., artículo 11.
[6] Rodríguez-Cabrero, A., ‘Spain’, ESPN Thematic Report on Access to social protection of people working as self-employed or on non-standard contracts, Brussels: European Commission, 2017, p. 7.
[7] Cherry, M., Aloisi, A., ‘Dependent Contractors in the Gig Economy: a Comparative Approach’, American University Law Review, vol. 66, p. 639.
[8] Ley 20/2007, de 11 de julio, del Estatuto del Trabajo Autónomo, artículo 11b.
[9] Juzgado de lo Social de Barcelona No. 11, sentencia de 29 de Mayo de 2018, ES:JSO:2018:2390.
[10] It is, however, unclear the impact of these two features on the final decision.
[11] Juzgado de lo Social de Valencia No. 6, sentencia de 1 Junio de 2018, ES:JSO:2018:1482.
[12] It is stated in the legal grounds of the case that, while, in theory, the rider could replace himself with another person, it was up to him to find the other person, and required the consent of the company to do so. Moreover, this clause was not used in practice by the claimant.
[13] Juzgado de lo Social de Valencia No. 6, sentencia de 1 Junio de 2018, ES:JSO:2018:1482, p. 7.
[14] EFE, ‘Deliveroo acepta la sentencia que consideró falso autónomo a un repartidor de Valencia’, El Pais, 6 November 2018.
[15] Juzgado de lo Social de Madrid No. 39, sentencia de 3 Septiembre de 2018, ES:JSO:2018:3042.
[16] Juzgado de lo Social de Madrid No. 17, sentencia de 11 de Enero de 2019, ES:JSO:2019:269. 
[17] Juzgado de lo Social de Madrid No. 33, sentencia de 11 de Febrero de 2019, Sentencia No. 53/2019.
[18] Juzgado de lo Social de Gijón No. 1, sentencia de 20 de Febrero de 2019, ES:JSO:2019:280.
[19] Juzgado de lo Social de Barcelona No. 4, sentencia de 4 de Abril de 2019, Sentencia No. 202/2019.
[20] In a report of the Labour Inspectorate of 4 November 2016, as noted in Juzgado de lo Social de Madrid No. 17, sentencia de 11 de Enero de 2019, ES:JSO:2019:269, p. 3.
[21] Zafra, I., ‘La Inspección de Trabajo en Valencia dice que 200 repartidores de Glovo son falsos autónomos’, El Pais, 27 December 2018.
[22] Ubieto, G., ‘Inspección de Trabajo dictamina en Barcelona que los 'riders' de Glovo son falsos autónomos’, El Periódico, 14 February 2019.
[23] Ibid.
[24] Inspección Provincial de Trabajo y Seguridad Social de Valencia, Acta de liquidación de cuotas a la seguridad social, desempleo, fondo de garantia salarial y formación professional por falta de afiliación o alta, dirigida a Roofoods Spain, SL., por el periodo 05/2016 al 09/2017, comunicada el 11 Diciembre 2017, 2017.
[25] Gómez, M. V., ‘La Inspección de Trabajo asesta otro golpe al modelo laboral de Deliveroo’, El Pais, 26 January 2018.
[26] Gómez, M. V., ‘La Inspección de Trabajo reclama a Deliveroo 1,3 millones de euros por sus falsos autónomos en Barcelona’, El Pais, 3 July 2018.
[27] Gómez, M.V., ‘Macrojuicio al modelo laboral de los ‘riders’ de Deliveroo’, El Pais, 31 May 2019.

 

 

Dispatch No. 19 - Germany - "EU law requires working time recording:
Consequences of the ECJ-ruling in the case 'CCOO' for member states and especially Germany"

by Dr. Thomas Klein* & Dominik Leist**

December 2019

In its decision of May 14, 2019, in case C-55/18, the European Court of Justice (ECJ) ruled that EU law requires member states to impose an obligation on employers to set up a system enabling the duration of daily working time to be measured.[1] This article first examines the main proceedings and the way in which the Court argues. In a second step, the concrete consequences of the judgement for the member states in general and the situation in Germany in particular are presented.

I. Underlying preliminary ruling procedure

In an increasing number of national court proceedings, the interpretation of national law depends on EU law requirements, the interpretation of which in turn is the sole responsibility of the ECJ. A reference for a preliminary ruling by a national court serves to enable national courts in such a situation to refer their question of interpretation of EU law in advance to the ECJ in order to consider its point of view in their decision.

The decision to be addressed is based on such a reference for a preliminary ruling from the Audiencia Nacional (National Court of Justice), Spain. It was preceded by an action brought by the CCOO, an association of workers, seeking a declaration that Deutsche Bank as employer was required under Spanish law to set up a system to record the actual daily working hours of all their workers. The CCOO argued that an obligation to establish such a system arises from the interpretation of Spanish law in the light of Article 31(2) CFREU (Charter of Fundamental Rights of the European Union ) and the European Working-Time-Directive (Directive 2003/88/EC).[2] However, it had not yet been clarified whether the EU law requires such an obligation.

The Audiencia Nacional therefore referred several similar questions to the ECJ, which the ECJ summarized in the question whether Art. 3, 5, 6, 16, 22 of Directive 2003/88/EC in conjunction with Articles 4(1), 11(3) and 16(3) of Directive 89/391/EEC and Article 31(2) of the CFREU must be interpreted as precluding the legislation of a member state which, according to its interpretation by the national courts, does not oblige employers to set up a system measuring the daily working time worked by each worker.[3][4]

II. Decision and reasoning of the ECJ

The ECJ ruled that Art. 31 (2) CFREU and the aforementioned directives preclude a national regulatory regime which does not oblige the employer to record working time. Neither Art. 31 (2) CFREU nor the directive explicitly provide for a recording obligation. However, the ECJ argues that such an obligation is necessary in order to guarantee the practical effectiveness of expressly standardized rights such as the weekly and daily minimum rest periods and the weekly maximum working time.[5] In particular, the ECJ emphasizes that without such a system the worker can hardly effectively prove his actual hours worked.[6] In this context, the ECJ again emphasizes that the directive standards to be examined concretize the fundamental right enshrined in Art. 31 (2) CFREU and must therefore be interpreted in its light.[7] The ECJ also establishes concrete requirements for the necessary time recording. The necessary practical effectiveness of the envisaged rights is only guaranteed if employers are obliged to set up an "objective, reliable, and accessible" system for recording working time.

III. Consequences of the ruling for the Member States

For the member states, the first result is that the implementation obligations with regard to the directive requirements also include the obligation of the employers to introduce a working time recording system. Since the transposition deadline has already expired, the member states must immediately establish an obligation to record working time, unless such an obligation already exists explicitly or can at least be assumed by interpreting national law.

The requirements of the ECJ expressly demanding an "objective, reliable, and accessible" system must be adhered to. The exact meaning of these features is currently the subject of lively discussions.[8] It is not least questionable whether the feature "objective" refers to the recording itself or to the usability of the recording result.[9] In designing such a system, however, the ECJ expressly leaves the Member States a margin of discretion.[10] However, this refers only to the "how", not to the "whether" of an obligation to record working time. The base limit here is the suitability for practical effectiveness of directive's rights.

Another interesting question at present is whether the judgement also imposes an obligation on private employers to record working time even before the court’s requirements are implemented by the member states. This could, on the one hand, be the case if the provisions of the Working Time Directive could be applied directly between private individuals. EU-Directives basically only serve as targets that have to be implemented by the Member States within a given deadline. The ECJ has indeed provided for exceptions to this principle in previous decisions in cases where the transposition deadline has passed and “unconditional and sufficiently precise rules” in the Directive exist at the same time.[11] These exceptions, however, relate only to an effect on public authorities. [12] In contrast, a direct effect of EU-Directives between private individuals cannot be considered according to the settled case law of the ECJ.[13]

The alternative possibility for an obligation on employers to record working time even before the implementation of the judicial provisions in national law would be to regard the fundamental right of Article 31 (2) CFREU as directly applicable in the horizontal relationship (between private individuals). This interpretation has already been affirmed in another decision regarding the holiday periods also granted in Art. 31 (2) CFREU.[14] However, the ECJ does not comment on the direct applicability of the fundamental right in a horizontal relationship. This is presumably due to the narrowly framed question referred for the ruling and does not imply that the judgment is to be understood as a rejection of this option. Quite to the contrary, the conditions laid down in the case "Max Planck Gesellschaft zur Förderung der Wissenschaften" for a direct horizontal effect, as already emphasized by Advocate General Pitruzzella , speaks clearly in favor of the affirmation of a direct horizontal effect also in this case, i.e. with regard for working time law.[15][16]

IV. Need for implementation in Germany

German law provides for time recording obligations only selectively for certain professions specifically susceptible to abuse. In comparison, a general recording obligation - similar to Spanish law - is only provided for overtime, but not for regular working hours.

The question therefore arises as to whether German law can be interpreted in conformity with EU law in the sense of a general obligation to record working time. As the statute to be interpreted accordingly might be considered the ArbZG (German Working Time Act), which is part of the public law on occupational health and safety. Violations of the provisions are subject to fines in accordance with §§ 22, 23 ArbZG. Because of the punitive nature of those fines an analogous application of the recording obligation for overtime is opposed to the constitutional prohibition of analogy for criminal law and the imposition of fines (Article 103 section 2 of the Basic Law).[17]

German civil law could, however, be interpreted in conformity with EU law without methodological reservations. For example, one could regard the obligation under EU law as a contractual secondary obligation of the employer within the meaning of § 241 (2) BGB (Civil Code) or as part of the obligation under § 618 (1) BGB (Civil Code).[18] In both cases, however, the enforcement obligation would lie with the employee who would have to sue their employers for setting up a recording system. This cannot satisfy the requirements of the ECJ, which in its judgment repeatedly emphasizes the weak position of the employee vis-à-vis his employer, as a need for providing an effective regulation. Alternatively, rights of initiative and enforcement possibilities of the work council for the introduction of a recording system might also be an option.[19] Thus the right of codetermination from § 87 (1) No. 2 BetrVG (Works Constitution Act) refers also to the recording and control of the working time or the renunciation of such and contains a right of initiative of the work council.[20][21] Although these possibilities can be helpful in some cases, they do not provide the actual effectiveness necessary as in many enterprises, no work council exists.

Altogether, therefore, German law cannot be interpreted in a way that meets the requirements of the ECJ for the recording of working time, which effectively means that German law does not currently comply with EU law. A legislative intervention for introducing a time recording system in compliance with the requirements of the European Court of Justice is therefore an urgent necessity.


*Dr. Thomas Klein, Research Associate at the Institute for Labour Law and Industrial Relations in the European Union (IAAEU), Trier, Germany
Contact: klein@uni-trier.de
**Dominik Leist, Research Associate at the chair of Professor Monika Schlachter, Law Faculty, Trier University, Germany
Contact: leist@uni-trier.de

Notes

[1] Case C-55/18 Judgment, Federación de Servicios de Comisiones Obreras (CCOO) v. Deutsche Bank SAE (May 14, 2019), http://curia.europa.eu/juris/documents.jsf?num=C-55/18.

[2] Charter of Fundamental Rights of the European Union, art. 31(2), 2012 O. J. (C 326) 391, 401.

[3] Council Directive 2003/88, arts. 3, 5, 6, 16, 22, 2003 O.J. (L 299) 9, 11-15 (EC).

[4] Council Directive 2003/88, arts. 4(1), 11(3), 16(3), 1989 O.J. (L 183) 1, 3-7 (EC).

[5] Case C-55/18 Judgment, CCOO v. Deutsche Bank SAE, ¶¶ 46-60 (May 14, 2019), http://curia.europa.eu/juris/documents.jsf?num=C-55/18.

[6] Id. ¶ 54.

[7] Id. ¶ 31 (citing Case C-112/13 Judgement, A v. B and Others, ¶ 51 (Sept. 11, 2014), http://curia.europa.eu/juris/documents.jsf?num=C-112/1; Joined Cases C-569/16 and C-570/16 Judgement,  Stadt Wuppertal v. Maria Elisabeth Bauer and Volker Willmeroth v. Martina Broßonn ¶ 85 (Nov. 6, 2019), http://curia.europa.eu/juris/documents.jsf?num=C-569/16.

[8] See Thomas Klein & Dominik Leist, Die Unionsrechtliche Pflicht zur Arbeitszeiterfassung, Zeitschrift für Europäisches Sozial- und Arbeitsrecht, 2019, at 367.

[9] Id.; Tortsten von Roetteken, Pflicht des Arbeitgebers zur Einrichtung eines Systems zur Erfassung der Täglichen Effektiven Arbeitszeit, 23 Juris-Praxisreport Arbeitsrecht 1, at D (2019).

[10] Case C-55/18 Judgment, CCOO v. Deutsche Bank SAE, ¶ 63 (May 14, 2019), http://curia.europa.eu/juris/documents.jsf?num=C-55/18.

[11] Instead of all. Case-8/81 Judgement, Ursula Becker v. Finanzamt Münster-Innenstadt, ¶ 25 (Jan. 19, 1982), http://curia.europa.eu/juris/documents.jsf?num=C-8/81.

[12] Dominik Leist, Unionsrecht gebietet Pflicht zur Systematischen Arbeitszeiterfassung, 22 Juris-Praxisreport Arbeitsrecht 1, at D.II (2019) (rejecting the possibility of an immediate directive effect of the Working-Time-Directive also for state employers).

[13] Settled case law since Case C-152/84 Judgment, M. H. Marshall v. Southampton and South-West Hampshire Area Health Authority (Feb. 2, 1986), http://curia.europa.eu/juris/documents.jsf?num=C-152/84.

[14] Case C-684/16 Judgment, Max-Planck-Gesellschaft zur Förderung der Wissenschaften e.V. v Tetsuji Shimizu, ¶ 81 (Nov. 11, 2018), http://curia.europa.eu/juris/documents.jsf?num=C-684/16.

[15] Case C-55/18 Opinion, CCOO v. Deutsche Bank SAE, ¶ 94 (Jan. 31, 2019), http://curia.europa.eu/juris/documents.jsf?num=C-55/18.

[16] Johannes Heuschmid, Neujustierung des Arbeitszeitrechts und des Systems der Arbeitszeiterfassung durch den EuGH, Neue Juristische Wochenschrift, 2019, at 1854 Is 1854 a page number, and is it the pincite? – ask author; Thomas Klein & Dominik Leist, supra note 8, at 370; Roetteken, supra note 9, at C; Daniel Ulber, Arbeitszeiterfassung als Pflicht des Arbeitgebers – Die Folgen der Entscheidung des EuGH in der Rechtssache CCOO, Neue Zeitschrift Für Arbeitsrecht, 2019, at 680.

[17] Leist, supra note 12, at D.I.; Ulber, supra note 16, at 680 (not exluding an interpretation consistent with EU law).

[18] Klein & Leist, supra note 8, at 371.

[19] Id.

[20] R. Richardi, in Betriebsverfassungsgesetz: BetrVG § 87 para. 297 (R. Richardi ed., 16th ed. 2018); Thomas Klebe, in BetrVG: Betriebsverfassungsgesetz § 87 para. 100 (Wolfgang Däubler et al. eds., 16th ed. 2018). I would think page numbers would be better here – ask author.

[21] Richardi, supra note 20, at para. 65.

 

 

 

Dispatch No. 18 – Australia – "The development of labor hire regulation in Australia: Promoting the integrity of the labor hire industry and protecting workers engaged in labor hire arrangements through a licensing system," by Maria Azzurra Tranfaglia*

 August 7, 2019

This dispatch will start by exploring the rationale underpinning the recent introduction of labour hire legislation in some Australian states. It will then offer a general overview of these regulatory developments, namely: the Victorian Labour Hire Licensing Act 2018 (Vic), which has come fully into effect on 29 April 2019; the Queensland Labour Hire Licensing Act 2017 (Qld), in operation since June 2018; and the South Australian Labour Hire Licensing Act 2017 (SA). Final reflections will highlight the challenges faced by the legislators in defining the scope of application of the labor hire licensing regimes.

From an Australian perspective, the provision of a licensing regime for certain types of triangular arrangements represents an important change in the regulatory landscape aimed at addressing the lack of effective protections for workers engaged through unscrupulous and/or insolvent labor suppliers. At the same time, the Australian states’ legislative experience is a powerful illustration of the need to regulate labor intermediaries beyond pure labor hire or “agency work,” as it is more commonly referred to in Europe. It therefore constitutes a regulatory laboratory to watch closely when looking for solutions to better protect workers and the economy by the abuse of broader triangular business structures and fissuring mechanisms.

 

I. Labor hire arrangements: definitions, general trends, and the call for regulation

In the absence of a specific definition of labor hire under Australian labor law, the term has often been used loosely to encompass a multitude of triangular arrangements. Many have drawn the parallel with agency work as it is understood in Europe, i.e., where the formal employer is the employment agency and the worker is directed by the user-company/host.[1] At the same time, in in certain sectors (e.g. cleaning), labor hire has often been associated with labor contractors, i.e., third parties that may or may not maintain control over their workforce.[2]

Labor hire arrangements have generally been referred to as “triangular relationships” in which a labor hire agency supplies the labor of a worker to a third party (host) in exchange for a fee.[3] In practice in Australia, a labor hire worker is engaged either as an independent contractor or, more often, as a casual employee by an agency that is then hired under a commercial agreement to another business that coordinates or controls that worker’s activity. Whilst the engagement of labor hire independent contractors has long been a controversial, though accepted practice, these sort of arrangements—also referred to as “Odco” style arrangements from the name of the business that started using them—have lately been deemed fraudulent unless highly skilled workers are involved.[4] On the other hand, in cases involving labor hire employees, according to the common law, the exercise of control by the host is an inherent characteristic of labor hire arrangements.[5] Therefore courts have generally found the labor hire agency to be the true employer, unless the latter was found to act as a mere screen between the host and the workers.[6]

So far, Australian labor hire agencies have ranged from the large well-known multinational firms, such as Adecco and Manpower, and some substantial local firms, such as Skilled Engineering, to many small operators.[7] As recently summarized in the Report of the Victorian Inquiry into Labour Hire and Insecure Work, the reality of labor hire appears polarized:

At one end of the spectrum are labour hire agencies and arrangements which are highly transparent and compliant with workplace laws, awards and other industrial instruments, health and safety legislation and other applicable legal requirements. At the other end of the spectrum are ‘invisible’ labour hire agencies and arrangements, operating almost entirely outside the existing regulatory framework. However, the boundaries between them are not clear. There is a range of agencies and arrangements falling between the two extremes. . . . Sometimes, the reputable and rogue operators interact. . . .[8]

Australia has never signed the ILO Convention No. 181/1997 on private employment agencies[9] and up until recently many scholars have noted a general lack of systematic protective regulation for intermediated workers, resulting in a highly porous and opaque system.[10] Despite the acknowledgement of the importance and the legitimacy of labor hire arrangements for the Australian economy due to the need for flexibility in modern workplaces, concerns have often been raised in the past two decades in relation to the effective protection of the workers involved, especially in light of their predominantly casual status.[11] Clauses ensuring equal treatment of on-hired workers have become a feature of Modern Awards, a set of 122 federal instruments developed between 2008 and 2010 that establish industry or occupational minimum employment standards.[12] However, labor hire workers remain not legally entitled to the same rights established for user companies’ employees under the relevant enterprise agreements, unless unions manage to negotiate parity clauses.[13] Moreover, there are generally no legal thresholds in relation to the number of labor hire workers that a company can host. Most importantly, in case of insolvent fly-by-night operators, labor hire workers cannot automatically claim damages against the host. User companies can be sanctioned as accessories if their intentional involvement in the contravention can be proved.[14] Nevertheless, under Australian law the responsibility for underpayments in case of triangular work arrangements generally lies with one entity: the direct employer. And this approach has begun to appear increasingly out of sync with the current fragmented world of work relationships, where workers are often dependent on and/or controlled by more than one entity.[15]

A series of inquiries both at State and at Federal have been promoted in the past to assess the adequacy of the law in protecting labor hire workers from unscrupulous practices aimed at undercutting employment conditions.[16] They triggered much research interest but no definitive regulatory solution.[17] The introduction of a licensing system for labor hire providers has often been placed on the agenda, mainly by the Union movement, but also by agencies interested in improving the reputation of the industry.[18] However, such proposals have never received much support from governments in the past and the view that they would impose unnecessary burdens and be unlikely to eradicate fly-by-night operators prevailed.[19]

 

II. The State Labor hire licensing Acts and their scope of application

Between 2014 – 2016, a series of media revelations of exploitative practices associated with triangular arrangements such as franchising and labor hire in certain sectors (including but not limited to cleaning, horticulture, and food processing) have forcefully brought the issue to the public attention and led to a revival of calls for regulatory reforms both at State and at Federal level.[20] The Fair Work Ombudsman started conducting a series of strategic enforcement activities aimed at encouraging compliance with workplace rights, including investigations of high profile businesses engaging in labor hire arrangements with unscrupulous providers.[21] The federal regulator’s attempts to keep pace with the evolving landscape of triangular business structures[22] built momentum for the introduction at federal level of an expanded form of accessorial liability entailing higher sanctions applicable to franchisors and holding companies.[23] At the same time, inquiries into the labor hire industry have been conducted in a number of States, including Victoria, South Australia, and Queensland, and have recommended the introduction of a licensing scheme to improve the reliability of labor market intermediaries.[24] These investigations were all established between 2015 and 2016 to measure the extent, the nature and the consequences of labor hire and to then recommend the best regulatory response. They have raised important questions in relation to whether and to what extent the major players overseeing these business structures should be deemed liable as entities that ultimately dictate the working conditions and profit from the labor of the workers at the base.[25] The support for a licensing scheme at state level was significant and generally underpinned by a narrative that attempted to reconcile the need of addressing the protection gap for workers with the importance of restoring trust in the labor hire industry for the benefit of businesses and the overall economy.

The Victorian independent Inquiry recommended the introduction of a licensing scheme modeled on the U.K. Gangmasters (Licensing) Act in the sectors characterized by the most egregious breaches of workplace rights: horticulture, meat processing, and cleaning.[26] The Victorian Government accepted many of the Inquiry’s recommendations. However, it opted for a universal licensing scheme, similar to those initially enacted under the South Australian Labour Hire Licensing Act 2017 (SA), and the fully operational Queensland Labour Hire Licensing Act 2017 (Qld). Though this type of licensing approach has been opposed and criticized by representatives of employment agencies’ peak body for unfairly capturing an unnecessarily imposing high licensing fees on white-collar businesses, the independent chair of the Victorian Inquiry has welcomed its adoption.[27] As of 29 April 2019 the Victorian Act has effectively come into force and labor hire providers have six months from that date to apply for a license to operate legally. In regard to the South Australian regime minted in 2017, following the election of the new Liberal government and a re-examination due to concerns around the effectiveness of the scheme, its operation was postponed. However, the attempt to repeal the Act failed and the scheme has been revived, with a new deadline being set on 31 August 2019 for businesses to apply for the relevant license.

The general structure of the labor hire licensing schemes, though with some peculiarities for each state,[28] can be summarized as follows:

  • providers of labor-hire services are required to hold a license, and businesses wanting to use labor-hire staff are required to only use licensed providers;
  • to obtain a license, providers are required to pass “a fit and proper person test,” and show, among other things, to be a financially viable business and to have a record of compliance with workplace and labor-hire laws;
  • licensed providers are subject to reporting obligations;
  • an authority is responsible for monitoring and investigating compliance;[29]
  • operators that do not comply with or attempt to elude the scheme are liable for civil and criminal penalties.

In other words, the regulatory regimes operate to deter businesses from engaging unreliable providers and to eradicate unscrupulous practices by establishing entry requirements in an industry where the commodity being sold is people’s labor. To this end, they impose some level of responsibility on the client/user companies by requiring them to only engage licensed providers and establishing sanctions for failure to comply with the scheme.[30]

The legislators have been grappling with the difficulties of defining what labor hire services providers are, while trying to capture the multifaceted reality of triangular employment arrangements and the complexities of the contracting structures in sectors that are most at risk of noncompliance. Both the South Australian and the Victorian Act identify a “provider of labour hire services” as any person that in the course of carrying on a business supplies to another person a worker to do work “in and as part of the business . . . of the other person.”[31] This is the case regardless of who controls the work (host or labor hire services provider) and regardless of whether the workers are supplied directly or through one or more intermediaries.[32] Moreover, the Victorian Act extends the application of the regime also to operators that merely perform the recruitment and placement function, if they are providing accommodation for the period during which the individuals perform the work, as well as to firms that offer contractor management services.[33] The general definition appears even broader in Queensland, where “a person (provider) provides labour hire services if, in the course of carrying on a business, the person supplies another person (a worker) to do work.”[34] The statutes above also contain a very extensive notion of “worker” (not just employees), with the Victorian Act expressly including also apprentices and individuals under training contracts.[35]

The letter of the law might prima facie suggest that a much broader range of triangular arrangements beyond pure labor hire (e.g. subcontracting, secondment arrangements, as well as other work models typical of the so-called gig economy) are to be covered by the licensing requirements. However, the risk of overreach is partly counterweighed by the current interpretation of what constitute labor hire as opposed to genuine subcontracting.[36] Furthermore, a series of exceptions have been (and will potentially continue to be) introduced by relevant regulations aimed at excluding class of labor hire providers, services, or workers. In Queensland, for example, where the licensing scheme is fully operational since June 2018, the regulations have excluded, amongst others, the application of the regime for the provision of workers earning more than the high-income threshold (currently $145,400) and lawyers seconded to a client.[37]

In South Australia the Government Gazette dated 6 June 2019 has carved out a series of exemptions including “where the business provides workers:

  • but providing labour hire services is not a core function of the business
  • to another business within the same group of companies – e.g. parent company supplying workers to a subsidiary company
  • to work in another business where both businesses are part of the same franchise
  • to work in another business that are not part of a franchise but are collectively operating using the same banner, branding or trading name.”[38]

Under the Victorian regime, instead, the Regulations have excluded amongst others i) secondment arrangements, ii) arrangements in which a worker performs work for an entity or group of entities that carry on business collectively as one recognizable business and iii) workplace learning and vocational placements.[39] On the other hand, the Victorian Regulations have provided a series of deeming provisions that essentially extend the application of the labor hire licensing regime to any type of triangular arrangement concluded in the cleaning, horticulture, and meat industries.[40] This addition was arguably necessary to prevent that arrangements in industries found to be the most problematic by the Victorian Inquiry, might be disguised as genuine subcontracting arrangements to elude the application of the new legislation.

 

III. CONCLUSION

In summary, though arguably not depicting the traditional understanding of labor hire/agency work, the Acts have tried to capture the multifaceted reality of triangular employment arrangements and the complexities of the contracting structures in sectors that are most at risk of noncompliance with workplace rights. To use a mythological metaphor, in tackling the notion of labor hire State legislators were, like Hercules, faced with the proverbial hydra.[41] In order to avoid the risk of multiple heads re-growing outside the scope of the legislation due to a narrow predetermined definition, they have taken a broad initial stance to allow a case-by-case heuristic reduction and/or ad hoc shaping of the scope.

From a regulatory perspective, Australian state-based licensing schemes represent an innovative ex ante measure aimed at preventing, rather than remedying ex post, the negative impact of unscrupulous practices associated with certain triangular work arrangements. They differ from the sector specific U.K. regulation of gangmasters. At the same time, they are unlike other continental European countries’ regulatory models, where pure agency work authorization systems are coupled with a(n) (often difficult to enforce) strict joint-liability regime applicable to broader triangular arrangements, including subcontracting.[42] While the deterrent function of the penalties—together with the enforcement efforts of the respective licensing authorities—should ultimately benefit workers by increasing the likelihood of them dealing with reliable employers, state Labour Hire Licensing Acts cannot, due to jurisdictional limitations, create individual rights vis-a-vis user companies in case of underpayments. To this end, a more comprehensive framework at federal level would be needed. Some commentators have hypothesized the extension of the new liability regime introduced for franchisors and holding companies also to host companies in labor hire arrangements, and more specifically to lead companies in supply chains (including cleaning supply chains).[43] In the meanwhile, unions have tried to address the accountability issue by way of collective agreements with lead companies aimed at ensuring that labor hire providers in supply chains operate in compliance with employment standards.[44] In terms of policy proposals, the Labor party had placed equal treatment of labor hire workers and a national labor hire licensing system on the federal agenda.[45] Also the current Coalition government has recently endorsed a regulation of labor hire at national level, though in the form of a “light touch” national registration scheme limited to high risk sectors as recommended by the Report of the “Migrant Workers Taskforce.”[46]

* Maria Azzurra Tranfaglia is a PhD candidate at the University of Melbourne and acknowledges the support of an Australian Government Research Training Program. Azzurra is currently a Victorian public sector employee. However, the views expressed in this dispatch are personal and related to her PhD research and do not represent those of her current employer.

Notes

  1. [1] “What is termed ‘labour hire’ in the Australian context is referred to as ‘agency work’ in the United Kingdom and much of continental Europe.” See Anthony Forsyth, The Victorian Inquiry into Labour Hire and Insecure Work: Addressing Worker Exploitation in Complex Business Structures, 6 E-J. Intl. & Comp. Lab. Stud. 1, 6, (September-October 2017).
  2. [2] See, for example, the broad definition offered by Andrew Stewart et al., Creighton and Stewart’s Labour Law (6th ed. 2016).
  3. [3] Richard Johnstone et al., Beyond Employment: The Legal Regulation of Work Relationships 60 (1d ed. 2012).
  4. [4] See for example Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd (2015) 228 FCR 346 (Federal Court of Australia); Fair Work Ombudsman v Contracting Solutions Australia Pty Ltd (2013) FCA 7 (Federal Court of Australia).
  5. [5] See, for example, FP Group Pty Ltd v Tooheys Pty Ltd (2013] FWCFB 9605, 28 (Fair Work Commission of Australia). See also, Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (2011] FCA 1176, 60-61 (Federal Court of Australia):
  6. [6] FP Group Pty Ltd v Tooheys Pty Ltd (2013) FWCFB 9605 (Federal Work Commission of Australia). In this full Bench decision, the Fair Work Commission made clear that labor hire arrangements are not illegitimate per se, even when their objective is to avoid liability for employment-related obligations. It stated that the interposition of the hiring agency between its clients and the workers—which is the typical scheme of labor hire—does not automatically result in an employment relationship between the worker and the user-company. That a crucial consideration when assessing whether or not the labor supplier is the real employer of the worker it supplies is the commercial practicality of its business and the authenticity of the underlying arrangements.
  7. [7] John Burgess & Julia Connell, International Aspects of Temporary Agency Employment, in International Perspectives on Temporary Agency Work 1 (John Burgess & Julia Cornell eds. 2004).
  8. [8] Anthony Forsyth, Victorian Inquiry into the Labour Hire Industry and Insecure Work: Final Report, Department of Economic Development, Jobs, Transport and Resources: Melbourne 56 (August 2016).
  9. [9] See Elsa Underhill. The Role of Employment Agencies in Structuring and Regulating Labour Markets, in Labour Law and Labour Market Regulation (Christopher Arup et al. eds. 2006) at 304.
  10. [10] Iain Campbell et al., Temporary Agency Work in Australia: A Basic Profile and a Few Questions, in International Perspectives on Temporary Work and Workers (John Burgess & Julia Connell eds. 2004); For an historical perspective on employment agencies regulation in Australia See Anthony O’Donnell & Richard Mitchell, The Regulation of Public and Private Employment Agencies in Australia: An Historical Perspective, 23 Comp. Lab. L. & Pol'y J. 7 (2001).
  11. [11] Id. See also Pauline Thai, Unfair dismissal protection for labour hire workers? Implementing the doctrine of joint employment in Australia, 25 Au. J. Lab. L. 158 (2012).
  12. [12] Richard Johnstone & Andrew Stewart, Swimming Against the Tide? Australian Labour Regulation and the Fissured Workplace, 37 Comp. Lab. L. & Pol'y J. 55, 60 (2015).
  13. [13] “Parity,” “site rate,” and “jump up clauses,” which extend to labor hire workers the same conditions applicable to direct employees, are a common feature in unionized sectors. However, as labor hire employees are not directly covered by these agreements, such clauses can only be enforced by a union that is covered by the agreement.
  14. [14] Fair Work Act 2009 (Cth) s. 550.
  15. [15] Tess Hardy, Who Should Be Held Liable for Workplace Contraventions and On What Basis?, 29 Au. J. Lab. L. 78 (2016); Maria Azzurra Tranfaglia, Tackling Underpayment in Cleaning Supply Chains, Pursuit The University of Melbourne (July 12, 2019) available at https://pursuit.unimelb.edu.au/articles/tackling-underpayment-in-cleaning-supply-chains.
  16. [16] See Parliament of New South Wales, NSW Labour Hire Task Force Report (2001); Parliament of Australia, Inquiry into Independent Contractors and Labour Hire (2005). See also Brian Howe Et Al., Lives on Hold: Unlocking the Potential of Australia’s Workforce (April 2012). The 2012 Inquiry recommended that industrial regulations be strengthened to provide a universal set of protections to all Australian workers such as “Reforms to better capture indirect employment arrangements like labour hire and dependent contracting.”
  17. [17] Andrew Stewart, Redefining Employment? Meeting the Challenge of Contract and Agency Labour, 15 Au. J. Lab. L. 1 – 42 (2002); Steve O'Neill, Labour Hire: Issues and Responses, Parliament of Australia, Economics, Commercial and Industrial Relations Group, March 8, 2004, available at, http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp0304/04rp09; Trina Malone, Vulnerability in the Fair-work Place: Why Unfair Dismissal Laws Fail to Adequately Protect Labour-hire Employees in Australia, Centre for Employment and Labour Relations Law, The University of Melbourne 1, 24 (May 2011); Underhill Elsa, Report – Labour Hire Employment and Independent Contracting in Australia: two Enquiries, How Much Change? 19 Au. J. Lab. L. 306-14 (2006). Thai Pauline, Unfair Dismissal Protection for Labour Hire Workers? Implementing the Doctrine of Joint Employment in Australia 25 Au. J. Lab. L.\ 158 (2012).
  18. [18] Underhill, supra note 18, at 307.
  19. [19] See, for example, Skilled, Submission to the Senate Inquiry into Independent Contractors and Labour Hire, Parliament House, 2005, Canberra and Recruitment and Consulting Services Association (RCSA), Submission to the Senate Inquiry into Independent Contractors and Labour Hire, Parliament House, 2005, Canberra, cited by Mitlacher, Lars W. Mitlache & John Burgess, Temporary Agency Work in Germany and Australia: Contrasting Regulatory regimes and Policy Challenges 23 Int'l J. Comp. Lab. L. & Indus. Rel. 401, 427(2007). In particular, the key industry Group (RCSA) has repeatedly claimed that self-regulation would be the best option, often suggesting that a higher level of regulation would impose unnecessary burdens, be unlikely to eradicate fly-by-night operators, and ultimately reduce the number of jobs.
  20. [20] See ABC Four Corners, 7 -Eleven: The Price of Convenience (August 30, 2015). Tess Hardy, Franchises: All Care and No Responsibility, The Conversation (October 29, 2015). See also Pat McGarth, Myer Cleaners Accuse Retailer of Underpayment, Denying Entitlements with 'Sham Contracting' Practice, ABC News (October 22, 2015); Maria Azzurra Tranfaglia, Law Allows Myer to Outsource Responsibility for Labour Hire Workers, The Conversation (October 28, 2015); Maria Azzurra Tranfaglia, Australian Dream a Nightmare for Many Labour Hire Employees, The Conversation (February 18, 2015).
  21. [21] See Fair Work Ombudsman v Al Hilfi (2016) FCA 193 (Federal Court of Australia); Natalie James, A Report on the Fair Work Ombudsman’s Inquiry into the Labour Procurement Arrangements of the Baiada Group in New South Wales, Fair Work Ombudsman, available at https://www.fairwork.gov.au/about-us/news-and-media-releases/2015-media-releases/june-2015/20150618-baiada-group-statement-of-findings (June 2015). See also, Tess Hardy, Reconsidering the Notion of ‘Employer’ in the Era of the Fissured Workplace: Traversing the Legislative Landscape in Australia, in 95 Bulletin of Comparative Labour Relations 53, 53-80 (Roger Blanpain et al., eds. 2017).The Notion of Employer in the Era of the Fissured Workplace - Should Labour Law Responsibilities Exceed the Boundary of the Legal Entity? 53 – 80 (Wolters Kluwer 2017).
  22. [22] See, for example, Commonwealth, A Report of the Fair Work Ombudsman’s Inquiry into 7-Eleven (April 2016).
  23. [23] Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth), passed by Parliament on September 5, 2017.
  24. [24] Parliament of Queensland, Finance and Administration Committee, Inquiry into the practices of the
labour hire industry in Queensland, Report No. 25(June 2016); Parliament of South Australia, Final Report: Inquiry into the Labour Hire Industry, Report No. 93 (October 2016). Forsyth, supra note 8.
  25. [25] Hardy, supra note 15.
  26. [26] Forsyth, supra note 8.
  27. [27] See amongst others: Employers “pulling hair out” over new labour hire scheme, Workplace Express (May 10, 2019).
  28. [28] See table prepared by Anthony Forsyth, Overview of Labour Hire Licensing Legislation in Queensland, South Australia and Victoria, Corrs Chamber Westgarth (June 26, 2018), available at https://corrs.com.au/site-uploads/images/PDFs/Insights/article-employment-labour-Victorian-Labour-Hire-Licensing-Act-passed.pdf.
  29. [29] Labour Hire Authority, https://labourhireauthority.vic.gov.au/; Labour Hire Licensing Queensland, https://www.labourhire.qld.gov.au/i-provide-labour-hire/laws-and-compliance.
  30. [30] The maximum amount of penalties for engaging in prohibited conduct in Victoria is approximately $ 140,000 for natural persons, and approximately $ 500,000 for corporations. In Queensland it ranges approximately between $ 130,000 and $ 400,000. See Labour Hire Licensing Act 2017 (QLD) s 11, 12, 13; Labour Hire Licensing Act 2018 (VIC) s 13, 14, 15, 16, 94.
  31. [31] Labour Hire Licensing Act 2018 (VIC) s 7; Labour Hire Licensing Act 2017 (SA) s 7. The Explanatory Memorandum of the Victorian legislation clarifies that determining whether the workers are working for the business of the host (labour hire) rather than for the business of the provider (subcontracting) requires going through a series of factors. Control exercised by the host is not determinative. Other factors that need to be taken into account are low skilled/low paid activities, integration in the host’s business, or the fact that the activity used to be performed by the host’s direct employees.
  32. [32] Id
  33. [33] Labour Hire Licensing Act 2018 (VIC) s 8.
  34. [34] Labour Hire Licensing Act 2018 (QLD) s 7. Note that the Queensland Licensing Act does not specify “in and as part of the business . . . of the other person” and therefore could potentially extend to a broader set of arrangements, in which workers are supplied to perform work for an individual that does not run a business. However, information provided by the relevant regulatory authority appear to exclude genuine subcontracting.
  35. [35] Labour Hire Licensing Act 2018 (VIC) s 9.
  36. [36] Labour Hire Licensing Queensland, See current information provided on the website of the Queensland authority under ‘What is not a labour hire service?’ at https://www.labourhire.qld.gov.au/i-provide-labour-hire/licensing; Labour Hire Authority, the website of the Victorian authority, General definition of labour hire services at https://labourhireauthority.vic.gov.au/provider/general-definition-of-labour-hire-services/.
  37. [37] Labour Hire Licensing Regulations 2018 (QLD) s 4.
  38. [38] See Labour hire laws, South Australian Government Consumer and Business Services (June 14, 2019), available at https://www.cbs.sa.gov.au/campaigns/labour-hire-laws.
  39. [39] Labour Hire Licensing Regulations 2018 (VIC) s 4.
  40. [40] Labour Hire Licensing Regulations 2018 (VIC) s 5-6.
  41. [41] According to the Greek mythology, killing the Hydra of Lerna was the second of the twelve labors of Hercules. The myth narrates that when one of the Hydra’s heads was cut off, two more grew in its place.
  42. [42] Maria Azzurra Tranfaglia, Agency Work and its Regulatory Challenges: Lessons Learnt Through a Comparative Overview of Australian and Italian Approaches, in The Evolving Project of Labour Law (Howe, Chapman, Landau eds. 2017).
  43. [43] See Andrew Stewart & Tess Hardy, Submission to Senate Inquiry into the Exploitation of General and Specialist Cleaners Working in Retail Chains for Contracting or Subcontracting Cleaning Companies, available at https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Education_and_Employment/ExploitationofCleaners/Submissions (2018).
  44. [44] See Woolworths Group, Statement of Principles, available at https://www.woolworthsgroup.com.au/content/Document/Woolworths%20Group%20Statement%20of%20Principles_FINAL.pdf.
  45. [45] See Anna Patty, Second class citizens': ALP pledge to lift pay for labour hire workers, The Sydney Morning Herald (July 16, 2018), available at https://www.smh.com.au/business/workplace/second-class-citizens-alp-pledge-to-lift-pay-for-labour-hire-workers-20180716-p4zrqp.html.
  46. [46] See Anthony Forsyth, Our 'culture of underpayment' must be eradicated, The Sydney Morning Herald (April 5, 2019), available at https://www.smh.com.au/business/workplace/our-culture-of-underpayment-must-be-eradicated-20190319-p515e2.html.

 

Dispatch No. 17 – Netherlands – "Contradictory Court Rulings on the Status of Deliveroo workers in the Netherlands," by Nuna Zekic*

July 1, 2019

I. Introduction

On January 15th, 2019, two verdicts were issued regarding Deliveroo workers in the Netherlands. One was on the classification of Deliveroo riders as employees,[1] and the second on the application of the collective agreement “Road transport and haulage by road” on meal delivery by Deliveroo riders.[2] Both cases were commenced by Federatie Nederlandse Vakbeweging (FNV), the largest trade union in the Netherlands. The verdict on the employment status is especially important, because half of a year earlier, the same court ruled in a case commenced by one individual Deliveroo rider that he in fact was an independent contractor and not an employee.[3] Why do courts in comparable situations come to such contradictory rulings?

II. The Employment Contract in the Netherlands

The Netherlands does not have a specialized labor court, like some other countries do; instead, regular civil law courts deal with labor and employment cases. The employment contract is defined in the Dutch Civil Code as a contract whereby employees commit themselves to perform labor in service of an employer in exchange for remuneration.[4] The part “in service of the employer” implies that the employee is working under control of the employer. When there is no obligation on the side of the worker to perform labor, Dutch labor law scholars will often decide that there is no employment relationship.[5] As in other systems, the control element is considered to be the characteristic feature of the employment contract. The three elements—labor, remuneration, and control—are important to determine whether a worker is indeed working under an employment contract, but they can be present in other working arrangements too, such as contracts with independent contractors.

Freedom of contract is important in Dutch labor law. The Dutch Supreme Court finds that in principle, the parties in the labor market can contract for work under (many) different agreements. What is applicable between parties is determined by what they had in mind when concluding the agreement, while also taking into account how they actually performed the agreement.[6] That means that the intentions of the contracting parties are very relevant for the classification of the contract, as well as the conduct of the parties. In fact, all of the relevant facts and circumstances of the case have to be taken together, without a single circumstance being decisive. This is called the “holistic approach,” which is the leading approach in Dutch jurisprudence. In this approach, the social status or the social position of the worker can also be relevant: the more economically dependent the worker is, the likelier it is that the judge will rule the worker to be an employee.[7]

The employment qualification test has only gained in importance in recent years. In the Netherlands, workers can only be classified either as employees or as independent contractors (e.g. solo self-employed workers). However, the increase of the use of nonstandard types of employment contracts has been considerable in the Netherlands in the past decade.[8] Flexible employment as well as the number of solo self-employed workers are rising. In 2015, 21% of the workers had a flexible contract, while in 2003, this was 13.6%.[9] It seems that especially the most flexible and insecure types of employment contracts, such as zero-hours contracts, are on the rise.[10] Moreover, transition from flexible work to more permanent positions have decreased.[11]

III. Deliveroo Rulings

Deliveroo has been active in the Netherlands since 2015. Initially, Deliveroo concluded employment contracts with the riders, but from 2017 it stopped using employment contracts and started concluding agreements with riders as independent contractors. The judge in the latest case (the FNV-ruling) therefore chose as the central question whether the character of the legal relationship between Deliveroo and its riders has changed in such a way that the elements of the employment contracts—notably the element of subordination—are no longer present. In the first Deliveroo ruling the judge did not consider this fact. Both judges use the above “formula” established by the Dutch Supreme Court in which not only the rights and duties are considered that the contracting parties had intended to agree, but also the way in which they actually executed their agreement.[12]

In the first Deliveroo ruling, the judge stayed close to the wording of the contract and emphasized that the contract explicitly mentioned that the parties did not intend to enter into an employment contract. Furthermore, the judge found that the rider was aware that he would be working as an independent contractor, since he asked for this contract himself and since he had registered as independent contract at the Chamber of Commerce. In the FNV-ruling, however, the judge chose to emphasize that the contract used by Deliveroo was a standard type of contract that was completely and unilaterally formulated by Deliveroo and that this contract was in fact nonnegotiable.[13] In such situations, the written contract could not be of overriding importance in determining the intention of the contracting parties. The court remarked that it understood the need for flexibility on the side of Deliveroo and even on the side of some riders, but it ruled that the parties cannot decide to opt out of labor law given its imperative and protective nature.[14] The court then considered the meaning of “independent contractor” and decided that a certain element of entrepreneurship must be present—something this judge found to be missing in Deliveroo riders. On the contrary, the work performed by the riders formed the core of the Deliveroo business. Even though Deliveroo stressed the technology aspect of the company and the fact that it was exploring and developing other possible markets, delivery of meals was an essential part of (the identity of) the company; something that was reflected in the name as well.[15] In sum, in the FNV-ruling, the judge paid less attention to the contract and the intentions of the contracting parties. This is where this ruling differs from many other court rulings in the Netherlands. 

As previously stated, the judge examined whether the legal relationship between Deliveroo and its riders changed in such a way that the elements of the employment contract were no longer met. Since Deliveroo riders were first employees and then later were labeled independent contractors, the judge assessed how much their work and the working relations with Deliveroo changed in the meantime. Notably, the judge found that the contractual obligation to accept and perform work changed considerably after the riders became independent contractors. When they were employees, they were obliged to be available for work during a certain minimum of time and they were obliged to accept and perform the offered “rides” during their shift.[16] Declining deliveries (time and again) would result in a summary dismissal. In contrast, there was no obligation to be available for work and to perform work for Deliveroo riders as independent contractors. They were free to decide if and when they logged in the app. The obligation to perform work only arose when the rider accepted a delivery in the app. Notwithstanding this fact, the judge stressed that it was important to assess whether the obligation to be available for work really changed when one looked at the actual situation in practice. The judge assumed that it was not plausible that Deliveroo and the rider signed the contract for incidental delivery. The small remuneration that the rider received for one delivery compared to the costs of purchasing the meal box and the entry in the register of business names at the Chamber of Commerce were signs that the rider did not intend to work for Deliveroo only incidentally. This was also not Deliveroo’s intention, the judge found. The system “Frank” that Deliveroo uses to assign deliveries to riders works in such a way that riders who have applied for shifts in advance are given priority. That means that Deliveroo prefers that riders log in and are available for shifts.[17] Deliveroo also monitors riders’ performance. Riders who deliver often and well can also get “priority access” to certain shifts and areas, which increases their chances of getting assigned deliveries in popular shifts. There is also a bonus system that encourages the riders to work as much as possible and to perform the work well. If the rider wishes to generate enough income, it is in their best interest to log in for a shift and to perform the work well. In addition, if the rider declines a delivery offer, they need to fill in a reason for the decline. Deliveroo can use this—even when the rider fills in no reason—to measure performance. Overall, the judge found that there was no complete freedom to decide whether or not to (be available for) work on the side of the riders. Deliveroo tried to convince the judge otherwise and presented a monthly survey of all deliveries, which shows that 44.5% of all deliveries offered to riders were in fact declined. This was not enough to change her mind, however, since the judge could not conclude from this survey why the deliveries were declined or what were the consequences of declining deliveries.

Deliveroo also referred to the fact that the riders are not obliged to perform the work in person. The contract states that they are free to find a replacement, as long as the substitute has shown beforehand a proof of identity and a permit to work in the Netherlands.[18] However, the judge found this argument to be of little substance. There was very little time to find a replacement when one accepted the delivery, so the need and the ability to make use of this contractual possibility were small. The law indeed states that the employee is obliged to perform the work in person; in performing their work they can only be replaced by a third party with the employer’s permission.[19] The judge found this not to be a distinguishing criterion. According to Dutch law, a subcontractor is obliged to perform work in person as well, unless otherwise agreed.[20] Besides, the possibility of replacement in Deliveroo’s contract can be seen as permission given by the employer.

The judge concluded that when the riders are at work, there is unabated control. It may be the case that there are only general instructions on how to perform the work and that there are no concrete instructions every time the rider needs to make a delivery, but with such “simple, unskilled standard tasks,” no additional instructions are needed. It is sufficient to give general instructions.[21] There is a clear contradiction here with the first Deliveroo ruling from July 2018 where the judge placed these general instructions under the heading of “safety” and remarked that such instructions are not “illogical” in view of the nature of the service. In the context of reliability and safety, Deliveroo was allowed to impose such rules on “those who perform work under its flag.” Such (safety) rules could be given both to independent contractors and to workers. That distinction was not relevant in this case according to the judge, since the rules were rather related to the nature of the service and not so much to the relation between Deliveroo and the riders.[22] In addition, the judge clearly remarked that these were general rules and not case-specific. 

 IV. Analysis

In the FNV ruling, the judge declared that the central question was whether there was (still) a subordinate relationship between Deliveroo and its riders. The main arguments were that real freedom was missing and that the possibility of replacement was an empty shell. The judge stressed the underlying mechanisms, which restricted the real freedom of riders to decide when and if to work for the platform, such as low salaries and the consequences of rejecting shifts.

The Dutch judges clearly disagree on the question of whether or not Deliveroo exercises control over how the riders perform their work. Both see that Deliveroo only gives general instructions, but for one judge (in the FNV case), this is enough to establish control because the type of work does not require other instructions. The other judge that ruled that Deliveroo riders are self-employed found that these general rules are related to and necessary for the type of service Deliveroo is providing and that they do not indicate an employment relationship. The judge in the FNV ruling stressed that GPS control offers a possibility for Deliveroo to follow and monitor the riders.

One of the important aspects in such cases is whether or not the riders are required to use a certain uniform or a meal box and whether or not they have to operate under the logo of the platform. Through the Dutch cases, it is clear that Deliveroo has changed its strategy on this point, at least in the Netherlands. In the first ruling—July 2018—it was not clear whether the use of Deliveroo material was mandatory. In the second ruling—January 2019—it was clear that since Deliveroo stopped using employment contracts, they also no longer require riders to use their material. This change of strategy was not enough to convince the judge in the second case that there was no subordination. Indeed, there still might be strong incentives for the workers to use the uniforms and the meal boxes because of the convenience and the need to be recognizable as meal deliverers both in traffic and with consumers.

In sum, the Dutch test for employment status takes a holistic view: all the circumstances of the case need to be considered in relation to one another. The Supreme Court explicitly mentioned the social status of the parties as one of the circumstances that can be considered. In this context, the economic dependency of the worker in question plays an important role as well. In other words, the judge will often examine whether the worker truly and deliberately chose to be an independent contractor. However, not one factor is decisive in this test. The consequence of this holistic view is that very similar cases can have very different results. Courts can come to different conclusions even in cases where the same employer and the same type of work is concerned. This seems to be the result, at least in part, of differences in the importance given to different elements of the test to determine employment status.

*Nuna Zekic is Associate Professor at Tilburg University, Department of Labour Law and Social Policy.

Notes

  1. District Court Amsterdam 15 January 2019, ECLI:NL:RBAMS:2019:198.
  2. District Court Amsterdam 15 January 2019, ECLI:NL:RBAMS:2019:210.
  3. District Court Amsterdam 23 July 23 2018, ECLI:NL:RBAMS:2018:5183.
  4. Art. 7:610 BW.
  5. E.g., Willem H A C M Bouwens, Rogier A A Duk & Wim C L van der Grinten, Arbeidsovereenkomstenrecht 4 (2018).
  6. Dutch Supreme Court 14 November  1997, ECLI:NL:HR:1997:ZC2495 (Groen/Schroevers).
  7. Bouwens, supra note 6, at 11.
  8. Lian Köster & Wendy Smits, Tijdelijk Werk: Nederland in Europees Perspectief, in Dynamiek op de Nederlandse Arbeidsmarkt 129, 147-48 (2014); Arjan Heyma & Siemen van der Werff, De Sociaaleconomische Situatie van Langdurig Flexibele Werknemers, Seo Economish Onderzoek (2013).
  9. Jonneke Bolhaar, Arne Brouwers & Bas Scheer, De flexibele schil van de Nederlandse arbeidsmarkt, CPB Achtergronddocument (Nov. 17, 2016), available at https://www.cpb.nl/sites/default/files/omnidownload/CPB-Achtergronddocument-17nov2016-De-flexibele-schil-van-de-nederlandse-arbeidsmarkt-een-analyse-op-basis-van-microdata.pdf; Other documents report an increase from 16% in 2003 to 27% in 2017, Statistics Netherlands (CBS), Werkzame beroepsbevolking; positie in de werkkring (Mar. 14, 2019), available at https://statline.cbs.nl/StatWeb/publication/?DM=SLNL&PA=82646ned .
  10. Bolhaar, supra note 10.
  11. Köstersupra note 9;. see also Ronald Dekker, Doorstroom van Flexwerkers, ESB Arbeidsrecht 70, 70-73 (2012).
  12. Dutch Supreme Court supra note 7; Dutch Supreme Court 25 March 2011, ECLI:NL:HR:2011:BP3887 (Gouden Kooi).
  13. District Court Amsterdam 15 January 2019, ECLI:NL:RBAMS:2019:198, [21].
  14. Id. at 22.
  15. Id. at 25.
  16. Id. at 29.
  17. Id. at 31.
  18. Id. at 38.
  19. Art. 7:659 BW.
  20. Art. 7:404 BW.
  21. District Court Amsterdam supra note 2, at 54.
  22. Id. at 20.

 

Dispatch No. 16 – Spain –"The Next Spanish Labor Law Reform: The Spanish Government has Reached an Agreement with the Trade Unions—but not with the Employer Associations—to Soften Key Aspects of its Labor Law Reforms," by Adrián Todolí Signes*

April 6, 2019

I. Context of the Agreement

In June 2018, there was a change of government in Spain following a vote of no confidence in the president of the conservative Partido Popular. This vote of no confidence, lodged by Pedro Sánchez of the left-wing PSOE party, obtained the majority vote needed for him to become the president of the Spanish government. This circumstance is relevant to the analysis of the agreement for two reasons: i) to highlight the fact that this new government does not have four years to implement its electoral program but only the two remaining years of the term in office, which places it under pressure to demonstrate its capacity to change things with respect to the previous government that it replaced after the vote of no confidence; and ii) to point out that there are no new parliamentary majorities after an election, but instead that the change of government was made possible by the fact that some parliamentary parties that previously supported the conservative government now support the new one. This second point is of great importance since it implies that the new government is aware that, although it has the parliamentary backing it needs to govern, it may not have enough to pass certain measures affecting labor relations.

On the other hand, it must be noted that, in 2012, the previous conservative government passed a comprehensive labor reform package that modified many of the individual and collective rights of Spanish workers. This reform was criticized by the trade unions[1]—and by much of the doctrine[2]—for the following reasons: i) it weakened collective bargaining; ii) it increased the employer's capacity to unilaterally determine working conditions; iii) it increased the employer's ability to unilaterally modify working conditions without sufficient justification; iv) it facilitated collective dismissals without sufficient justification; v) it reduced the amount of compensation due for the unjustified dismissal of workers; vi) it increased the employer's capacity to unilaterally set working hours and overtime for workers; and vii) it increased fixed-term employment with the creation of new types of work contracts.

This reform was implemented unilaterally by the government, without reaching any agreement with trade unions or with employer associations but was applauded by the business confederation for introducing greater flexibility in labor relations.[3]


II. Matters Included in the Current Agreement between the Government and the Major Trade Unions

The agreement discussed here was approved on December 13, 2018 between the Spanish government and the main Spanish trade union confederations—CCOO and UGT. In it, the government undertakes to modify by legislative means the aspects that are considered—according to the government and trade unions—most detrimental for workers in the 2012 labor reform. However, the agreement does not specify a deadline for the amendment and neither does it state exactly what legal instrument will be used to implement the changes. The legislative modifications that have been proposed are the following:

  • 1) Re-introduce ultra-activity into collective bargaining agreements
  • 2) Establish priority in the application of the collective bargaining agreement of the sector over that of the company
  • 3) Oblige subcontractors to pay the same salary or apply the same collective agreement to their workers as the main company
  • 4) Establish the obligation for the company to record the effective working hours of its workers


A. Ultra-activity of Collective Bargaining Agreements

In Spain, this agreement remained in force in the part relating to employees' working conditions (ultra-activity of the collective bargaining agreement art. 86.3 ET) until the 2012 labor reform, when a fixed-term collective bargaining agreement came to an end. That is to say, even if a collective bargaining agreement with a term of three years had expired, it remained in force, as required by law, until there was a new agreement to replace it. The Spanish model of industrial relations entrusts the regulation of working conditions mostly to the collective bargaining agreements, while the Statute of Labor clearly plays a secondary role in regulating labor conditions. This is why, until the 2012 reform, it was understood that there was a need to guarantee the labor conditions of workers between the expiry of one collective agreement and the approval of the next one.

The 2012 reform, however, put an end to this ultra-activity by establishing that once the collective bargaining agreement expired it would only remain active for one additional year. This meant that employers only had to wait one year before being able to stop applying the working conditions guaranteed by the collective agreement. It also put trade unions under strong pressure to accept working conditions that were worse than those in the previous collective bargaining agreement.

Well, the first proposal of the new agreement between the trade unions and the government returns to the previous situation by re-introducing ultra-activity sine die into collective bargaining agreements; that is, the collective agreement remains in force until another agreement is approved to replace it.

B. Priority in the Application of the Sectoral Collective Agreement

In many European countries the issue of centralized and decentralized collective bargaining is the subject of much debate. Spain is no exception. Prior to the 2012 labor reform this debate was resolved by leaving the social partners to reach a decision as to which type of collective agreement had priority: the sectoral agreement or the company agreement.[4]

With the 2012 labor reform, however, priority in the application of the company agreement became mandatory.[5] In other words, trade unions and employer associations cannot, even by agreement, establish a priority other than that of the company agreement. This has led to the creation of many companies with their own agreements that establish wages well below those of the sector. Subcontracting has also increased, as some companies prefer to outsource part of their production to companies that have company agreements. It has also given rise to strong competition among companies based on low wages and not on the quality of their products and services.

This agreement aims to centralize collective bargaining again, leaving the priority in the application of the agreements up to the social partners.

C. Oblige Subcontractors to Pay the Same Salary or Apply the Same Collective Agreement to their Workers as the Main Company

Subcontracting and the decentralization of production have increased greatly in Spain in recent years. Many companies have dismissed workers and then immediately engaged the same services through a third company that pays those workers lower wages. This has meant that at present the decentralization of production is not being carried out due to reasons related to specialization (because the subcontractor company is a specialist in that field) or to the quality of the services provided by the third company, but instead the work is outsourced simply as a way to save labor costs.

The agreement between trade unions and the government proposes that the subcontractor company should pay its workers the same salary as the main company pays to its own workers. This regulation is similar to the one that already exists for Temporary Employment Agencies. Indeed, according to Directive 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on temporary agency work,[6] workers employed through a temporary agency have the same rights as workers in the main company.

The main difference between this regulation and the one proposed in the agreement is that the latter is not as ambitious. Thus, there is no principle of equal treatment between the employee of the main company and that of the subcontractor company, but only equal treatment in terms of pay. In short, the aim of both regulations is precisely to prevent subcontracting from being carried out with the sole purpose of saving labor costs.

D. Establish the Obligation for the Company to Record the Effective Working Hours of its Workers

This last point in the agreement aims to resolve a problem concerning unpaid overtime in Spain and of fraudulent conduct in part-time contracts. Indeed, in recent years, both the trade unions and also the labor inspection authorities have been reporting the existence of employees with part-time contracts who in fact work full-time. In this way, the company pays less tax and lower Social Security contributions, which eventually has a detrimental effect on the worker's retirement benefit.

Labor inspectors also complain that they do not have sufficient tools to address this kind of fraud. The proposal of the government and the trade unions is to oblige all companies to keep an effective record of the hours worked by employees. This would allow the inspector to check whether the employee has worked more hours than he or she should have done. This proposal has been taken up and accepted by the trade unions and incorporated into the agreement.

III. Conclusions

Firstly, it can be seen that much of the 2012 labor reform remains unchanged under this agreement. In fact, the agreement does not propose to increase the amount of compensation paid for dismissal of workers or to reduce the possibilities of the company legally carrying out collective dismissals with little justification. No modification is made concerning the existing possibilities of the employer unilaterally altering working conditions, and no effective formulas are put forward to reduce seasonality in Spain.

The second conclusion that can be drawn is that proposals for labor reform are being made that are not directly aimed at reversing the 2012 reform, although they do combat its detrimental effects on workers. This is the case, for example, of the negative effects that the 2012 reform caused in terms of flexible working hours in favor of the employer and abusive practices in the part-time engagement of workers.

The third conclusion that can be drawn is that the agreement does not specify a deadline for its approval. The government has undertaken the approval of these measures as soon as possible, but without setting a deadline. At present, the government must obtain sufficient parliamentary support to pass these reforms to which it has committed itself with the trade unions.

*Adrián Todolí Signes is Professor of Labor Law and Social Security at the University of Valencia. Licenciado en Economía y Derecho.

Notes

  1. Comisión Ejecutiva Confederal, Efectos de la Reforma Laboral  (Sept., 2013), http://www.ccoo.es/bffd07942760f1f51e6438e745df2e3f000001.pdf 2200112.
  2. Jesús Cruz Villalón, Impacto de las Reformas Laborales sobre la Negociación Colectiva, 120 Temas Laborales: Revista andaluza de Trabajo y Bienestar Social, 13-32 (2013) (Spain). Jesús Cruz Villalon, Efectos Incontrolados de la Reforma (El País, 2012), https://elpais.com/economia/2012/02/12/actualidad/1329009978_726310.html.
  3. José María Lacasa, La Reforma Laboral Desde el Punto de Vista Empresarial, 68 Boletin de Estudios Económicos 191-204 (2013) (Spain).
  4. The concept of priority refers to which agreement should be applied to an employee when there are two agreements in the same domain: one at a higher, multi-company level and the other within the company itself.
  5. This priority in the company agreement is limited to certain matters, which are listed in art. 82.3 ET. What happens is that this list includes the most important matters in a collective bargaining agreement, such as wages, which makes it practically an absolute priority. See Eva Lopez-Terrada & Adrián Todoli-Signes, El Convenio Colectivo de Empresa en Materia Salarial: Un Estudio sobre la Prioridad Aplicativa y sus Problemas Jurídicos, 7 Derecho de las Relaciones Laborales 743-753 (2015) (Spain).
  6. 2008 O.J. (L 104) 9.

 

Dispatch No. 15 – Iceland & Russia – "To Protect the Right to Strike or Not? The Question Before the European Court of Human Rights in app no 2451/16 Association of Academics v Iceland and app no 44873/09 Ognevenko v Russia, by Tonia Novitz*

March 29, 2019 

Introduction

In 2018 two differently constituted Chambers of the European Court of Human Rights (ECtHR) encountered two quite distinct cases that raised the question as to whether protection of the right to strike was required under Article 11 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR). 

The contrast between the cases and their outcomes seems stark. The first, Association of Academics v Iceland[1] concerned the extent to which the state can intervene in otherwise legitimate trade union activity in the context of a genuine industrial dispute within the health sector. Was legislative imposition of compulsory arbitration acceptable? To which the ECtHR provided an emphatic answer in the affirmative on the basis that the state’s conduct was not disproportionate and, in any case, comfortably fell within a wide margin of appreciation (as had already been stated by the Icelandic Supreme Court, which had balanced the relevant interests engaged here). There was no mention in the case of International Labour Organization (ILO) standards and the ECtHR drew heavily on the controversial findings of the ECtHR in National Union of Rail, Maritime and Transport Workers v UK.[2] The second case, Ognevenko v Russia[3] was not so much related to the collective rights of a trade union but the right to strike of an individual worker. In finding a breach of Article 11 of the ECHR, the majority judgment made extensive reference to “ILO principles concerning the right to strike,” which state that railway transport is not an essential service unless exceptional circumstances arise, regarding which the Russian state had provided no evidence. Accordingly, Russian legislation that restricted the train driver Ognevenko’s ability to take industrial action, ultimately leading to his dismissal, was not considered “necessary in a democratic society,” but rather disproportionate. Notably, it was observed that the Russian courts had no opportunity to engage in any balancing of relevant interests being required only to ensure formal compliance with the Russian legislation, which they had done emphatically. Pecuniary and nonpecuniary damages were therefore awarded in addition to costs and expenses.

It is suggested here that it is possible to reconcile the cases in a number of different ways. A mere juxtaposition of collective trade union versus individual worker rights seems unsatisfactory, but arguably does reveal a tension between two strands of ECtHR case law, which revert to the Court’s natural bias towards individual protections that have been the subject of critical comment. A more convenient explanation for the Council of Europe, seeking to uphold the consistency of ECtHR decisions, might be the very different scope for judicial balancing of public policy objectives in the two cases. Overall, however, I shall argue here that the approach taken by the Chamber of the Court in Ognevenko is preferable insofar as it makes detailed reference to the significance of ILO standards and supervisory findings. Moreover, it is just possible that Association of Academics could have been decided in the same way without recourse to a wide margin of appreciation, but rather with reference to health and safety concerns identified as relevant by ILO supervisory bodies.    

I. Two Strands of Case Law: Collective and Individual

There are arguably two significant strands of case law regarding the scope of the guarantee of freedom of association under Article 11 of the ECHR that relate to protection of the right to strike. Arguably, the unanimous Association of Academics case reflects the first of these regarding the claims that may legitimately be made by trade unions; while the majority judgment in Ognevenko reflects concern with protection of the individual worker as striker from criminal penalties and even disciplinary action by an employer, including dismissal. Arguably, the case law regarding the first strand of case law is less emphatically protective of a right to strike than the second. 

For some considerable period of time, neither collective bargaining nor the right to strike were considered to be rights necessary to the ability to form and join trade unions for the protection of workers’ interests, in accordance with the wording of Article 11(1).[4] However, the negative freedom of an individual worker not to belong to a trade union had been upheld.[5] That approach was revisited in the ECtHR Grand Chamber judgment in Demir and Baykara v Turkey,[6] which found (with reference to Turkey’s international commitments regarding ILO Conventions) that collective bargaining must be regarded as an essential element of freedom of association under the Convention. Moreover, the scope of limitations on the extent to which restrictions could be placed on collective bargaining by civil servants had to be determined by reference to ILO Conventions Nos 98 and 151, which indicated that a wide-ranging ban was inappropriate. That case was brought both by one of the union members and by the President of the union. This may have been a wise maneuver eliciting sympathy both for the individual and the collective entity simultaneously. Subsequently, the ways in which the cases were presented to the ECtHR meant that the two types of applicant tended to part company.

As regards the trade union applicant, hovering in the background to the Association of Academics case was the judgment in UNISON v UK, in which the ECtHR had found (as early as 2002), that the right to strike could be protected under Article 11(1) but was not to be regarded as an essential aspect of freedom of association. On the facts of that case concerning trade union resistance to privatization, interference with the union’s access to industrial action was, curiously, regarded as justified by reference to Article 11(2). That provision requires that any interference with freedom of association under Article 11(1) must be “prescribed by law and . . . necessary in a democratic society in the interests of national security or public safety, for the prevention of disorder or crime, for the protection of health or morals or for the protection of the rights and freedoms of others.” Special exclusions apply in respect of the armed forces, the police and “administration of the state.” In UNISON a wide margin of appreciation was applied, it being sufficient that the rights of others would be protected by the effective delivery of the health service. The observation was also made that there was “no immediate risk of detriment” to the workers in question, as they could take industrial action in the future when their terms and conditions were in fact threatened or downgraded.[7]

The case of Enerji Yapi-Yol Sen marked the first successful claim for interference with the right to strike under Article 11 on the basis of a circular published by the Prime Minister’s Public Service Staff Directorate which, inter alia, prohibited all public sector employees from taking part planned industrial action. The unequivocal nature of this instruction and the conclusion of ECtHR that it did not answer a “pressing social need” indicated disproportionate interference with the applicant union’s rights. However, in National Union of Rail, Maritime and Transport Workers (RMT) v the United Kingdom[8] there were echoes again of the UNISON approach, when the ECtHR stated that: “The Court does not . . . discern any need in the present case to determine whether the taking of industrial action should now be accorded the status of an essential element of the Article 11 guarantee.”[9] Moreover, the UK ban on secondary action at issue in that case had not prevented workers engaging in more limited collective bargaining and a strike, so that it was considered that there had not been sufficient interference with their rights under Article 11.[10]

Subsequently, there has been a more stringent assertion by the ECtHR in a case brought by a Croatian trade union that the strike is “the most powerful instrument to protect occupational interests of its members.”[11] Nevertheless, in the Association of Academics case the Chamber reverted to the position that: “So far the Court has not found that the taking of industrial action should be accorded the status of an essential element of the Article 11 guarantee,” although it is clear that strike action is protected by Article 11 as it is considered to be a part of trade union activity.[12] Moreover, the limited access to industrial action prior to the imposition of arbitration was treated as sufficient. That this did not “lead to the outcome desired by the union and its members does not mean that the exercise of their Article 11 rights is illusory. . . . Nor does the right to strike imply a right to prevail.”[13] On this basis, a broad margin of appreciation under Article 11(2) was deemed appropriate for the Icelandic state given the other interests at issue.[14]

By way of contrast, the approach of Ognevenko v Russia[15] chimes with a series of earlier Turkish cases concerned with the protection of individual striking workers. In Saime Özcan v Turkey[16]and Urcan v Turkey,[17] the ECtHR had found attempts to impose significant fines on striking secondary school teachers in the public sector to be in violation of their Article 11 rights. In Karacay v Turkey[18], Kaya and Seyhan v Turkey[19] and Çerikçi v Turkey,[20] a breach arose from disciplinary action taken against public servants who had each participated in industrial action. Civil suits brought by the Turkish government against toll booth operators for taking three hours industrial action were also found to constitute a breach of Article 11 in Dilek et al v Turkey.[21] These cases seem consistent with the concern expressed in Demir regarding wide-ranging constraints on collective bargaining in the state sector.[22] There has, however, been the apparently anomalous judgment of Trofimchuk v Ukraine,[23] where dismissal of a boiler plant operator was considered justified in the circumstances, but which has been regarded as at odds with a general trend towards individual protection of the human rights of workers before the Court.[24]

In Ognevenko the blanket ban on strikes by railway workers can be considered akin to the total Turkish prohibition on civil servant collective bargaining and industrial action, creating palpable personal injustice to the individuals affected. On this basis, the majority judgment emphasised previous findings that the right to strike was “one of the most important means” by which trade unions and their members could defend their interests and is accordingly protected under Article 11 ECHR.[25] The dismissal (a disciplinary sanction combined with an earlier transgression) therefore amounted to an interference with Ognevenko’s rights as “guaranteed” by Article 11.[26] This interference was “prescribed by law,” but not necessary in a democratic society under Article 11(2) as was evident from ILO and European Social Charter supervisory findings that railway transport is not an essential service, which could endanger the life or health of (a part of) the population.[27] Even if it were an essential service, it would need to be shown that this particular railway driver’s role was essential, given the stringency of the protection derived from Article 11.[28] Nor was any suitable alternative to an all-out ban considered by the state, when a “minimum service” could have provided an alternative form of restriction, indicating disproportionate interference.[29] Dismissal was regarded as a “severe penalty” that was unwarranted, as in the earlier Turkish cases cited in the concluding part of the majority judgment.[30] The only opposition came from the Russian Judge Dedov, staunchly defending his own national position with reference to the wider margin of appreciation given in the RMT judgment,[31] but he failed to persuade the other members of the Chamber. In this sense, the distinction between collective and individual protections seems to be borne out. However, there are other factors that would also seem to have been influential.

II. Deference to “Balancing” of Interests by National Courts

One relevant factor in both the judgments might be the extent to which national courts engaged with the same issues that are of concern to the ECtHR. A key factor in the Association of Academics case was said to be the capacity of the applicant to challenge the Icelandic legislation imposing arbitration before the Icelandic courts. The District Court of Reykjavik considered its legality with reference to Article 74 of the Icelandic Constitution alongside Iceland’s international obligations, including ILO Conventions. When the District Court found for the Icelandic state, appeal was made to the Supreme Court that upheld that judgment.[32] The care and attention to the findings of the courts in the judgment go beyond mere demonstration of exhaustion of remedies. Instead, it is considered pertinent that the Supreme Court “assessed the necessity of the impugned measures” and did so by evaluating “the situation in the hospitals and health care services affecting patient care due to the strike actions by looking at evidence . . . supported by statistical data.”[33] Moreover, the Supreme Court had taken into account the number of meetings conducted previously and the extent of the impasse between the parties.[34] It was in this context that the ECtHR cited again the RMT case to the effect that “although the process of collective bargaining and strike action did not lead to the outcome desired by the applicant’s member unions and their members, this does not mean that their Article 11 rights were illusory.”[35]

By way of contrast, in Ognevenko, Russian courts—in upholding the applicant’s dismissal—had applied legislation prohibiting participation in industrial action on public railways uncritically.[36] The ECtHR found on the facts that the courts’ finding that the applicant was covered by the ban set out in the legislation was neither “unreasonable or arbitrary” and could accordingly be regarded as being “prescribed by law.”[37] However, when considering the Ognevenko’s challenge to the dismissal, the national courts “had to confine their analysis to formal compliance with the relevant Russian laws and consequently could not balance the applicant’s freedom of association with competing public interests.”[38] This limitation combined with the failure of the Russian state to defend its policies seems to have contributed to the finding that there had been a breach of Article 11.

III. The Relevance of ILO Standards and Supervisory Findings

A last relevant factor for determination of these two cases may well be how ILO standards and supervisory findings influenced the ECtHR. The ILO Committee on Freedom of Association (CFA) and the Committee of Experts on the Application of Conventions and Recommendations (CEACR) have been instrumental in recognizing the right to strike as an entitlement flowing from membership of the ILO under its Constitution, and also arising under ILO Convention No. 87. On these bases, the right to strike is understood to be “one of the essential means through which workers and their organisations may promote and defend their economic and social interests.”[39] The ILO supervisory bodies have also elaborated on the legitimate exceptions to a right to strike, which include the entitlement to exclude protection of purely political strikes, but also strikes in “essential services.” Both the Association of Academics and Ognevenko cases concern an attempt by the state to limit strikes in what have been deemed “essential services.”

Controversy over the status of CEACR supervisory findings arose in the ILO, notably after the ECtHR judgments in Demir and Baykara and Enerji Yapi-Yol Sen and prior to the RMT case. The latter refers explicitly to the walkout by the employers’ group from the ILO Conference Committee on the Application of Standards (CCAS) in protest against CEACR observations and direct requests regarding the right to strike.[40] This conflict has, at least temporarily, been resolved by an agreement between the employers and workers group in the ILO endorsed by governments in 2015,[41] so that we might expect return to business as usual within the ECtHR.

Curiously, the judgment of Association of Academics reviews only established ECtHR case law and pays no attention to ILO standards, making only the following nod in that direction: “The degree of common ground between member States of the Council of Europe in relation to the issue arising in the case may also be relevant, as may any international consensus reflected in the apposite international instruments.”[42] This is curious, as ILO standards would have supported the Court’s finding, since ILO supervisory bodies have found it permissible to restrict strikes in essential services “the interruption of which would endanger the life, personal safety or health of the whole or part of the population.”[43] This would accord with the basis on which Association of Academics case is decided, namely the need to maintain health services placed under threat through industrial action.

By way of contrast, the Chamber majority judgment in Ognevenko makes explicit reference to various international human rights standards, including the International Covenant of Economic, Social and Cultural Rights and the European Social Charter, but more significantly (and at length) to “ILO principles concerning the right to strike” derived from the 5th revision of the CFA Digest of Decisions and CFA case law regarding Russia.[44] The reiteration of the CFA findings by the CEACR is also given explicit attention, namely “that the right to strike may be restricted only in respect of public servants exercising authority in the name of the State and in essential services in the strict sense of the term—that is to say services the interruption of which would endanger the life, personal safety or health of the whole or part of the population ” (the basis on which Association of Academics was ultimately decided).[45] Further, the ECtHR referred to the reminder issued by the CEACR to Russia that “railway transport did not constitute an essential service in the strict sense of the term” and that the CEACR “continues to request Russia to ensure that railway workers can exercise the right to strike.”[46] It was on this basis that it was found that while the right to strike is not absolute, exceptions must be “construed strictly” not impairing “the very essence of the right to organise.”[47] ILO supervisory criticism of Russian legislation,[48] ILO norms regarding use of “minimum services,”[49] and ILO concern with dismissal as a sanction,[50] all directed the majority of the Chamber in Ognevenko to finding a breach of Article 11.

Conclusion

Ognevenko then returns to recognition of the significance of ILO standards for the analysis of the ECtHR of compliance with Article 11, in a way that Association Academics could have done without the outcome of that decisions necessarily changing. We have yet to learn whether the apparent distinction between trade union and individual applicants will affect the preparedness of the Chambers of the ECtHR to adopt such an approach. It will also be interesting to see in future cases what influence internal constitutional review may have when compared with the consensus reached in international labor law through ILO standard setting and supervision. These need not and arguably should not be in tension when it comes to protection of freedom of association under Article 11. The Association of Academics case arguably indicates that they have the potential to be mutually reinforcing. However, that supposition has yet to be fully examined in the still inconsistent ECHR jurisprudence relating to the right to strike.

Tonia Novitz is Professor of Labour Law, University of Bristol, UK: tonia.novitz@bristol.ac.uk.

Notes

  1. Association of Academics v. Iceland, App. No. 2451/16, 67 Eur. H.R. Rep. SE4 (2018).
  2. National Union of Rail, Maritime and Transport Workers v. U.K., App. No. 31045/10, 2014-II Eur. Ct. H.R 336. See Alan Bogg & K.D. Ewing, The Implications of the RMT Case, 43 Indus. L.J. 221 (2014).
  3. Ognevenko v. Russia, App. No. 44873/09, Eur. Ct. H.R. (Nov. 20, 2018), https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-187732%22]}.
  4. See Swedish Engine Drivers' Union v. Sweden, App. No. 5614/72, 1 Eur. H.R. Rep. 617 (1976); Schmidt v. Sweden, App. No. 5589/72, 1 Eur. H.R. Rep. 632, para. 33–36 (discussed in Tonia Novitz, International and European Protection of the Right to Strike 225–31 (2003)).  
  5. Young, James and Webster v. U.K., App. No. 7601/76; 7806/77. 4 Eur. H.R. Rep. 38 (1982), confirmed in Søresnsen v. Denmark, App. No. 52562/99; 52620/99 (Jan. 11, 2006), https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-72015%22]}. See also Virginia Mantouvalou, Is There a Human Right Not to Be a Union Member? Labour Rights under the European Convention on Human Rights, in Human Rights at Work: Perspectives on Law and Regulation 439 (Colin Fenwick & Tonia Novitz, eds. 2010).
  6. Demir v. Turkey, App. No. 34503/97, Eur. Ct. H.R. (Nov. 12, 2008), https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-89558%22]}. See also K.D. Ewing & John Hendy, The Dramatic Implications of Demir and Baykara, 39 Indus. L.J. 2 (2010).
  7. UNISON v. U.K., App. No. 53574/99 (Feb. 10, 2002).
  8. See National Union of Rail, Maritime and Transport Workers v. U.K., App. No. 31045/10, 2014-II Eur. Ct. H.R 336.
  9. Id. para. 77, 84.
  10. Id. para. 85.
  11. Hrvatski Liječnički Sindikat v. Croatia, App. No. 36701/09, Eur. Ct. H.R. (Nov. 27, 2014), https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-148181%22]}, at para. 59. See also id. (De Albuquerque, J., concurring) for an extensive reference made by Judge de Albuquerque to ILO standards, at para. 3.  
  12. See Association of Academics v. Iceland, App. No. 2451/16, 67 Eur. H.R. Rep. SE4 (2018), at para. 24 (citing RMT Workers, App. No. 31045/10, 2014-II Eur. Ct. H.R 336, at para. 77).
  13. Id. (citing RMT Workers, App. No. 31045/10, 2014-II Eur. Ct. H.R 336, at para. 85); see also id. at para. 32.
  14. Id. para. 25.
  15. Ognevenko v. Russia, App. No. 44873/09, Eur. Ct. H.R. (Nov. 20, 2018), https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-187732%22]}.
  16. Saime Özcan v. Turkey, App. No. 22943/04, Eur. Ct. H.R. (Sept. 15, 2009), https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-93987%22]} (in French).
  17. Urcan v. Turkey, App. No. 23018/04, Eur. Ct. H.R. (July 17, 2008), definitive judgment Oct. 17, 2008, https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-87634%22]} (in French).
  18. Karaçay v. Turkey, App. No. 6615/03, Eur. Ct. H.R. (Mar. 27 2007), definitive judgment June 27, 2007, https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-79902%22]} (in French).
  19. Kaya v. Turkey, App. No. 30946/04, Eur. Ct. H.R. (Sept. 15, 2009), definitive judgement Dec. 15, 2009, https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-93993%22]} (in French).
  20. Çerikci v. Turkey, App. No. 33322/07, Eur. Ct. H.R. (Oct. 13, 2010), https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-99946%22]} (in French).
  21. Dilek v. Turkey, App. Nos. 74611/02, 26876/02,& 27628/02, Eur. Ct. H.R. (July 17, 2007), https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-81713%22]} (in French).
  22. Demir v. Turkey, App. No. 34503/97, Eur. Ct. H.R. (Nov. 12, 2008), https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-89558%22]}.
  23. Trofimchuk v. Ukraine, App. No. 4241/03, Eur. Ct. H.R. (Jan. 28, 2011), https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-101310%22]}.
  24. Filip Dorssemont, The Right to Take Collective Action under Article 11 ECHR, in The European Convention on Human Rights and the Employment Relation 359–65 (Filip Dorssemont et al., eds. 2013).
  25. See Ognevenko v. Russia, App. No. 44873/09, Eur. Ct. H.R. (Nov. 20, 2018), https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-187732%22]}, at paras. 56–57.
  26. Id. para. 62.
  27. Id. para. 72.
  28. Id. para. 73.
  29. Id. paras. 77–80.
  30. Id. para. 23.
  31. Id. (Dedov, J., disseting), at paras. 19–20.
  32. See Association of Academics v. Iceland, App. No. 2451/16, 67 Eur. H.R. Rep. SE4 (2018), at paras. 10–18.
  33. Id. para. 30.
  34. Id. paras. 31–34.
  35. Id. para. 32.
  36. See Ognevenko, App. No. 44873/09, at para. 40.
  37. Id. para. 65.
  38. Id. para. 82.
  39. Int’l Labor Org. (ILO), Freedom of Association: Digest of Decisions and Principles of the Freedom of Association Committee of the Governing Body of the ILO paras. 522–23 (5th ed. 2006) [hereinafter ILO, Digest]. See also Comm. of Experts on the Application of Conventions and Recommendations (CEACR), Freedom of Association and Collective Bargaining: General Survey 62 (1983); CEACR, Freedom of Association and Collective Bargaining 66 (1994). Note this is also reiterated in a new edition of ILO, Freedom of Association: Compilation of Decisions of the Committee on Freedom of Association para. 752 (6th ed., 2018) [hereinafter ILO, Compilation].
  40. Int’l Labor Conference, ILO, Conference Committee on the Application of Standards: Extracts from the Record of Proceedings No. 19/Part 1, 101st session (2012), discussed in Claire La Hovary, Showdown at the ILO? A Historical Perspective on the Employers’ Group’s 2012 Challenge to the Right to Strike, 42 Indus. L.J. 338 (2013); and Janice Bellace, The ILO and the Right to Strike, 153 Int’l Lab. Rev. 29 (2014). See also National Union of Rail, Maritime and Transport Workers v. U.K., App. No. 31045/10, 2014-II Eur. Ct. H.R 336, at para. 97.
  41. See Tripartite Meeting on the Freedom of Association and Protection of the Right to Organise Convention, ILO 1, 1–4 (Feb. 23-25, 2015), https://www.ilo.org/wcmsp5/groups/public/---ed_norm/---relconf/documents/meetingdocument/wcms_346764.pdf.
  42. Association of Academics v. Iceland, App. No. 2451/16, 67 Eur. H.R. Rep. SE4 (2018), at para. 25.
  43. ILO, Digest, supra note 39, at para. 578. In this scenario a minimum service may be appropriate which is proportionate. See id. paras. 607, 634. See also ILO, Compilation, supra note 39, at para. 816–23.
  44. Ognevenko v. Russia, App. No. 44873/09, Eur. Ct. H.R. (Nov. 20, 2018), https://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-187732%22]}, at paras. 19–21.
  45. Id. para. 22.
  46. Id. para. 23.
  47. Id. paras. 58–59.
  48. Id. para. 72.
  49. Id. para. 77 (citing ILO, Digest, supra note 39, at para. 621).
  50. Id. para. 83 (citing ILO, Digest, supra note 39, at para. 666).

 

Dispatch No. 14 – Greece – "Labor Law Reforms in Greece during the Eurozone Crisis: Here to Stay?",  by Nikolaos A. Papadopoulos

March 22, 2019

Introduction

Greece has formally exited its 3rd and last bailout program after having gone through hundreds of structural reforms, a major transformation of its labor market and labor law regime, and harsh societal consequences to adjust to the debt crisis. Nevertheless, most of the austerity measures are still in force and developments in that regard are still unclear. In fact, despite the reforms, no significant signs of progress towards the intended economic goals of “fighting unemployment and restoring competitiveness”[1] have been noted so far in Greece, as unemployment stands at the very high rates of 18.6% and at 36.6% for the young,[2] GDP growth remains subdued and fragile,[3] and the public debt still stands at the outstanding 176.1% of GDP.[4] It is important to note that in that regard, the third Greek MoU formally reached its end on the 20th of August 2018.[5] However, as announced by Eurogroup[6] and the European Commission,[7] Greece has now entered a post-Memorandum Enhanced Surveillance Procedure[8] that is considered even stricter than that of other countries that have exited similar programs.[9] In that context, there is a governmental commitment to continue structural reforms in certain areas including the labor market, and to keep untouched and not reverse the reforms that have been implemented with the previous memoranda—at least until 2022 (principle of irreversibility).[10]

This study goes back to the events that marked the Greek labor law regime during the crisis by reviewing the rich academic literature on the topic aims to shed light at the rather complicated issue of the implications of austerity on labor law, and to stimulate a further debate on future postcrisis prospects. In particular, it briefly examines the precrisis Greek labor market and labor law regime, identifies the main individual and collective labor law reforms undertaken to address the crisis, and concludes with critical remarks.

I. The Precrisis Labor Market and Labor Law Regime in Greece

In order to understand the content and the significance of the labor law reforms that were implemented during the crisis in Greece, analyzed in the next sub-chapter, it is important to show initially a general image of Greece’s precrisis labor market and labor law regime. Greece’s labor market and institutional arrangements before the crisis (since 1990) were similar to other south-European countries such as Italy, Spain, and Portugal, which were showing high self-employment and informal work rates, low part-time/flexible work and unemployment rates among prime-age and older workers, and pronounced labor market segmentation along various lines.[11] The national system of industrial relations was centralized and highly characterized by a conflict between industrial relations and social movements[12] (which, nevertheless, declined due to the EU integration), lack of social dialogue, and by state intervention in wage and labor standards setting as well as high employment protection (constitutional and legislative), but weak enforcement of legal mechanisms.

An important piece of labor legislation before the crisis was Law 1876/1990, which set the general framework for collective bargaining and industrial relations, rendering them stable but increasingly decentralized and involving a complex interaction between different sources of labor rights.[13] Its aim was to limit the state’s intervention by promoting the constitutionally protected collective autonomy of social partners[14] through a multilevel system of collective agreements between them, each with different applicability.[15] As a result, the social partners and not the state were responsible for setting the working conditions and the minimum wage laid down in the national general collective agreement and applied throughout Greece to all persons (in the private sector), whether they were trade union members or not. In addition, employers and employees could improve those standards with agreements at occupational or sectoral level, which also could be made compulsorily applicable to all workers by the Minister of Labor under certain conditions. Crucial in that context was also the principle of favorability (Günstigkeitsprinzip or principe de faveur), according to which any provision more favorable to the worker included in a collective agreement prevails over conflicting legislative provisions and any more favorable provision set in an individual contract prevails over one set in a collective agreement. What is more, a lower level collective agreement could prevail over a higher one if it entails more favorable provisions. Finally, there was a possibility under specific conditions of extending the application of collective agreements also to nonsignatories companies by the Minister of Labor even after their expiration. It was also possible to have unilateral recourse to mediation-arbitration resulting in a private law act fully equivalent to a collective agreement in case of an industrial conflict concerning any issue that could be regulated in a collective agreement.

II. Labor Law Reforms During the Crisis

The main statutes that implemented the three MoUs in the Greek legal order and bring changes to the existing labor law regime are the following: ss regards the first MoU, acts 3845/2010, 3846/2010, 3863/2010, 3899/2010, 3985/2011, 3986/2011, and 4024/2011 were adopted by the Greek Parliament. As regards the second MoU, acts 4046/2012 and Cabinet Decision 6/28.2.2012, 4093/2012, and 4111/2013 were adopted, and finally as regards the third MoU, acts 4334/2015, 4335/2015, 4336/2015 and 4472/2017 were adopted. It is important to note that in that regard, the labor market reform provisions laid down in the three Greek MoUs are so significantly detailed that the framework laws seem to translate them automatically into domestic statutory provisions[16] by qualifying them as “absolute rules of direct application.”[17] In the pages that follow, the primary—and most important for the purposes of this study—Greek labor law reforms will be briefly presented.

III. Individual Labor Law

These abovementioned statutes outline the direction of the reforms regarding individual labor law with changes made to a wide variety of areas. Primarily, dismissals were facilitated by drastically reducing the notification period and consequently severance pay up to 50%,[18] and increasing the necessary thresholds also facilitated collective redundancies. Subsequently, flexible forms of employment were fostered e.g. by increasing the maximum duration of fixed-term contracts from 12 to 36 months including renewals,[19] or by the vast use of the unilaterally imposed work rotation[20] and of a 12-month fixed-term employment contract that was a result of the increase from 2 to 12 months of the probationary period of a contract, under which dismissal is allowed without previous notice or severance pay.[21] In addition, new possibilities for determining working time arrangements were created and decreases in overtime work remuneration were established.[22] It also should be noted, that considerable emphasis was given to changes regarding lower remuneration and minimum monthly and daily wage levels of young people between 15-24 years of age[23] by, for example, excluding them from the scope of the national collective agreement and generally binding provisions concerning minimum wage and working conditions.[24] Finally, the national minimum wage, as well as the monthly salaries of all public-sector employees was reduced, including premiums and bonuses,[25] while job positions in the public sector were abolished or suppressed.[26]

IV. Collective Labor Law

As regards collective labor law, all the provisions of act 1876/1990 discussed above were found to be deficient for fulfilling the economic purposes of the MoUs. The aim of the first MoU’s measures was to create a more flexible (but still strong) collective bargaining system and to transfer the wage setting closer to company-level. However, that changed significantly after the adoption of the second MoU, which totally altered the policy direction by imposing an immediate realignment of the (significantly reduced[27]) minimum wage level through statutory law[28] (and later through Decision of the Ministry of Labor with the consent of the Cabinet Council[29]) resulting in strong debate in academia and among the social partners considering the constitutional protection of collective autonomy[30] (discussed in the previous sub-chapter). More specifically, the conclusion of company-level collective agreements was stipulated by being given priority over sectoral ones even if they contain clauses less favorable to the employees and by suspending the possibility of extending sectoral and occupational agreements. Thus, the principle of favorability in case of conflicting provisions of sectoral and company-level collective agreements was abandoned.[31] In addition, company level agreements were also facilitated when the number of employees is less than ten. Another important development was the establishment of “associations of persons,” an ad hoc collective representation body alternative to the trade union. It was given the right to bargain working conditions and conclude company-level collective agreements with the employer containing clauses that may deviate from the applicable sectoral agreement, even in a less favorable way, as long as the body represents three fifths of the company staff and there is no trade union legally capable to bargain such an agreement.[32] As regards the previously discussed existing possibility of administratively extending sectoral and occupational collective agreements to nonsignatory companies, that was suspended, resulting in employers leaving the organization in which they were affiliated with and thus opting out from the binding effect of the sectoral agreement since only the members of the signatory organizations are bound by it unless extended.[33] Additionally, unilateral recourse to mediation-arbitration was eliminated and was replaced by the need for the consent of both parties, while drastic restrictions were set at the scope of the procedure,[34] (only as regards basic monthly or daily wage) including economic and financial considerations. Finally, with the adoption of the third Memorandum, any return to the previous system of act 1976/1990 was legislatively excluded and any new legislative initiative of the government must abide by the “best EU practices”[35] and the creditors’ agreement.[36]

V. Concluding remarks

These significant developments in labor law and industrial relations in Greece have been described to be “unique and exceptional”[37] among Europe, although at the same time they have been deemed also an aspect of Europeanization of labor markets and wage setting institutions and procedures[38] through the implementation of Economic Adjustment Programs (included in Council Decisions on the basis of article 126 TFEU) that promote the transfer of decision-making on labor law from the national to the supranational level.[39] However, the EU lacks the exclusive competence to have an impact on Member states’ labor law systems[40] and specifically on areas of wage and pay levels and setting, trade union rights, collective bargaining, and the right to strike.[41] In addition, serious doubts have been raised in academia also about the feasibility of such a policy direction considering the different labor traditions and systems of EU countries and the constant internal devaluation (wage reductions and high wage flexibility). The latter has been used as an alternative to currency devaluation (reduction of value of exchange rate),[42] which is not a choice for Eurozone countries due to their participation in the EU’s Economic and Monetary Union. Against that background, austerity-based labor law reforms in Greece seem to be driven more by ideology than pragmatism with emphasis being given more to flexibility than security,[43] which is unlikely to restore the competitiveness of the Greek economy since it disregards the specificities and path-dependencies of the Greek model resulting in a dysfunctional liberal market economy.[44]

To sum up, the steps taken initially before the full onset of the crisis seemed to be consistent with the protective function of labor law,[45] however the situation changed dramatically, leading to a transformation of Greek individual and collective labor law as the crisis was expanding and to a new labor law paradigm in line with the new EU economic governance.[46] Specifically, the main principles and foundations of Greek labor law and its protective function were abandoned resulting in a neoliberal[47] shift towards civil law—the law on contracts and in commodification of labor without collective constraints and in the employer’s favor, raising serious questions about the reforms’ conformity with supranational and national fundamental rights protection standards.[48] Thus, it remains to be seen whether the recent postmemorandum policy actions and intentions of the Greek government such as the ministerial decision extending four sectoral collective labour agreements,[49] the restoration of collective bargaining, and the potential increase of minimum wage[50] will receive the appreciation of the Commission, and whether they will be accompanied by other measures sufficiently addressing the above-described situation and to what extent. In the meantime, the public debt remains high and the creditors’ pressing “recipe” of implementing austerity reforms still prevails in the EU.

* Nikolaos Papadopoulos is a PhD Candidate at the Department of International and European Law of Maastricht University: nikos.papadopoulos@maastrichtuniversity.nl 

Notes

  1. Hellenic Parliament, Memorandum of Understanding on Specific Economic Policy Conditionality (2012), https://www.hellenicparliament.gr/UserFiles/c8827c35-4399-4fbb-8ea6-aebdc768f4f7/18_ΠΑΡΑΡΤΗΜΑ_V_2_ΑΓΓ_MoU_ΚΑΤΑΘΕΣΗ%20ΒΟΥΛΗ_10-2-2012[1].pdf (accessed Dec. 22, 2018).
  2. Press Release, Hellenic Statistical Authority, Labor Force Survey: November 2018 (Dec. 6, 2018).
  3. Giorgos Argitis & Nasos Koratzanis, August 2018: New Challenges for EU, Uncertain Prospects for Greece (2018).
  4. Press Release, Hellenic Statistical Authority, Fiscal Data for the Years 2014-2017 (Oct. 22, 2018).
  5. Press Release, European Stability Mechanism, Greece Successfully Concludes ESM Programme (Aug. 20, 2018).
  6. Press Release, Council of the EU, Eurogroup Statement on Greece of 22 June 2018 (June 22, 2018).
  7. Press Release, European Commission, Commission Supports Normalisation in Greece Through Activation of Post-Programme Framework (July 11, 2018); Press Release, Commission Supports Normalisation in Greece Through Activation of Post-Programme Framework – Questions and Answers (July 11, 2018).
  8. Regulation 472/2013, of the European Parliament and of the Council of 21 May 2013 on the Strengthening of Economic and Budgetary Surveillance of Member States in the Euro Area Experiencing or Threatened with Serious Difficulties with Respect to their Financial Stability, 2013 O.J. (L 140).
  9. E.g., review missions every three months instead of six. For the latest review mission of November 21, 2018 see European Commission, Enhanced Surveillance Report (Nov. 2018), available at https://ec.europa.eu/info/sites/info/files/economy-finance/ip090_en.pdf.
  10. “Hot” Eurogroup for Installment, Surveillance and Debt, EFSYN (June 21, 2018), http://www.efsyn.gr/arthro/kayto-eurogroup-gia-dosi-epopteia-kai-hreos; Austerity and Debt, EFSYN (May 7, 2018), http://www.efsyn.gr/arthro/litotita-kai-hreos (last visited Dec. 22, 2018).
  11. Maria Karamessini, The Southern European Social Model: Changes and Continuities in Recent Decades (2007).
  12. Christos A. Ioannou, Recasting Greek Industrial Relations: Internal Devaluation in Light of the Economic Crisis and European Integration, 28(2) Int’l J. Comp. Lab. L. Indus. Rel. 204 (2012).
  13. Eftychia Achtsioglou & Michael Doherty, There Must Be Some Way Out of Here: The Crisis, Labour Rights and Member States in the Eye of the Storm, 20(2) Eur. L. J. 221 (2013).
  14. Collective autonomy is the right of workers’ and employers’ representative bodies to negotiate collectively, and to define jointly, the terms and conditions of employment, as well as to resort to arbitration in the event that negotiations fail. See article 22(2) of Greek Constitution which prohibits State intervention in the bargaining procedure and in the content of collective agreements and arbitration awards. 1975 Syntagma [Syn.] [Constitution] 22(2) (Greece).
  15. Aristea Koukiadaki & Chara Kokkinou., Deconstructing the Greek System of Industrial Relations 22(3) Eur. J. Indus. Rel. 208 (2016).
  16. Achtsioglou & Doherty, supra note 3 at 226.
  17. Nomos (2012: 4046) Énkrisi ton Schedíon Symváseon Chrimatodotikís Diefkólynsis metaxý tou Evropaïkoú Tameíou Chrimatopistotikís Statherótitas (E.T.CH.S.), tis Ellinikís Dimokratías kai tis Trápezas tis Elládos, tou Schedíou tou Mnimoníou Synennóisis metaxý tis Ellinikís Dimokratías, tis Evropaïkís Epitropís kai tis Trápezas tis Elládos kai álles epeígouses diatáxeis gia ti meíosi tou dimosíou chréous kai ti diásosi tis ethnikís oikonomías [Approval of the Draft Financing Facility Schemes between the European Financial Stability Facility (EFSF), the Hellenic Republic and the Bank of Greece, the Draft Memorandum of Understanding between the Hellenic Republic, the European Commission and the Bank of Greece and Other Urgent Provisions to Reduce Public Debt and Rescue the National Economy], Ephemeris tes Kyverneseos tes Hellenikes Demokratias [E.K.E.D.], 2012, A:1 (Greece).
  18. Nomos (2010: 3863) Nómos Yp'Arithm. 3863: Néo Asfalistikó Sýstima kai synafeís diatáxeis, rythmíseis stis ergasiakés schéseis [Law No. 3863 of 2010 Concerning the New Social Security System], Ephemeris tes Kyverneseos tes Hellenikes Demokratias [E.K.E.D.], 2010, A:115 (Greece).
  19. Nomos (2010: 3899) Επείγοντα μέτρα εφαρμογής του προγράμματος στήριξης της Ελληνικής Οικονομίας [Urgent Measures for the Implementation of the Green Economy Support Program], Ephemeris tes Kyverneseos tes Hellenikes Demokratias [E.K.E.D.], 2010, A:212 (Greece).
  20. Unilaterally imposed work rotation was established before the crisis by Act 2639/1998 but was not commonly used by employers. Nomos (1998: 2639) Rýthmisi ergasiakón schéseon, sýstasi Sómatos Epitheórisis Ergasías kai álles diatáxeis [Establishment of Industrial Relations, Establishment of a Labor Inspectorate and Other Provisions], Ephemeris tes Kyverneseos tes Hellenikes Demokratias [E.K.E.D.], 1998, A:205 (Greece).
  21. See supra note 18 and 19.
  22. Supra note 18.
  23. Nomos (2012: 4093) Nómos arith. 4093/2012 gia tin énkrisi tis mesopróthesmis dimosionomikís stratigikís 2013-2016 kai ti théspisi éktakton métron efarmogís tou nómou arith. 4046/2012 kai tis mesopróthesmis dimosionomikís stratigikís 2013-2016 [Law N°4093/2012 Approving the Medium-Term Fiscal Strategy 2013-2016 and Introducing Emergency Measures Implementing Law N° 4046/2012 and the Medium-Term Fiscal Strategy 2013-2016], Ephemeris tes Kyverneseos tes Hellenikes Demokratias [E.K.E.D.], 2012, A:222 (Greece).
  24. For a detailed analysis of the labour law reforms’ implications on young people see Matina Yannakourou & Georgios Tsatiris, Youth and Labour Law in the Context of Financial Crisis, 74(10) Epitheorissi Ergatikou Dikaiou, 1245-1265 (2015) (Greece).
  25. Nomos (2010: 3833) Prostasía Tis Ethnikís Oikonomías - Epeígonta Métra Gia Tin Antimetópisi Tis Dimosionomikís Krísis [Protection of the National Economy - Emergency Measures to Tackle the Financial Crisis], Ephemeris tes Kyverneseos tes Hellenikes Demokratias [E.K.E.D.], 2010, A:40 (Greece); Nomos (2010: 3845) Métra gia tin efarmogí tou michanismoú stírixis tis ellinikís oikonomías apó ta kráti-méli tis Zónis tou evró kai to Diethnés Nomismatikó Tameío [Measures for the Implementation of the Support Mechanism of the Greek Economy by the Member States of the Euro Area and the International Monetary Fund], Ephemeris tes Kyverneseos tes Hellenikes Demokratias [E.K.E.D.], 2010, A:65 (Greece); Nomos (2011: 4024) Nómos Arith. 4024 Tou 2011 Schetiká Me Ta Thémata Syntáxeon Gíratos, Enopoiiménou Misthologikoú Systímatos - Sýstima Taxinómisis, Apothematiká Apaschólisis Kai Álles Diatáxeis Schetiká Me To Mesopróthesmo Plaísio Tis Dimosionomikís Stratigikís 2012-2015 [Law No. 4024 of 2011 Concerning Issues of Retirement Pensions, of Unified Wage System - Grading System, Employment Reserves and Other Provisions Concerning the Mid-Term Framework of Fiscal Strategy 2012-2015], Ephemeris tes Kyverneseos tes Hellenikes Demokratias [E.K.E.D.], 2011, A:226 (Greece).
  26. E.g., by the transfer of employees to other public-sector services or by the establishment of “labour reserves.” See Costas Papadimitriou, The Greek Labour Law Face to the Crisis: A Dangerous Passage Towards a New Juridical Nature 12-13 (Eur. Lab. L. Network Working Paper No. 3, 2013).
  27. Nomos (2012: 4046) Énkrisi Ton Schedíon Symváseon Chrimatodotikís Diefkólynsis Metaxý Tou Evropaïkoú Tameíou Chrimatopistotikís Statherótitas (E.T.CH.S.), Tis Ellinikís Dimokratías Kai Tis Trápezas Tis Elládos, Tou Schedíou Tou Mnimoníou Synennóisis Metaxý Tis Ellinikís Dimokratías, Tis Evropaïkís Epitropís Kai Tis Trápezas Tis Elládos Kai Álles Epeígouses Diatáxeis Gia Ti Meíosi Tou Dimosíou Chréous Kai Ti Diásosi Tis Ethnikís Oikonomías [Approval of the Draft Financing Facility Schemes between the European Financial Stability Facility (EFSF), the Hellenic Republic and the Bank of Greece, the Draft Memorandum of Understanding between the Hellenic Republic, the European Commission and the Bank of Greece and other Urgent Provisions to Reduce Public Debt and Rescue the National Economy], Ephemeris tes Kyverneseos tes Hellenikes Demokratias [E.K.E.D.], 2012, A:28 (Greece); Board of Ministers’ Act 6/2012.
  28. Supra note 23; See Matina Yannakourou & Chronis Tsimpoukis, Flexibility Without Security and Deconstruction of Collective Bargaining: The New Paradigm of Labor Law in Greece, 35(3) Comp. Lab. L. Pol’y J. 353 (2014).
  29. Nomos (2013: 4172) Forología Eisodímatos, Epeígonta Métra Efarmogís Tou N. 4046/2012, Tou N. 4093/2012 Kai Tou N. 4127/2013 Kai Álles Diatáxeis [Income tax, Emergency Measures Implementing Law 4046/2012, Law 4093/2012 and Law 4127/2013 and other Provisions], Ephemeris tes Kyverneseos tes Hellenikes Demokratias [E.K.E.D.], 2013, A:167 (Greece).
  30. [30] See Aris Kazakos, Collective Labour Law (Athens-Thessaloniki: Sakkoulas Publications 3rd ed. 2013); supra note 18 at 356.
  31. Nomos (2011: 4024) Nómos Arith. 4024 Tou 2011 Schetiká Me Ta Thémata Syntáxeon Gíratos, Enopoiiménou Misthologikoú Systímatos - Sýstima Taxinómisis, Apothematiká Apaschólisis Kai Álles Diatáxeis Schetiká Me To Mesopróthesmo Plaísio Tis Dimosionomikís Stratigikís 2012-2015 [Law No. 4024 of 2011 Concerning Issues of Retirement Pensions, of Unified Wage System - Grading System, Employment Reserves and Other Provisions Concerning the Mid-Term Framework of Fiscal Strategy 2012-2015], Ephemeris tes Kyverneseos tes Hellenikes Demokratias [E.K.E.D.], 2011, A:226 (Greece); In accordance with Act 4472/2017 this measure is still today applicable despite the criticism and the government’s reassurances about its temporality. Nomos (2017: 4472) Syntaxiodotikés Diatáxeis Dimosíou Kai Tropopoíisi Diatáxeon Tou N. 4387/2016, Métra Efarmogís Ton Dimosionomikón Stóchon Kai Metarrythmíseon, Métra Koinonikís Stírixis Kai Ergasiakés Rythmíseis, Mesopróthesmo Plaísio Dimosionomikís Stratigikís 2018-2021 Kai Loipés Diatáxeis [Public Pension Provision and Amendment of the Provisions of Law 4387/2016, Measures for the Implementation of Fiscal Targets and Reforms, Social Support Measures and Working Arrangements, Medium-Term Financial Strategy Framework 2018-2021 and other Provisions], Ephemeris tes Kyverneseos tes Hellenikes Demokratias [E.K.E.D.], 2017, A:74 (Greece).
  32. Id.
  33. Id.
  34. Supra note 18; supra note 19.
  35. European Commission Press Release 375/17, Eurogroup Statement on Greece (June 15, 2017).
  36. Aris Kazakos, Collective Autonomy in the Vice of Internal Devaluation Policy, 76(2) Epitheorissi Ergatikou Dikaiou, 209 (2017).
  37. Council of the European Union, Statement by the Heads of State or Government of the Euro Area and EU Institutions (July 21, 2011); Manos Matsaganis, The Welfare State and the Crisis: The Case of Greece, 21 J. Eur. Soc. Pol’y 502 (2011).
  38. Ioannou, supra note 12 at 221.
  39. Simon Deakin & Aristea Koukiadaki, The Sovereign Debt Crisis and the Evolution of Labour Law in Europe in Resocialising Europe in a Time of Crisis 176 (Nicola Countouris & Mark Freedland eds., 2013).
  40. See Consolidated Version of the Treaty on the Functioning of the European Union art. 153, May 9, 2008, 2008 O.J. (C 115) 47, 114-116 [hereinafter TFEU].
  41. See Ioannou, supra note 12 at 214-215; Joanna Pagones, The European Union’s Response to the Sovereign Debt Crisis: Its Effect on Labor Relations in Greece, 36 Fordham In’l L. J. 1517, 1548 (2013); Kostas Chrysogonos & Anastasios Pavlopoulos, The Memorandum as Circumvention of European Union Law, 73 Epitheorissi Ergatikou Dikaiou 381 (2014) (Greece).
  42. See Robert Mundells, A Theory of Optimal Currency Areas, 51 Am. Econ. Rev. 657-665 (1961).
  43. Sotirios Zartaloudis & Andreas Kornelakis, Flexicurity between Europeanization and Varieties of Capitalism? A Comparative Analysis of Employment Protection Reforms in Portugal and Greece, 55 J. Common Mkt. Stud. 1-2 (2017); Manos Matsaganis, The Greek Crisis: Social Impact and Policy Responses, 30, 35 (2013). This is considered problematic since flexicurity is the central element of the EU Employment Strategy. For a critique of flexicurity during the crisis see Astrid Sanders, The Changing Face of 'Flexicurity' in Times of Austerity? in Resocialising Europe in a Time of Crisis (Nicola Countouris & Mark Freedland eds., 2013).
  44. Andreas Kornelakis & Horen Voskeritsian, The Transformation of Employment Regulation in Greece: Towards a Dysfunctional Liberal Market Economy? 69(2) Relations Industrielles 359 (2014).
  45. Papadimitriou, supra note 26 at 4.
  46. Yannakourou & Tsimpoukis, supra note 28 at 369.
  47. Colin Crouch, Entrenching Neo-Liberalism: the Current Agenda of European Social Policy, in 44 Resocialising Europe in a Time of Crisis (Nicola Countouris & Mark Freedland eds., 2013).
  48. See in that regard the decisions of the European Committee of Social Rights in Collective Complaints. Complaint No. 66/2011, General Federation of Employees of the National Electric Power Corporation (GENOP-DEI) and Confederation of Greek Civil Servants’ Trade Unions (ADEDY) v. Greece (May 23, 2012); Complaint No. 111/2014, Greek General Confederation of Labour (GSEE) v. Greece (March 23, 2017).
  49. Efi Achtsioglou Signs for Extension of Four Collective Labour Agreements, The Greek Observer, http://thegreekobserver.com/politics/article/48198/efi-achtsioglou-signs-for-extension-of-four-collective-labour-agreements/ (last visited on June 11, 2018).
  50. Greece to Get New Minimum Wage in 2019 - October 23, 2018, Wage Indicator, https://wageindicator.org/salary/minimum-wage/minimum-wages-news/greece-to-get-new-minimum-wage-in-2019-october-23-2018-1 (last visited on June 11, 2018).

 

Dispatch No. 13 – Italy – “With great power comes virtual freedom’: A Review of the First Italian Case Holding that (Food-delivery) Platform Workers are not Employees,” by Antonio Aloisi*

December 3, 2018

Introduction

While platform work is on the rise at a global level, attracting intense media attention and provoking considerable discussion among social partners, academics, and international organizations[[1]], there are only a few reported European court cases on the employment status of workers—a key controversial issue inherent to this phenomenon. Concomitantly, current social institutions seem to be under pressure: the heated debate revolves around the scope of application of employment protection and its suitability and adaptability in the midst of the ongoing digital transformation. On the one side, existing legal categories are deemed unable to accommodate tech-enabled organizational patterns and their “nonstandard” qualities, and on the other, “disruption” and “innovation” come at a high price for workers. Indeed, several “titans” are gaining their competitive advantage thanks to an aggressive (paradigmatic) mode of business based on avoiding the vast bulk of labor-related responsibilities whilst retaining a command-and-control position toward the contracted-out workforce.

Nevertheless, over the last years, tribunals and public bodies—in the wake of labor lawyers and advocates—have played an active role in raising public awareness on employment and working conditions in nonstandard arrangements facilitated by digital infrastructure (mainly apps)[[2]]. At the European level, the preliminary judicial results are mixed or even truly contradictory. Admittedly, it would be imprudent to generalize specific conclusions, as they are fact-dependent, let alone the heterogeneity of conditions across different types of platform work. In a few cases, the legal disputes lean toward the recognition of an employment relationship. On the contrary, more often they have resulted in the rejection of platform workers’ claims because of the supposed freedom they enjoy in deciding if and when to turn on the app and complete a task or project. This argument seems far from persuasive and, above all, it does not consider the formidable and even boundless advances of digital tools when it comes to organizing and vetting workers[[3]].

The first Italian ruling has long been awaited for various reasons, including the possibility of assessing both the enduring legacy of settled case law and the relevance of a new provision introduced by the 2015 labor market reform that, according to prudent interpretations, could extend labor protections to self-employed workers whose personal activity is organized by a client[[4]]. Yet, last April, the Employment Tribunal of Turin rejected a claim from six riders of the platform Foodora to be reclassified as employees. More recently, the Employment Tribunal of Milan made a similar decision for a delivery courier working for the platform Glovo and using his own car[[5]]. The importance of these rulings goes beyond the specific situations at stake, since they touch on the judicial interpretation of the notion of employment for the purposes of Italian labor law. This review mainly covers the Foodora case, which presents the greatest hermeneutical complications, but to a certain extent similar considerations are valid as regards the second case.

The dispatch is organized as follows. Section I describes the main facts underlying the legal dispute. Section II offers a context analysis of the Italian legal framework by clarifying the differences between the notions of employment and self-employment. Particular attention is paid to the most recent legislative interventions aimed at extending labor protections to independent workers whose personal activity is organized by the client. By arguing that the judge failed to consider the specificities of the digital work model, section III criticizes the reasoning relying on a too-narrow and formalistic understanding of the notion of subordination as well as the conclusive relevance attributed to the riders’ presumed flexibility. Section IV closes by summarizing the main rulings decided in a set of European countries. It also provides some reflections on the possibility of applying the current legislation to platform worker. In sum, the dispatch advocates that, in order to properly classify the nature of the actual activity performed by platform workers, judges should assess the role of digital tools when it comes to organizing, monitoring, and disciplining the workforce, rather than merely focusing on discontinuity and flexibility.

I. A Snapshot of the Main Facts under Scrutiny, According to the Judge’s Description

The facts underlying the first litigation on platform work ever decided in Italy were briefly outlined by the judge[[6]], who specifically refused to consider the appropriateness of the agreed remuneration, the risk of labor exploitation and “the other complex issues concerning the gig-economy.” The Italian branch of Foodora hired six riders under a “coordinated and continuous collaboration” contract (a subcategory of the self-employment model, as discussed in more detail below). The contract expired and was not renewed by the platform at the end of November 2016. The group of workers filed an employment claim demanding: (i) wage differentials according to either the national collective agreement for logistics or that of the service sector; (ii) job reinstatement after the wrongful termination; (iii) compensation for the harm suffered as a result of the infringement of privacy; and (iv) actions for damages for breach of safety and health regulations. They also alleged they were dismissed as a form of retaliation against their decision to lead or take part in a collective demonstration against the shift in the payment system from an hourly-based to a piece-rate model, announced in October 2016.

According to the judge’s assessment (the case also involved witness examination), after filing an online form, the six riders attended a preliminary interview where middle managers clarified that a bicycle and a smartphone with Internet access were required for the work and requested a deposit of € 50 of their riders for safety devices such as helmets, fluorescent jackets, and a lunchbox. The appellants voluntarily signed a “collaborazione coordinata e continuative”[[7]] pre-formulated standard contract according to which “the worker shall be free to apply or not apply for a specific delivery depending on her or his personal availability” (p. 4). The gross hourly pay was € 5.60. The workers had to enroll in a separate social security regime and were covered by insurance paid for by the platform (only two-thirds of the premium). Moreover, the contract stipulated that, “the necessary coordination aside, the worker shall not be subject to any hierarchic or disciplinary power or time and availability obligation to the platform.” Despite that, once the order was accepted, the worker had to deliver the meal “mandatorily” within thirty minutes of collection—a penalty of € 15 would otherwise apply.

Slots were assigned through an online scheduling software (named “Shyftplan”) and an app downloaded on the worker’s smartphone (“Hurrier,” previously “Urban Ninjia”). At the beginning of every week, the platform published a list of available shifts and the relevant number of riders needed. Having collected the personal preferences, a Foodora team leader confirmed the shift allocation. Based on the agreed calendar, the workers wearing the company’s branded clothes had to reach one of the “hotspot areas,” turn on the app with their own credentials, log into it, and activate the geo-localization widget. The app displayed orders and location. Once accepted, the rider had to reach the restaurant, pick up the order, check it, and notify the result via the app (in the event of any cancellation, the rider had to send a message to the support staff). After that, informed of the details concerning the exact address and location, the rider had to deliver the meal to the final customer and send confirmation of the completed drop. Admittedly, this format of service provision is commonly found in the food-delivery (sub)sector.

II. The Normative Background (an “All-or-Nothing” Scenario), the Case-by-Case Approach and the “Jobs Act” Reform(s)

Before reviewing the judicial reasoning, it is worth sketching out the Italian system where there exists a fundamental strict binary divide between employment (lavoratore subordinato) and self-employment (lavoratore autonomo), reinforced by the recent legislative interventions. Although in a civil law system, the discretion enjoyed by the Employment Tribunals as regards the assessment—and the subsequent qualification—of a work relationship is remarkable. Tribunals normally base their rulings on evidence, irrespective of how the parties classify a given contractual relationship. For the purposes of the distinction between the two categories, the way that tasks are structured and accomplished is crucial. The “primacy of facts” is established as a general principle according to which substance must prevail over form, i.e. the label placed on the relationship is a factor in the judicial outcome, but it is certainly not the most important one[[8]]. Moreover, neither the legislature nor the contractual parties can classify a relationship in order to exclude the protective regime attached to its actual nature (according to the principle of “non-availability of the legal regime”).

Article 2094 of the Civil Code defines a subordinate employee as “a person bound, in return for a remuneration, to cooperate in the firm by providing either physical or intellectual labour, under the direction of the entrepreneur.” The key element of the employment relationship is the worker’s personal subjection to the command, organizational, and disciplinary powers of the employer (for example, the ability to modify the content of the contractual relationship unilaterally, to monitor performance execution and to implement sanctions in case of failure to comply with guidelines)[[9]]. More specifically, managerial power—whatever the means used to exercise it—and protective obligations are hallmarks of employment status, together with a complementary trade-off: employees have to follow their employers’ orders in exchange for economic stability and legal security[[10]]. Understandably, this legal template allows for the implementation of a hierarchical structure, enabling the employer to implement flexible strategies in the use of the labor force in such a way as to cope with changing organizational needs.

A variety of doctrines have been developed to ensure that the law qualifies a relationship according to the realities of the situation. A ruling could disregard or override the contractual label that the parties choose when the substance of the work relationship contains legal indications of subordination and if the level of dependence is such that in reality the relationship is one of employment. Because of the complexity and diversity of the process, case law developed a wide spectrum of “symptomatic” factors that could suggest the existence of an employment relationship “by approximation.” The so-called “typological” test (i.e. a balanced assessment) covers a range of complementary and accessory “indexes” such as (i) the requirement that the worker follows reasonable work rules or even nonspecific guidance; (ii) the length of the relationship and its continuous nature; (iii) the respect of set working hours; (iv) the form of remuneration (i.e. a fixed monthly salary); (v) integration with the employer’s core business; (vi) the absence of risk of loss related to the business. The analysis is multifactorial and no single factor is dispositive.

On a different note, article 2222 of the Civil Code provides for the definition of a contract for services (“contratto d’opera”) under which “a self-employed worker performs work or services in exchange for remuneration mainly through her own effort and in the absence of a relationship of subordination vis-à-vis the principal.” However, more than forty years ago, the Italian legislator has introduced a subset of the self-employment category, which has been mistakenly considered an intermediate category. Act No. 533 of 1973 modified article 409 sub-section 3 of the Code of Civil Procedure by declaring the legislation concerning the settlement of labor disputes applicable to commercial agents and to all “contractual relations implying a continuous performance of work, mainly of a personal character, although not in a position of subordination” (collaborazione coordinata e continuativa, the so-called Co.Co.Co.). As a result, some protection was extended to a tranche of self-employed workers (“quasi-subordinate worker,” lavoratori parasubordinati). Hiring these employees is substantially cheaper than hiring an employee who is entitled to substantive labor rights such as annual leave, sick leave, maternity leave, overtime, and job security against unfair dismissal[[11]].

After a permanent process of legislative intervention[[12]], the ultimate result is a return to the binary distinction of employee and self-employed workers. In particular, article 2 of Legislative Decree 81 of the 2015 Jobs Act reform has meritoriously extended employment protection to workers whose performance is organised by the client, also as regards place and working hours[[13]]. This new provision, applicable only when the performance displays a purely personal and continuous nature, has given rise to conflicting interpretations and criticism of its unfortunate wording[[14]]. Despite that, it could provide for an easing of the burden of proof[[15]]. In 2017, the legislature further amended the article governing (genuine) coordinated and continuous collaborations whose scope is now limited to “collaborators organis[ing] the work activity independently, in accordance with the coordination arrangements mutually agreed by the parties.” In short, if job performance is organized by the principal, the collaborator must be treated as an employee, if the work is organized autonomously, although in coordination with the client, then the activity is outside the domain of labor law.

III. The Judges’ Narrow Interpretation of the Notion of Subordination: An Inadequate Solution to the Long-Lasting Dilemma

At first glance, the judge in the commented Foodora case relied on a very narrow understanding of the notion of subordination, “defined as the worker’s subjection to managerial, organisational and disciplinary powers, resulting from specific orders given [by the employer] as well as to a constant surveillance and monitoring over the performance execution”[[16]]. Dissimilarly, alternative case law acknowledges that workers could have a considerable amount of autonomy—granted by general directives—yet they still could be classified as employees. It must be said that case law has moved toward a “soft” notion of subordination in order to bring both creative and complex as well as menial and repetitive activities under the protective scope of employment status[[17]]. Yet the judge fully subscribed to a traditional approach based on a continuous and detailed notion of control (an analogic version of this power), without even exploring alternative and pluralistic conceptualizations[[18]]. In this regard, it should be recalled that the European Commission’s Communication on the agenda for the collaborative economy stresses that “[t]he existence of subordination is not necessarily dependent on the actual exercise of management or supervision on a continuous basis”[[19]].

Moreover, it is striking how the examination was limited to a merely formalistic analysis (“there was no obligation the workers offer their services and no obligation for the company to provide further work”). Nothing is said on the subtle or implicit forms of constraint affecting the worker’s will. The metrics on availability, time-to-respond, and success rate, not to mention the erratic evaluation outsourced to customers, might impact on a rider’s personal career and determine whether the worker will be assigned the selected shifts in the future and will receive further orders. Therefore, it could be said that the implicit threat of unspecified consequences, together with the inevitability of following the platform’s guidelines, makes workers compliant with “tacit binding instructions,” thus minimizing their autonomy. There can be little doubt that platforms monitor, admonish, or even terminate workers for failing to meet internally set standards, “in [a] form . . . that far exceeds the level of supervision experienced by most traditional employees”[[20]]. Hence, the supposed autonomy could be, in a way, merely virtual. Moreover, technically speaking, riders are free because the platforms can rely on an almost infinite range of “fungible” workers, promptly recruited thanks to near zero transaction costs.

In spite of this strict definition of command-and-control, the judge emphasized a factor bearing little or no relation to it. By relying on a previous interpretation developed in the context of a misclassification lawsuit filed by a motorcycle messenger (known as “pony express”) in the late 1980s (a broadly comparable, but not identical situation, also in the light of the nondigital organization of that business)[[21]], the judge claimed that “subordination is at odds with the possibility for a worker to interrupt the performance”[[22]]. In short, the Tribunal stated that the workers were free to decide when to work, by accepting or refusing a particular call, and even to disregard previously agreed shifts. In the eyes of the judge, this instantiation is “in itself, a decisive factor when it comes to excluding the workers’ subjection to the managerial and organisational power of the employer, since it is evident that, if [the platform] cannot request work, then it cannot exercise its command power” (p. 7). After this “cursory assessment,”[[23]] the judge scrutinized the existence of managerial and disciplinary prerogatives, “once workers are in a shift, after communicating their availability,” but without success, in spite of the allocation of shifts, the specification of locations, the repeated follow-up phone calls, the remote monitoring, and the internal ranking of the best performers.

This section concludes by focusing on the restrictive interpretation given to art. 2 of Legislative Decree 81/2015. As argued above, the 2015 reform marked a paradigm shift: instead of amending or rewording traditional definitions, the protective effects of employment status were “attached” to a specific group of collaborators—nominally independent—whose personal activity is unilaterally organized by the principal (a criterion based on space-temporal coordination). According to preliminary comments, the new regulatory tactic could have captured atypical arrangements facilitated or, even better, organized via a digital infrastructure[[24]]. However, these new provisions are much-debated in relation to their effectiveness in “updating” the scope of employment. Nevertheless, only by way of “obiter dictum,” the judicial interpretation goes even further, thus neglecting the expressed intention of the law-maker as well as the text of the law and its systematic interpretation[[25]]. It is indeed contradictory that the requirements to be met in order for a worker to qualify for the protection traditionally afforded to employees are even stricter than the ones defining the status of employment[[26]].

IV. The Italian Rulings in a Comparative Perspective: Discussing the Way Forward

The strong intermingling of old and new legal challenges constitutes the underlying reason why the gig economy has attracted so much interest in recent times. Roughly speaking, across Europe the “qualifying dilemma” has been dealt with in two conflicting ways. In June a ruling by the Valencia court stated that Deliveroo’s riders are employees because they are subject to tight control by the platform monitoring their delivery rides, with GPS features, and to the laying down of the main terms and conditions, including prices[[27]]. Last March, a Belgian administrative commission came to similar conclusions[[28]]. Conversely, in 2017 the Paris Court of Appeals held that a Deliveroo courier could not be reclassified as an employee because he was free to select his shifts, in addition to refusing to work without any consequences[[29]]. Two other British cases involving drivers and couriers respectively were decided in the opposite way. The first, dating back to 2016, has placed Uber drivers in an intermediate category entitled to minimum wage and working time protection. By fully upholding the Employment Tribunal’s findings[[30]], the Employment Appeal Tribunal argued that the platform exercised significant control over how drivers performed their work[[31]]. On the contrary, an administrative committee[[32]] and a High Court denied food-delivery workers statutory collective labor rights by virtue of a clause, allowing them to be replaced by other colleagues, purposely introduced and hardly practicable.

As emerges from this case note, the judge in Turin decided the case by looking at the rear-view mirror. The ruling uncritically embraces the case law considered crucial for the determination of employment, of whether workers are free to decide their time schedule. In the search for a legal precedent, the judge applied the same reasoning made thirty years ago for delivery couriers on mopeds, even though technological progress and the regulatory framework have taken significant steps forward. He renounced investigating in depth the impact that the digital transformation is having on employment relationships, specifically in the last mile logistics sector. He argued that elements such as working conditions determined by the platform, the indication of the places where and precise time limit within which the deliveries must be completed, the frequent monitoring activity through the GPS feature must be considered “defining patterns of the business model, rather than distinctive elements of the nature of the relationship” (p. 11), arguably a strong legal argument[[33]]. Still, the Foodora case is a squandered opportunity to apply to platform work a provision of the Jobs Act, seeking to extend employment protection to workers who are only nominally independent without too much upheaval. “[A]s [art. 2 of Legislative Decree 81/2015] is worded, it has a narrower scope than the notion of employment” (p. 14), as disputed by the judge, but this puzzling reading would appear to violate the spirit, if not the letter, of the new law.

At the time of writing, several remarkable initiatives have been taken, namely a new national collective agreement regulating the job position of the “rider” in the logistics sector, the draft of a new legislative decree proposed by the Labour and Industry Minister (this project was abandoned), and a number of local efforts carried out by municipalities, workers’ representatives, spontaneous movements and food delivery platforms[[34]]. However, in many cases, the delimitation of the “border areas” of the employment and self-employment statuses has regularly posed insurmountable difficulties. In Italy, as well as in other European countries, ascertaining employment status is not merely a dogmatic issue, as is pivotal to determine the scope of workers’ protection. Therefore, it is important to interpret the quintessence of the notion of subordination as a legal subjection to the managerial control and disciplinary authority of the employer. To this extent, the flexibility of workers to refuse individual calls does not preclude the existence of unilateral management or reinforced surveillance[[35]], nor does it justify the exclusion of nonstandard workers from labor protection[[36]]. In addition to this, a more in-depth examination of working conditions could instead lead to different solutions. Indeed, despite the seeming novelty of the medium, the hierarchical or, at least, organizational power over platform workers might be robust at times when performance is executed, as illustrated by the case at hand.

* Antonio Aloisi, Ph.D., is a Max Weber Postdoctoral Fellow in the Law Department at the European University Institute and Teaching Fellow in European Social Law at Bocconi University: antonio.aloisi@eui.eu

 Notes

  1. For most recent contributions see, for instance, Willem Pieter de Groen et al., Employment and Working Conditions of Selected Types of Platform Work, Eurofound (2018); Janine Berg et al., Digital Labour Platforms and the Future of Work: Towards Decent Work in the Online World, International Labour Office (2018).
  2. Notably, the European Court of Justice reveals expressly the Uber business model: “[the platform] influence[s] . . .  the conditions under which that service is provided by those drivers. On the latter point, it appears, inter alia, that Uber determines at least the maximum fare by means of the eponymous application, that the company receives that amount from the client before paying part of it to the nonprofessional driver of the vehicle, and that it exercises a certain control over the quality of the vehicles, the drivers and their conduct, which can, in some circumstances, result in their exclusion.” The Court took the view that the service provided by the platform was more than a matching activity connecting, by means of a digital app, a nonprofessional driver with a private individual wishing to make “urban journeys.” It is important to stress the fact that the Advocate General’s Opinion refrains from addressing the crucial issue of worker classification, denying that the intrusive control is “exercised in the context of a traditional employer-employee relationship.” See Case C-434/15, Asociación Profesional Elite Taxi v. Uber Systems, ECLI:EU:C:2017:981 (Dec. 20, 2017) (Spain).
  3. For a preliminary mapping exercise, see Valerio De Stefano, Platform Work and Labour Protection. Flexibility Is Not Enough, Regulating for Globalization (May 23, 2018), https://goo.gl/w6Ujai.
  4. Annamaria Donini, Il Lavoro su Piattaforma Digitale ‘Prende Forma’ Tra Autonomia e Subordinazione. Nuove Regole per Nuovi Lavori?, 26 Diritto delle Relazioni Industriali, 164, 164-67 (2016).
  5. Tribunale di Milano, 10 settembre 2018, n. 1853.
  6. Tribunale di Torino, 11 aprile 2018, n. 778.
  7. Literally “coordinated and continuous collaboration.”
  8. See also International Labour Organisation, R198 - Employment Relationship Recommendation (2006). For a detailed guide, see International  Labour Organisation, Regulating the Employment Relationship in Europe: A Guide to Recommendation No 198 (2013).
  9. See, for instance, Cass., 29 novembre 2007, n. 24903 (It.) (“the principal element of an employment contract—and the criterion that distinguishes it from a self-employment contract—is subordination, understood as a link of personal subjection to the power of direction”). See also Cass., 13 maggio 2004, n. 9151 (It.); Cass., 11 maggio 2005, n. 9894 (on the notion of “hetero-organisation”). For a complete overview, see Luca Nogler, The Concept of ‘Subordination’ in European and Comparative Law (Università degli Studi di Tre ed. 2009).
  10. Jeremias Prassl,, Collective Voice in the Platform Economy: Challenges, Opportunities, Solutions, Syndicat European Trade Union (Sept. 2018), https://goo.gl/L3x2R6.
  11. See Miriam Cherry & Antonio Aloisi, Dependent Contractors in the Gig Economy: a Comparative Approach, 66 Am. U. L. Rev. 635, 635-89 (2017).
  12. Id.
  13. However, collective agreements may lead to opt-out from labor law regulation.
  14. Tosi Paolo. (2015), L’art 2, Comma 1. D.lgs. n. 81/2015: Una Norma Apparente?, 6 Argomenti di Diritto del Lavoro 1117, 1117-133; Fiorella Lunardon, Le Reti D’impresa e le Piattaforme Digitali della Sharing Economy, 2 Argomenti di Diritto del Lavoro 375, 375-88 (2018).
  15. The elements that should be considered are: (i) a purely personal nature of the activity and (ii) the organisation of the performance by the client (a criterion based on space-temporal coordination). If that is the case, the application of employment protection legislation is “automatic.”
  16. Cass., 8 febbraio2010, n. 2728 (It.) as mentioned in Tribunale di Torino, supra note 6, at  6.
  17. This was done by taking into account accessory indexes such as “general guidance merely indicating an objective which requires subsequent implementing actions” or the “integration into the employer’s core business.”
  18. Maurizio Del Conte& Orsola Razzolini, La Gig Economy alla Prova del Giudice: la Difficile Reinterpretazione della Fattispecie e Degli Indici Denotativi, 40 Giornale di Diritto del Lavoro e di Relazioni Industriali 673, 673-82 (2018); Giuseppe Recchia, Gig Economy e Dilemmi Qualificatori: La Prima Sentenza Italiana, 7 Il Lavoro nella Giurisprudenza 721-34 (2018).
  19. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, “A European agenda for the collaborative economy.” See A European Agenda for the Collaborative Economy, SWD (2016) 184 final, June 2, 2016, at 12 (referring to Danosa (C-232/09)). See also Antonio Aloisi, The role of European Institutions in Promoting Decent Work in the Collaborative Economy, in  Multi-disciplinary Design of Sharing Services 161 (Maurizio Bruglieri ed., 2018).
  20. Elizabeth Kennedy. (2016), Employed by an Algorithm: Labor Rights in the On-Demand Economy, 40 Seattle U. L. Rev.,,987, 987-1048 (2016).
  21. Cass., 10 Luglio 1991, n. 7608, in 1 Rivista Italiana di Diritto del Lavoro (RIDL) 1, 103 (1992); Cass., 20 January 2011, n. 1238, in RFI, 2011, No. 721. On the contrary, Cass., 21 Marzo1989, in 2 FI ¶ 462. See Marco Biasi, Il Tribunale di Torino e la Qualificazione dei Riders di Foodora, 4/5 Argomenti di Diritto del Lavoro (forthcoming Novermber 2018).
  22. The Tribunal of Milan and the highest judicial authority, Corte di Cassazione, agreed that the worker was independent. See Tribunale di Milano, 10 Ottobre 1987, in 2 Rivista italiana di diritto del lavoro 688 (1987) (“[t]he work, performed by the courier assigned to pick up and delivery by using the own vehicle, has not to be considered ‘subordinate,’ in the absence of the crucial requirement of continuity. Those workers are not required to appear every day at the workplace and the can refuse to complete the performance”). See also Cass., 14 aprile 1989, n. 5671 (It.).
  23. Del Conte et al., supra note 18.
  24. Antonio Aloisi, Il Lavoro ‘a Chiamata’ e le Piattaforme Online Della Collaborative Economy: Nozioni e Tipi Legali in Cerca di Tutele, 2 Labour & Law Issues 16, 16-56 (2016).
  25. Pietro Ichino, Subordinazione, Autonomia e Protezione del Lavoro Nella Gig-economy, 2 Rivista Italiana di Diritto del Lavoro 294, 294-303 (2018).
  26. In particular, the judge argued that, in order to qualify for the protection afforded by art. 2 of the Legislative Decree 81/2015, the worker “must be subject to the [fully-fledged] managerial and organisational power of the employerand not only as regards the time and space requirements” (p. 14). See Patrizia Tullini, La Qualificazione Giuridica dei Rapporti di Lavoro dei ‘Gig-workers’: Nuove Pronunce e Vecchi Approcci Metodologici, 1 Lavoro, Diritti, Europa 1, 1-9.
  27. See CGPJ 1 June 2018, Roj: SJSO 1482/2018, ECLI: ES:JSO:2018:1482 (Spain).
  28. Commission Administrative de Règlement de la Relation de Travail, 18 JLMB 857, 857-65 (2018) (Belg.).
  29. As in the Italian case, it emerged that nonresponses and absences did not result in disciplinary sanctions. Other factors taken into account were the autonomous organisation as regards time and space, the absence of exclusivity clauses and noncompete agreements. See Cour d’appel [CA] [regional court of appeal] Paris, chambre 2, pôle 6 Nov. 9, 2017, pôle 6, n. 16/12875.
  30. Aslam v. Uber, [2016] (E.T)  2202551/2015 (U.K.).
  31. Uber v. Aslam, [2017] (E.A.T) UKEAT/0056/17/DA.
  32. Independent Workers’ Union of Great Britain v RooFoods Ltd, [2016] (C.A.C)  TUR1/985.
  33. Elena Gramano, Dalla Eterodirezione alla Eteroganizzazione e Ritorno. Un Commento alla Sentenza Foodora, Labor, Il Lavoro nel Diritto (Forthcoming 2018).
  34. Willem Pieter de Groen et al., supra note 1.
  35. Valentina Cagnin, Gig-economy e la Questione Qualificatoria dei Qig-workers: Uno Sguardo Oltre Confine, in Lavoro Autonomo e Capitalismo delle Piattaforme 31 (Adalberto Perulli  ed., 2018).
  36. Benjamin Sachs,  Enough with the Flexibility Trope, On Labor (May 15, 2018), https://onlabor.org/enough-with-the-flexibility-trope/.

 

Dispatch No. 12 – Italy – “Whistleblower protection in Italy: an employment law perspective on a controversial brand-new legislative intervention,” by Giovanni Gaudio*

September 2, 2018

Definitions and rationales

This dispatch will analyze the legal issues regarding whistleblowing in Italy, where the law has not extensively regulated it for years, until the legislative intervention by Law No. 179, 30 November 2017.

According to a widely accepted definition among scholars, whistleblowers are “organization members (including former members and job applicants) who disclose illegal, immoral, or illegitimate practices (including omissions) under the control of their employers, to persons or organizations who may be able to effect action.”[1] To the extent of this brief comment, it is useful to draw a few distinctions among different types of whistleblowing. Namely, the basic classification that will be used in this dispatch distinguishes various kinds of whistleblowing depending on the nature of the employer, i.e. private versus public employers, and the recipients of the reporting, i.e. internal versus external whistleblowing.

As a general remark about the scope of this brief dispatch, it will only cover the regulation applicable to private employers, although the abovementioned Law has provided a brand new legal framework on this matter for both public and private employers. Moreover, it will focus only on, among organization members, employee whistleblowers.

I. The Traditional Absence of any Whistleblowing Regulation in Italy and the Role Played by Case Law in Protecting Whistleblowers

The main reason why many legislators, first in Anglo-Celtic countries, started to introduce specific regulations in this respect has traditionally been in order to offer protection to the whistleblower against retaliation by the employer, i.e. dismissal, demotion or any other change in employment conditions that may be detrimental for who blew the whistle. This has become a hot topic for employment lawyers, since it is critical to understand the legal implications with regard to safeguarding the position of the whistleblowers within the organization of the employer.

While the very first regulations regarding whistleblowing were introduced in the United States,[2] this legislative model has traditionally remained largely foreign to European countries, with the sole exception of the United Kingdom.[3]

This has also been true in Italy, where there was a lack of specific legislation until very recently. The causes of this legislative inertia can be attributable to both Italians’ cultural background and Italian employment laws. On the one hand, the poor attention paid to whistleblowing can be ascribed to sociological reasons, due to the fact that in Italy “there is a widespread feeling . . . of collusion and code of silence, that leads to consider the whistleblower a spy, an informer, reporting exclusively for its personal interest.”[4] On the other hand, when drawing a comparison between Italy and the United States, there has not traditionally been a legal need to protect employees from an at-will dismissal in Italy, as it would be traditionally possible under U.S. law, because whistleblowers are already safeguarded by existing employment laws.

In this respect, Italian case law has traditionally deemed that the protection of whistleblowers against retaliation falls within the scope of the right to criticize others, which is a specification of the freedom of expression generally safeguarded by both Article 21 of the Italian Constitution and Article 1 of the Italian Workers’ Statute. Consequently, if an employer dismisses an employee because he/she blew the whistle, this will be considered a retaliatory action taken by the employer, who shall be condemned to reinstate the relevant employee.[5] In these cases, the burden of proof lies solely on the employee.

However, the right to criticize others must be balanced with the employee’s duty of loyalty and confidentiality provided for by Article 2105 of the Italian Civil Code. Accordingly, the whistleblowing shall be considered as a protected form of freedom of expression provided that the relevant information is true, its communication has been measured, and the content of the information is of an interest worthy of protection. Otherwise, the employee breaches the duty of loyalty and, as such, will be exposed to well-grounded disciplinary sanctions; in the most serious cases, this may result in dismissal. Thus, Italian case law uses a sort of proportionality analysis in weighing the whistleblower’s right to report against conflicting interests.

As a result, it was argued that a legislative intervention to protect whistleblowers against retaliation was not needed because Italian law already provided for appropriate remedies in this respect.[6] On the contrary, a specific legislation would have been appropriate in order to regulate other critical issues not covered by Italian employment laws, such as the safeguard of the whistleblower’s anonymity or confidentiality, and the protection of the right of defense of the alleged author of the misconduct.[7]

In lack of any specific legal provisions, these issues, as well as the implementation of institutional internal channels to report the wrongdoings, have been left to the unilateral decision of employers, above all Anglo-Celtic multinational companies who have transplanted their codes of conduct and/or internal policies in Italy.[8]

II. Legislative Intervention in the Private Sector

With the exclusion of certain sectoral legislative provisions aimed at banks, financial institutions, and antimoney laundering that transposed EU Directives in recent years, there has been a lack of ad-hoc intervention in the private sector until recently.

However, this legislative inertia has not hindered private employers from unilaterally providing for systems to facilitate voluntary internal reporting and encourage it within broader strategies of corporate social responsibility. These systems have often been implemented by Italian employers within the scope of Legislative Decree No. 231, 8 June 2001, which regulates the administrative liability of corporate entities resulting from the commission of certain crimes. In order to avoid being held responsible before the criminal Courts, the relevant companies may establish appropriate organizational models and set up a supervisory body known as the Organismo di Vigilanza. Although these provisions did not expressly provide protection for neither the whistleblower nor the alleged author of the misconduct, many employers started to introduce internal ad-hoc procedures, allowing employees to report wrongdoings to the Organismo di Vigilanza or to other bodies or individuals in charge, de facto partially filling the normative gap. These procedures are aimed at guaranteeing the effectiveness of the organizational models so that companies may decrease the likelihood of being held responsible for the commission of crimes within their organizations.

Within this broader context, Law No. 179, 30 November 2017 has recently amended Article 6 of Legislative Decree 8 June 2001, No. 231.

As a preliminary remark, it should be noted that this system is not a mandatory generalized one, as the legislator has introduced it within the organizational models, which are by definition optional legal tools.

This piece of legislation generally provides for institutional systems of internal whistleblowing, since the organizational models shall introduce channels through which the employee can report wrongdoings. However, the only types of misconduct that fall within the scope of this provision are the ones that are relevant pursuant to Legislative Decree 8 June 2001, No. 231, i.e. specific crimes hereby enumerated and violations of the organizational models. As for the internal channels, at least one of them has to be implemented through IT systems and they must guarantee the confidentiality of the identity of the discloser. No external channels are expressly provided, although the law specifies that, if a discriminatory measure is adopted against the whistleblower, the latter and the trade unions can report such fact to the labor inspectorate. In addition, the discloser cannot be the subject of any direct or indirect retaliatory measure connected to the content of the whistleblowing, which will be considered as null and void. Moreover, the customary allocation of the burden of proof has been reversed, as it is the employer who must demonstrate that any discriminatory or retaliatory action was not grounded on the content of the whistleblowing. Lastly, the organizational models must provide for disciplinary sanctions against both those who do not respect the anti-retaliation protections for the whistleblower and those, who intentionally or by serious negligence, make unfounded reports.

Moreover, the same Law provides for certain revisions to the criteria to balance between the right to criticize others and the duty of loyalty and confidentiality. In particular, the interest worthy of protection of the information revealed prevails over the duty of loyalty and confidentiality when the information is disclosed by the whistleblower using the channels provided by the abovementioned Law.

III. Points of transnational interest and final remarks

Law No. 179, 30 November 2017 is the most important attempt of the Italian legislator to deal with the phenomenon of whistleblowing and tries to regulate it with the primary goal of guaranteeing the protection of the informant.

As a preliminary comment, it should be pointed out that the law does not provide for a generally applicable protection of the informers for two important reasons. First, it only applies to those private employers that implement the organizational models pursuant to Legislative Decree 8 June 2001, No. 231, which are not mandatory legal tools. Second, the definition of wrongdoings is particularly narrow, as it is limited to certain crimes and/or the violations of the relevant organizational models. As a result, in all other cases, the protection of the whistleblower is still left to the general principles developed by the case law highlighted above.

From a policy perspective, the intention of the legislator was to implement a culture of legality in the workplace in a country where, for cultural reasons, a whistleblower is often seen as a spy. In this respect, transplanting this legal tool in Italy is a step in the right direction, also considering that blowing the whistle was almost an unknown option for Italian employees. Therefore, the mere fact that the law expressly introduces antiretaliation protections may reverse this social perspective, encouraging individuals in the workplace to start reporting wrongdoings and changing organizational cultures by persuading employees that reporting may have a positive impact on their organization and society as a whole.

In addition, the legislative intervention is also legally significant to the extent that it institutionalizes ex ante specific channels and procedures to report misconduct, which must be implemented with  view to guarantee confidentiality in relation to the identity of the whistleblower. In fact, it has often been pointed out that this kind of provision may be effective in incentivizing employees to speak up when they uncover illegitimate practices within the workplace.[9]

Nevertheless, the same conclusion cannot be reached from a technical standpoint. First, the law specifies that the discloser cannot be the subject of any retaliatory measure connected to the content of the whistleblowing, thus transplanting in Italy a rule that has been central in other jurisdictions like the United States. However, this legislative intervention seems to be an example of poor comparison. In particular, this point was already undisputed in the Italian case law outlined above and, as a result, this provision does not seem to add anything to the existing legal framework.[10]

Similar conclusions can be reached with reference to the change in the customary allocation of the burden of proof, according to which it is the employer that must demonstrate that any discriminatory or retaliatory action was not grounded on the content of the whistleblowing. Although this straightforward provision is quite common in common law countries,[11] it could be argued that a more balanced wording may have avoided possible unintended consequences in Italy. On the one hand, this provision seems futile with reference to measures taken by the employer, such as dismissals and transfers, whose grounds are to be proven by the employer in any case. On the other hand, this provision is not in line with what it is generally provided by the law with reference to burden of proof in cases of discrimination. In such cases, the customary allocation is reversed only where the employee can at least offer some indications that the alleged discrimination took place. Without this technical addition, the current provision can lead to controversial consequences where, in absence of any retaliation, the whistleblower can claim so only to obtain some undeserved advantages from the employer where the latter cannot prove the opposite.

In addition, several doubts can be raised with reference to the need for revising the criteria used by case law in order to balance, on the one hand, the right to criticize others and the duty of loyalty and confidentiality, on the other. The law now provides that the sole explicit limitation to the right to criticize others is the interest wrothy of protection of the information revealed. Such wording demonstrates a clear preference for the interests of the whistleblower and of the public in general over the interests of the employer and the protection of the reputation of the alleged author of the wrongdoing. In doing so, it may be argued that the existing position of the case law on this point seemed more balanced, because it operated a more comprehensive proportionality analysis.

This last remark sheds light on another issue, namely the fact that the law is relatively silent when it comes to the protection of the reputation and the right of defense of the alleged author of the misconduct. The lack of any substantial provision in this respect is even more significant in Italy, where, for cultural reasons, anti-retaliation whistleblowing laws may be wrongly perceived as being an incitement to report wrongdoings for personal interests and, especially where reports can be made with a strong guarantee of the confidentiality on whistleblower’s identity, leaves the law vulnerable to abuse.

*Giovanni Gaudio is a Ph.D. Candidate in Legal Studies—Business & Social Law at Bocconi University. 

Notes

  1. Marcia P. Miceli et al., Outsider ‘Whistleblowers’: Conceptualizing and Distinguishing ‘Bell-ringing’ Behavior, in International Handbook on Whistleblowing Research 71 (A.J. Brown et al. eds., 2014).
  2. David Lewis et al., The Key to Protection: Civil and Employment Law Remedies, in International Handbook on Whistleblowing Research 350, 352-59 (A.J. Brown et al. eds., 2014).
  3. Roberto Lattanzi, Prime Riflessioni sul c.d. Whistleblowing: Un Modello da Replicare “ad Occhi Chiusi”?, Rivista Italiana di Diritto del Lavoro 335, 338 (2010).
  4. Mapping Journalism: Whistleblowing Protection, Centre for Media Pluralism and Media Freedom - Robert Schuman Centre for Advanced Studies - European University Institute (2014), http://journalism.cmpf.eui.eu/maps/whistleblowing.
  5. Cass., 17 January 2017, n. 996 (It.).
  6. Lattanzi, supra note 3, at 347.
  7. Id. at 349.
  8. Id. at 340.
  9. Björn Fasterling, Whistleblower Protection: A Comparative Law Perspective, International Handbook on Whistleblowing Research 331, 339-45 (A.J. Brown et al. eds., 2014).
  10. Fasterling, supra note 9, at 346.
  11. Lewis, supra note 2, at 374.

 

 

Dispatch No. 11 – United Kingdom – "Winners and losers in the 2018 UK university faculty strike (with some comparisons to U.S. law)," by Carol Daugherty Rasnic*

August 8, 2018

Management has no divine rights.
Walter Reuther, President of United Auto Workers, 1946-1970

In January 2018, the British university group (Universities United Kingdom, UUK) and the pension manager (Universities Superannuation Scheme, USS) announced that the faculty and staff defined benefit pension program (DB) for faculty and staff would be converted to a defined contribution one (DC).

University and College Union (UCU) voted on January 22, 2018 for fourteen days of strikes staggered according to university. This four-week period of work stoppages by sixty-four universities that began on February 22, 2018 was the longest in British higher education history.

UCU’s estimated effect on a typical lecturer was £200,000 (current exchange rate is £1 to U.S. $1.32) in retirement,[1] or as much as £10,000 per year.[2] UCU disputed UUK’s claim of a £5 billion deficit,[3] countering that between 1997 and 2009, when assets were high, UUK made no contributions.[4]

I. The Duty to Bargain

Unlike labor-management law in the United States, there is no duty to bargain during a labor dispute under UK law. The comprehensive U.S. statute, the Taft-Hartley Act, requires both parties to bargain in good faith over issues concerning wages, hours, and other conditions of employment.[5]

To the contrary, the governing UK statute, the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRA)[6] simply establishes procedures for recognition of a union.[7] There is no corresponding duty to negotiate toward arriving at a collective bargaining agreement. Collective bargaining rights are considerably more indirect under UK law than in its U.S. counterpart. A provision in TULRA provides immunity from liability for workers engaged in lawful collective activity,[8] but there is no express positive right.

UK workers’ rights in this regard are derived more from international treaties. For example, the European Convention on Human Rights (ECHR) protects both the right to strike and to bargain collectively.[9]

Regarding the right to strike, many European countries include this as a fundamental right in their constitutions.[10] Any such right in the United States is derivative from statutory law.[11] The United Kingdom has no written constitution and no domestic law other than that instigated by international law that grants the right to strike. Nonetheless, the United Kingdom is a signatory to International Labour Organization (ILO) Convention No. 87, which has language similar to the U.S. statute, that is, the right to associate and to engage in activities for mutual benefit.[12] Additionally, the United Kingdom is a member state of the European Convention on Human Rights (and among the ten founding members of the Council of Europe, of which the ECHR is a body),[13] which includes the right to bargain collectively.[14] Whether the right to strike is incorporated into the Article 11 freedom of association is a question that the European Court of Human Rights has not addressed. Moreover, until Brexit (the departure of the United Kingdom from the European Union) becomes official,[15] the United Kingdom is still bound by similar provisions in EU law.[16]

The Taft-Hartley Act applies only to private sector employment, excluding railroads and airlines, whereas, the struck UK universities were public institutions. U.S. public universities are state institutions governed by fifty different sets of laws. Only eleven states permit public sector strikes.[17]

II. USS’ Unilateral Change in Structure of the Pension Plan: Breach of Contract?

Generally, U.S. employment contracts include pension provisions, whether in collective bargaining agreements or in individual contracts, so that these agreements might make a plan unilaterally unalterable. Any unilateral change would likely constitute a breach of the contract.

The British universities pension plan is not part of the collective bargaining agreement, but it is structured through a series of documents adopted by USS and no breach of contractual obligation has been claimed, presumably because there is no such contractual clause in the union agreement. One could argue that a contractual obligation is implied or, in the alternative, that the promissory estoppel theory might be used because of reliance on the pension structure by each faculty member upon acceptance of their job.

III. Legality of Deductions from Strikers’ Salaries

U.S. law views this strictly on a contractual basis, so strikers are not compensated for hours not worked. Moreover, the U.S. Supreme Court has held that economic strikers can lawfully be permanently replaced.[18] An employer that might terminate workers implicitly might also eliminate pay for work not performed.

The answer under British law is more complicated. Pension law expert Ewan McGaughey, Professor of Law at King’s College London, reasons that pay reductions during this strike violate established law. In Liverpool City Council v. Irwin,[19] the House of Lords permitted nonperformance by one party to a contract in the event of breach by the other. Because of the landlord’s failure to maintain common premises, tenants were within their rights not to pay rent when due. Thus, the nonbreaching party (faculty in the instant case), but not the breaching party (universities), could refuse to perform.

Moreover, even if pay reduction during a strike were regarded as legal, McGaughey posits that the amounts deducted were excessive. In Hartley v. King Edward VI College,[20] the House of Lords held the employer’s reduction of 1/260 of total salary, based upon total days worked annually, to be excessive. The Hartley court held that only 1/365 was lawful (based upon total days in the calendar year),[21] and the universities were deducting considerably more.[22]

IV. Universities’ Obligation to Refund Students’ Tuition

No student fees were charged by British or continental European universities until the 1990s. The UK’s initial tuition charge was through a 1998 law[23] that authorized fees up to £1,000 per year. These amounts were incrementally increased to the 2017-2018 academic year maximum fees of £9,250 (exchange rate for 1 Euro is U.S. $1.3),[24] high by European standards. For example, some countries (Austria and Denmark) do not currently charge student fees, the amount in France ranges only from €200-650 per year, and in Germany, €100-250.[25]

This should be a contractual issue. Students pay for taught hours, and if those hours are not being taught, the universities’ consideration fails. Nonetheless, most universities staunchly refused to refund any part of tuition payments to students. Because university officials blamed the strike on faculty and staff, most confirmed that there would be “alternative learning materials and supervisory support.”[26] The simplistic rebuttal would be that students had been promised classroom contact hours, not “alternative . . . materials . . . and supervisory support.”

Minister of Education Sam Gyimah publicly stated that fees should be returned to students. An exception was King’s College London that had announced it would reimburse students.[27]

Several students had demanded repayment, and a student petition at the University of Liverpool demanded payment to each student of £1,078.16, the fractional amount of total tuition allotted to the fourteen days of strike.[28] Some predict a class action seeking reimbursements.

Thomas Hale, a writer for Financial Times Alpha, mentioned an unusual feature in this strike. Striking faculty were not being paid during the strike, but students’ tuition was retained. This resulted in the struck institutions’ actually being financially benefitted from the labor dispute.[29]

V. Penalization of “Scabs” Who Work Despite Majority Approval of a Strike

The union-to-union member relationship is also contractual in U.S. law. The Labor Management Reporting and Disclosure Act of 1959 (commonly referred as the Landrum-Griffin Act)[30] imposes union reporting requirements and implements many safeguards to members against union abuse.

At the same time, the statute supports members’ duty to pay dues in a timely fashion and to comply with internal union rules. Generally, a union member is required to strike upon a majority vote to strike, and if a majority votes not to strike, to refrain from striking. For example, the Communication Workers of America Constitution, while requiring a majority vote for a strike,[31] provides that a member who does not participate might be disciplined (generally by payment of a penalty).[32] International Order of Machinists also provides similar punitive measures in such cases.[33]

To the contrary, UK statutory law prohibits any such punishments. In Britain, a union member is free to decide whether he will strike, despite a majority vote by his union. Legislation strictly forbids any punitive measure taken against him as a consequence.[34]

VI. Tentative Settlement and Suspension of Strikes

On March 5, 2018, the Advisory, Conciliation and Arbitration Services (ACAS) began mediation sessions with UUK and UCU.[35] After six days, that body drafted a proposal in which UUK would permit independent assessors to study the claimed deficit and defer until 2020 any action changing the DB to a DC structure. Additionally, contributions to the fund from both sides would be increased, and faculty would agree to reschedule teaching any classes missed because of the strike.[36] UCU members rejected this proposal on March 13, 2018.[37]

The next series of strikes scheduled were to begin on April 16, 2018, while ACAS and representatives from UUC and UCU continued to meet. On April 4, 2018, a second proposal was presented and voting on this version would end at 2 pm on April 13, 2018.[38] The DC plan would be withdrawn by UUK, and faculty would not reschedule classes. A jointly appointed panel of experts would evaluate the funds to determine the extent of a deficit, if any. Results of that body’s determination would be factored into further negotiations that will, it is hoped, resolve all issues.[39] Significantly, if rejected, exams would be canceled.

A record 63.5% voted, with a 64% margin approving this offer.[40] Faculty had been tenacious, and the linchpin issue—the DB-to-DC plan—had been resolved in their favor. Because the original vote to strike provided for additional work stoppages until resolution of all contentious matters, the “settlement” is a provisional one.

VII. Economic and Business Model Concerns

There have been criticisms in recent years, both in the United States[41] and in the United Kingdom bemoaning the corporatization of universities over achievement and retention of academic excellence. Des Freedman, Professor of Media and Communications at Goldsmiths, University of London, is in this camp. He criticizes the “bloated nature of a higher education system that gobbles up tuition” so that it might continue to support infrastructure and increasing salaries for vice-chancellors (the counterpart to a U.S. university’s President), while being persistently parsimonious in compensating faculty.[42]

This view has much merit. The Times (London) covered what Lord Adonis, former Labour minister of Education, called the “greed” of “some grossly overpaid” vice-chancellors, referencing Dame Glynis Breakwell, Vice-Chancellor of Bath who was paid $451,000 (including pension contributions).[43] The average package for UK vice-chancellors was £268,103.[44] Michael Shattuck, Visiting Professor at UCL, credits this to the morphing of institutions of higher education into business model, with boards replete with persons from industry and finance and relatively few true academics.[45]

A comparison with faculty salaries is instructive. The average full professor’s salary is £61,203 per year. The highest average earnings were those at Queens University Belfast at £88,268. Perhaps surprisingly, the lowest were at Oxford (£28,448) and Cambridge (£25,358), usually regarded as the United Kingdom’s stellar universities.[46] The majority of faculty are ranked lower than professor status. The United States university’s counterpart to Associate Professor average pay was £51,679, and for Assistant Professor, £42,104.[47]

VIII.    Final Comment

U.S. labor law scholars would likely advise that (1) the United Kingdom add mandatory bargaining during a labor dispute to its statute; (2) faculty insist that pension provisions be included in the next collective bargaining agreement; and (3) students file an action seeking tuition reimbursements on a breach of contract basis.

Whether the suspended strike will come to a timely demise depends upon the success of current ACAS negotiations. For now, the conclusion of the labor dispute that has so disrupted higher education in Britain is a classic waiting game.

*Carol Daugherty Rasnic is Professor Emeritus of Labor and Business Law, Virginia Commonwealth University, and Adjunct Professor, Regent University School of Law

 

Notes

  1. Sally Weale, UK universities face disruption as staff back industrial action, The Guardian (Jan. 22, 2018), https://www.theguardian.com/education/2018/jan/22/uk-universities-face-disruption-staff-back-industrial-action.
  2. Sally Hunt, Strike action on this scale has never been seen before on British university campuses, The Telegraph (Feb. 22, 2018), https://www.telegraph.co.uk/education/2018/02/22/strike-action-scale-has-never-seen-british-university-campuses/.
  3. Weale, supra note 1
  4. Ewan McGaughey, Pension strike: university staff are getting a ‘Die Quickly’ pension plan. It won’t work, London School of Economics Politics and Policy blogs (Mar. 6, 2018). blogs.lse.ac.uk/politicsandpolicy/pension-strike-explainer
  5. The Labor-Management Relations Act, 29 U.S.C. §§ 141-197, §§ 8(a)(5), 8(b)(3), and 8(d) (1947).
  6. Trade Union and Labour Relations (Consolidation) Act 1992 (TULRA).
  7. TULRA Schedule A1.
  8. Id. at § 219.
  9. Eur. Convention on Human Rights [Convention for the Prot. of Human Rights and Fundamental Freedoms] (4 November 1950, entered into force 3 September 1953) ETS 5 (ECHR) art. 11.
  10. See, e.g., Grundgesetz für die Bundesrepublik Deutschland [Grundgesetz] [GG] [Basic Law], May 23, 1949, BGBI. I, art. 9 (Ger.).
  11. Sec. 7 of the Wagner Act, 29 U.S.C. §§ 11-159 (1935), to which the Taft-Hartley Amendments were added in 1947, vests workers with the right to associate and to engage in concerted activities for mutual aid and protection, inferring a right to strike.
  12. The General Conference of the International Labour Organisation, 31st Sess., San Francisco, U.S., June 17, 1948, Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), ILC.31/VII, arts. 3, 8, & 10 at p. 87.
  13. Convention on the Protection of Human Rights and Fundamental Freedoms (4 November 1950, entered into force 3 September 1953) ETS 5 (ECHR). See art. 11 for freedom of association.
  14. Id. Article 11. The 1998 UK Human Rights Act c.42 Schedule 1 incorporates the ECHR into domestic law, so those rights might be enforced in domestic courts.
  15. The announced date is March 29, 2019. See James Blitz, Alex Barker, and George Parke, Brexit timeline: key dates in UK’s divorce with EU, Financial Times (June 22, 2018), https://www.ft.com/content/64e7f218-4ad4-11e7-919a-1e14ce4af89b.
  16. Interestingly, Article 12 of the Charter of Fundamental Rights of the European Union, 2007/C 303/01 includes the “right to freedom of peaceful association and freedom of association . . . in . . . trade union . . . matters,” but The Treaty of the Functioning of the European Union (TFEU) art. 153(5) excludes the right to strike from areas of competence of EU legislation.
  17. See Kirsten Bass, Overview: How Different States Respond to Public Sector Labor Unrest, On Labor (Mar. 11, 2014), https://onlabor.org/overview-how-different-states-respond-to-public-sector-labor-unrest/.
  18. NLRB v. Mackay Radio and Telegraph, 304 U.S. 333 (1938).
  19. Liverpool City Council v. Irwin, [31 March 1976] UKHL 1.
  20. Hartley v. King Edward VI College, [2017] UKSC 39.
  21. Ewan McGaughey, Can universities cut staff pay for the strike as they please?, “No way”, says the law. London School of Economics blog site (Mar. 17, 2018), http://blogs.lse.ac.uk/politicsandpolicy/staff-pay-pensions-strike/, or, https://.printfriendly.com/p/g/jp2fe4.
  22. Richard Adams, Universities threaten to punish striking staff over cancelled lectures, The Guardian (Mar. 2, 2018), https://www.theguardian.com/education/2018/mar/02/uk-universities-threaten-punish-striking-staff-cancelled-lectures.
  23. Higher Education Act 1998, amended yearly.
  24. House of Commons Library, Briefing paper No. 917, 19 Feb. 2018.
  25. See Tuition Fees at Universities in Europe in 2018—Overview and Comparison, Studyportals (Jan. 8, 2018), https://www.mastersportal.com/articles/405/tuition-fees-at-universities-in-europe-in-2018-overview-and-comparison.html.
  26. Thomas Hale, The Strange Economics of the University Strikes, Financial times Alphaville (Feb. 22, 2018), https://ftalphaville.ft.com/2018/02/22/2198956/the-strange-economics-of-the-university-strikes/.
  27. Eleanor Busy, University Strikes: Students Set to Receive ‘Direct Compensation’ Over Lectures Missed Due to Action, Minister Says, Independent (Feb. 28, 2018), https://www.independent.co.uk/news/education/education-news/university-strikes-compensation-lecturers-students-sam-gyimah-direct-minister-latest-a8232746.html.
  28. Hale, supra note 26.
  29. Id.
  30. 29 U.S.C. §§ 402-531 (1959).
  31. Commc’n Workers of Am. [CWA] Const. art. XVIII, § 6.
  32. Id. at art. XIX §1(f).
  33. Electronic message from William H. Haller, Esquire, Associate General Counsel of IAM (May 21, 2018).
  34. The Advisory, Conciliation, and Arbitration Services (ACAS) is the UK governmental body charged with assisting in the resolution of labor disputes. Employment Act 1988 sec 3-5 (Part I).
  35. Employment Protection Act, 1975, repealed and replaced by Trade Union Labor Relations Act, 1992.
  36. Sean Coughlin, Deal Offered in University Pensions Row, BBC News (Mar. 13, 2018), http://www.bbc.com/news/education-433880857.
  37. Katie Tarrant & Daniel Ruben, Strikes Set to continue during exam season as UCU rejects deal, The Boar [student newspaper, University of Warwick] (Mar. 15, 2018) at 3.
  38. Ballot opens over latest proposals in university pensions dispute, University and College Union (Apr. 4, 2018), https://www.ucu.org.uk/article/9431/Ballot-opens-over-latest-proposals-in-university-pensions-dispute?list=1676.
  39. Rosemary Bennett, Lecturers end strike in time for finals, The Times, Apr. 14, 2018, at 2, col. 2-4.
  40. UCU members vote in record numbers to accept proposals in pensions dispute, University and College Union (Apr. 13, 2018), https://www.ucu.org.uk/article/9439/UCU-members-vote-in-record-numbers-to-accept-proposals-in-pensions-dispute.
  41. See, e.g., Noam Chomsky, The Death of American Universities [an edited version of his remarks to the Adjunct Faculty Association of the United Steelworkers, Pittsburgh, Penn., Oct. 10, 2014]. Jacobin (Mar. 3, 2014). https://www.jacobinmag.com/2014/03/the-death-of-american-universities/.
  42. Des Freedman, Universities Ending the Strike is not a Climbdown – The Fight Goes On, The Guardian (Apr. 16, 2017), https://www.theguardian.com/commentisfree/2018/apr/16/university-pensions-strikes-union-campaign.
  43. Jack Grove, The Times Higher Education v-c survey 2018, The Times (Feb.22, 2018), https://www.timeshighereducation.com/features/times-higher-education-v-c-pay-survey-2018. A link in this article includes a compilation of the salaries (basic and including pension contributions) of the vice-chancellors in every UK university.)
  44. Id.
  45. Id.
  46. Professor Salaries in the United Kingdom. Indeed [a job search site], https://www.indeed.co.uk/salaries/Professor-Salaries.
  47. Id.

 

 Dispatch No. 10 – Belgium – "Marginal part-time in Europe: 2018’s expansion of flexi-jobs in Belgium," by Mathias Wouters* and Pieter Pecinovsky*

July 11, 2018

While in some common law countries the concept of “daily” or “casual” employment is clearly established in statutory and case law, this is far from being the case in continental European countries.[1] Nonetheless, as Valerio De Stefano observed,[2] working arrangements that allow employers to scale their workforce by determining unilaterally the working hours of workers, such as on-call and zero-hour work, and thus resemble the common law idea of casual employment, are spreading in Europe. Often, these arrangements have been introduced to combat undeclared work by affording high amounts of flexibility to employers.

In Belgium, a flexible arrangement that does not, however, go as far as allowing on-call work and also functions as a policy instrument against undeclared work has been introduced. In fact, one of the compensatory measures introduced by the Belgian legislature in 2015 to compensate for the introduction of the so-called “white cash register,” i.e. a measure to prevent undeclared work in the “hospitality sector” (hotels, restaurants and bars), was to adopt a new employment status called travailleur exerçant un flexi-job. The popularity of this status is predominantly driven by the favorable fiscal and para-fiscal treatment—i.e. social security contributions—hence the compensatory nature of this scheme. With regard to the implications for labor law, we first briefly describe the main conditions that must be met for a worker to be engaged as a “flexi-jobber” and the social protection given to these workers. The second part first relays the concerns of the National Labour Council and Council of State, to consequently indicate why the Constitutional Court did not annul the statute. The third and final part describes the legislature’s recent multidimensional expansion of the statute and why this is a significant development.

The loi portant des dispositions diverses en matière sociale of 16 November 2015 constitutes the main legal basis for flexi-jobs. As mentioned above, article 2 initially limited its use to employers belonging to the joint committee for the hospitality sector or to temporary work agencies supplying workers to user firms in the hospitality sector. Besides this sectoral limitation, there are also restrictions linked to the persons that can be actually employed in flexi-jobs. These criteria ratione personae provide that only employees who already are employed for four fifths of the time, as compared to a full-time job in the respective industry, by one or more employers different to the flexi-employer are eligible to engage in a flexi-job.[3]

The legal framework for an employee who is eligible to work as a flexi-jobber necessitates a framework agreement to first be concluded between the flexi-jobber and flexi-employer with mandatory information. This framework agreement aims to avoid the creation of on-call work. Despite this intention, as Sarah De Groof points out, it is unclear how these mandatory particulars will prevent this factual outcome.[4] Especially since a prospective flexi-jobber can conclude multiple framework agreements for a definite or indefinite term with several employers wanting to offer them flexi-employment. Nevertheless, only once this framework agreement has been drafted, can a legally valid contrat de travail flexi-job be agreed upon between the parties of the framework agreement and only this actual employment contract, concluded for a definite term or well-defined work, contains an actual duty for the flexi-jobber to perform the work.

Most importantly with regard to social protection, flexi-jobbers accrue social rights despite the lower amount of social security contributions owed. Furthermore, the general loi relative aux contrats de travail in principle applies to the contrat de travail flexi-job. As such, for example, pursuant to the Belgian implementation of Council Directive 1999/77/EC on fixed-term work, the flexi-employer will have to prove that the use of these successive fixed-term employment contracts is justified based on the nature of the job or other legitimate reasons. Whereas this is probably justifiable in relation to the hospitality sector because of seasonal and holiday related fluctuations in demand, the same is not necessarily true for different sectors. The law itself also creates the notions flexisalaire and flexipécule de vacances. This “flexi-wage” consists of an indexed hourly minimum wage of 8.82 euro. Additionally a “flexi holiday pay” is paid together with the wage by multiplying the wage with 767%.

Even though the current government remains convinced that it struck a fair balance between flexibility and social protection, several legal and political concerns have been raised. On a policy level, it is important to note that the representative trade unions represented in the National Labour Council[5] formulated a negative advice. Multiple reasons were cited for this rejection, but the most important policy considerations were that since the status was intended to compensate for the impact of antifraud measures, and these “white cash registers” did not seem to get adequately implemented, the flexi-job scheme would ultimately rather serve to legitimate illegal employment and while withholding government revenue due to the corresponding beneficial (para-)fiscal contributions due. In addition, the scheme pursues both flexibility and low labor costs, thereby threatening permanent jobs while advancing a precarious form of employment. Besides, according to the trade unions, the government also did not respect their right to collective bargaining since the social partners were left in the dark during the legislative process.

By way of introduction to the legal objections, it is only appropriate to first convey the remarks made by the Council of State’s Legislation Section back in 2015. A major question mark posed by the Council was whether the flexi-job status was in compliance with the constitutional principle of equality. In that regard the first remark concerned the sectoral limitation of the status to employers belonging to the hospitality sector, especially since not all companies considered a hotel, restaurant, or bar necessarily belong to this particular joint committee. A second remark related to the ratio of 4/5th of fulltime employment as a condition for eligibility. Interestingly, the Council noted that this amounts to what it called “imposed solidarity among employers”, meaning that despite the nonexistent fiscal and lower social security contributions benefitting the flexi-employer, the flexi-jobber nevertheless accrues social rights and the payment of the corresponding social benefits is therefore at least in part dependent on the social contributions paid by the employers who contribute to the condition of 4/5th full employment. Despite the explanatory memorandum clarifying that the status is mainly justified because of the labor-intensive nature of these activities and high labor costs, the imminent implementation of the “white cash registers,” and the need to thus lower labor costs and provide for a flexible but legal alternative, the Council nevertheless issued strong reservations about the legality in light of the principle of equality.

The Constitutional Court, however, concluded in a judgment of 28 September 2017[6] that the flexi-jobbers were not unequally treated in comparison to standard employees in the hospitality sector. In particular, two conclusions in the judgment stand out. The first relates to Belgium’s article 23 of the Constitution which imposes a “stand-still obligation” to preserve the existing level of fair working conditions and remuneration, social security and collective bargaining unless reasons of public interest justify otherwise. In that regard, the Court states that the legislative measure cannot reasonably be considered a significant deterioration of that level because of the provided guarantees. The main consideration leading up to that conclusion seems to be that flexi-jobs do not substitute “normal” employment contracts and this characteristic seems to primarily prevent it from violating the stand-still obligation.

The second conclusion of the Court is that all differences between flexi-jobbers and normal employees in the sector are objectively and reasonably justified. The trade unions who lodged the appeal, had pointed out in particular the difference in employment conditions, holiday pay schemes, publication and control of the work schedules, wage definitions, social contribution and benefit mechanisms and the possibility to negotiate wage payments using a framework agreement. An important first consideration in order to reach this decision was that the legislator has broad discretionary powers to decide the category of workers and employers eligible to adopt a new form of employment contracts. The role of the Court is limited to assessing whether the different treatment of the beneficiaries is reasonably justified and does not disproportionally affect the rights of the affected employees and employers. Looking at some of the more contested elements of the law, the Court notes that for example the 4/5th eligibility condition is justified, due to the goal of the legislator to make sure that flexi-jobs would not substitute permanent employment, therefore only allowing employees who already enjoy “quasi-permanent” employment to become flexi-jobbers. The fact that the legislator diluted the requirement to 4/5th does not contradict this objective but arises from the socioeconomic increase in quasi-fulltime employment.[7]

Besides this favorable judgment, the government released impact assessments of the flexi-job status indicating that the growth of permanent employment in the hospitality sector picked up pace, thereby implying that flexi-jobs surely have not negatively impacted the growth of traditional employment in the sector. Detractors however contend that this growth of standard employment in the sector is largely dependent on the overall improved economic situation and thus does not prove that flexi-jobs do not substitute permanent employment. In any case by September 2017 there were over 28.000 flexi-jobbers working in 7300 businesses.

Following the positive evaluation of flexi-jobs and its success in the hospitality sector, in the summer of 2017 the government (urged on by the Flemish liberal party) agreed to pursue the expansion of the flexi-job status both in sectoral terms as well as ratione personae. On 1 January 2018 the Loi Programme of 25 December 2017 expanded the flexi-jobs-system to the retail industry. This includes the sectors of small businesses like bakeries, butcher shops, hairdressers, beauty parlors, catering services, etc. But the new law also expanded the system to department stores and supermarkets. This is remarkable since these last categories are usually big employers, although many smaller supermarkets are franchised undertakings with ‘independent’ employers (in which case the use of undeclared work is usually more prevalent). The system also became possible for agency workers who are sent to work in one of the included sectors.

Next to this rather massive sectoral expansion, the Loi Programme of 25 December 2017 also made flexi-jobs possible for retired persons in order for them to be able to raise their net income (supplementing their pension). Pensioners naturally do not have to comply with the condition that they must be employed at least 4/5th. Already in January 2018 this expansion has proven to be popular with 1200 retired flexi-jobbers. This amount is expected to increase rapidly seen the formidable available workforce of Belgian pensioners. Lastly the Loi Programme made sure that young teachers who work on a contractual basis (instead of the standard fixed appointment) could do flexi-jobs even during the summer break when they are in factual state of unemployment.

The flexible nature of this scheme can be interesting from a comparative perspective. The system of flexi-jobs started as a sort of compensatory measure for employers in the hospitality sector because of the introduction of “white cash registers” to combat undeclared work and fiscal fraud. This initial intention can be questioned taking into account the recent expansion of the system to the retail sector. In fact, flexi-jobs are now looking more and more like a half-hearted attempt of certain political parties in the ruling majority to make flexible Belgian labor law. On the one hand it creates fiscal and working time opportunities for employers and employees, but on the other hand it may threaten standard and full-time jobs. However, the strict conditions to be fulfilled to enter a flexi-job make this form of work not entirely comparable to the far more flexible systems of zero-hours contracts or on-call work (e.g. in the Netherlands and the UK), which are still disputed and quantitatively trivial in Belgium. Yet, a possible further expansion of the system to other sectors or persons and a softening of the conditions (especially the 4/5th rule) in the future might turn the initially rather stringent flexi-jobs-system into a gateway to make flexible and to deconstruct the Belgian social security system and labor law regulation. This, of course, is what the social partners have warned of in the National Labour Council. In any case the Government emphasizes the current success of the system. It will have to be seen if the system can maintain a healthy balance between allowing workers to earn additional income on the side (and combatting social fraud), and its potentially disruptive effect on standard forms of employment.

Mathias Wouters and Pieter Pecinovsky are PhD Researchers at KU Leuven 

Notes

  1. In Belgium, most notably Patrick Humblet rejects the concept, stating that “[s]uch on-call contracts testify to a 19th-century view on the employee; he/she is relegated to a wage slave who turns up by order of the boss.” Patrick Humblet, Apologie van het recht op uitbuiting Een provocatie, (Te) hoge werkdruk: psychosociaal risico of economische dwangmatigheid? De limieten van het welzijnsrecjt 17, 27 (2015).
  2. Valerio De Stefano, Casual Work Beyond Casual Work in the EU: The Underground Casualisation of the European Workforce – and What To Do About It, 7 Eur. Lab. L.J. 421 (2016).
  3. Whether an employee fulfils this threshold is judged in reference quarter T-3, meaning that in order to perform a flexi-job from January until March 2018, the employee in question must have worked 4/5th of a fulltime job for one or more employers combined in the reference quarter from April until June 2017. This eligibility condition has to be complied with for each consecutive quarter. Several additional measures were also taken to prevent abusive use of the beneficial (para-)fiscal scheme.
  4. Sarah De Groof, Flexi-jobs in de horeca, 1 Arbeidsrecht J. 10, 11 (2016).
  5. [4] An institution meant to bring social partners together to reach national (or sectoral) collective bargaining agreements and to give the most authoritative opinions on legislative proposals. “Together with the Central Economic Council, the National Labour Council is traditionally called ‘the House of the Belgian social Partners.’” About Us, Nationale Arbeidsraad (Aug., 2016), www.cnt-nar.be/DOC-DIVERS/About-us.pdf.
  6. Cour Constitutionnelle [CC][Constitutional Court] decision no 106/2017, Sep. 28, 2017.
  7. Another contended part of the eligibility condition was that the 4/5th ratio was only to be complied with in reference quarter T-3. This means that the flexi-jobber does not have to be employed for 4/5th in reference quarter T-2, T-1 or T in order to work as a flexi-jobber in reference quarter T. This element was deemed justified by the Court because the official figures of actual employment in the social security database need to be sufficiently stable to efficiently verify the ratio.

 

 

Dispatch No. 9 – Italy – “The new legal status of independent contractors in the Italian legal system,”
by Elena Gramano*

July 3, 2018

Rapid technological developments, new ways of offering services in the market through websites, digital platforms, and online providers, fragmentation of the employer’s role into groups or nets of companies that share decisions and processes, often outside formal relationships of control or of capital sharing, the mechanization of working activities, and the increased level of workers’ skills required by the labor market all seem to have created a crisis in the traditional legal parameters of the definition of work, challenging the dogmatic categories of subordinate and self-employed workers.

The problem of the distinction between subordination and self-employment in working relationships between increasingly disintegrated companies and their workers is certainly not new. Legal scholars and the courts have for a long time been addressing this issue, which concerns relationships that it is difficult to describe in terms of the archetypal employee who is subject to the precise direction and overall control of a unique and distinctly identifiable employer.

After years of debate, the Italian legislator decided for the very first time to protect, enhance, and support genuine self-employment in all its forms and dimensions, thus recognizing the strategic value that it has progressively assumed in the Italian economic system.

Law No. 81/2017, known as the “Self-employment Statute,” entered into force in the Italian legal system on June 6 2017, and introduced what has been defined as a “Statute” of rights and protections for self-employed workers.[1] Far from mimicking on a smaller scale the typical rights of subordinate employees, it enhances and protects the specific characteristics of the autonomy of organization and management of independent contractors, to support all forms of work that do not fall within the rules on employment law.

Traditionally, a self-employed worker has been considered as an economic subject capable of negotiating independently the contractual conditions of her activity, without the need for a heteronomous intervention by the legislator. For decades, this assumption has justified the complete absence of a legislative plan in this area.

Labor market developments have shown that this hypothesis is no longer true or, at least, that it is not always and not necessarily true.

The adoption of the Self-employment Statute marks an important break with the labor law that developed in the last century. Today, for the first time, self-employed workers are joining a community governed by legal regulations designed and built to meet their specific needs. The legislator chose to create a set of provisions containing rights and protections exclusively for self-employed workers, to establish for the first time a common legal identity for them.

On the one hand, some provisions recall the protection already provided for employees; on the other, some focus on protecting the social and contractual position of these workers, to correct the functioning of the market where market freedom ends up harming the worker, even if she is self-employed. In a very brief summary, the characteristic features at the base of this recent intervention in Law No. 81/2017 can be identified as follows: a) the protection of an independent contractor against unfair contractual terms (unilateral changes to the conditions of the contract, unilateral termination without notice, excessive payment terms); b) protection against delays in payment of compensation and the recognition of intellectual property rights for self-employed workers; c) the provision of social protections during the working relationship with the principal, similar to some of the protections so far only granted to employees; and d) protection in the labor market, with a series of measures to promote the chances of independent contractors finding clients and occasions of work.[2]

The Italian legal system does not have a definition of self-employment.

At the beginning of Title III of Book V of the Civil Code, Article 2222 defines a contract for services (“contratto d’opera”) as a contract under which an independent contractor “performs work or services in exchange for remuneration, mainly through her labor and in the absence of a relationship of subordination vis-a-vis the principal.”[3]

Far from providing a separate definition of self-employed workers, the Code limits itself to illustrating that work performed without subordination is autonomous. The meaning of the provision thus reflects the concept of “subordinate employee” described in Article 2094 of the Civil Code, which specifies that whoever undertakes to collaborate in an enterprise in exchange for remuneration, providing her intellectual or manual work at the dependence and under the direction of an entrepreneur, is subordinate.[4]

The scope of application of the Self-employment Statute is established through the explicit reference to the cited Article 2222 of the Italian Civil Code[5] and the explicit exclusion of two categories of subjects: on the one hand, employees and, on the other, entrepreneurs (even small ones, as defined by Article 2083 of the Italian Civil Code) (Article 1).[6]

It is important to underline that the legislator has not created any new third category or subspecies of existing categories: the law applies to “genuinely” self-employed workers, providing rules that reflect the full independence of their work.

In particular, the Statute articulates the protection afforded to self-employed workers in three main sets of rules.

The Statute recognizes that, unlike subordinate employees, self-employed workers must continuously go into the market to offer their services, which are mainly personal and self-organized. However, the law also recognizes that a self-employed person may be in a position of contractual weakness with respect to other subjects and may, therefore, encounter difficulties in negotiating good economic conditions in exchange for the work she provides.

Therefore, the first step taken by the legislator concerns the protection of the self-employed person during the negotiation and execution of the contract with the client.

First, the law guarantees the employee’s claims so that she can be protected in the event of late payment or non-payment. For this reason, it establishes that the provisions of Legislative Decree No. 231/2002 are also fully applicable to commercial transactions between self-employed persons and undertakings, between two self-employed persons, or between self-employed persons and public administrations, subject to the application of more favorable provisions (Article 2).[7]

The application of Legislative Decree No. 231/2002, which implemented European Directive 2000/35/EC on combating late payment in commercial transactions,[8] means that self-employed workers are entitled to payment of default interest, unless the debtor proves that the payment of the price was delayed because it was impossible for the service to be performed as the result of a cause not attributable to the debtor. Interest commences from the date established in the contract or, failing that, from the date set by law (Article 4, Legislative Decree No. 231/2002).[9]

The parties may, as part of their own contractual freedom, set a longer period for payment than the legal period, provided that the agreement is made in writing (otherwise it is null). Article 3, Law No. 81/2017 specifies, however, that terms under which the client is entitled to pay the worker more than 60 days after the payment note has been sent are considered unfair ex lege.[10]

The worker is also entitled to compensation for the costs incurred for the recovery of sums not paid in good time, subject to proof of greater damage if the debtor cannot prove that the delay is not her fault.

Finally, an agreement on the date of payment, or on the consequences of late payment, is null and void if, having regard to good commercial practice, the nature of the services covered by the contract, the condition of the parties and the business relations between them, as well as any other circumstances, it is grossly unfair and acts to the detriment of the creditor.

In particular, an agreement which, with no objective justification, has as its main object the provision of the debtor with additional liquidity at the worker’s expense, or an agreement whereby a contractor or a main subcontractor imposes on its suppliers or subcontractors unjustifiably longer payment terms than the payment periods granted to it, is considered to be grossly unfair.

The Self-employment Statute becomes applicable at the stage of negotiations on the contractual terms and conditions to be applied between the client and the self-employed worker, and establishes that a term under which the client may unilaterally modify the content of the contract or may unilaterally withdraw from the contract without notice (if the contract provides for continuous work) shall be regarded as an abuse under the law.

In the event of unfair terms and therefore—as has been said—void clauses, an independent contractor is also entitled to compensation for damages. It is not clear whether the list of unfair terms and, therefore, terms that render the contract null and void should be considered as exhaustive or whether it can be extended by judicial interpretation.

The last paragraph of Article 3 of the Statute provides for the application of Article 2, par. 9, of Law No. 192/1998, on the abuse of economic dependence.[11] 

Parts of Italian legal doctrine, together with some rather isolated jurisprudence, strongly supported the idea of specific protection for self-employed workers who are in a position of economic dependence on their major client. This proposal has been systematically rejected by the legislator because economic dependence is a criterion that attaches importance to an aspect (the economic situation of one of the parties) that is unrelated to the cause of the contract and unrelated to the subjective positions—obligations and rights—generated by the contract.

This approach has been preserved by the regulatory intervention of 2017, which, on the contrary, excluded the need for a contract to meet this particular criterion from the outset, extending the new discipline to the entire area of self-employment.

However, by its reference to Article 2, par. 9, Law No. 192/1998, the new law specifies that when a situation of economic dependence does occur, the abuse of this position is prohibited. More specifically, a condition of economic dependence occurs where an undertaking is capable of causing an excessive imbalance in its business relations with a self-employed person. It is also assessed by taking into account the real possibility of the worker finding satisfactory alternatives on the market.

The abuse of a position of economic dependence may also consist of a refusal to sell or purchase, the imposition of unjustifiably burdensome or discriminatory contractual conditions, or the arbitrary termination of existing business relationships.

An agreement that leads to economic dependency is null.

Finally, Article 4 of the Statute[12] protects the worker’s position with regard to the rights to use for economic purposes original inventions and contributions made in the performance of the contract, by stating that these rights belong to the independent contractor, unless the inventive activity is envisaged as the object of the contract and the contractor is therefore economically compensated for it. The new legislation provides for the application of Law No. 633/1941 and the so-called Industrial Property Code.[13] It should be noted that, by contrast, an employer is the owner of the economic rights in the inventions of her employees, where the inventions have been made in the performance of the employment contract.

As mentioned above, the Statute for the very first time establishes certain specific social protections for independent contractors.

Self-employed women are entitled to maternity allowance for the two months preceding the date of birth and for the following three months, irrespective of whether they actually abstain from work (Article 13).[14] Therefore, while women who are employed as subordinate employees must cease to work during this period, self-employed women are given the freedom to choose whether to work or to suspend their activity, as the allowance is paid in either case.

Moreover, the pregnancy, illness, or injury of a self-employed worker who works continuously on behalf of a client does not lead to the termination of the contract, the performance of which, at the worker’s request, may be suspended, without entitlement to compensation, for a period not exceeding 150 days per year (Article 14).[15] However, the client is entitled to withdraw from the contract if she has no interest in its continuation.

Moreover, in the event of maternity, it is possible that a self-employed female worker, with the prior consent of the client, can be replaced by another trusted worker who meets the necessary professional requirements, and there may also be job-sharing between the replaced worker and her substitute (Article 14, par. 2).[16]

Finally, self-employed workers are entitled to parental leave of up to six months for both parents during the child’s first three years. The allowance is equal to 30% of the income from work relative to the contribution paid and is due only if the worker has made at least three months’ worth of contributions (Article 8, par. 2).[17]

Lastly, Law No. 81/2017[18] provides for a series of tools, made available by public institutions but also with the help of private subjects, which favor both orientation in the labor market and access to professional opportunities.

In particular, the law establishes that public employment centers and specifically authorized bodies must carry out intermediary activities so that there is a branch office dedicated explicitly to self-employed workers in each office that is open to the public (Article 10).[19]

The purpose of this advice desk is to collect applications and offers from workers, to provide relevant information to professionals and businesses who request it, and to provide information on procedures for starting up self-employment activities, on access to public procurement, and on possible credit opportunities.

Public authorities themselves are called upon to promote the participation of self-employed workers when they act as contracting authorities in public contracts for the provision of services or in calls for tenders for personal consultancy or research assignments, in particular by facilitating their access to information on public tenders and their participation in award procedures (Article 12[20]).

*Elena Gramano, Ph.D., is a post-doctoral Research Fellow at Goethe University of Frankfurt, under the guidance of Professor Dr. Bernd Waas.

Notes

  1. Legge 22 maggio 2017, n. 81, G.U. June 13, 2017, n. 135 (It.).
  2. Id. at art. 3, 12, 14.
  3.  Article 2222 C.c.
  4.  Article 2094 C.c.
  5. Article 2222 C.c.
  6. Article 2083 C.c.
  7. D.Lgs. 9 ottobre 2002, n. 231, art. 2, G.U. Oct. 23, 2002, n. 249 (It.).
  8.  Council Directive 2000/35, 2000 O.J. (L. 200) (EC).
  9. D.Lgs. n. 231/2002, art 4.
  10. L. n. 81/2017, art 3.  
  11.  Id. (citing Legge 18 giugno 1998, n.192, G.U. Jun. 22, 1998, n.143, art. 2, ¶ 9 (It.).
  12.  Id. art. 4.
  13. Legge 22 aprile 1941, n.633, G.U. Jul. 16, 1941, n.166 (It.).
  14. L. n. 81/2017, art. 13.
  15. Id. art 14.
  16.  Id. ¶ 2.
  17. Id. art. 8, ¶ 2.
  18. L. n. 81/2017.
  19.  Id. art. 10.
  20. Id. art. 12.

 

DISPATCH No. 8, "Workers’ Privacy in the Employment Contract: Developments From Chile,"
by Sergio Gamonal C.[1] and César F. Rosado Marzán[2][3]

June 27, 2018

I. Facts and Context

Journalists, social critics, and legal commentators are discussing hot-button issues related to “video surveillance” and “cyber surveillance” of workers by their employers. Indeed, some of these critics argue that employer surveillance could lead to so-called cyber subordination threatening fundamental privacy rights and presenting challenges to labor and employment law (hereinafter referred to as “work law”).  Fortunately, courts are addressing these priva cy challenges.  In the Chilean Supreme Court’s recent opinion, Sindicato Interempresas N° 6 de Conductores y Trabajadores Flota Talagante v. Asociación Gremial de Empresarios de Taxibuses Flota Talagante[4] (“Talagante”) involving an employer, a bus company, that monitored its workers with video cameras, the Court reaffirmed its prior jurisprudence placing limits on employers’ surveillance activities.

The Court reached its opinion in Talagante after aggrieved workers, represented by their labor union, filed a special constitutional review action called “recurso de protección,” which generally alleges that a party violated an individual’s fundamental rights.[5] Parties may file a recurso de protección when they believe that the government or a private individual has violated their fundamental rights and, as such, the plaintiff requires immediate equitable assistance from the Court. Because the recurso de protección is an emergency procedure, its purpose is solely to stay the infringing actions of the party violating fundamental rights and restore the aggrieved individual(s) to the status quo. Recursos de protección require that the allegedly infringed right is “undoubted”—certain and clearly recognized. If the court doubts the existence of the right, then the party alleging the violation must file an ordinary suit. Moreover, parties who file a recurso de protección cannot claim damages. If they claim damages, they must do so through an ordinary proceeding. Parties must file the recurso de protección in an appeals court and, if necessary, appeal that decision to the Supreme Court.

In this particular case, the president of the Interempresas No. 6 Talagante Fleet Workers’ Union (the “Union”), filed a recurso de protección in representation of all Union members against an intercity bus company called the Taxibuses Flota Talagante (hereinafter “Employer”).[6]

The Union alleged that the Employer installed surveillance cameras on the buses to watch the drivers.[7] While the Employer had previously installed two cameras for security purposes, it installed a third camera to record the drivers, as the video showed workers’ faces.[8] The Union alleged that such general surveillance was unrelated to safeguarding security in the buses and therefore violated workers’ fundamental rights.[9] The Court thus had to order the employer to desist video recording the workers.

The Employer challenged the Union’s allegations. It alleged that since August 2016 it had improved security in the buses by installing new cameras with better resolution.[10] In addition, according to the Employer, its employment contracts and its workplace safety manual provided for workplace video recordings.[11] It alleged that the third camera installed in all the buses captured a panoramic view of the door, the entrance area, the ticket box, the money collected by the driver, and seats located on the right side of the driver, showing the driver’s head only occasionally.[12] Therefore, the employer alleged that the camera’s purpose was to provide safety and security in the bus, not to observe the drivers in a general fashion.[13]

II. The Legal Issue and Relevant Law

The legal question before the Court was whether the employer could place surveillance cameras that directly recorded the worker, as the cameras did in this case.[14]

Chilean jurisprudence had already settled a very similar issue, holding that an employer could video record activities only for security reasons, but not to monitor the behavior of workers.[15]  Extant jurisprudence was built on constitutional principles: Article 19 N ° 4 of the Chilean Constitution expressly states that privacy is a fundamental right.[16] Moreover, article 5 of the Labor Code states that employers must exercise their authority only to the extent permitted by the Constitution, especially because the Constitution protects the privacy and honor of workers.[17] Moreover, article 154 of the Labor Code states that the employer can only exert control of workers in the least personal fashion to guarantee workers’ privacy.[18]

III. The Court’s Decision

The Court of Appeals of San Miguel decided the case in the first instance.[19] Given the legal precepts stated above, and reviewing the facts alleged, the Court determined that the employer was violating workers’ fundamental privacy rights by recording the workers, showing their faces, and recording audio.[20] The Court of Appeals recognized that, generally, cameras do not disturb privacy rights.[21] However, the aim of the video recording in this particular case, which focused on the workers’ faces, violated the privacy rights of the workers.[22] The Court ordered the employer to change its surveillance practices so that they fulfilled the declared security purposes while respecting the workers’ fundamental privacy rights.[23]

On March 20, 2017, the Supreme Court, in a 4-1 opinion, affirmed the Court of Appeals’ decision.[24]  A minority vote stated, without any explanation, that the Court should have denied the Union’s recurso de protección.[25]  As reported in the opinion:

The court reached this opinion with one contrary vote by Minister Egnem, who would have reversed the ruling below and, consequently, rejected the recurso de protección because the facts and law did not show that the plaintiffs had an undoubted right that required assistance and protection through this precautionary route of urgency.[26]

IV. Commentary

We fully agree with the majority vote of the Chilean Supreme Court.

First, it is well established in Chile that constitutionally enshrined, fundamental rights percolate into the contract of employment. These rights include protecting the physical and mental integrity of a person, his or her private and public life, the honor of the person and his or her family, the inviolability of all forms of private communication, freedom of conscience, the manifestation of all beliefs, including the free exercise of worship, the freedom to express opinions without censorship, nondiscrimination, and freedom of association.[27]

Second, human rights in the contract of employment are part of what Chile understands to be the “Citizenship in the Enterprise” (Ciudadanía de la Empresa). Citizenship of the Enterprise implies that the management’s authority, rulemaking capacity, and overall control of the workplace are limited.[28]

The idea of “Citizenship of the Enterprise” first stemmed from a 1969 opinion of the Directorate of Labor (“DT”), the administrative authority that enforces the Labor Code, which determined that the employer could not physically search employees before they exited the workplace after a day’s work.[29] The DT decided that such searches ran against workers’ dignity.[30] The DT has continued to argue that physical searches violate fundamental rights, such as those pertaining to the dignity of the person, the right to privacy, workers’ psychic integrity, and the inviolability of all forms of private communication. [31]

In 2001, the Chilean legislature amended the Labor Code with Law No. 19759, providing a new first paragraph for Article 5 that recognized constitutional guarantees in employment, including privacy rights and dignitary concerns.[32] In addition, the amendment requires that when employers implement measure to control workers, these measures must be germane to security concerns, and must be of general applicability in order to ensure protection of workers’ dignity.[33]

Citizenship of the Enterprise constitutes an evolution of both labor and constitutional law. At the outset, it was understood that the state, as the public authority, was exclusively bound to safeguard human rights. However, in the twentieth century, labor and constitutional law began to understand that private parties, namely employers, must also respect the human rights of subordinates. This legal relationship between private individuals has been denominated in Spain and in Latin America (following the German theory) as “horizontal effects” of fundamental rights.[34] Contemporary constitutional and labor jurisprudence thus understands that “any center of power” can violate human rights, not just the state or other public authority. Some scholars also speak of “diagonal efficacy “of fundamental rights in the contract of employment.[35]

The Supreme Court’s doctrine in this case has existed since at least 2003.[36] Then, the Court determined that the employer’s use of video cameras in the workplace is licit only for “technical” or safety reasons, and if the employer is not seeking to monitor workers generally.[37] It also supports prior administrative holdings of the DT. For example, the DT has established that an employer does not violate workers’ dignity if it installs a closed circuit television to avoid robberies.[38] Security cameras could survey the entrances and exits of offices, bathrooms, lockers, showers, dining halls, the union bulletin board, and work areas.[39] In other words, a camera necessary for security does not necessarily violate workers’ fundamental rights.[40]

In another administrative opinion, the DT noted two possible employer uses of cameras: (1) to watch workers generally, or (2) for “technical” needs associated with the production process or for security reasons.[41] The DT determined that general worker surveillance was illicit.[42] The second type, serving “technical” needs associated with the production process or for security reasons, was legal.[43] The DT recognized that legal surveillance—the second type of surveillance—may result in what otherwise could be deemed an illegal oversight of workers.[44] However, the DT determined that apparent illegal surveillance resulting from legitimate security concerns was merely an “accidental consequence” or a “side effect” of licit surveillance, and, hence, legal.[45]

In conclusion, we believe that the Supreme Court’s holding was correct. It followed prior Supreme Court opinions and administrative rulings pertaining to workers’ privacy rights. It also helps us to extend privacy concerns in other areas, such as “cyber surveillance.” Given developments in information technologies, it is possible for employers to monitor the behavior of subordinate workers by invasive means that threaten privacy rights. The Chilean Supreme Court’s recent opinion on video surveillance thus helps to protect other contemporary privacy concerns. Simply put, an employer should not be able to monitor employees through cyber means. It would need to prove security concerns, or aims towards safeguarding productivity to justify cyber surveillance.

We should note that one dissenting judge, of five, disagreed with the four-member majority. She insinuated, without making any explicit argument or providing any rationale, that the facts and law failed to show a violation of workers’ privacy rights, despite what appeared to be an overbroad filming of workers’ activities. She may have also insinuated that workers’ privacy rights were doubtful.[46] But workers privacy rights are not doubtful. Perhaps, the dissenting judge believed that the employer could dispose of workers’ fundamental rights and annul them in the workplace. It’s hard to give any weight to such innuendos, especially when not backed by reasoned statements.

Notes:

  1. Professor of Law, Universidad Adolfo Ibáñez
  2. Visiting Professor of Law, University of Iowa College of Law. Associate Professor of Law and Co-Director, Institute for Law and the Workplace, IIT Chicago-Kent College of Law.
  3. The authors are listed in alphabetical order. They thank Sarah Bahn for editorial assistance. The opinions here are solely the authors.’ Mistakes and omissions are the sole responsibility of the authors. Direct any inquiries to crosado@kentlaw.iit.edu.
  4. Corte Suprema de Justicia [C.S.J.] [Supreme Court], 20 marzo 2017, “Sindicato Interempresas N° 6 de Conductores y Trabajadores Flota Talagante c. Asociación Gremial de Empresarios de Taxibuses Flota Talagante,” Rol de la causa: 39-2017 (Chile).
  5. Id.
  6. Id.
  7. Id.
  8. Id.
  9. Id.
  10. Id.
  11. Id.
  12. Id.
  13. Id.
  14. Id.
  15. See Sergio Gamonal C., La “Cibervigilancia” dentro de la empresa: comentario a una sentencia de la Corte Suprema, Revista Laboral Chilena, June 2004, at 90, 90–94 (2004).
  16. Constitución Política de la República de Chile [C.P.] art. 19.
  17. Código del Trabajo [Cód. Trab.] [Labor Code] art. 5.
  18. Cód. Trab. art. 154.
  19. Corte de Apelaciones [C. Apel.] [Court of Appeals] 19 Diciembre 2016, “Sindicato Interempresas N° 6 de Conductores y Trabajadores Flota Talagante c. Asociación Gremial de Empresarios de Taxibuses Flota Talagante,” Rol de la causa: 3441-2016 (Chile).
  20. Id.
  21. Id.
  22. Id.
  23. Id.
  24. C.S.J., 20 marzo 2017, “Sindicato Interempresas N° 6 de Conductores y Trabajadores Flota Talagante.”
  25. Id.
  26. Id.   
  27. The original Spanish text states:
    Acordada con el voto en contra de la Ministra Sra. Egnem, quien estuvo por revocar el fallo en alzada y consecuencialmente, por rechazar el recurso de protección deducido en autos, teniendo únicamente presente para ella que los antecedentes no dan cuenta de un derecho indubitado que asista a los recurrentes y que requiera ser resguardado por esta vía cautelar de urgencia.
  28. See José Luis Ugarte Cataldo, Tutela de Derechos Fundamentales del Trabajador 33–39 (2009); Sergio Gamonal Contreras., El Procedimiento de Tutela de Derechos Laborales 21–23 (2007). 
  29. Antonio Baylos Grau, Derecho del Trabajo: Modelo para Armar 99 (1991).
  30. Dirección del Trabajo, Dictamen Nº 3965, (June 5, 1969).
  31. Id.
  32. See Sergio Gamonal Contreras, Ciudadanía en la Empresa: o los derechos fundamentales inespecíficos 26 (2004).
  33. Cód. Trab. art. 5.
  34. Id.
  35. See generally Stephen Gardbaum, The “Horizontal Effect” of Constitutional Rights, 102 Mich. L. Rev. 380, 391 (2002) (describing how Germany is recognized for its doctrine of “horizontal effects.).
  36. See generally Sergio Gamonal C., Cidadania na Empresa e Eficácia Diagonal dos Direitos Fundamentais (Jorge Alberto Araujo trans., 2011); Sergio Gamonal C., La Eficacia Diagonal u Oblicua y los Estándares de Conducta en el Derecho del Trabajo (2015) [hereinafter Gamonal C., Eficacia Diagonal].
  37. [36]. Corte Suprema de Justicia [C.S.J.] [Supreme Court], 12 mayo 2003, “Sindicato Nacional Interempresa de Trabajadores Metalúrgicos, Comunicaciones, Energía y Actividades Conexas c. Electroerosión JAPAX Chile S.A.,” Rol de la causa: 1575-03 (Chile). See Gamonal C., supra note 12, at 90.
  38. C.S.J., 12 mayo 2003, “Sindicato Nacional Interempresa de Trabajadores Metalúrgicos, Comunicaciones, Energía y Actividades Conexas,” [<publication abbreviation>] No. < > p. < >.
  39.  See Gamonal C., Eficacia Diagonal, supra note 32, at 93–94.
  40. Id.
  41. Ministerio del Trabajo y Previsión Social, Dictamen Nº 363, (January 25, 2002).
  42. Id.
  43. Id.
  44. Id.
  45. Id.
  46. Dirección del Trabajo, Dictamen Nº 363, (January 25, 2002).
  47. C.S.J., 20 marzo 2017, “Sindicato Interempresas N° 6 de Conductores y Trabajadores Flota Talagante.”

 

 DISPATCH No. 7, "The Peculiarities of Telework in Post-Soviet Space: Russia, Kazakhstan, Belorussia, and Ukraine," by Elena Sychenko

May 8, 2018

Abstract:

The main objective of this paper is to provide a critical overview of the new Russian and Kazakh legislation by comparing it with the norms of the European Framework Agreement and exploring the possible ways of protecting teleworkers’ rights in Belorussia and Ukraine in the lack of special provisions. The article will comprise of three parts: the first one will trace Russian experience, the second will analyze the Kazakh approach to distant work, and the third part will be dedicated to the relevant policies in Ukraine and Belorussia. In the concluding part the perspectives of further development in this sphere will be evaluated.

The Peculiarities of Telework in Post-Soviet Space: Russia, Kazakhstan, Belorussia, and Ukraine

The spread of telework has become a strong trend in a contemporary world since 1990s labor law scholars and national (as well supranational) governments and social partners sought to establish a due legal framework for the regulation of such a type of employment contract.  Much work has been done in this direction on the European level; the European Framework Agreement established the unique understanding of telework and fixed the minimum guarantees of distant workers’ rights. The adoption of this agreement lead to gradual changes of national approaches to this type of work and contributed significantly to the enhancement of national labor provisions that are fixed in the legislation or in the collective agreements. In the countries chosen for the present research, the situation is completely different. Trade unions do not play any important role in the elaboration of labor law