Case C-216/15, Betriebsrat der Ruhrlandklinik – stopping the sisters of merciless competition [judgment 2016, ECLI:EU:C:2016:883]

A German clinic wants to hire-in nursing staff from the German Red Cross. It expects those nurses to be put to work on a non-temporary basis. However, the clinic’s plan is being blocked by the clinic’s works council. It points out that the plan breaches a rule in German law that says employees can only be seconded on a temporary basis. ‘Irrelevant’, the clinic would say, ‘the German rule only applies to employees, and since Red Cross nursing staff do not have a contract of employment they are not employees’. Is this literal reading of German law not contrary to the protective aim of the EU’s ‘temporary agency work’ Directive 2008/104/EC?

Background
Rurhlandklinik runs a clinic in Germany. About 190 people work for it. In 2011, it decided it needed more nursing sisters and care staff. Consequently, it asked the Association of the German Red Cross Sisters to rent it the necessary man-power and to do so for money.

However, the clinic’s plan to put the German Red Cross’s nurses to work on a non-temporary basis, has hit the buffers. The works council is blocking the proposed appointment of a Red Cross nurse because it thinks the clinic’s plan breaches German employment law.

Citing an ‘unreasonable refusal’ by the works council, the clinic swanned off to the local court for a judicial declaration that the Red Cross nurse could be put to work in its clinic. According to the clinic, it would only be acting illegally if the nurse concerned was an employee under German law.

The clinic says that is not the case here. Despite the Red Cross paying its people both a salary and other work-related social rights, its staff are not engaged on the basis of a contract of employment (the Red Cross requires its staff to become members of the association). Consequently, the nurse concerned is not an employee and so German law is not infringed. In the absence of any legal impediment, the nurse can be put to work in the clinic on a non-temporary basis.

The dispute between the works council and the clinic has escalated up to Germany’s Federal Labour Court, who cannot resolve the dispute without knowing what the correct interpretation of EU law should be.

The relevant EU legislation is the EU’s ‘temporary agency work’ Directive 2008/104/EC (OJ [2008] L327/9).

Article 3(1) defines a ‘worker’ in these terms:

For the purposes of this Directive: (a) ‘worker’ means any person who, in the Member State concerned, is protected as a worker under national employment law;

It is not contested that German law does not permit workers to be seconded to another institution on any thing but a temporary footing.

That said, it is also EU law that the definitions which exist in national employment law do not exist in splendid isolation. Indeed, the CJEU has suggested that there are limits to the scope of national law.

In Case C-393/10, Dermod Patrick O’Brien ECLI:EU:C:2012:110, the CJEU explained:

34 However, the discretion granted to the Member States by Directive 97/81 in order to define the concepts used in the Framework Agreement on part-time work is not unlimited. As the Advocate General observed in points 36 and 37 of her Opinion, certain words used in that agreement may be defined in accordance with the national law and practices on condition that they respect the effectiveness of the directive and the general principles of European Union law.

The sting is in the tail, namely, the ‘effectiveness’ of EU law and the Directive.

For present purposes, this transforms the legal question into one of: is the Red Cross performing ‘economic activities’, as that concept is defined in Articles 1(1) and (2) of the Directive?

Those provisions of the Directive state:

Article 1 ‘Scope’
1. This Directive applies to workers with a contract of employment or employment relationship with a temporary-work agency who are assigned to user undertakings to work temporarily under their supervision and direction.

2. This Directive applies to public and private undertakings which are temporary-work agencies or user undertakings engaged in economic activities whether or not they are operating for gain.

3. Member States may, after consulting the social partners, provide that this Directive does not apply to employment contracts or relationships concluded under a specific public or publicly supported vocational training, integration or retraining programme.

Since the Red Cross is paid money by the clinic to cover the wage costs for supplying the nursing staff, and it receives extra money to cover its admin costs too, the Red Cross could be said to be engaged in economic activities for the purposes of the Directive.

So, is the aim of the Directive being thwarted here? Article 2 provides:

The purpose of this Directive is to ensure the protection of temporary agency workers and to improve the quality of temporary agency work by ensuring that the principle of equal treatment, as set out in Article 5, is applied to temporary agency workers, and by recognising temporary-work agencies as employers, while taking into account the need to establish a suitable framework for the use of temporary agency work with a view to contributing effectively to the creation of jobs and to the development of flexible forms of working.

Could the aim of the Directive be thwarted when:

i) the Red Cross benefits from the fact that its staff are not employees, and indeed, it will never engage its staff on the basis of a contract of employment and instead requires them to become members of the association?

ii) there is a risk of distorting competition in the German health care sector if the Red Cross can operate outside of the Directive but similar temporary work agencies are required to operate within it? and,

iii) somewhat differently, German law stipulates that workers can only be seconded on a temporary basis?

The five judges in the Federal Labour Court decided to make a reference to the CJEU.

Question Referred
According to the Curia website, the Federal Labour Court has asked:

Does Article 1(1) and (2) of Directive 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on temporary agency work […] apply to the assignment of a member of an association to another undertaking for the performance of work under that undertaking’s functional and organisational instructions if, upon joining the association, the member undertook to make his full working capacity available also to third parties, for which he receives a monthly remuneration from the association, the calculation of which is determined by the usual criteria for the particular activity, and the association receives, in return for the assignment, compensation for the personnel costs of the association member and a flat-rate administrative charge?