Case C-396/13, Sähköalojen ammattiliitto ry – Polish sparks short-circuit national social law [judgment 2015, ECLI:EU:C:2015:86]

Where Polish employees are posted to work on a Finnish power plant, can a Finnish union insist that those workers receive every bit of ‘pay’ as that concept is fleshed out in the relevant Finnish collective agreement? Or is the Polish company correct that: (i) Polish law governs their employees’ contract of employment (ii) under Polish law, workers cannot assign any labour-related claims; and (iii), a Finnish court has no jurisdiction to find that Polish law contravenes the EU Charter’s provisions on freedom of association?

Facts
The Finnish Electrical Workers’ Union ‘Sähköalojen ammattiliitto ry’ has decided to sue the Finnish branch of a Polish company ‘Elektrobudowa Spółka Akcyjna’, which posts its workers to work on a power plant in Finland.

The union’s decision rested on the belief that the Polish workers had not been paid all of the benefits to which they were entitled under the Finnish collective agreement applicable in the ‘supply of electricity and construction’ sector of the Finnish economy. That collective agreement had also been declared binding erga omnes by the Finnish state. (A collective agreement declared binding erga omnes is ‘universally applicable’ and applies across an entire sector of a national economy.)

More specifically, the Finnish Electrical Workers’ Union has alleged that the Polish employees’ rate of pay falls below that set down in the collective agreement – piece rates have not been offered to them and there is doubt as to whether the Polish workers have been slotted into the correct pay scales. The Polish workers have also not been paid the flat-rate daily allowance or the compensation for daily ‘travel-to-work’ time – both of those benefits form part of ‘pay’ under the collective agreement.

Since Finnish law allows an employee with an ‘unpaid wage’ claim to assign their right to a trade union, the Finnish union believes it is entitled to bring an action against the Polish company. Because of the numbers of Polish workers that have been posted, the total value of the union’s claim runs into several million euro. And the union has decided to bring this action before a Finnish District Court.

At first instance, the Polish company denied liability. In essence, there were three planks to its defence.

First, the key piece of EU legislation is the so-called ‘Rome I’ Regulation (EC) No 593/2008 on the law applicable to contractual obligations. As its name suggests, the Regulation governs contracts. Article 8 is relevant because, in this case, the posted workers’ contracts of employment are governed by Polish law. Furthermore, the effect of Article 14(2), which deals with assigned claims, is governed by Polish law. Thus, it is directly relevant that Article 84 of the Polish Labour Code states that workers with labour-related claims are not allowed to assign their claims. In light of these provisions of the Rome I Regulation, therefore, the Finnish union’s claim must fail in its entirety.

Second, and contrary to the Finnish union’s allegation that Article 84 of the Polish Labour Code infringes freedom of association because it allegedly stops workers assigning their claims to unions, impedes the work of unions, access to the courts, and for labour law to protect the weaker party; the union’s allegation must fail because (i) Article 84 of the Polish Labour Code is a purely national measure and its application cannot be tested against the freedom of association provision in Article 12 of the EU Charter; (ii), Article 84 of the Polish Labour Code does not prevent employees either from joining a union or unions representing workers; and (iii), the Polish-British Protocol precludes any Finnish court from determining that the Polish law is contrary to the fundamental rights, freedoms and principles proclaimed in the EU Charter.

Third, even if that were not the case, any application of the EU Charter’s provision on freedom of association entails a respect for the principle of proportionality. This would involve taking into account the treaty-enshrined freedom to provide services. And so the Finnish collective agreement would need to be interpreted in light of the EU posted workers Directive, the CJEU’s case law, and the EU Treaty.

Thus, it is significant that the EU ‘posted workers’ Directive 96/71 sets out the maximum conditions which a host Member State can impose on posted workers working within its jurisdiction. Article 3 on ‘Terms and conditions of employment’ stipulates:

1. Member States shall ensure that, whatever the law applicable to the employment relationship, the undertakings referred to in Article 1 (1) guarantee workers posted to their territory the terms and conditions of employment covering the following matters which, in the Member State where the work is carried out, are laid down:
- by law, regulation or administrative provision, and/or
- by collective agreements or arbitration awards which have been declared universally applicable within the meaning of paragraph 8, insofar as they concern the activities referred to in the Annex:
(a) maximum work periods and minimum rest periods;
(b) minimum paid annual holidays;
(c) the minimum rates of pay, including overtime rates; this point does not apply to supplementary occupational retirement pension schemes;
(d) the conditions of hiring-out of workers, in particular the supply of workers by temporary employment undertakings;
(e) health, safety and hygiene at work;
(f) protective measures with regard to the terms and conditions of employment of pregnant women or women who have recently given birth, of children and of young people;
(g) equality of treatment between men and women and other provisions on non-discrimination.
For the purposes of this Directive, the concept of minimum rates of pay referred to in paragraph 1 (c) is defined by the national law and/or practice of the Member State to whose territory the worker is posted.

This Directive has been interpreted in the CJEU’s case law. After the CJEU’s ruling in C-341/05 Laval, host states cannot impose charges that are not foreseeable. Furthermore, daily flat-rate stipendia and travel-to-work benefits do not form part of minimum pay. Even if they would, then any allegations that that the Polish employer’s wage undercuts the rates in the collective agreement must still take into account other employee benefits that go into pay, such as food vouchers. Under Polish law, there is no obligation on an employer to pay flat-rate stipendia or travel-to-work benefits.

Even if flat-rate stipendia or travel-to-work benefits did form a part of the Finnish collective agreement, then the Finnish collective agreement would still need to be interpreted in light of the aims of the Directive. The Directive was designed to ensure the freedom to provide services. That goal could not be achieved if a posting company would need to pay those extra benefits for they would represent a disproportionate cost. In turn, that would make the posted employees disproportionately expensive in comparison to those workers who would be provided by other firms in the host state. The result would be discrimination against firms that post their workers, and this would infringe those companies’ freedom to provide services.

The Finnish District Court hearing the dispute did not know how to apply EU law. It decided to ask a number of questions of the CJEU, and requested the CJEU to deal with the reference under the expedited procedure.

Questions Referred
According to the Curia website, the Satakunta District Court has asked:

1.1 May a trade union acting in the interests of workers rely directly on Article 47 of the Charter of Fundamental Rights of the European Union as an immediate source of rights against a service provider from another Member State in a situation in which the provision claimed to be contrary to Article 47 (Article 84 of the Polish Labour Code) is a purely national provision?

1.2 Does it follow from European Union law, in particular the principle of effective legal protection apparent from Article 47 of the Charter of Fundamental Rights of the European Union and Articles 5, second paragraph, and 6 of Directive 96/71/EC, […] interpreted in conjunction with the freedom of association in trade union matters protected by Article 12 of the Charter, in proceedings concerning claims which have become due for the purposes of that directive in the State in which the work is performed, that the national court must disapply a provision of the labour code of the workers’ home State which prevents the assignment of a pay claim to a trade union of the State in which the work is performed, if the corresponding provision of the State in which the work is performed permits the assignment of a pay claim which has become due and hence the status of claimant to a trade union of which all the workers who have assigned their claims are members?

1.3 Must the terms of Protocol No 30 annexed to the Treaty of Lisbon be interpreted as meaning that a national court situated in a country other than Poland or the United Kingdom must take them into account in the event that the dispute in question has a significant link with Poland, in particular where the law applicable to the contracts of employment is Polish law? In other words, does the Polish-British Protocol preclude the Finnish court from determining that the Polish laws, regulations or administrative provisions, practices or measures are contrary to the fundamental rights, freedoms and principles proclaimed in the Charter of Fundamental Rights of the European Union?

1.4 Must Article 14(2) of the Rome I Regulation be interpreted, having regard to Article 47 of the Charter of Fundamental Rights of the European Union, as prohibiting the application of national legislation of a Member State which contains a prohibition of the assignment of claims and demands arising from an employment relationship?

1.5 Must Article 14(2) of the Rome I Regulation be interpreted as meaning that the law applicable to the assignment of claims arising from a contract of employment is the law which applies to the contract of employment in question under the Rome I Regulation, regardless of whether the provisions of another law also affect the content of the individual claim?

1.6. Is Article 3 of Directive 96/71, read in the light of Articles 56 and 57 TFEU, to be interpreted as meaning that the concept of minimum rates of pay covers basic hourly pay according to pay groups, job guarantee pay, holiday allowance, flat-rate daily allowance and compensation for daily travel-to-work time, as those terms of work are defined in a collective agreement declared universally applicable and falling within the scope of the annex to the directive?
1.6.1. Must Articles 56 [and 57] TFEU and/or Article 3 of Directive 96/71/EC be interpreted as precluding Member States in their capacity as ‘host State’ from imposing, in their national legislation (a universally applicable collective agreement), on service providers from other Member States an obligation to pay compensation for travelling time and a daily allowance to employees posted to their territory, taking into account that under the national legislation referred to all posted workers are regarded as travelling to work for the whole period of their posting, which entitles them to compensation for travelling time and daily allowances?
1.6.2. Must Articles 56 and 57 TFEU and/or Article 3 of Directive 96/71/EC be interpreted as not permitting the national court to decline to recognise a pay classification created and used in its home State by a company from another Member State, if that has been done?
1.6.3. Must Articles 56 and 57 TFEU and/or Article 3 of Directive 96/71/EC be interpreted as permitting an employer from another Member State to determine, validly and so as to bind the court of the country in which the work is performed, the categorisation of employees in pay groups in a situation in which a universally applicable collective agreement in the country in which the work is performed requires a categorisation into pay groups with a different end result to be made, or may the Member State which is the host State to which the employees of a service provider from another Member State have been posted lay down rules to be observed by the service provider on the criteria for categorisation of employees into pay groups?
1.6.4. When interpreting Article 3 of Directive 96/71/EC, read in the light of Articles 56 and 57 TFEU, are accommodation paid for by an employer who is obliged under a collective agreement mentioned in Question 6 and meal vouchers provided in accordance with a contract of employment by a service provider from another Member State to be regarded as compensation for expenses caused by being a posted worker or as part of the concept of minimum rates of pay within the meaning of Article 3(1)?
1.6.5. May Article 3 of Directive 96/71/EC in conjunction with Articles 56 and 57 TFEU be interpreted as meaning that a universally applicable collective agreement of the State in which the work is performed must be regarded as justified on the ground of requirements of public policy, when interpreting the question of job-based pay, compensation for travelling time and daily allowances?