A landmark ruling of the European Court of Justice (ECJ) outlawing minimum wage conditions in public tender contracts has been strongly criticised by trade unions, NGOs and politicians from across the political spectrum. The verdict could lead to the revision of an EU directive on the posting of workers abroad.
The Court ruled, on 3 April 2008, that a Lower Saxony law obliging public building contractors to respect collective agreements (see Background) is incompatible with the EU directive on the posting of workers. It notably judged that Germany had failed to respect specific procedures laid down in the Directive on making collective agreements universally binding.
The Court conceded that member states are entitled to impose minimum rates of pay on foreign companies posting workers to their territory. But it went on to say that in the case of Lower Saxony, the restriction to the freedom to provide services was not justified by the objective of ensuring the protection of workers.
The Court argued that there were no good reasons why workers should only be protected in this way when they work on projects which are subject to public works contracts, whereas those working under private contracts do not benefit from a similar level of protection.
On the day of the Court Ruling, the European Commission adopted a Recommendation on posted workers. The non-binding text comes as a reaction to a number of key problems that the Commission identified by means of an in-depth monitoring of the posting of workers across the EU. According to the Commission, they concern the “virtual absence of administrative cooperation, unsatisfactory access to information and cross-border enforcement problems”.
Concequently, the Commission proposes a package of measures focusing on better information exchange, namely:
- Setting up an electronic network for exchange of information beteween member states’ administrations. This system will handle technical information in a structured way, dispensing of problems encountered earlier with respect to language use;
- better access to information for both service providers and posted workers, mainly by means of understandable and accessible web sites, and;
- setting up a High Level Committee for the exchange of information and best practice among member states.