The EU Court of Justice judgement in the landmark Laval case has upset trade unions, who argue that the ruling questions collective bargaining agreements. Trade unionists and politicians say the ruling opens the door to “wage dumping” in the EU.
Contrary to the Advocate-General’s opinion, the Court ruled, on 18 December 2007, that the blockage of a building site in order to force a foreign service provider to enter into negotiations on pay and sign collective agreements is illegal under EU rules on the freedom to provide services. It argued that the action can be justified in cases where the public interest of protecting workers prevailed. According to the Court, however, this was not the case in the Laval situation.
The Court stressed that the Posting of Workers Directive does not impose an obligation on foreign service providers to respect any working standards beyond the minimum standards as set in the directive. It added, however, that such companies may be forced to respect member states’ rules on minimum pay.
It went on to point out that collective action such as the one taken by Swedish trade unions to force Laval into a collective agreement are likely make it less attractive, or more difficult, for such a company to carry out construction work in Sweden and that it therefore constituted a restriction on the freedom to provide services.
The Court conceded that the blockade of Laval building sites served the purpose of protecting Swedish workers against possible social dumping, which “may constitute an overriding reason of public interest”.
It argued, however, that Swedish provisions, in particular on minimum pay, are not precise and accessible enough. Therefore requiring Laval to respect them would have raised a barrier to the company’s entry on the Swedish services market.