My opening remarks will cover both the directive and the regulation, and Ms Flood and Mr. Greene will be available on matters of detail that may be of interest to the committee. The two proposals launched by the European Commission in March are intended to strike the right balance between protecting workers and facilitating cross-border service provision in the context of fair competition in Europe's Single Market.
The proposal for an enforcement directive aims to remove uncertainties that have arisen in the implementation of the 1996 rules on the posting of workers. It aims to ensure better information for workers and companies about their rights and obligations, and better co-ordination between national competent authorities. In Ireland's case, our competent authority is the National Employment Rights Authority. The parallel so-called Monti II regulation is intended to take account of recent case law of the Court of Justice of the European Union and confirm that the freedom to provide services does not have primacy over social rights or vice versa. It is intended to confirm that the fundamental right or freedom to strike and economic freedoms must be placed on an equal footing.
The posting of workers plays an important role in the cross-border provision of services, particularly in sectors like construction, transport and temporary agency work. It is also important for service activities requiring a specialised, highly skilled workforce, such as in the information technology sector. The original 1996 posting of workers directive set out a core of mandatory working conditions applicable to posted workers in the host member state. It seeks to guarantee fair competition between all service providers and a level playing field. It also seeks to ensure that posted workers enjoy an adequate degree of protection during postings and prevents a race to the bottom with regard to working conditions.
The Commission's package of proposals will be examined in the Council of Ministers and by the European Parliament. Ireland's key concerns will be to ensure that any additional legislative intervention in this area will bring clarity and legal certainty to it. A key public policy concern is to ensure that core working conditions, such as minimum rates of pay, working time and provisions on health and safety at work, are well defined and that the temporary posting of workers is not used as a way to side-step minimum entitlements relating to pay and conditions.
In this context our priority is to ensure that any new proposal respects a diversity of the different industrial relations systems across member states, including the long-established role of bodies such as the Labour Relations Commission and the Labour Court. Departmental officials are currently engaged with the Council's deliberations on the new proposals via the working group on social questions. The Department has also initiated a round of consultations with social partners and other key stakeholders in order to ascertain views on the overall package of measures.
Turning specifically to the directive, the Government broadly welcomes the Commission's draft proposal for a directive on the enforcement of the original posting of workers directive. Ireland attaches great importance to the two fundamental principles at the heart of this proposal - the free movement of workers within the EU and the protection of those workers' rights on the one hand, and on the other hand the freedom of businesses to provide services anywhere in the EU's internal market. The challenge in getting the text of this directive agreed between member states will be in striking the appropriate balance between these two fundamental principles.
An improved system of enforcement of the posted workers directive should be capable of being achieved without creating excessive administrative burdens. This means avoiding excessive new burdens in resource constrained times for competent authorities of the state by minimising the need for new institutional systems or entities for the purpose. More importantly, perhaps, it means the new measures should not unduly impinge on business, particularly small and medium-sized businesses, which are disproportionately affected by administrative burdens.
Any improved system of enforcement of existing posted workers' rights should build on, not duplicate, existing compliance and enforcement arrangements that exist at national level. In the Irish context, there are robust employment rights enforcement arrangements in place and significant inspection resources committed in that area. Any new arrangement should also be proportionate and, in this context, it is interesting to note that according to the Commission statistics the relevance of posting in the Irish employment context is very low. Workers posted from Ireland as a percentage of employment in private sectors in other member states was an average of 0.1%, and workers posted to Ireland as a percentage of employment in the private sector averaged 0.5% between 2007 and 2009, which would include some of the boom years.
The provisions of the draft directive which provide for greater access to information across member states are welcome. The objective in Article 5 is to improve access to information about working and employment conditions in other member states where a business is considering providing services. Many small and medium-sized businesses, which are a cornerstone of job creation in Ireland and in most member states, are hampered by the lack of clearly and readily accessible information of this nature and this proposal can bring greater transparency in the area of information provision. There is also a welcome emphasis on providing information electronically, whether it be through an opening up of business registers or the use of the Internal Market information system, to exchange information between sending and host member states on companies engaged in the temporary posting of workers.
The principles governing administrative co-operation between member states to facilitate the implementation of the directive are also welcome, even as some of the finer detail concerning response times to requests for assistance remains to be agreed. The key to making such mutual assistance workable is to find realistic response times that do not create an excessive administrative burden for the member state which is the subject of the request.
Article 12 proposes introducing a provision whereby, for the construction industry, a contractor may be held jointly and severally liable for remuneration at minimum rates of pay owed to a posted worker and taxes and social insurance contributions owed to the state by a sub-contractor. The purpose of this Article is to provide enhanced protection for posted workers in the event that their employer, the sub-contractor, disappears or fails to pay them what they are owed. This Article also provides that a main contractor may avoid such liability by undertaking "due diligence" in conformity with a system to be created by the member state.
The committee may be aware of the concerns of employers in this regard. From the Government's perspective, we would have our own concerns. Joint and several liability is not a feature of existing employment law in Ireland and we have sought the Attorney General's advice as to whether this proposal is feasible in an Irish context. The Commission recognises that there are differing views among member states and stakeholders on the feasibility or desirability of such an instrument at EU level. Only eight member states have joint and several liability provisions for parties other than the direct employer with regard to wages, taxes or social security contributions.
In Articles 13 and 14 of the draft directive, some general principles are articulated concerning cross-border enforcement of administrative fines and penalties for those companies found by a host member state to be in breach of its employment legislation. While welcome on the face of it, the challenges should not be underestimated in terms of putting in place a framework for such cross-border enforcement. The existence in some member states of administrative fines and penalties for non-compliance with the relevant legislation, versus the criminal sanctions applied in jurisdictions, such as Ireland, is one such challenge. We are engaging in further consultation with the relevant national authorities which will inform our position on this element of the draft directive.
Turning to the regulation, this legislative proposal for a Council regulation, the so-called Monti II regulation, has been proposed by the European Commission in order to complement the parallel proposal for a partial revision of the directive and to build upon the significance of the European Court of Justice judgments in the Viking Line and Laval cases. These cases recognised for the first time that the right to take collective action, including the right to strike, constitutes a fundamental right and an integral part of the general principles of EU law. The purpose of the draft regulation, accordingly, is to clarify the exercise of freedom of establishment and the freedom to provide services alongside fundamental social rights, including the right to take collective action, in accordance with national law and practices and in compliance with EU law. A feature of an EU regulation is that it has more legal certainty than a directive, which would still leave room for diverging transposition and takes somewhat longer to produce real effects on the ground. A regulation is often seen as being a more direct and effective way of introducing particular proposals but, as the committee is aware, it requires unanimity among member states.
This regulation is intended to confirm that the freedom to provide services does not have primacy over social rights or the other way around. The proposal explicitly states that it may not be interpreted as affecting the right to strike. It avoids reversing or re-interpreting the case law of the Court of Justice of the European Union. It does not give primacy to economic rights, nor does it give primacy to social rights. Instead, it sets out to uphold a balance not only between those important rights, but also between the different social models and industrial relations within the Union. The draft regulation lays down general principles with respect to the exercise of the right to strike within the context of the freedom of establishment and the freedom to provide services. The proposal provides for a new alert mechanism for industrial disputes in situations that affect the proper functioning of the Single Market, but leaves national law governing the right to strike unaffected.
Undoubtedly some of the concerns of member states about the proposed regulation stem from the fact that the Treaty on the Functioning of the European Union, TFEU, clearly stipulates that the provisions of Article 153 of that treaty do not apply to the right to take collective action. The Commission is seeking a way out of this dilemma by basing the proposed regulation on the so-called "flexibility clause" at Article 352. This article may be used if a measure by the Union should prove necessary in order to attain one of the objectives set out in the treaties. The precondition is that the treaties do not provide the necessary powers for this, so it is using a specific clause within the treaty to try to bring forward this regulation.
The Irish Business and Employers Confederation, IBEC, is generally opposed to the proposed regulation and considers that there is no legal basis for EU legislation on the right to take collective action. IBEC objects to the Commission's reliance on Article 352 in furtherance of the proposed regulation. It considers that the legal base chosen for the proposed regulation constitutes a distortion of the purpose for which Article 352 is intended and operates to undermine the specific exclusions outlined in Article 153. IBEC's view is that Ireland already has well established industrial relations mechanisms which give expression to the right to collective bargaining and action, underpinned by statute. Any significant change in this, such as is being proposed, especially in the current climate, runs the risk of upsetting the careful balance that has been struck between workers and employers in this jurisdiction.
For its part, the Irish Congress of Trade Unions appears to consider that the proposals on the right of unions to take strike action could result in the right to strike being undermined across Europe and could well be in contravention of International Labour Organisation conventions. Its view appears to be that neither economic freedoms nor competition rules should have priority over fundamental social rights.
What is clear from the reactions of the social partners at both the national and European level is that they have significant concerns about the proposed regulation for altogether divergent reasons. The Department is aware of the sensitivities that surround these issues. The Oireachtas Joint Committee on European Affairs previously examined some of these issues in its 2009 report, "The Lisbon Treaty and Workers Rights". The committee may wish to note that a majority of parliaments of member states have not submitted reasoned opinions to the Commission in respect of this proposed Monti II regulation. This is very likely to be because of the significant doubts that have been expressed, in public commentary and elsewhere, about the prospects of the Monti II regulation being adopted in its current form.
However, as the draft regulation is currently framed, the Government's overriding concern would be to ensure that any additional legislative intervention in this area would bring clarity and legal certainty to it. Legislative intervention in this area would bring clarity and legal certainty. We are fully involved in the Council's deliberations on the new proposals and we are taking steps to consult directly with social partners to ascertain their views on the overall package of measures. Given the requirement for unanimity in respect of a regulation, it is likely that Ministers in the Employment Council would only agree on the proposed instrument if they are convinced it will bring real added value in terms of legal certainty to all member states.
