On 8 December 2017, the Danish Labour Court passed judgment in a case regarding a provision on deferred salary in a so-called Laval collective agreement. The Labour Court thereby emphasises that it is (still) allowed to make an agreement whereby foreign enterprises must pay e.g. pension contributions and holiday allowance in Denmark to serve as security and at the same time must pay the amounts in their home countries, however with subsequent refund thereof.
In this case the validity of a so-called Laval collective agreement entered into by 3F (a Danish Union) and the Italian enterprise Solesi was questioned, and it was also questioned whether Solesi had paid the correct salary to the employees seconded to Denmark in connection with a construction project. The parties disagreed whether the provision in the collective agreement on deferred salary was legally invalid due to non-compliance with the Directive concerning the posting of workers in the framework of the provision of services (96/71/EC), the Danish Consolidation Act concerning the Posting of Workers etc., section 6a, and the Directive on safeguarding the supplementary pension rights of employed and selfemployed persons moving within the Community (98/49/EC).
In the Labour Court, Solesi submitted that clause 3 on deferred salary in the collective agreement entered into was non-compliant with basic EU law principles.
Clause 3 of the collective agreement thus entailed that Solesi paid i.a. the holiday allowance to the 3F holiday fund, but was entitled to have the excess amounts paid refunded when Solesi documented that amounts equivalent to what had been paid to the Danish holiday fund had been paid or put aside as reserves in the home country. Solesi's view was that clause 3 in the collective agreement entailed that Solesi's situation was inferior to the situations of Danish enterprises as there was a requirement for double payment. Reference to i.a. the Laval judgment was made1.
Solesi further remarked that clause 3 of the collective agreement on pension contributions was in contradiction with the pension directive, article 6 (2), as Solesi alredy paid contributions for the employees in its home country to the supplementary pension scheme "Prevedi". As documentation for Solesi's payments to "Prevedi" for the employees, Solesi submitted a number of registration forms signed by the persons who allegedly participated in the project in Denmark. However, nothing to document that Solesi had made payments for the period in question for the employees to "Prevedi" had been submitted. The Labour Court therefore found no grounds to establish that the arrangement involving payments of pension contributions as part of the deferred salary was in contradiction with the pension directive.
The Labour Court found no grounds either to refer the questions to the European Court of Justice and stated as follows: "The Labour Court thus finds no grounds to assume that the collective agreement on the basis of which 3F gave notice of conflict and which Solesi entered into after negotiations is in contradiction with EU law or for any other reason is legally invalid."
Finally, the Labour Court notes that the union is to receive the fine to be paid by the foreign company – also as regards the non-unionised employees. One of the basic considerations behind the rules – to avoid social dumping – may otherwise not be obtained. The Labour Court did thus not find that this question was in contradiction with the right not to be organised.
In conclusion, Solesi is ordered to pay a fine of DKK 14 million to 3F pursuant to the so-called principle of difference, i.e. what the enterprise saved plus an amount of a penal nature.
Bird & Bird comments:
- That unions may still legally conflict to obtain a collective agreement with foreign enterprises as long as the general rules on conflicts and notices are observed.
- That a provision on deferred salary in a Laval collective agreement not in itself is regarded as legally invalid or in contradiction with EU law principles.
- That it is remains unsolved whether a sympathy blockade may be initiated in support of a claim for an adoption agreement entailing a higher minimum wage than what follows from the current collective agreement.
- That there are strict requirements for the documentation of the payments made by the foreign enterprises in their home countries.
- That it remains unsolved when and in which circumstances a foreign pension scheme may be regarded as comparable to a Danish pension scheme in the collective agreement.
- That a fine to be paid to the union itself – which will not benefit any of the non-organised employees – is not in contradiction with the right not to be organised.
- That it will be difficult for a foreign enterprise which has entered into an adoption agreement to submit that the adoption agreement or parts thereof are not legally valid because of a "threat" of a sympathy blockade if the enterprise has not used the right to refer the question of the validity of the use of collective fighting steps to support the claim for a collective agreement to the Labour Court.
1 C-341/05: The issue of the case was whether a Latvian enterprise's right to deliver services in Sweden in accordance with EU law was consistent with the union's right to conflict to secure employee rights through collective agreements.