Abstract
The article analyses the CJEU ruling C-311/21 TimePartner, where the Court interpreted the option provided in the Temporary Agency Work Directive for social partners to derogate from the principle of equal treatment. The CJEU concluded that the term ‘while respecting the overall protection of temporary agency workers’ is a criterion for using the option to derogate, and that a derogating collective agreement must be subject to legal review of fulfilling this criterion, even in Member States where collective agreements are presumed to be correct. Furthermore, the CJEU ruled that in order to respect the overall protection, any disadvantages in basic working conditions, i.e., working time and pay, should be set off against other advantages relating to the basic working conditions for the temporary agency workers. Finally, that the assessment is an in concreto comparison of disadvantages and advantages in terms of the basic working conditions applicable at the specific user undertaking. The article argues that the CJEU, with this approach, at the same time restricts the room for negotiation of national social partners concluding derogating agreements, and directs the legal review of the national judiciaries. This approach may interfere in the national industrial relations systems in some Member States more than others. The article then discusses how the Danish legal framework respects the overall protection of temporary agency workers. Temporary agency workers are addressed in many collective agreements in force at user undertakings with a view to counteracting circumvention of the collective agreement, and likewise, many temporary work agencies are covered by collective agreements. The transposition process in 2013 of the option to derogate is presented. The Danish Supreme Court in 2019 ruled, that the term ‘respecting the overall protection’ in the derogation provision in the Danish Temporary Agency Workers Act constitutes a legal criterion, which can be subject to judicial review, and is not an automatic consequence of a collective agreement. The article discusses how an assessment of the level of protection would be carried out in Danish industrial judiciaries, taking inspiration from earlier industrial case law comparing the overall protection of competing collective agreements. The article finally asserts that the approach of the CJEU in the TimePartner ruling protects temporary agency workers rather than pursuing flexibility in the labour markets, and as such favours one of the dual aims of the Directive. In that light, the approach taken by the CJEU ensures that derogating collective agreements meet certain standards in terms of the basic working conditions of temporary agency workers. At the same time, the ruling does not interfere with other negotiated or legislated working conditions, where the TAW Directive does not in itself require equal treatment or ‘overall protection’. The limitation of the TAW Directive to concern equal treatment only for basic working conditions, and not all working conditions, thus continues to allow a degree of flexibility for employers as well as for temporary agency workers.
Keywords
Introduction: the dual purpose of the Temporary Agency Work Directive
The TAW Directive is the third Directive determining working conditions for persons employed in atypical forms of work, as specified in Point 7 of the 1989 Community Charter of the Fundamental Social Rights of Workers.
The TAW Directive seeks to reconcile two overarching aims, as stipulated in Article 2: ‘The purpose of this Directive is
The protection of temporary agency workers is guaranteed by two principles: first, the principle of equal treatment, provided in Article 5(1), which asserts that the basic working and employment conditions of temporary agency workers, during their period of assignment, must be at least those that would apply had they been directly employed by the user undertaking. The temporary agency worker is entitled to equal treatment only concerning basic working conditions as defined in Article 3(1)(f), 1 in essence working time and pay, protection of pregnant women and nursing mothers, and protection of children and young people, cf. Article 5(1)(a), as well as non-discrimination on grounds of sex, race, ethnic origin, religion, beliefs, disabilities, age or sexual orientation, cf. Article 5(1)(b). These limited rights to equal treatment are considered acceptable, due to the dual aims of the Directive and the fact that temporary agency work is performed only temporarily. Second, a protection against abuse of temporary agency workers is provided for in Article 5(5), which implies that Member States must counteract the conclusion of successive assignments designed to circumvent the provisions of the TAW Directive.
A derogation from the principle of equal treatment is possible in two situations:
Payment between assignments: Member States may derogate from the principle of equal pay if the temporary agency worker has a permanent contract of employment and is paid between assignments (cf. Article 5(2)). Collective agreements: Social partners may derogate from the principle of equal working and employment conditions in collective agreements, while respecting the overall protection of temporary agency workers (cf. Article 5(3)).
The second possibility of derogation (cf. Article 5(3)) was under review by the CJEU in C-311/21 TimePartner.
C-311/21 TimePartner facts and key legal issue
In the TimePartner case, a temporary agency worker employed on a fixed-term contract was assigned to a retail undertaking. Employees of the user undertaking were covered by a collective agreement for retail workers in Bavaria, providing them with a gross hourly wage of EUR 13.64. The temporary agency worker was covered by a collective agreement for temporary agency workers in Germany, providing them with a gross hourly wage of EUR 9.23. The temporary agency workers’ agreement was concluded between the Interessenverband Deutscher Zeitarbeitsunternehmen eV (German Association of Temporary Work Agencies), of which TimePartner was a member, and the Deutscher Gewerkschaftsbund (German Trade Union Confederation), which included the Vereinte Dienstleistungsgewerkschaft (United Services Union), of which the temporary agency worker was a member.
The collective agreement for temporary agency workers derogated from the principle of equal treatment, as the hourly pay for temporary agency workers - one of the basic working conditions - was lower than that paid to employees of the user undertaking performing the same functions. The temporary agency worker claimed that this derogation by collective agreement infringed the overall protection of temporary agency workers (Article 5(3)) and thus did not meet the requirements for derogations from the principle of equal treatment. As such, the temporary agency worker claimed she was entitled to equal treatment concerning pay, cf. Article 5(1), and she filed a claim for outstanding hourly payments.
The key issue was how to interpret the concept ‘while respecting the overall protection of temporary agency workers’ in the provision in Article 5(3).
The CJEU's interpretation of ‘while respecting the overall protection’
The Court first stated that the objective of Article 5(3) should be understood in light of recital 16 (para. 36).
The wording of Article 5(3) is slightly ambiguous by using the term ‘
The Court secondly stated (para. 38) that Article 5(3) is an exception to the principle of equal treatment established in Article 5(1), not just an alternative means for providing protection to temporary agency workers.
As exceptions to the principle of equal treatment derogating collective agreements can be subjected to specific limitations. First, a derogation by collective agreement is confined to the limits of the overall protection of temporary agency workers. Second, any derogations in the collective agreement must be confined to a strict minimum to ensure a high degree of flexibility in labour markets and in industrial relations. The requirement to limit derogations in collective agreements to those that are strictly necessary corresponds to earlier case law on the interpretation of derogations by collective agreement from the scope of protection provided for in the Working Time Directive, Directive 2003/88, cf. cases C-227/09 Accardo and others and C-151/02 Jaeger. The Court has thus limited the framework for derogation by collective negotiations.
The Court thirdly stated (para. 39) that a collective agreement, which provides for unequal basic pay or working conditions to the detriment of the temporary agency workers, in order to respect the overall protection of temporary agency workers must afford other advantages to compensate for the reduced rights.
The crucial factor in the ‘overall protection’ of temporary agency workers is established by the CJEU as a quid pro quo approach: any terms introduced to the detriment of temporary agency workers must be offset by providing other advantages. If this is not the case, authorising social partners to agree to merely weaken the basic working conditions without having to provide for compensatory advantages would necessarily diminish the overall protection of the workers (para. 39).
A quid pro quo approach is, according to the Court, supported by the mechanism in Article 5(2) allowing derogations regarding equal pay during assignments (para. 42). Derogations in respect of equal pay can take place only if the temporary agency workers receive alternative advantages of the same kind, i.e., pay, between assignments. This payment between assignments offsets derogations from the principle of equal pay during assignments (paras. 54–55 and Opinion pt. 54) and thus justifies the detrimental conditions. The Court relies on the same quid pro quo approach for the general derogation option provided in Article 5(3).
Finally, this approach was further narrowed down by determining that any disadvantage must be offset by an advantage within the limited category of ‘basic working conditions’ (para. 41), i.e., in terms of duration of working time, overtime, breaks, rest periods, night work, holidays, public holidays and pay. ‘Overall protection’ is thus interpreted as the requirement to achieve a balance in basic working conditions.
The quid pro quo approach only applies to collective agreement provisions on working time (as in the Working Time Directive) and pay. This approach is quite restrictive and gives social partners only limited room for manoeuvre when negotiating the terms for temporary agency workers with a view to safeguarding flexibility and the diversity of labour markets and industrial relations. In many Member States, social partners’ autonomy to negotiate is very wide and includes a variety of elements, which are prioritised and refined during the process of negotiating. A disadvantage relating to pay, for example, could easily be offset by providing advantages in other areas, such as pension contributions, upskilling, sick pay, or the regulation of shop stewards. The Court's restrictive quid pro quo approach within the basic working conditions considerably limits social partners’ room for negotiating.
Providing strict limitations to the exception provided for in Article 5(3) could be seen as prioritising the TAW Directive's first aim – to improve temporary agency workers’ working conditions – over the Directive's second aim – to respect the diversity of labour markets and flexible forms of work
Article 5(3) does not require the temporary agency worker to be employed on a permanent contract (para. 53). Derogating agreements concluded under Article 5(3) can be negotiated irrespective of the temporary agency workers working under a fixed-term or permanent contract of employment with the temporary work agency (para. 56). The social partners may independently negotiate both the derogation and the advantage to compensate for the derogation's detrimental effect (para. 55) as long as the advantage is within the group of basic working conditions and as long as a judicial review finds, that the advantages and disadvantages are balanced the fact that the temporary agency worker receives pay between assignments can be included as an element in the assessment of his or her overall level of protection. Temporary agency workers with a fixed-term contract, who do not receive pay between assignments, must on the other hand be afforded substantial advantages to offset a difference in pay during assignments..
Respecting the overall protection of temporary agency workers means that a collective agreement that allows for differences in treatment in relation to basic working and employment conditions must afford alternative advantages (compensation) within the category of basic working and employment conditions (para. 44).
The overall protection of temporary agency workers does not entail any protection that exceeds the mandatory protection of workers in general under national and EU law, and does not require temporary agency workers to be offered a permanent employment contract.
Prescription of criteria for presuming that collective agreements respect the ‘overall protection of temporary agency workers’?
In some national systems, collective bargaining agreements are the result of a collective negotiation process involving social partners in a situation of equal power. Due to the process of equally powerful parties negotiating, the result is presumed to be fair and balanced, a ‘presumption of fairness of collective agreements’. In the process of negotiation, both parties can prioritise or refine their claims; in any free and equal negotiation in principle the result will be perceived as fair and appropriate by both parties. Even just the fact that an agreement is signed by the social partners implies that the agreement is presumed to be fair and appropriate. 2 Due to this presumption of fairness, some Member States do not subject collective agreements to legal review.
The Court was asked whether a presumption of fairness, including a presumption of respect for the overall protection of temporary agency workers, could be obtained, inter alia, by prescribing specific criteria or conditions that must be met for derogations in collective agreements.
First, the Court recalled that a presumption of fairness of collective agreements does not override legal protections provided for in EU Directives. When concluding collective agreements, the social partners must respect EU law (para. 61). The argument of presumed fairness of collective agreements and the social partners’ autonomy in negotiations had been touched upon earlier in case C-312/17 Bedi, which concerned a potential breach of Directive 78/2000 3 by collective agreement provisions. In C-312/17 Bedi, the German Government argued that Article 28 of the EU Charter authorises social partners to conclude and negotiate collective agreements and as such, they are not required to choose the most equal, reasonable or appropriate solution (Bedi, para. 67). The Court, nonetheless, reiterated that when social partners adopt measures within the scope of a Directive, the agreed provisions must comply with that Directive (Bedi, para. 70).
The Court followed the same approach in the TimePartner case. The process of collective bargaining, including the presumption of fairness of the negotiation's results, does not bypass the material requirement of respect for the overall protection of temporary agency workers specified in Article 5(3). When concluding collective agreements, the social partners must respect EU law, and the Member States continue to assume the overall responsibility for guaranteeing the achievement of the objectives set out in the Directive, cf. Article 11(1), also when implementation is carried out by collective agreement (para. 62). Article 5(3) does not release the Member States from their obligation to ensure that the overall protection of temporary agency workers is respected (para. 65). Even when a presumption of fairness is closely aligned with the national system, it cannot prevent an assessment in concreto of whether a collective agreement actually respects the overall protection of temporary agency workers.
This does not require Member States to set down the conditions and criteria that collective agreements must comply with (para. 66). This would infringe the national systems’ autonomy for collective bargaining as provided for under recitals 16 and 19. The Court will not prescribe criteria that Member States must comply with to strengthen the presumption of fairness within the scope of the overall protection of temporary agency workers. 4 Likewise, any criteria established at the national level will not release Member States from their obligation to safeguard the overall protection of temporary agency workers as specified in Article 5(3).
Secondly, the Court emphasised (paras. 70–78) that even though the social partners enjoy autonomy in the negotiation process, the resulting derogating collective agreement under Article 5(3) must be subject to effective judicial review to determine whether the social partners have complied with their obligation to respect the overall protection of such workers.
The social partners’ autonomy is recognised in Article 28 of the Charter of Fundamental Rights, entitling workers and employers, or their respective organisations, to negotiate and conclude collective agreements at the appropriate levels in accordance with EU law and national laws and practices. Similarly, Article 152(1) TFEU states that the European Union ‘recognises and promotes the role of the social partners at its level, taking into account the diversity of national systems’ and that it ‘facilitate[s] dialogue between the social partners, [while] respecting their autonomy’; the significance of that autonomy is also noted in recital 19 of the Directive.
During the negotiation stage of an agreement between the social partners, they may engage in dialogue and act autonomously without taking any orders or instructions from anyone, particularly not from Member States or EU institutions. The social partners enjoy broad discretion not only in their choice to pursue a specific aim in the field of social and employment policy, but also in defining measures capable of achieving that aim.
The Court reiterated that the social partners must negotiate all rights covered by EU law provisions in compliance with that law. Broad discretion must in this case be exercised within the scope of ensuring compliance with EU law.
Hence, although Member States are not required to adopt legislation that sets out criteria or conditions that must be met to guarantee respect for temporary agency workers’ overall protection, the Member States, including their courts, must, within the meaning of Article 5(3), ensure that any collective agreements that provide for differences in treatment in relation to basic working and employment conditions, inter alia, guarantee overall protection of temporary agency workers in accordance with Article 5(3).
To ensure the full effet utile of the TAW Directive, all derogations in collective agreements must be subject to judicial review to determine whether they adequately respect the overall protection of temporary agency workers by providing them comparable benefits in return for any derogations from the principle of equal treatment (para. 77). The ‘overall protection’ is seen as a separate requirement, that must be subject to judicial review (para. 79).
In line with the Court's reasoning, the overall protection of temporary agency workers is not considered an assumed consequence of the process of negotiation, i.e., a presumption of fairness of collective agreements, but is instead considered a form of independent legal standard of protection which may be subject to judicial review. Such a judicial review cannot be replaced by the establishment of specific criteria for collective agreements derogating from the principle of equal treatment.
The scope and extent of the judicial review concerning the ‘overall protection of temporary agency workers’?
The Bundesarbeitsgericht asked the CJEU whether an assessment of respect for the overall protection of temporary agency workers should be based—in the abstract—on the collectively agreed working conditions for temporary agency workers who are covered by such an agreement, or whether the assessment should be an evaluative analysis which compares the collectively agreed working conditions with—in concreto—the actual working conditions applicable in the use undertaking to which the temporary agency worker is assigned.
The Court confirmed the second option. To determine whether a derogation by collective agreement in accordance with Article 5(3) respects the overall protection of temporary agency workers, national courts must compare the terms of the derogating by collective agreement with the working conditions of the employees at the user undertaking.
The Court reiterated that the EU legislators’ intention, when adopting the principle of equal treatment, was to ensure that temporary agency workers do not, as a rule, find themselves in a less favourable situation than comparable workers of the user undertaking (para. 47). Temporary agency workers are entitled to the same basic working and employment conditions as those that would apply had they been directly employed by the user undertaking. A derogation from this principle, cf. Article 5(3), is only possible if the agreement respects the overall protection of temporary agency workers (para. 36).
The Court further stated that to determine, in concrete terms, whether a collective agreement that provides for unequal treatment in relation to basic working conditions effectively guarantees the overall protection of temporary agency workers, certain benefits must be made available to them to compensate for the unequal treatment (para. 48). To determine whether this is the case, a comparison must be made with reference to the basic working and employment conditions of employees at the user undertaking (para. 48); an abstract approach that does not compare the advantages and disadvantages in basic working conditions with the actual working conditions of comparable workers at the user undertaking does not effectively guarantee the overall protection of temporary agency workers.
To verify whether a derogation by collective agreement respects the overall protection of temporary agency workers (para. 50), the national court must first determine the basic working and employment conditions that would apply to the temporary agency worker if he or she had been recruited directly by the user undertaking for the same job. Second, the national court must compare those basic working conditions with the ones established in the collective agreement that covers the temporary agency worker, and third, the national court must determine whether there are compensatory basic working conditions offered to the temporary agency worker, and if so, whether they can offset the difference in treatment suffered (para. 49).
The Court thus specified in detail how national courts should assess whether a collective agreement respects the overall protection of temporary agency workers. Also, this prescribed in concreto assessment seriously limits the scope for negotiation of the social partners. Furthermore, an assessment in light of the basic working conditions of individual user undertakings presents different tasks for the social partners in the Member States, as the systems for working conditions and pay differ so considerably. At one end of the spectrum are the Member States where basic working conditions, as defined in Article 5(1), are set out in national legislation or where employers are obligated by law to follow specific collective agreement, and where the task facing the social partners therefor may be less onerous. In this case, many employers are bound by the same level of basic working conditions, with only smaller shop level variations, and the level of basic working conditions at the user undertaking(s) can more quickly be determined. At the other end of the spectrum, the ruling presents quite a task for social partners in the Member States where pay and working time are not set out in legislation, where employers (user undertakings) are not bound by statutory law to be covered by any or aspecific collective agreement, whereo the content of collective agreements vary inter alia according to geographical area, sector, and size of the company, and where a collective agreement may be concluded with a single employer or as a sector agreement. In this case, a patchwork of basic working terms are in play at user undertaking(s). Additionally, social partners may conclude derogating collective agreements at different levels, either with a single temporary work agency, with a group of agencies or as a sector agreement for certain forms of temporary agency work. This means, that the content of the derogating agreements may also vary inter alia according to geographical area. As such, it seems that social partners who wish to make use of the option to derogate and find flexible solutions reflecting the labour market face quite a task in finding a way to guarantee a level of advantages in basic working conditions for each assignment to a specific user undertaking, that offsets disadvantages in the applicable basic working terms of that undertaking. If the assessment of the national courts finds that the derogating agreement does not guarantee offsetting advantages compared to the basic working conditions at a specific undertaking, the result is that the principle of equal treatment, cf. Article 5(1), continues to apply to the temporary agency worker. For the Member States with an industrial relations system at that end of the spectrum, it may seem that the CJEU, with the TimePartner ruling, has severely limited the scope for social partners to make use of Article 5(3) at all, particularly by establishing an in concreto comparison. Perhaps there will be an opportunity to refine and nuance this approach in future CJEU case law, with a view to accommodating the wider variety of social dialogue systems across the Member States.
The case of Denmark and ‘overall protection’ under Article 5(3)
Before presenting the Danish approach to effective application of Article 5(3), we will first briefly review the legal context of temporary agency workers in Denmark.
Temporary agency work in Denmark only accounts for approximately 1.1% of the country's total workforce, 5 which is low compared to the rest of Europe. Several elements in the Danish labour market affect the use of temporary agency workers. First, the need for flexibility and the fluctuating work force is accommodated by means other than the hiring of temporary agency workers. The Danish flexicurity system provides for flexibility in dismissal protection, as well as social security/upskilling mechanisms for workers between periods of employment. Hiring and firing is flexible, and the fluctuating demands of the labour market, resulting in a lack of work, would constitute a valid reason for termination even for workers directly employed by the user undertaking. Second, many temporary agency workers perform work at user undertakings that are covered by a collective agreement establishing a principle of equal treatment of temporary agency workers, with a view to reducing the economic incentive of user undertakings to circumvent the collective agreement by hiring (cheaper) temporary agency workers instead of employing regular workers. Third, some collective agreements in force at user undertakings have specific provisions for temporary agency workers, which allow for certain adaptations of the collective agreement provisions for temporary agency workers to protect the flexibility of their engagement. Fourth, collective agreements can be concluded directly with temporary work agencies as individually negotiated agreements for a temporary work agency, in which case the temporary work agency must provide for the working conditions and pay as set out in the collective agreement. Fifth, accession agreements can be concluded with temporary work agencies, binding the temporary work agency to follow a specific sector agreement, with adaptations, when sending their temporary agency workers on assignments. Sixth, the option to derogate in Article 5(3) in the TAW Directive is transposed in section 3(5) of the Danish TAW Act, with a few additional criteria.
Implementation of Article 5(3), formal criteria and judicial review
The TAW Directive was transposed by the Statutory Act on Temporary Agency Work
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(the TAW Act). The principle of equal treatment is stipulated in Section 3(1)-(2) of the TAW Act. According to Section 3(5) of the Act, derogations from the principle of equal treatment in collective agreements are possible: Subsections (1)-(4) do not apply in the event that the temporary work agency is covered by or has acceded to a collective agreement that has been concluded by the most representative social partners in Denmark, and which applies to the entire territory of Denmark, whereby the general protection of temporary agency workers is respected.
In the preparatory works for Section 3(5), the Minister of Employment elaborated: It is proposed, that the option to derogate from the principle of equal treatment is made conditional on the requirement that the derogating arrangement is based in collective agreements with a national scope of application, which are or will be concluded by the most representative social partners in Denmark, and which cover the temporary agency work in question. This option to derogate provides flexibility in relation to the conclusion of collective agreements, on the one hand, and on the other hand ensures that the basic protection of temporary agency workers’ employment conditions, established in the aforementioned nationally applicable collective agreements, is not undermined.
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The requirement that only collective agreements concluded by the most representative social partners may derogate from the principle of equal treatment is based on the objective of preventing social dumping in the field of temporary agency work, as well as to ensure that temporary agency workers, who cannot base any claims on the principle of equal treatment, are instead provided an adequate level of rights in collective agreements.
In 2014, an amendment 10 gave exclusive competence to the Labour Court to assess whether the requirements in Section 3(5) for derogations from the principle of equal treatment are met, cf. Section 3(7) of the TAW Act. The Danish Labour Court is a specialist court that has exclusive competence in industrial relations disputes. 11
The Minister further elaborated:
12
According to the proposal, the Labour Court will have exclusive competence to assess whether a temporary work agency is covered by or has acceded to a collective agreement that is concluded by the most representative social partners in Denmark and applies to the entire Danish territory, whereby the overall protection of temporary agency workers is respected. This implies that ordinary courts cannot assess whether a temporary work agency meets the conditions set out in Section 3(5).
The Danish Labour Court has exclusive competence to determine whether the criteria in Section 3(5) of the Danish TAW Act are fulfilled. Subjecting collective agreements to judicial review is not new for Danish industrial tribunals. The Labour Court and industrial tribunals have comprehensively reviewed the contents of collective agreements. During the review, the Labour Court will determine not only whether the formal criteria for derogations in collective agreements have been fulfilled, but also since a Supreme Court ruling of 2019 (see below section 5), whether the criterion of respect for ‘overall protection’ of temporary agency workers is met.
Several elements in the case law of industrial tribunals ensure effective application of Article 5(3) of the TAW Directive.
The scope of derogations in Section 3(5) is limited
First, according to the case law of Danish industrial tribunals, the possibility for derogations from the principle of equal treatment in section 3(5) applies only to derogations from the equal treatment provided for in the TAW Act, not from other legal sources.
User undertakings may have their own collective agreements. As mentioned above in section 5, collective agreements often explicitly provide for a duty for the user undertaking to ensure that the collective agreement is applied to all workers at the user undertaking, i.e., to employees and temporary agency workers alike. 13 This duty of equal treatment for temporary agency workers originates in the collective agreement itself. 14 Moreover, collective agreements in Denmark are typically area agreements and cover all workers who perform work at the user undertaking, regardless of the union membership status of the person performing the work. That is, a user undertaking bound by a collective agreement establishinges equal treatment for temporary agency workers, must ensure that the collective agreement provisions are followed for all temporary agency workers, regardless of their union membership status.
Temporary work agencies may also conclude collective agreements. These collective agreements may meet the criteria for derogations from the principle of equal treatment under Section 3(5), and may provide for alternative pay and working conditions for temporary agency workers. Temporary agency workers covered by a collective agreement concluded by the temporary work agency may be assigned to a user undertaking that is covered by a collective agreement that provides for (equal) treatment for temporary agency workers who perform work for the undertaking. In this situation, the question is whether the temporary agency's collective agreement may derogate from the duty of equal treatment provided for in the user undertaking's collective agreement.
This question was settled by the Industrial Arbitration ruling of 13 August 2015. 15 The question concerned a conflict between collective agreements, and whether one collective agreement could overrule a principle of equal treatment in another collective agreement. In order to derogate from a provision in a collective agreement, there has to be a legal basis for this derogation. The umpire considered, whether the right to derogations in the TAW Act could be used as the legal basis. However, the umpire to a restrictive approach to the interpretation of the right to derogate in the TAW Act, and determined that the TAW Act does not affect a principle of equal treatment of temporary agency workers based in a collective agreement in force at the user undertaking. Section 3(5) of the TAW Act only provides for the right to derogate from the principle of equal treatment based on the TAW Act itself. Section 3(5) therefor does not provide a legal basis for derogations from the principle of equal treatment established in other legal sources, such as collective agreements in force at the user undertaking. As such, the scope of application of the right to derogate in the TAW Act was interpreted restrictively.
In other words, in the situations where a user undertaking is covered by a collective agreement that establishes a duty of equal treatment for temporary agency workers, temporary agency workers sent to work at this user undertaking is entitled to the provisions in the user undertaking's collective agreement, even if a collective agreement with the temporary work agencye allows for less favourable pay and working conditions. Danish industrial law takes a strict approach to the scope of derogation in the TAW Act 3(5), which is limited to the principle of equal treatment based on Section 3(1)-(2) of the TAW Act.
In concreto assessments are not new to Danish industrial case law
As will be outlined below in section 7, the question of whether the TAW Act Section 5(3) includes a material criterion that could be subject to legal review was discussed in the preparatory works in 2013, but was rejected by the Minister. The Minister was of the view that an in concreto assessment of the level of protection was not necessary, as the level of protection was appropriate as long as the social partners had agreed to it, i.e., there is a presumption of fairness and appropriateness.
This initial approach to perceived fairness of derogations in collective agreements of a certain quality was adjusted by the Supreme Court in a ruling in 2019, as outlined below in section 7. The Supreme Court concluded that judicial review must include an assessment of whether a specific derogating collective agreement respects the overall protection of temporary agency workers
A review of the level of protection in collective agreements is not new to industrial tribunals. Industrial tribunals have, in other areas of collective labour law, assessed whether one collective agreement is more lenient than another. The case law illustrates how a review of the level of protection in derogations by collective agreement could be conducted.
Some industry agreements between a trade union and an employer association contain a clause prohibiting the trade union from concluding collective agreements on more lenient terms with unorganised (free-standing) employers. The purpose of this clause is to ensure that collective agreements—and thus the terms for competition between companies—are similar for all companies, regardless of whether they are members of an employer's association or not. 16
As collective agreements differ considerably from one another and provide for varying degrees of working conditions, comparing the overall level of protection in specific collective agreements is a difficult task. Determining whether one collective agreement is more lenient than another requires an in-depth interpretation and comparison of the content of the two agreements. Industrial case law has developed methods for assessing whether the overall level of protection provided in one collective agreement is more or less lenient than that afforded in another.
This method entails an overall assessment of substantial individual derogations and/or an overall assessment of a combination of many seemingly minor derogations. The assessment focuses on whether one collective agreement provides more lenient terms for the employer, inter alia, by granting the employer greater flexibility and greater margin of discretion. This method has been applied in a number of rulings that compare the level of protection in one collective agreement to another agreement.
Industrial Arbitration ruling of 29 June 1994 17 concerned a shop-level agreement with a free-standing temporary work agency in the plant nurseries industry. 18 The arbitrator stated that due to the significant uncertainty connected with a so-called overall assessment of the collective agreements to be compared, the review ought to focus on the more substantial individual provisions. Several provisions in the industry agreement were not found in the agreement with the freestanding temporary work agency, including the right to sick leave benefits, sick leave pay, pay for leave to care for sick children, retirement pension contributions, and the regulation of shop stewards. The arbitrator concluded that the agreement with the free-standing temporary work agency had excluded so many substantial provisions that it constituted a breach of the industry sector agreement.
Industrial Arbitration ruling of 22 February 1995 19 concerned a shop-level agreement with a freestanding restaurant in the hospitality industry. The arbitrator stated that to ensure compliance with the prohibition clause in the industry agreement, an agreement with a free-standing restaurant ought to only contain minor derogations from the industry agreement, or should provide terms which, after an overall assessment, clearly outweigh the more lenient ones. The review concluded that the restaurant's agreement deviated structurally from the industry agreement, and included several terms that were more favourable for the employer. This included that salaries were paid every four weeks instead of every two weeks which gave the free-standing employer an administrative advantage as well as more flexibility in organising work schedulesovertime work, notice periods for termination, and the regulation of shop stewards. On the other hand, some terms were more restrictive for the free-standing employer, such as the possibility for employees to negotiate higher salaries under the freestanding restaurant agreement than under the industry agreement. Ultimately, the employer's flexibility and margin of discretion was given more weight than the possibility for workers to negotiate higher salaries. According to the assessment, the trade union had not sufficiently lifted the burden of proof that the shop-level agreement only contained minor derogations from the industry agreement.
In Industrial Arbitration ruling of 30 January 2008, 20 which again involved a shop-level agreement with a free-standing restaurant, the industry agreement as well as the agreement with the free-standing restaurant contained provisions on salaries, working time, meal breaks, paid food and drink, and clothing. The arbitrator concluded that the pay levels in the shop-level agreement were lower and the employer's flexibility to differentiate between staff was larger than in the applicable sector agreement. Moreover, the workers' entitlement in relation to working time, meal breaks and paid food and drinks deviated from those provided for in the industry agreement. These differences were considered substantial derogations and the trade union was found to be in breach of the industry agreement.
These cases highlight that the method of assessment used by industrial tribunals includes reviews of several normative elements, such as the structure of the collective agreement, salary level, working hours and overtime, the regulation of shop stewards, pension contributions, sick leave pay, and carer’s leave for sick children. The arbitrators defined a number of elements as ‘substantial’, including pension contributions, sick leave pay, and carer’s leave for sick children. In addition, the arbitrators placed considerable weight on structural elements of the agreement, such as whether the employer had a larger margin of flexibility to differentiate between the salaries of staff, organise their working time, meal breaks, overtime work, and notice periods for termination. These ‘substantial’ elements are not limited to ‘basic working conditions’, i.e., working time and pay, as outlined in Section 3(1)(f) of the TAW Directive.
Effective application in the understanding of the CJEU entails an in concreto assessment of the advantages and disadvantages in the derogating agreement compared to the basic working conditions in force at the user undertaking. An assessment of the level of protection in one collective agreement compared with a reference agreement, and as such and in concreto assessment of collective agreements, is not new to Danish industrial tribunals. The method prescribed by the CJEU, however, restricts the scope for the judiciary to compare a prescribed list of working terms and pay in the two legal bases, and as such directs and limits the room for maneuver in the legal assessment of the Danish industrial judiciaries when it comes to assessing the overall level of protection of temporary agency workers.
Temporary work agencies are employers in industrial relations
Existing collective agreements, even before the TAW Directive and the TAW Act were implemented, were required to treat temporary work agencies like regular companies/employers. As already mentioned, Industrial Arbitration ruling of 29 June 1994 21 concerned a shop-level agreement with a temporary work agency in the plant nurseries industry. 22 The arbitrator in this case confirmed that the industry agreement's prohibition of concluding agreements with free-standing employers at lower pay and working conditions also applied to agreements with temporary work agencies as employers. An agreement with a ‘free-standing’ temporary work agency was treated like any other shop-level agreement with a free-standing employer.
It was specifically underlined that the nature or ‘uniqueness’ of a free-standing company is irrelevant when determining whether one collective agreement is too lenient compared to another. The assessment on the degree of leniency is carried out using the same method for the atypical employer as for the more typical employers. This was illustrated with the case for temporary work agencies in the plant nurseries industry. 23
Derogating agreements under Article 5(3) therefore cannot give special consideration or introduce more lenient terms alone with reference to the employer being a temporary work agency. Temporary work agencies are treated like regular employers and as such, are subject to the same duties and expectations as other employers that engage in industrial relations the Danish labour market. This is a Danish limitation on the scope of negotiation for the social partners when agreeing on derogations to Danish collective agreements.
Interpretation of the notion of ‘overall protection’ in the Danish TAW Act
Implementation process
As mentioned, Article 5(3) of the TAW Directive was transposed by Section 3(5) of the TAW Act. Subsections (1)-(4) do not apply in the event that the temporary work agency is covered by or has acceded to a collective agreement that has been concluded by the most representative social partners in Denmark, and which applies to the entire territory of Denmark, whereby the overall protection of temporary agency workers is respected.
During the parliamentary debates in 2013, the Minister's understanding was questioned. Several concerns were raised by the Parliament Employment Committee (Beskæftigelsesudvalget) about the level of protection in derogating collective agreements under the proposed Section 3(5). 24 The Committee questioned whether such procedural guarantees would be sufficient to correspond to the EU Directive's requirements, and questioned whether a mutual agreement among the social partners sufficed to ascertain that the bargaining procedure had provided an appropriate level of protection for temporary agency workers.
The Minister acknowledged that situations might arise in which a temporary agency worker's rights were less favourable due to a derogating collective agreement concluded by the most representative social partners. 25 The Minister emphasised that the social partners’ mutual understanding implies that the most representative collective agreements provide an appropriate level of protection for temporary agency workers, and stated that it can be viewed as a fact that the level of protection determined by the most representative social partners can be considered appropriate, as long as the social partners agree. Therefore, there is no reason to dispute that the proposed provision fulfils the protective purposes of the TAW Directive. 26
The Minister further asserted that it was highly unlikely that the CJEU would arrive at a different conclusion about the perceived level of appropriate protection in collective agreements concluded by the most representative social partners. 27 It would be highly unlikely for the CJEU to find that collective agreements, which the social partners agree provide an appropriate level of protection for temporary agency workers, do not correspond to the minimum requirements of EU law. 28 To that end, the Minister noted that the comparison would be between the level of protection provided in the most representative and nationally applicable collective agreements in Denmark and the minimum level of protection in the EU. 29
As is apparent from the preparatory works, the Minister promoted a presumption of appropriateness, including that the most representative social partners were a guarantee to ensure the overall protection prescribed in Article 5(3). What was not so clear—at least not from the wording of Section 3(5) or from the preparatory works—was whether the ‘overall protection of temporary agency workers’ should be understood as an independent material criterion for derogations from the principle of equal treatment, or whether it simply refers to the effect of a collective agreement that fulfils the formal criteria of Section 3(5).
Furthermore, neither Section 3(5) nor the preparatory works provided any guidance on how to assess whether the ‘overall protection of temporary agency workers’ is respected in derogations by collective agreements. This was left entirely to the jurisdiction of the Labour Court, according to section 3(7), very much in line with the Danish approach to industrial relations and industrial tribunals.
Interpretation by the Supreme Court in 2019
The term ‘whereby the overall protection of temporary agency workers is respected’ was interpreted by the Supreme Court in a ruling of 17 December 2019 (U 2020.845 H). 30
The material question of the case concerned payment of wages during sick leave. Employees employed directly by the user undertaking were entitled to regular wages during sick leave in accordance with the Salaried Employees Act, which does not directly apply to temporary agency workers. Temporary agency workers were entitled only to sick leave benefits during sick leave, in the amount of DKK 112–144 per hour, in accordance with the Collective Agreement for Salaried Employees applicable at the temporary work agency. A temporary agency worker took six days of sick leave during an assignment to the user undertaking, where he received sick leave benefits according to the Collective Agreement for Salaried Employees. Had he been paid his regular wages during his sick leave, according to the principle of equal treatment, he would have received DKK 220 per hour. The temporary agency worker had not enjoyed equal treatment, as equal treatment would have resulted in full wages during sick leave as the workers directly employed by the user undertaking performing the same kind of work..
The dispute concerned whether the criteria under Section 3(5) of the TAW Act, to derogate from the principle of equal treatment, had been met.
The temporary work agency's argument was that the Collective Agreement for Salaried Employees fulfilled the criteria laid down in Section 3(5), as the agency had acceded to this collective agreement; as the agreement was applicable during the worker's assignment; and as the collective agreement had been concluded by the most representative social partners in Denmark and applied to the entire Danish territory. Since the formal requirements of Section 3(5) had been met, the temporary agency worker's overall protection was guaranteed, and a derogation from the equal treatment principle was therefore possible. The temporary work agency disputed that the term ‘whereby the overall protection of temporary agency workers is respected’ was an independent criterion subject to judicial review by the Labour Court.
The Supreme Court stated that according to the preparatory works, the term ‘whereby the overall protection of temporary agency workers is respected’ is formulated in such a way that it appears that the overall protection of temporary agency workers in the TAW Directive must be respected. The Supreme Court further concluded that Section 3(5)—apart from the conditions on accession to a collective agreement, the social partners’ representativeness, and the geographical scope of the collective agreement—contains an individual criterion on the overall protection of temporary agency workers. Finally, the conclusion was, that the Labour Court's competence under Section 3(7) to assess whether derogating collective agreement fulfil the criteria set out in Section 3(5), includes the competence to assess whether the agreement respects the overall protection of temporary agency workers as provided for in the Directive. Likewise, the Labour Court can decide on additional payments and compensation (cf. Labour Court Act Section 12(9)) if the derogating agreement does not fulfil the criteria, and the temporary agency worker was instead entitled to equal treatment.
The Supreme Court thus clarified that the last part of the provision ‘whereby the overall protection of temporary agency workers is respected’ is a material criterion that is subject to independent judicial review and is not simply an automatic consequence of the social partners’ negotiation procedure at a certain level. Moreover, the Supreme Court clarified that the Labour Court as part of the competence in the TAW Act section 3(7) must include an assessment on whether the collective agreement corresponds to the protection provided for in the Directive.
The Supreme Court did not, however, give the Labour Court any instructions on how to conduct such a review. This is consistent with the delegation of competences between the ordinary courts and the specialised Labour Court. There are no special restrictions to the Labour Court's review procedures elsewhere in national legislation or case law.
The case was eventually settled and the Labour Court did not get an opportunity to illustrate how the assessment of the level of protection in the collective agreement for the temporary work agency would be carried out. No other cases have been brought before the Labour Court seeking an assessment of whether a derogation in a collective agreement respects the overall level of protection of temporary agency workers.
As mentioned above in section 5.3., previous industrial case law indicates that the Labour Court would perform a comprehensive review, with reference to substantial individual rights as well as to a combination of several minor derogations.
Point of reference for ‘overall protection’
Neither the wording of Section 3(5), the preparatory works, nor the 2019 Supreme Court ruling provided clear guidance on what the point of reference - the in conrecto assessment - for the level of protection should be. Danish case law provides several options.
The CJEU clarified this in its TimePartner ruling as the basic working conditions at the user undertaking.
The Danish preparatory works discussed this component and provided an indicator, asserting that the comparator should be ‘the EU law's minimum requirements in terms of the protection of temporary agency workers’ pay and employment conditions’ and ‘the minimum level in the EU.’ 31 However, this is not a very precise reference.
In Danish case law a general contractual principle entails that any unclear terms or gaps in contracts are interpreted in line with the most common terms in contracts of a similar kind. When the contract parties do not expressly conclude deviating terms, it is assumed that their implied intention is to align the contract with what is ‘usual’ in the industry. This is also the case for employment contracts, where unclear terms concerning pay and working conditions are interpreted in line with pay and working terms in the same or similar occupations. Such conditions are often considered as being provided for in sector agreements concluded between the major social partners. This may be the case for notice periods, working hours, and sometimes even wages. Assessments of whether a derogation in a collective agreement provides for an overall level of protection could be inspired by the existing levels of protection provided for in collective agreements for the same type of work in the same industry. This would apply to all workplaces, regardless of their membership status, and to all temporary agency workers, regardless of their union membership status.
Not only case law, but legislation likewise sometimes provides a duty for the employer to comply with pay and working conditions established in collective agreements, regardless of the employer's membership status. This is the case with legislation aiming to protect persons in vulnerable or exposed positions, i.e., subsidised employment, apprentices and trainees, posted workers, health and safety representatives, employee representatives on company boards, and employee representatives in SE and SCE company committees. This statutory choice to use collective agreements as the reference point for what is considered common working conditions could also serve as inspiration for assessing appropriate levels of protection in collective agreements of a certain quality. According to that understanding, the level of protection found in collective agreements in the relevant sector or the relevant type of work would be considered as providing for ‘overall protection’ of temporary agency workers.
In that sense, it would be in line with existing Danish contractual principles as well as legislative mechanisms to use collective agreements concluded by the social partners of a certain representativeness for the same or similar work as the comparator.
Whether this complies with the new point of reference established by the CJEU is uncertain. As mentioned above in section 4, reference to the working conditions at the user undertaking may be a moving target in Member States without statutory duties to be covered by any/a specific collective agreement. It is particularly difficult to determine the comparator basic working conditions for user undertakings not covered by a collective agreement, for user undertakings with an individual shop-level agreement, or for user undertakings with individually adapted accession agreement.
Conclusions
The TimePartner ruling addressed a number of questions relating to the protection of temporary agency workers and derogations by collective agreements. It clarifies the concept of ‘overall protection of temporary agency workers’ and how the assessment thereof should be conducted. The ruling prioritises the protective purposes of the TAW Directive over the objective of diversity of labour markets.
The ruling has placed certain limits on social partners’ autonomy in negotiating collective agreements for temporary agency workers as well as on the judicial review of collective agreements by national industrial judiciaries.
First, the social partners’ autonomy in the negotiation process for derogating agreements is mainly theoretical, as the results of the negotiations will be measured narrowly and strictly in a judicial review. To adequately respect the overall protection of temporary agency workers, the review must make a quid pro quo assessment of the terms within the limited category of ‘basic working conditions’, i.e., working time provisions and rights concerning pay in comparison to the terms applicable at the user undertaking. This significantly limits the social partners’ creativity and bargaining autonomy, as any disadvantages in basic working conditions must be offset by benefits within the limited category of other basic working conditions.
That having been said, the quid pro quo method is in itself aligned with the bargaining process. It is the delimitation of the category of working terms included in the bargaining process that reduces the autonomy of the social partners.
Second, the very fact that the CJEU prescribes one specific method for reviewing the level of protection in a collective agreement may give rise to criticism from some Member States. The fact that the level of protection is a material criterion that may be subject to judicial review is one thing. This could probably be absorbed by the national systems for industrial relations with minor adjustments. However, the CJEU prescribes both the method of assessment and a limited category of working conditions subject to that assessment, which seems to represent quite an intrusion into national industrial relations systems. Reviewing the content of negotiated agreements is a delicate and highly specialised matter, and it would have been more respectful to refer the determination of the review to the varied industrial relations systems of Member States . The CJEU could have deferred the question of effectively guaranteeing the protection of temporary agency workers to the Member States and their national courts, which would have corresponded well with respect for diversity of national labour markets provided for in the TAW Directive. From a Danish point of view, not even the Supreme Court has prescribed a method for assessing the level of protection of derogations in collective agreements, but has referred this exercise to the specialised Labour Court.
In short, the CJEU's ruling not only limits social partners’ room for manoeuvre, but in addition prescribes a method for the judicial review of collective agreements in national courts. Both elements raise the threshold for engaging in collective bargaining as a means to provide decent pay and working conditions for temporary agency workers – perhaps unnecessarily so.
Third, the practicability of using the user undertaking as the point of reference could raise questions. At the same time, this option might have certain advantages.
On the one hand, using the user undertaking as a point of reference for comparisons seems quite complicated at first glance. The working conditions at user undertakings are often moving targets. For user entities covered by an industry or sector agreement, the pay and working conditions established may be the same in several user undertakings. However, for user entities not covered by a sector agreement, the basic working conditions are individual and unilaterally prescribed by the user undertaking. This means that an ex poste in concreto comparison in the review by national courts is challenging in itself.
But even moreso, it complicates the social partners’ collective bargaining process, as they are left with the task of ensuring ex ante—in any type of collective agreement at any level—that temporary agency workers are provided with other advantages compared with a hypothetical user undertaking. This seems like an unachievable task for social partners, since user undertakings are, as already mentioned, moving targets. This calls for a high degree of creativity among the social partners.
The diversity of labour markets and industrial law systems in the Member States was not given high priority in the Court's choice of in concreto reference, as the framework for negotiating derogations in agreements is considerably restricted.
On the other hand, introducing the user undertaking as the point of reference for comparison aligns Article 5(3) with the purpose of preventing the abuse of temporary agency workers. As the individual user undertaking is the point of reference for comparisons, the potential economic rationale at shop level using temporary agency workers is reduced.
The principle of equal treatment between temporary agency workers and workers at the user undertaking as a starting point ensures decent working conditions and prevents abuse, as the economic incentive for using temporary agency workers is reduced when they are entitled to the same basic working conditions as regular employees. Derogations from the principle of equal treatment may result in cheaper labour for the user undertaking and may thus not prevent abuse of temporary agency workers as clearly as the principle of equal treatment in itself.
If the user undertaking becomes the point of reference, the economic incentive for that specific user undertaking to hire temporary agency workers is reduced, as is the incentive to introduce derogations in agreements in general. The result is that derogations in agreements more effectively aligned also with the aim of preventing abuse of temporary agency workers. What is left as an advantage for the employer when using temporary workers is the flexibility in the work force. This flexibility purpose aligns very well with the overall aim of the TAW Directive, and also an accepted advantage, as the temporality of the work as temporary agency worker is the levelling element making the reduced working conditions acceptable.
In Denmark, the social partners often include temporary agency workers in existing collective agreements, placing the duty on the user undertaking to comply with the collective agreement provisions for temporary agency workers. This ensures maximum application of the collective agreement in force (area agreements rather than member agreements).
In many industries, derogating agreements for temporary agency workers are also used. A derogation in an agreement may only deviate from the principle of equal treatment in the TAW Act, i.e., it may not deviate from the principle of equal treatment enshrined in other legal sources, such as collective agreements in force at the user undertaking.
Several indicators for assessments of derogations by collective agreements can be mentioned.
The rigid formal requirements set out in Section 3(5) of the TAW Act for derogations in collective agreements concluded by the most representative social partners, as well as the requirement of national scope, set a high threshold for the quality of derogations. This ensures a certain level of quality in the protection of temporary agency workers.
The preparatory works to the provision indicate that the Minister and social partners were of the understanding that the formal criteria in themselves would suffice to ensure an appropriate level of protection for temporary agency workers, i.e., a presumption of fairness.
However, in 2019 the Supreme Court clarified that the criterion ‘respecting the overall protection’ is an individual criterion of Section 3(5) that may be subject of an independent legal review. Such a judicial review must be carried out by the Labour Court.
Industrial tribunals in Denmark have a long tradition of conducting in-depth assessments of the contents of collective agreements: they have developed a method for assessing whether one collective agreement provides more lenient terms than another. The assessment can be carried out as a review of the substantial provisions of the agreement or of several seemingly minor derogations, and whether they constitute a substantial derogation.
Finally, the point of reference in Denmark for ‘an overall level of protection’ would typically be understood as the level of protection provided in collective agreements for the same or similar types of work. This is expressly stated by ordinary courts when interpreting and addressing gaps in individual employment contracts not covered by a collective agreement. This is also often explicitly stated in statutory acts that stipulate working conditions for specific groups of vulnerable or exposed workers.
Even though the use of temporary agency workers in Denmark is very low due to the existing framework for temporary agency workers in collective agreements in force at user undertakings, and the flexible framework for hiring and firing employees which reduces the need for temporary agency workers, situations of potential abuse of temporary agency workers do arise.
To date, no judicial review of the question of whether a derogation by collective agreement fulfils the requirement of respecting ‘the overall protection’ of temporary agency workers has been conducted. Case law of industrial tribunals and the Supreme Court clearly indicate that such a review of a derogation in a collective agreement would be comprehensive and in-depth. Presumably, the comparator would be the working conditions in collective agreements for the same or similar types of work. After the TimePartner ruling, this may have to be adjusted.
From that perspective, the framework for ensuring the full effet utile of the protection of temporary agency workers envisaged in the TAW Directive would—based on the strong role of the social partners and the relationship with the industrial tribunals in Denmark—already be in place.
Footnotes
Declaration of conflicting interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author received no financial support for the research, authorship, and/or publication of this article.
