The Norwegian Supreme Court recently ruled that the regulation on general application of the collective shipping and repair yard agreement to foreign workers in Norway does not violate EEA and EU law.
Pursuant to the General Application of Collective Agreements Act 1993, Norway has over the years enacted a number of regulations providing that specific collective bargaining agreements be given general application in the Norwegian labour market. The purpose of general application of collective agreements is to secure foreign employees wage and working terms equivalent to those enjoyed by Norwegian employees and to prevent distortion of the competition to the disadvantage for the Norwegian labour market.
General application of collective agreements may involve application of the entire collective agreement or relevant terms of the agreement. An agreement may be applied nationwide or to certain parts of the country and to all employees carrying out the type of work covered by the agreement or to work in the sector covered by the agreement. General application is resolved by way of regulations given by the public Tariff Board.
The collective agreement in question was given partial general application in 2008. The regulation applies nationwide and secures wage and working conditions for foreign employees comparable to the terms enjoyed by Norwegian employees, including supplement for work requiring overnight stays away from home.
A group of industrial companies brought legal action against the Norwegian state, claiming that the regulation violated EU and EEA law. The employers submitted that relevant applicable sections of the agreement must comply both with the EU Posting of Workers Directive (96/71/EC) and the EEA Agreement Article 36. The latter states that there shall be no restrictions on freedom to provide services within the territory of the EU and EEA member states. According to the employers this was not the case and therefore the regulation was invalid.
The employers submitted in particular that the Tariff Board had emphasized irrelevant reasons for applying the provision regarding supplement for work requiring overnight stays away from home. This supplement amounts to 20 % of the hourly rate and the employers claimed that the increased cost has led to less demand for foreign workers. According to the employers, this implied not an increase of the social security of the foreign employees, but rather the opposite.
A unanimous Supreme Court rejected the employers’ submissions. The Supreme Court suggested that once the generally applied provisions in question met the requirements of Article 3 no. 1 of the Posting of Workers Directive, there was no room for an additional test in relation to Article 36 of the EEA Agreement, contrary to the Advisory Opinion of the EFTA Court in case no. E-2/11. In any event, the Supreme Court found that the relevant provisions of the regulation met the requirements of both the Posting of Workers Directive and Article 36 of the EEA Agreement.
With regard to the supplement for overnight stays away from home, the Supreme Court found that this is a provision promoting social security and that the employers did not sufficiently justify their submission that the increased costs would lead to a reduced demand for foreign workers. The Supreme Court stated that even if the supplement leads to increased costs, it is still a genuine improvement for the employees posted in Norway and that the supplement did not go further than necessary to meet the objective.
The judgment is relevant to other generally applied collective agreements as it is deals with general questions regarding EU and EEA law.
