CHAPTER 2

Sources of European Employment Law

In Europe, there are three main sources of employment law: the European Union (EU), the European Social Charter (ESC), and the European Convention on Human Rights (ECHR). This chapter gives a brief overview of the creation, purpose, and scope of each of these sources.

The European Union

Following World War II in an attempt to rebuild Europe, foreign ministers decided in June 1955 to create a common economic institution and, in 1957, the European Economic Community was born.¹ Its sole purpose was to create and harmonize an internal economic market. The treaty created the three institutions of the EU: the Commission (which is the main legislator and has the power to bring states to the Court of Justice of the European Union for noncompliance); the Council of Ministers (who discuss, amend, and adopts laws); and the Parliament (the only directly elected body of the EU, which now has a colegislative role with the Commission). During its first decade, it also created the Court of Justice of the European Union (CJEU) (or the European Court of Justice, as it was then called).

The EU has evolved and its powers increased significantly since its creation, although its core purpose has remained. The EU is an inherently economic institution focused almost entirely on ensuring its economic stability. Business, and consequentially employment, plays an overwhelmingly large role in this and therefore it is logical that the EU would create laws to regulate both. Initially these legislative measures were concerned with removing barriers to trade and ensuring fair competition, but as their competences grew they became more involved in social cohesion and in developing a social policy. The Treaty on the Functioning of the European Union affirms its objective is to attain full employment while at the same time ensuring just conditions of work.²

There are a number of different sources of law within the EU itself and these are hierarchical. Primary sources of law are the treaties of the EU. These treaties create the legal order and they are binding on all member states. They are the superior law of the union and cannot be amended or revised outside the strict procedure set down in the treaties themselves. General principles of EU law are the unwritten rules of law that the CJEU would apply in order to avoid injustice, to fill a gap in EU law, or to strengthen the coherence of the law. As a general rule, they either form part of primary law or sit just below it, but remain above all other sources of EU law. In doing so, the court often draws on principles from established general principles or jus cogens of international law, such as the principle of legal certainty and procedural rights. Further, it can find general principles from the national systems of the member states. This does not require all member states to adopt a particular principle; it is sufficient that it is common to several.³

Secondary sources of EU law are ranked lower than the treaties and can be in the form of a Regulation, a Directive, or a Decision. Regulations are the most important of the secondary sources as they apply erga omnes (to everyone) simultaneously. A regulation has general application, explained in Koninklijke as applying “to objectively determine situations and produce legal effects with regard to persons described in a generalized and abstract manner.”⁴ A regulation is binding in its entirety, and incomplete or selective implementation is prohibited under EU law. Further, a regulation is directly applicable to all member states at the time of its entry into force.

Directives are used to harmonize the law throughout the union. They have no general application unless they are addressed to all member states. They impose an obligation on the state to fulfill a certain objective, but the method of achieving such is left to the member state to decide, as long as it chooses a path that ensures legal certainty and transparency. Directives will give the member state a certain amount of time in which to introduce the necessary law and/or procedure to give effect to the objective. The member state has responsibility to ensure that the directive is incorporated into national law. If the state fails or refuses to implement the directive within that time period, it becomes directly applicable in that member state; an individual may rely on it in national courts and the Commission may bring an action against that state for a breach of EU law.

Decisions, like directives, have no general application unless they are addressed to all member states. Decisions are binding from the date that they are made and against the member state to which they are addressed.

The CJEU as a source of EU law is complex. Its primary role is to interpret the laws of the EU and not create law. However, in practice, it has created law by bringing in general principles of EU law. A salient example of this is how the court has, over time, brought human rights within its scope. Here we can see three distinct phases of the court’s reasoning. The first phase is evident in the Stork case, where it refused to examine whether EU law was in compliance with the fundamental rights established in national constitutions.⁵ One reason for this outcome was based on the concept of supremacy (discussed in the following), but another was based on the fact that the treaties did not contain any reference to fundamental human rights. The court therefore focused on the economic goals, leaving human rights eminently rejected.⁶

The second phase is where the court, following pressure from member states, began to modify its position. In Stauder, the court remarked obiter that fundamental rights formed part of the general principles of EU law.⁷ This ruling was expanded upon in Internationale Handelsgellschaft, which is the first case that formally recognized fundamental rights as forming part of community law as deriving from the national constitutions of member states.⁸ In Nold, the court enunciated an additional basis for incorporating fundamental rights into community law (supplementary to national constitutions) and into international human rights treaties, in particular the ECHR.⁹ However, the court in Grant explained that there is a limitation in engaging with human rights, in that those fundamental rights cannot have the effect of extending a treaty provision beyond the competence of the EU.¹⁰

The third and final phase is the determination that the protection of fundamental rights extends not only to EU institutions but also to member states. This was initially a highly controversial move, given the lack of uniform application of fundamental rights within the member states, but also because of the haphazard development of the case law. This has since been ameliorated with the entry into force of the Charter of Fundamental Rights of the European Union, which gives the court broad powers to scrutinize whether member states are acting in a manner compatible with the human rights.¹¹

Under EU law, there is no doctrine of precedent. Previous case law is not binding and the CJEU follows a civil law approach to precedent. The doctrine of precedent, also known as stare decisis, is a cornerstone of the common law system and means “let the decision stand.” In operation it has the effect of ensuring that lower courts are bound by the decision of higher courts, and courts of the same jurisdiction should not depart from their previous ruling unless there is good reason to do so. This ensures consistency and stability in determinations. As the CJEU does not operate on a system of precedent it is very difficult to see how the judgments of the court could form part of the law of the EU, if they are liable to be repealed or changed with every new case. However, in practice, the court does respect its own previous decisions as to depart radically from them would be to undermine itself. Over the years it has played an important role in building up a body of consistent and coherent case laws, setting the benchmark for member states.

Two fundamental principles of EU law created by the CJEU ensure compliance and uniform application of law and principles throughout member states: the supremacy of EU law and also its direct applicability.

The concept of supremacy does not come from a treaty provision. Rather, the court explained the principle and its necessity in Costa v. ENEL: “The law stemming from the treaty, as an independent source of law, could not, because of its special and original nature, be overridden by domestic legal provisions, however framed, without being deprived of its character as community law and without the legal basis of the Community itself being called into question.”¹²

The position of the CJEU has not changed since this ruling. A fundamental and key concept of EU law is that it is supreme to national law and that such supremacy is necessary in order for the free market to function. This supremacy is effective over national constitutions and international agreements concluded after the creation of the EU.¹³

Thus, the law of the EU is supreme over national law and, where there is a conflict between the two, the member state is legally bound to give effect to EU law and disregard the national law. This is complimented by the second key principle of EU law—that it is directly effective in the national systems of member states. This is another creation of the court considered necessary in order to ensure not only the effectiveness of EU law, but also that individuals deriving benefit therefrom would be protected. Arguably, this concept was first established by the Permanent Court of International Justice in Concerning the Competences of the Courts of Danzig.¹⁴ Here, it was held that, where a treaty is adopted that creates rights and obligations capable of being relied upon in domestic courts, it provides an exception to the general rule that individuals are not subjects of international law. This principle was adopted by the CJEU in the Van Gend & Loos case, where it justified the approach by stating that the Community “constitutes a new legal order of international law… the subjects of which comprise not only of member states, but also their nationals.”¹⁵ In order for a piece of EU law to be directly effective, it must meet certain criteria, which have evolved from the CJEU over time. First, it must be clear and precise. Second, it must be unconditional, meaning that it does not require any implementing measures on the part of the member state. Finally, and where relevant, the deadline for implementation by a member state, where such is required, must have passed. This is restricted primarily to directives that depend upon measures being taken by the member state. This principle applies both horizontally and vertically, meaning that the provisions of EU law can be relied upon in national courts against the member state and also against private entities, such as businesses.¹⁶

In terms of employment laws this means that where the employer has failed to implement an EU law or is acting in breach of EU law the employee can rely on it in the domestic court. Therefore, it is extremely important that the employer be familiar with their obligations under EU employment law.

The European Court of Human Rights

The ECHR, proposed by the Council of Europe,¹⁷ adopted in 1950, and entered into force in 1953, was also created in the wake of World War II. While the EU was created primarily with the aim of ensuring peace in the region through economic stability and the rebuilding of national economies, the Council of Europe was tasked with protecting human rights in the region. Internationally, at this time the United Nations had just adopted the Universal Declaration on Human Rights in 1948 and negotiations were on the horizon to transpose this into a legally binding treaty. The ECHR was again a regional response to the war and sought to ensure accountability for human rights violations within its state parties. The ECHR¹⁸ was established, which was empowered to hear both individual¹⁹ and interstate complaints.²⁰

The Council of Europe is an entirely separate entity to the EU and the two should not be confused. While the EU was established as an inherently political institution with a primary objective of economic stability, the Council of Europe was primarily concerned with the promotion and protection of human rights. The ECHR contains a number of articles that are relevant to employment law. Article 8, which provides for the right to respect for private and family life, has been interpreted to include matters of occupational health and injury at work. Article 9, which provides for the freedom of thought, conscience, and religion, ensures that no one may be discriminated against on the grounds of religious belief or conscientious objection. Article 11 allowing for the freedom of assembly and association allows for employees to join trade unions and to peacefully protest. Article 14 contains a general prohibition on discrimination that may be applicable in employment matters.

Unlike the EU, rights under the ECHR can only be enforced against the state and not an individual. Thus, it imposes an obligation on the state to ensure that employers do not breach their convention rights. Under the admissibility rules of the ECHR the employee would have to first exhaust domestic remedies, in other words they would have to show that they have gone through the national court system first. Where the employee gets no satisfaction from the national courts, they can then apply to be heard in the ECHR.

The European Social Charter

The ESC, which entered into force in 1965, protects only social and economic rights. It is a creation of the Council of Europe and was designed as a counterpart to the ECHR, which textually protects civil and political rights only. Several revisions to the Charter have occurred, culminating in the Revised Social Charter of 1996, which came into force in July 1998.²¹ Part I of the Charter lists the rights in the form of objectives, while Part II establishes the corresponding obligations the state must fulfill in order to meet these objectives. Article 20 of the ESC establishes that the state must accept a minimum of 6 of the 9 core obligations. These are the right to work,²² the right to organize,²³ the right to collectively bargain,²⁴ the right of children and young persons to protection,²⁵ the right to social security,²⁶ the right to social and medical assistance,²⁷ the right of the family to social, legal, and economic protection,²⁸ the right of migrant workers and their families to protection and assistance,²⁹ and the right to equal opportunity and equal treatment in matters of employment without discrimination on the grounds of sex.³⁰ All other provisions are not deemed to be core. The European Committee on Social Rights (previously called the Committee of Independent Experts) oversees the enforcement of the ESC. The Committee does not see the ESC as a mere statement of rights. Rather, its aim is to “protect rights not merely theoretically, but also in fact.”³¹

In order to fulfill this supervisory role, states have an obligation to report on the implementation of the ESC rights that they have agreed to be bound by, every two years in respect of core rights and every four years for all other provisions. The Committee then issues compliance reports based upon its investigations of these submissions.³² It has been argued that this supervision is unsatisfactory in that it, like the reporting system for United Nations human rights treaties, relies solely on the subjective view of the state and arguably an independent assessment would be better.³³ These compliance reports are not legally binding and the Committee has no power to force the state to comply with its recommendations.

The collective complaints procedure was introduced as part of the revitalization of the Charter, which began in 1990. The complaints are also heard by the Committee and therefore the enforcement mechanism for breaches of the ESC is not judicial like the European Court and sanctions cannot be imposed on states. The recommendations and decisions are not enforceable and, thus, a violation may continue for years before any changes are made by the state to make it compliant with its obligations. Enforcement of Charter Rights relies mainly on political pressure, naming and shaming states that are in breach by publishing their reports to ensure that obligations are fulfilled.

The ESC identifies four groups that are permitted to bring a complaint before the Committee: (1) international organizations of employers and trade unions; (2) NGOs that have consultative status with the Council of Europe; (3) national organizations of employers or trade unions within the jurisdiction of the state against which they have lodged a complaint; and (4) (for states that have accepted the provision to allow NGO’s to take a complaint) other NGOs with particular competence in the matter complained of.³⁴

From the list of groups entitled to bring a case to the Committee it is clear that the focus is very much on employment and related matters.

As we can see earlier, there are three separate systems from which European employment law derives. As we go through the various chapters you will see that EU law plays the lead role, however the other two are certainly not to be dismissed. They confer rights on employees and citizens that the state must protect. The state does this by putting measures in place to ensure that employers respect these rights afforded to employees. Where the employer fails to do this, the state must step in and remedy the breach. If the state fails to do this it could find itself before the ECHR or the European Economic and Social Committee (EESC), or indeed the CJEU. As we have seen, EU law is different from the ECHR and the ESC as it applies both horizontally and vertically. In other words, you can take your employer to court for breach of rights derived from EU law. It will become evident in the coming chapters that EU law gives particular employment rights to individuals. While the individual is conferred with these rights it is the state that must implement them. Therefore, where the state fails to implement or enforce EU law, it is responsible to the individual. This is logical; if the state is not held accountable for its breaches of EU law it would render the law effectively useless if the person could not enforce the right. Thus, the issue of state liability for damage caused to an individual for a breach of EU law for which the state is responsible becomes a consideration.

The concept of state liability was established not by any particular treaty article but by the court in Francovich, where it stated that “a principle of state liability for damage to individuals caused by a breach of community law for which it is responsible is inherent in the scheme of the Treaty.”³⁵ Here the court is saying that state liability does not need to be explicitly addressed in the treaty itself, rather that it is inherently implied therein.

Subsequently, it confirmed that in order for the state to be liable, three essential ingredients must be present. First, the law that has been breached must have conferred a right on an individual; second, the breach must be severe enough to merit the award of damages. As such the state must have “manifestly and gravely” disregarded the limits of its discretion. Third, there must be a causal link between the state’s default and the damage sustained by the claimant.³⁶

Thus, the state’s obligation under EU law does come with sanctions should its failure to implement a law causes sufficient damage. In these circumstances the state may be liable to pay compensation to the individual(s) effected in addition to any fines it may face in the CJEU should the Commission institute proceedings.

¹ European Union 1957. Treaty establishing the European Community (Consolidated Version), Rome Treaty, 25 March.

² European Union 2007. Consolidated Version of the Treaty on European Union and the Treaty on the Functioning of the European Union, 13 December 2007, 2008/C 115/01.

³ Kaczorowska, A. 2013. European Union Law, 117. 3rd ed. New York: Routledge.

⁴ Case 143/77 Koninklijke Schilten Honing v Council and Commission [1977] ECR 797 [21].

⁵ Case 1/58 Friedrich Stork & Cie v. High Authority [1959] ECR 17.

⁶ Zuleeg, M.M. 1971. “Fundamental Rights and the Law of the European Communities.” Common Market Law Review 8, no. 4, pp. 446–61.

⁷ Case 26/69 Erich Stauder v. City of Ulm-Sozialamt [1969] ECR 419.

⁸ Case 11/70 Internationale Handelsgesellschaft [1970] ECR 1125.

⁹ Case 4/73 Nold, Kohlen-und BaustoffgroBhandlung v. Commission [1974] ECR 491.

¹⁰ Case C-249/96 Lisa Jacqueline Grant v. South-West Trains Ltd [1998] ECR I-621.

¹¹ European Union 2012. Charter of Fundamental Rights of the European Union, 26 October, 2012/C 326/02.

¹² [1964] ECR 585, 594.

¹³ Case 11/70 Internationale Handelsgesellschaft [1970] ECR 1125.

¹⁴ Advisory Opinion on 3 February 1928, Series B, No. 15

¹⁵ Case 26/62 NV Algemene Transport- en Expedite Onderneming van Gend & Loos v. Netherlands Inland Revenue Administration [1963] ECR 1, 12.

¹⁶ The horizontal application was confirmed in Case 43/75 Defrenne v. Sabene [1976] ECR 455.

¹⁷ Established in 1949 under the Statute of the Council of Europe ETS No. 001, a top priority for the newly created institution was to develop a Charter of Human Rights and a court to enforce the rights contained therein. See E. Bates. 2010. The Evolution of the European Convention on Human Rights: From its Inception to the Creation of a Permanent Court of Human Rights (London: Oxford University Press) and Mowbray, A. 2012. Cases, Materials and Commentary on the European Convention of Human Rights. 3rd ed. London: Oxford University Press.

¹⁸ Initially, the Convention established two part-time institutions; the European Commission of Human Rights acted as a court of first instance that would, in certain circumstances, refer cases to the European Court. Protocol 11 (CETS No 155) replaced these with a permanent court.

¹⁹ Article 34.

²⁰ Article 33.

²¹ Additional Optional Protocols were annexed to the Charter in 1988, 1991, and 1995.

²² Article 1 “Everyone shall have the opportunity to earn his living in an occupation freely entered into.”

²³ Article 5 “All workers and employers have the right to freedom of association in national or international organisations for the protection of their economic and social interests.”

²⁴ Article 6 “All workers and employers have the right to bargain collectively.”

²⁵ Article 7 “Children and young persons have the right to special protection against the physical and moral hazards to which they are exposed.”

²⁶ Article 12 “All workers and their dependants have the right to social security.”

²⁷ Article 13 “Anyone without adequate resources has the right to social and medical assistance.”

²⁸ Article 16 “The family as a fundamental unit of society has the right to appropriate social, legal, and economic protection to ensure its full development.”

²⁹ Article 19 “Migrant workers who are nationals of a Party and their family have the right to protection and assistance in the territory of another Party.”

³⁰ Article 20 “All workers have the right to equal opportunities and equal treatment in matters of employment and occupation without discrimination on the grounds of sex.”

³¹ International Commission of Jurists v. Portugal, Complaint No 1/1998, Decision on the merits, 9 September 1999.

³² Harris, D., and J. Darcy. 2001. The European Social Charter, 310. 2nd ed. New York: Transnational Publishers.

³³ Martin, N. 2009. “Forty Years of the European Charter: Celebration or Commiseration.” University College Dublin Law Review 1: 67.

³⁴ Additional Protocol to the European Social Charter Providing for a System of Collective Complaints, Strasbourg, 9 XI 1996 ETS No 158.

³⁵ Case 6/90 Francovich v. Italian State [1991] ECR I-5357.

³⁶ Case 36/93 Brasserie du Pecheur SA v. Bundesrepublik Deutschland [1996] ECR I-1029.