European Labour Laws Explained
Germany, like all European countries, has a distinct system for labor laws that is governed by both EU statutes and national law. When we talk about European labor laws, we are referring to any legislation that relates to employment, the workforce or employment in Europe. These include both broad regulation, such as a specific minimum wage that is applicable across the EU, and more generalized rules, such as intellectual property laws, which apply to all EU member states and affect the workforce as a whole.
For example, the EU requires that all members comply with its labor laws regarding parental leave and working time regulations. These basic labor laws are further complemented by both national regulations and internationally accepted laws regarding the treatment of employees. Key areas where these labor laws interact include:
The EU clearly has a vested interest in creating and maintaining a unified labor policy among its member states. EU labor laws are intended to create a strong and unified market across the continent that prioritizes the well being of European citizens. This is an important part of modern minimum labor standards in Europe, which were created in 2010. By establishing these laws on a continent-wide basis, the EU attempts to maximize the chance of citizen and legal equality for the 511 million people that live there.
Undoubtedly, national laws also play a role in labor regulations and affect the way that those laws are applied in each state. However, these are usually supplemented by EU statutes on a national level, which ensures that citizens will not have it harder in one country than another . Behind this, in addition to the above-mentioned laws, the EU also maintains stated policies for the benefit of workers’ rights, including:
While most EU laws regarding the workforce go back to the 90s, the oldest generally date back to the 60s. The EU has always intended for its member states to comply with its own labor regulations, though there arguably has not yet been a need for more tailored labor laws that have arisen in the past decade. However, the EU does reserve the right to create supplementary laws to reinforce its objectives and to bring any dated rules up to date as needed.
With the rise of technology that can potentially increase unemployment, disruptive market forces and a greater influx of refugees, the EU has had to adapt to the changing workforce. For example, the EU has recently started to enforce new laws that more strictly define the difference between employment and self-employment, which could have major implications on how people work, who pays taxes and who benefits from official employee benefits. Similarly, the intent is that the law will close loopholes and prevent companies from avoiding taxes on workers they classify as self-employed.
As with any new area of change, there will likely be a discrepancy between EU law and national law that favors the latter, at least in the short to mid-term. As both grow towards a state of equilibrium, we can expect there to be greater complementarity between these different laws in the overall European system.
Contracts of Employment in Europe
Employment contracts in Europe is regulated in some countries by European Union or European Council Directives to ensure a level playing field and common labour law standards in the EU.
Employment contracts in the EU must contemplate employers’ compliance with a number of EU mandatory requirements. For example, there are specific requirements on when an employment contract must be in writing and for the minimum content requirements of an employment contract. European labor law shareholder agreements (also referred to as employment contracts) are usually governed by the following core principles:
1. Both sides of the employment relationship must satisfy:
· The legal capacity equal to the rights and obligations established in the agreement.
· The capacity of exercise of labour rights or obligations.
- Real intention or consent. The parties must be able to establish the mutual pact containing various obligations and entitlements. The parties should perform according their will.
- Mutuality or equality. The parties must be legally supported by the sense of equality and non-discrimination. Both employer and employee should have a proper bargaining power and equal opportunities to enforce their function in the employment relationship. That is why European labor law prohibits discrimination between male and female for the same job position. There should not be any difference in terms of wages and bonuses. Same labour agreements must be applied for male and female representatives.
- Legal ability to make a pact. The parties must be recognized by law to possess the ability to make contract, so the implied capacity must always arise.
- Legality and good faith. The execution of the contract should not prohibit any specialized law and should be respected with the rules of law of good faith. An employment contract carried out by force, trickery or fraud is prohibited. The requirements essentially are identical among the members and only the provisions of the national law may differ slightly. EU member countries have made efforts to harmonize their employment laws and thus have implemented similar provisions. In some EU countries, like Germany, employee’s rights are protected by a collective bargaining agreement (CBA). It is optional for the parties to sign a written employment contract; however, if there is no written contract, then it is considered that a CBA is signed.
European Working Time Directive
The European working time regulations specifically address the maximum hours employees can work, daily and weekly rest breaks and rights to annual leave. The directive includes: Maximum working time – a limit of 48 hours of work throughout each week. There is the possibility for employees to opt-out from this limit, but the arrangement needs to be in writing. Daily rest – for an adult worker, there should be an uninterrupted rest period of minimum 11 hours between times of work. For example, a worker would not be permitted to work from 6am until 8pm every day and then be available again at 6am the next morning, as that would risk a break of 10 hours during the work week. However, exceptions can be made to this requirement. There are exceptions also further down the age scale so that a 16 or 17 year old may finish work at 10pm. In practice: there is one major exception to these working time regulations. Many workers will be familiar with the fact that a worker can be asked to opt-out of the maximum 48 hours per week if they wish. This voluntary scheme has recently been reviewed by the Government who have published a report recommending it to continue, although many campaign groups remain unconvinced. Weekly rest – a minimum of one 24 hour uninterrupted period each week (in addition to the daily rest above). However, again, the rules are slightly different for 16 and 17 year olds. In practice: odd as it may seem, the days off work in the working week count as 24 hours periods and each worker needs two days off in each week (or 48 hours in total). It is not enough for workers to get their 48 hours off over two weeks. Nor is it OK for them to get 48 hours off, but with a rest pay period of only seven days falling short of 48 hours. Annual leave – a statutory right to 4 weeks paid annual leave (in addition to the normal bank holiday entitlement). It is important to note that these four weeks of leave include the 8 public holidays in the UK which bear no relation to the regulations. In practice: This may come as a surprise to many employees who look forward to the prospect of bank holidays, only to realise that these fall within the minimum annual leave requirements. Special provisions: Special rules can apply to special categories of employee. Working time for bus, coach and lorry drivers is governed by separate regulations. For doctors in training there is a requirement to ensure recommended limits on working time are not exceeded. Other regulatory obligations: the regulations place an obligation on employers to keep a record of daily and weekly rest breaks taken by their employees.
European Rules on Salaries and Social Security Contributions
European labor laws contain regulations regarding wages as well as about remuneration. Some countries do not establish a minimum salary, although the majority of Member States shall apply a minimum wage. However, there are some discrepancies on national, regional or sectoral levels. The Council of the European Union "recommends" to all Member States that they set a minimum wage that: (i) is established in such a way, that "it enables the active population to afford a decent living"; and (ii) is not related to the productivity of workers in such a way that it "has a negative impact on female employment." Article 4 of the Charter of Fundamental Rights of the European Union states that "any worker has the right to a fair remuneration sufficient for a decent standard of living for himself or herself and his or her family."
One of the most prominent regulatory differences is the principle of the equal treatment between men and women. Member States are obliged to guarantee that women and men enjoy equal pay when they perform "same work," "similar work" and "work of equal value." According to the European Commission’s recommendation of 2014, "equal work" means work that is identical in nature, while "similar work" refers to work that is comparable, with similar demands in relation to their skill level, experience and responsibility. Both categories require, among others, a comparative job evaluation. "Work of equal value," further, is defined as "work for which a common value is attributed on the labour market." It requires, among other things, an appropriate common evaluation of the occupational groups categorized as representing such work.
European law also regulates the criteria for determining pay. In particular, the concept of "collective agreements" does not apply to all Member States (such as Germany or Austria) from a substantive legal perspective. EU regulations also provide some non-discrimination and equal treatment rights concerning pay, such as indirect discrimination in the context of gender equality law or the equal treatment principle for EU mobile workers. In Germany, capping of the percentage of unemployment compensation is regulated by the German Law on Employment Promotion ("SGB III"). However, it shall be noted that Member States have a wide discretion in regulating this area of labor law.
Health and Safety at Work
Employers are obligated to comply with strict health and safety regulations to protect their employees, wherever they may be employed. These obligations extend to a wide range of areas, with many specific requirements that vary by jurisdiction. The goal in all cases, however, is for the employer to ensure that workers are not exposed to avoidable risks to their health or safety .
Employers must (in so far as is reasonably practicable) ensure the health and safety at work of each of their employees, by doing all that is reasonably practicable:
"Reasonably practicable" means doing what is reasonable, taking account of the harm that could be caused by the risk, how likely it is that the risk could occur and what costs would be involved in reducing or eliminating the risk.
Employees must make full and proper use of personal protective equipment, safety devices and other such control measures provided by their employer to protect their health and safety. They must also report to their employer (or the employer’s nominee) any situation they think represents a serious and imminent danger, as soon as possible after discovery.
EU Anti-Discrimination and Equal Treatment Laws
In the European labor law landscape, anti-discrimination, equal treatment and enforcement of the same are regulated mainly in the European level, although member states can supplement these provisions with additional regulations and protections. Regardless of the applicable laws in the specific country where the employer is based or where the work is actually performed, the European legislation in this area is supplemented by an extended protection of employees and a broad definition of discrimination. International companies will have to comply with these rules.
There are several laws protecting and extending the principle of non-discrimination to all the employees of a company. The most important of them are: In the workplace, the most relevant aspect of the general principle of non-discrimination is the prohibition to discriminate against any worker, directly or indirectly, on grounds of gender, racial or ethnic origin, religion or belief, disability, age or sexual orientation. In principle these prohibited grounds of discrimination are applicable to any person in the European Union, and the application of the principle of non-discrimination to all persons represents a wide scope of application in the workplace. In addition, an employer should observe the principle of equal pay for equal work of equal value. To this end, it cannot pay different remuneration packages to workers as a result of discrimination on the grounds of gender. Finally, in the workplace the employer must provide a working environment that complies with the requirements of the principle of non-discrimination. An employer is liable for indirect discrimination if it does not take reasonable steps to prevent it occurring. European legislation on the principle of nondiscrimination provides that the European Commission (EC) can initiate infringement procedures against countries that are not observing the nondiscrimination rule. In case of breach, employers may be subject to sanctions and fines.
European Law and the Rights of Migrant Workers
Migrant workers in Europe enjoy substantial rights and protections under European labor laws. The principle of non-discrimination underpins these rights, providing that migrant workers are to be indemnified under at least the same conditions as national employees. EU Law generally forbids discrimination on many grounds, including race, ethnicity, sex, sexual orientation, religion, disabilities, and age. The fundamental principle of equality of treatment is assured by a host of European and national legal instruments, which generally forbid an employer to treat non-EU expatriate workers less favorably than EU nationals in respect of the terms and conditions of employment, social security, collective rights and any additional benefits.
However, migrant workers face various challenges. Currently, migrant workers from third countries tend to have lower wages and salaries than EU nationals, with significant and diverse social and economic disparities. EU studies consistently show that migrant workers are disproportionately affected by unemployment, which is in part attributable to EU restrictions on certain professions and limited mobility in the EU. Moreover, migrant workers often work in sectors where laws are less well enforced. This is particularly the case for sectors such as construction and in employment agencies, informal work sectors or those that operate outside of the trade union and social security systems. For example, laws on the transfer of undertakings, agency work, frontline working conditions and enforcement mechanism are regularly flouted or ignored. Typical breaches involve employers not ensuring that employees are paid at least the national minimum wage, timesheets altered to reflect shorter hours, failure to reimburse travel expenses, no or low holiday pay, breaches of workplace safety legislation and unregistered or illegal employment. Additionally, migrant workers may not have access to independent information or advice. They may not understand their employment rights or how to exercise them or may lack the financial resources to enforce them. Furthermore, migrant workers may be more vulnerable to retribution or expulsion from their country of residence if they complain of breaches or violations.
Navigating Claims, Disputes, and Exit Procedures
A clear understanding of labor law regulations regarding the procedure for ending contracts, handling workplace disputes and discerning employees’ rights in such matters is essential to human resource management at any organization. During the term of an employment contract, the law provides that disputes be resolved by peaceful means, in the spirit of dialogue, trust and respect. The law therefore aims at providing a platform for dialogue between the employer and the employee, and strives to regulate the conduct of the parties in order to prevent the issue from escalating to a level which could cause the employee to resign, without having exhausted all means to resolve the dispute amicably. Labor law provides two types of potential dispute resolution procedures: The amicable settlement procedure generally entails the employer and employee trying to reach a solution through the employer’s human resources or legal departments (or a specialized body established for such purposes). The amicable settlement should be finalized within fifteen working days as of the date of initiating the process or the last request for resolution, whichever takes place last. The amicable settlement may take either of two forms: Whereas the amicable settlement procedure is a matter of discretion, the conciliation procedure is mandatory. The employee may not initiate the process without seeking to settle the conflict amicably first. Conversely, the employer is not permitted to begin the procedure without the consent of the employee.
The conciliation procedure also takes between ten to fifteen working days, depending on the complexity of the dispute, the number of employees involved , etc. The deadline may be extended by ten working days in the event of particular complexity. Where the initial time-frame is exceeded, the dispute may not be heard by the Labour Court.- Termination of Employment In relation to the termination of the employment contract, the general rules provided on this subject by the Labour Code are as follows: In this regard, it is important to note that dismissal of:- any female case manager;- any employee in charge of a unit or a department; – any employee who has directly contributed to the accumulation or increase of the company’s profits; – any employee who has served the company for five or more years, and who earns less than the highest salary of the company’s fourteen successive employees, as such employee shall be entitled to one month’s salary. In the event the employee has worked for fifteen years or more, he/she shall also be entitled to additional compensation equivalent to one month’s salary for every additional year beyond the fifth year. The law further contains specifications for the calculation of additional compensation.
It is worth mentioning that, in the case of private sector employees, termination must be preceded by a warning to the employee, by either the direct manager or the human resources department. In cases in which the employee fails to respond positively to the warning, a termination notice must then be sent to the employee and submitted to the Ministry of Labour for approval (in a period not less than 15 days from the day of its submission). Such notice must be justified (i.e., under the circumstances of misconduct). Upon approval of the notice, the employer has to notify the employee and send him/her an invitation to attend a meeting, to be headed by a committee made up of: