Spending a whole day with friends and distinguished academics discussing the RegioPost judgment and its implications for the enforcement of labour law standards in public procurement settings under EU law proved to be both intellectually challenging and very rewarding. I am sincerely grateful to all speakers and participants for the excellent exchange of ideas (the event was definitely not short on controversy ...).
It will take us some time to get the formal publication of the proceedings of the conference in place, so I thought it would useful to advance here some of the most salient issues discussed at the event. These are my (lengthy) personal notes and, even if I tried to capture the essence of the speakers' presentations, they may not represent their views and they do not bind them in any way; all mistakes in these notes are my own.
Joanne Conaghan gave us a very warm welcome (literally, for it was a really hot day in Bristol after the gorgeous weekend weather) and stressed the relevance of putting the discussions to be held in the broader context of the constant struggle of harmonising economic and social considerations in any regulatory and policy framework.
With this in mind, the discussions for the day were organised around four panels, covering in turn different perspectives of the RegioPost judgment and, more generally, the difficulties and challenges in enforcing labour standards through public procurement.
Panel 1: Constitutional and Internal Market Aspects of the Enforcement of Labour Standards in the EU
Constitutional view on RegioPost
Phil Syrpis' paper addressed the constitutional framework considering the dynamic relationship between secondary and primary EU law, and in particular how the posting of workers directive (PWD) impacts on provision of services in the EU. Two constitutional visions: a) all secondary legislation is under the Treaties and, consequently, secondary law cannot have any influence on the way the CJEU interprets primary law; b) more organic or heterarchical model, the CJEU’s monopoly on the interpretation of primary law is necessarily complemented by legislative action whereby the legislative institutions provide input on the context of the rights and, consequently, the CJEU should take this into account when interpreting rights under the Treaties.
Not clear how secondary law in conflict with previous case law of the CJEU should be dealt with, as both models are in tension. The case law of the CJEU is inconsistent and the Court has not clarified what is the right approach in cases of conflict between secondary law and previous case law interpreting primary law. As an aside – these issues raise important points for Brexit, particularly when some directives create individual rights, as well as the possibility for MS to shape social and citizenship rights and influence the case law of the CJEU.
Initial reaction to RegioPost is that it clarifies some issues, but it confuses others too. Essentially, the question was about compatibility with Art 56 TFEU for the regional government to insist on compliance with regional minimum wage. Usefully, the CJEU distinguished between exhaustive and non-exhaustive harmonisation. Where there is exhaustive harmonisation, the framework provided by the secondary legislation displaces that of the Treaty. From a constitutional perspective, that is the easy case. However, Art 26 Dir 2004/18 does not lay down exhaustive rules on contract performance and, consequently, the analysis of legality needs to be carried out under primary law—ie Art 56 TFEU. Moreover, Art 26 explicitly required for contract compliance clauses to be in compliance with Union Law.
However, in para 60 of RegioPost, despite saying they would assess under primary law, the Court actually assessed compliance with the PWD, which is a measure of non-exhaustive secondary legislation as well. In the light of the relationship between primary and secondary law, this approach is strange and complicates the issue of what the hierarchies are. The provision of regional law was determined to be compatible with EU law due to compliance with Art 3 PWD, rather that Art 56 TFEU, which is unusual and confusing.
Distinction between exhaustive and non-exhaustive harmonisation presupposes that most initiatives by the EU legislator will be of exhaustive harmonisation. However, exhaustive harmonisation is never the case, particularly in areas such as social or environmental law. This requires a more sophisticated approach to what to do in these areas in terms of compatibility with EU law.
PWD and Dir 2004/18 seem to be in a strange relationship because the legality under Dir 2004/18 ends up depending on the interpretation of the PWD—does this trigger a privileged position of the PWD over the procurement rules? RegioPost suggests that the CJEU’s controversial interpretation of the PWD is more important to the CJEU than the interpretation of the procurement rules. That is odd. What should the relationship between particular directive and the CJEU’s interpretation of the Treaty? ‘Provided they are compatible with the Treaties’ should imply some independent analysis of compatibility with Art 56 TFEU itself, almost regardless of compatibility with other rules of secondary EU law.
For the future: what is the likely impact for changes in the public procurement rules? Art 26 Dir 2004/18 vis-à-vis Arts 18(2) and 70 Dir 2014/24. Does the subtle wording in Dir 2014/24 alter the position of the procurement rules? Also, in view of the proposals for the revision of the PWD, there are queries as to the permeability of procurement rules to that reform. Finally, it is also unclear to what extent these changes in secondary law are likely to affect the CJEU’s case law and interpretation of primary law (will it reflect the organic model?).
Art 56 TFEU and the principle of proportionality
Piotr Bogdanowicz stressed that RegioPost has been described as the gold standard for the social protection of workers performing public contracts. However, there was no reference to proportionality in the judgment. Generally, there is a three step methodology in this area: restriction, justification and proportionality assessment. It is surprising that RegioPost does not engage in this three-step analysis because it had been used in Ruffert and Bundesdruckerei. The lack of this analysis is a shortcoming of this Judgment and, unfortunately, another case challenging the coherence of the case law of the CJEU.
Why should proportionality apply to RegioPost? Because Art 56 TFEU should apply, mainly due to the fact that procurement rules are a fundamental expression of free provision of services, as well as the fact that the fundamental freedoms are the legal basis for the adoption of the Directives. Furthermore, due to the lack of exhaustive harmonisation.
The analysis is odd because, should Art 26 Dir 2004/18 not have required compatibility with EU law, would this have been an issue? This is particularly relevant because Art 70 Dir 2014/24 does not require it. In Piotr's opinion, there is no need for this requirement to be written in secondary law because it derives simply from supremacy of EU law. And, in order to assess such compatibility, the three-step approach needs to be followed. Restrictions are easy to prove and the CJEU rarely rejects the public interest reasons raised by the Member States, so proportionality ends up being the key issue of analysis in almost all cases.
In procurement, proportionality is particularly relevant because it has been included from the early generations of public procurement directives. Proportionality has always been applied in the procurement setting as a general principle of EU law. It was applied in the case law anticipating RegioPost (Ruffert and Bundesdruckerei) and in both cases the CJEU found that national measures did not pass the proportionality test. The importance of proportionality is also reflected in Art 18(1) Dir 2014/24, where it is explicitly consolidated.
Why did the CJEU not apply proportionality? It is difficult to identify the reasons why, mainly because it derives from the construction of the judgment itself. In para 67, the CJEU stresses that interpretation of Art 26 Dir 2004/18 is supported by Art 56 TFEU, which is a strange argument. That is why the abrogation of the proportionality analysis is an odd analytical strategy. In Ruffert, the CJEU had gone the same way but did apply proportionality to assess compatibility with EU law (after the restriction was demonstrated under the PWD). Even if the CJEU wanted to distinguish RegioPost from Ruffert, it ought to have carried the proportionality analysis. As it is now, it seems that the PWD offers a safe haven for national law, which could have been done 8 years ago (in Ruffert), but not now because Art 26 Dir 2004/18 applied to the case and this should have triggered a different analysis.
This adds complication under Dir 2014/24 because of Art 70 + 18(1), which change wording and potentially the test. The case law of the CJEU shows that the more politically sensitive the case, the less intrusive the scrutiny seems to be. ‘Indulgent’ scrutiny was advocated for by AG Mengozzi because the measure is applicable to workers assigned to public contracts rather than workers in the private sector—this raises an issue of conflict between economic and non-economic goals (competition v social protection). This, however, should trigger a strict proportionality test.
The implications of lack of proportionality in RegioPost are severe. A recent report by Bruegel showed that there is 1.2 million posted workers in the EU, 40% come from Eastern countries (20% come from Poland). The CJEU seems to have adopted a more careful approach to the PWD and this may improve the situation for posted workers. This is something that requires further case law from the CJEU.
DEBATE
focused on complex issues around the way the preliminary reference ‘framed’ the CJEU’s assessment and why the CJEU ‘abrogated’ alternative analyses such as non-discrimination or split of competences. The discussion also covered the difficulty of applying proportionality in fields where we are dealing with incommensurate values. Moreover, this is complicated by the lack of clarity and consistency of the recitals in specifying what specific secondary law interventions aim to achieve—which is particularly muddy regarding Dir 2014/24.
Panel 2: Public Procurement and Labour Standards (I):
EU Procurement Law Perspective
Sustainable procurement and corporate experimentation
Nina Boeger shared some thoughts beyond RegioPost and an enquiry into two developments arising from the financial crisis: a) rise of polarisation of corporate governance models with, on the one hand, market responses to financial crisis that persevere on traditional approach to maximisation of return on investment and, on the other hand and as a counterbalance, new or revived corporate models, such as social enterprise, cooperative enterprise and commons-oriented enterprise; b) rise of sustainable or smart procurement driven by austerity politics and cuts on public budgets, which is also becoming polarised with, on the one extreme, traditional or economically-driven procurement, with focus on immediate value for money obtainable from service outputs and very much focussed on price and concrete delivery and, on the other extreme of the spectrum, smart / sustainable procurement that aims to change perspective of procurement and commissioning practices and moving towards longer-term perspectives on triple bottom line for the communities that are relevant for the procurement or commissioning body, as well as process sensitivity and long term relationships with providers of services.
Smart procurement involves a recognition of the risk that contracting with shareholder-driven corporations entails (large corporations are “too big to fail” and the risk of failure that the public sector faces requires a more diffuse provider base), as well as the passing on of costs to the tax payer. There is also a concern on the risks of insufficient specification (under-specification) and uncertainty, which is an integral part of procurement and commissioning. Corporate governance and the way they are structured will affect the way they deal with these issues of risk and how they will respond. Alignment of corporate governance and risk issues is necessary and contracting authorities are searching for trust and reliability in addition to capacity. New corporate models (such as social enterprises) that are struggling to make their business sustainable are dying to access public demand, both to raise funds for their sustainability and to raise social awareness.
In view of these trends, it looks like there are promising possibilities in procurement in aligning two very important structural developments: emergence of new corporate forms and the development of smart procurement. The question now is whether there is enough flexibility in the legal regime to allow public authorities to procure in this way? [this looks like a watershed moment for EU public procurement law, which is still fulfilling a traditional role of non-discrimination, transparency and workable market openness; but is also fulfilling the role of a change agent by supporting the development of those new models—the tension is not anymore on what the EU / the MS can do, but rather about thinking about new structures of capitalism].
The issue of flexibility then hinges on certain aspects of Dir 2014/24, such as market engagement (Art 40), the possibility of reserving non-profit contracts (Spezzino), grounds for exclusion also help some experimentation (Art 57), reservation of contracts for employee-led organisations (Art 77—which is incredibly narrow) … but the main problem for the development of ‘corporate governance’ clauses in procurement is the requirement of link to the subject matter (LtSM), which has been extended massively compared to Dir 2004/18. This poses the question how do we make sure that we can distinguish corporate governance requirements linked to the provision of the service from the limits on mandating general corporate policies. It is necessary to have these conversations so that the developments can move forward.
Minimum and living wage in public contracts:
Enforceability after RegioPost
Abby Semple started off stressing that the discussion on the enforcement of labour (pay) standards needs to be more specific and we need a taxonomy that distinguishes minimum wage, sectoral minimum wage [in particular, wages specific to public contracts], collectively agreed wage and living wage (which is a voluntary undertaking to pay a wage above the legally-mandated minimum wage). There is also an interesting argument on whether requirements for fair trade that link to wages paid to producers can be included as part of the same analysis. She also stressed that minimum wages show great disparity in the 28 Member States, even when adjusted by parity of purchasing power. This raises significant practical difficulties.
What does RegioPost say? The CJEU distinguished the Ruffert case very strongly because it was then a non-universal collective agreement that set the minimum wage in dispute, whereas in RegioPost the minimum wage is a result of (regional) law, in which case it does not matter that it only applies to the public sector. The CJEU also acknowledged the social protection argument as potential justification (like in Bundesdruckerei), but did not engage in full proportionality assessment (maybe because it did not need to do so, but leaves RegioPost vulnerable to future case law where the CJEU may engage in proportionality review).
Proportionality review should be a mechanism of last resort because Dir 2014/24 sets precise rules and, if they were not shielded from proportionality review, then contracting authorities would have no liberty to rely on the secondary rules.
Interestingly, the CJEU did not distinguish from Bundesdruckerei. The CJEU did not make any assessment / statement on the issue of lack of a cross-border situation in RegioPost. This is important in itself. It is also relevant that the CJEU engaged with an analysis with the PWD, primarily because the referring court had raised it. Also because Art 26 Dir 2004/18 is an empty / reenvoi clause that required engaging with PWD (this is cross-referenced in Recital 34 of Dir 2004/18C and Recital 98 of Dir 2014/24).
It is also relevant to stress that RegioPost makes some conceptualisations of contract compliance / performance clauses problematic. Nord pas de Calais, which reinterpreted Beentjes, also created a circular self-justifying doctrine that indicated that contract performance clauses did not allow for exclusion of those that did not meet the requirements. The RegioPost judgment now allows for exclusion of tenderers that are not committing to comply with contract performance requirements, which conflicts with the Commission’s understanding under the previous case law.
Looking specifically at minimum wage clauses, it is relevant to look at the Fair trade coffee case (C-368/10), where the CJEU stressed that you could have fair trade as an award criterion. Fair trade includes, amongst other things, the payment of wage premia to producers—this creates a problem if a contracting authority can do it in a third jurisdiction, but not in its own jurisdiction. There is evidence that the Commission does not accept that payment of a living wage could be a pass/fail criterion (Scottish government sent repeated letters to the Commission, to which it replied in the negative). How to address living wage as an award criterion? Could you use the wages the tenderer is willing to pay as an award criterion? Semple does not see any reason why it is not possible.
Scenarios for further thought. 1. Could you have a maximum wage clause in the contract for cost-control purposes? 2. Where a contract is affected by TUPE, the obligation to apply same terms and conditions, as the contracting authority, you need to effectively require pre-existing terms and conditions including wages (and you NEED to do that, including where the incumbent is the contracting authority itself in case of outsourcing).
RegioPost allows for legally-embedded sectorial [public sector] minimum wages. It does not deal specifically with living wages but the argument can be made in light of fair trade coffee.
Competition and State aid implications of
minimum wage clauses in EU public procurement
Albert Sanchez-Graells' presentation focused on the trade / social dumping rationale for minimum wage requirements, and I submitted that the PWD is the anti-dumping standard under EU economic law, so that no more demanding standard can be allowed without subjecting them to a very strict proportionality test. I also submitted that the approach of the CJEU to the interpretation of the PWD in the public procurement scenario does not make economic sense because it creates double standards for cross-border and inter-regional situations, which results in an impossible situation for contracting authorities that, at the time of tendering, cannot foresee whether they will manage a purely domestic or cross-border procurement project (as that depends on actual interest from cross-border tenderers).
On that basis, I discussed the problems of reverse discrimination and unforeseen consequences (anti-SME, pro-delocalisation, etc) that can derive from strict enforcement of the contradictory rules created by the Bundesdrukerei-RegioPost tandem. I moved on to stress the competition law implications that can result from this situation and the difficulties in capturing such anticompetitive effects with the competition law prohibitions in Arts 101 and 102 TFEU, included the supporting State action theory.
I finally tackled issues of application of State aid and submitted that the payment of above-market wages by the contracting authorities is an economic advantage that triggers the prohibition of Art 107 TFEU and, in turn, this cannot be justified either under the 2014 general block exemption regulation (it does not fit the regulated categories of disadvantaged/disabled employment, or creation of jobs), or the de minimis regulation (the aid is not transparent). Thus, I submitted that State aid enforcement in this area can raise difficult issues in the near future.
DEBATE
focused mainly on the issues of the social economy model and the extent to which competition law / State aid can apply to these issues at all, as well as the undesirability of a strict proportionality assessment that would kill innovation. It is also discussed to what extent a proportionality analysis is at all possible and whether social requirements are necessarily protectionist or not, and whether this should be dealt with as an issue of direct or indirect discrimination and how EU law would regulate them, which comes back to issues of proportionality of restrictions vis-à-vis their intended goals. The debate then also moved upwards and looked at the different treatment under WTO GPA and the EU rules, as well as the possibility to coordinate them. The issue of the heterogeneity of what is considered a ‘social consideration’ was also explored in some detail.
Panel 3: Public Procurement and Labour Standards (II):
EU Labour Law Perspective
Government as a socially-responsible market actor after RegioPost
ACL Davies took a step back and looked at the discussion from first principles. Use of contracts to pursue contract-unrelated policy is controversial. It is useful to distinguish two dimensions: a) reinforcing existing legal requirements, and b) creating requirements that go beyond existing legal duties. a) may see superfluous but the leverage of contracting can make up for deficiencies in enforcement elsewhere (in the UK case, given the lack of labour inspectorate). b) has attracted significant opposition + international drive to reduce the use of contracting authorities’ discretion is a way of reducing the chance for them to adopt protectionist strategies, willingly or otherwise.
The justification for the use of procurement to enforce social goals is as follows: 1) consistency and trust in government (legislative process not only aspect of democratic mandate given to government), so if the government is committed to a public policy, it should enforce it through contracting (to show consistency and avoid silo mentality, all of these foster trust in government). This is linked to the doctrine of legitimate expectations to get government to follow promises made in the past. This use has a long tradition (government as a model employer, and procurement as an aspect of that). 2) stronger argument in modern times is to prevent the harm that competitive tendering can create. This is linked to ILO standards for government contracting. This is particularly relevant in labour-intensive services, where government can create a level playing field in terms of employment conditions, so that alternative providers compete on other dimensions and labour standards are taken out of competition.
Two issues with RegioPost: lack of understanding of procurement and lack of understanding of wage clauses in procurement. Before the negatives, RegioPost is generally welcome if nothing else because it reverses Ruffert on the basis of Art 26 Dir 2004/18.
BUT.
Art 56 TFEU and its key test for determining whether something is restrictive requires to assess whether it ‘constitutes an additional economic burden that may prohibit, impede or render less attractive the provision of their services in the host Member State’. This is applied in RegioPost and the minimum wage is characterised as an additional economic burden that makes the activities less attractive. The cost linked to the minimum wage can be a burden, but the cost can be passed on to the government and, from that perspective, there is no impediment or restriction to the provision in another Member State because the additional cost is covered by government. However, the services can be less advantageous by limiting the profit that the provider could achieve. This disadvantage is very artificial because it does not carry a loss for the service provider, but merely a missed opportunity for a larger benefit. This should not be covered by Art 56 TFEU or, at least, given that the disadvantage is very marginal. Maybe it is State aid (the government pays for it and State aid can be discussed), but it cannot also be exclusionary. It is either one or the other.
From the perspective of minimum wages, we need to remind ourselves that EU law does not say a great deal about wages. The difficulty of regulating pay at an EU-wide level is significant. This does not stop the CJEU from scrutinising different issues regarding pay in the internal market perspective, but the CJEU lacks a point of reference in this setting. This is what leads it to rely on the PWD and the importance on the wage being a minimum wage. The interpretation of the PWD in Laval is a clear attempt to elevate the PWD to the standard applicable in terms of social dumping in the EU. What’s wrong with the emphasis on minimum wage? The issue is with the justification on worker protection as the justification for the measure discussed in RegioPost. Minimum wage is of course a protection. The elephant in the room is that the minimum wage is only for public contracts, which diminishes the relevance of the argument as compared with contexts of general economic regulation.
In the public procurement setting, minimum wage is not a concern as in the labour market as a whole, but a protection against the competitive nature of government contracts and the ensuing downward pressure on worker protection. So the analysis should be procurement context-specific.
So, upshot, it is better that Ruffert, but RegioPost misses the difference between procurement and regulation, procurement being the space where the government is ready to put its money where its mouth is. This ought to do with preventing the harm that procurement might otherwise cause.
Labour law in the state of exception
Lisa Rodgers looked at labour law as an exception to economic rules and tried to see how far that helps us when thinking about labour standards in public procurement. It is worth stressing the link between economic and social law, and the theory of the ‘state of exception’ derived from neoliberal thought following the crisis. Labour law is an exception or concession against the basic economic foundation that we have. Following the crisis and austerity measures, this exceptionality has become more clear. The focus on procurement is an expression of this exceptionalism.
The state of exception is a theoretical perspective that uses the importance of the exception itself. The argument is that the ‘exception’ is the most important element in any system of regulation because it is at the edge of the legal system and it shows how politics get involved in the adjudication of legal issues. Used this way, it crowds out political considerations because the law starts covering it all.
Positive claims about inclusion of labour law in economic standards: 1) labour law’s concerns are included within the law; 2) labour law’s concerns become part of the economic paradigm; 3) law is subject to interpretation by favourable CJEU; 4) other Treaty provisions can help; 5) incorporation of international legal standards is facilitated.
Responses to the claims: 1) labour law is an exception or a concession, so it is included (by exclusion) as a discretion rather than a mandatory condition [eg Arts 56(1) and 57(4) Dir 2014/24] and some innovations do not include social/economic concerns [eg Art 68 Dir 2014/24]; 2) as an ‘exception’, labour law is only part of the economic paradigm, which weakens the political power of labour law institutions; 3) the CJEU has given broad discretion to consider employment and social considerations as part of the public procurement process (Beentjes), BUT the link to the subject-matter of the contract (LtSM) is an increasingly constraining economic test, which means that the contracting authority cannot influence the policy it applies; 4) relationship between labour standards, public procurement and other EU law provisions and policies (including soft law) show a shift in those instruments and a prevalence of macroeconomic policies that downgrades labour law standards’ relevance; 5) finally, there is a very limiting approach to the inclusion of international standards [narrow list included in Dir 2014/24 and NO reference to ILO convention 94 on public contracts) + Art 18(2)].
In conclusion, labour law is increasingly seen as important in the context of the public procurement directives, but there are some important risks if labour law is seen as an exception or a concession to economic law and economic goals. Labour standards are restricted because they need to comply with economic paradigms, there is a tendency to promote individual over collective rights, the institutions of labour law can find their power to challenge the law reduced.
Scope for collective bargaining in posting and procurement
Tonia Novitz looked at Laval and Ruffert and their impact on collective bargaining in public procurement, and positioned them in historical context (decided in 2007 and 2008), which has changed very significantly as a result of the economic crisis. Elektrobudwa and RegioPost indicate new horizons for trade union protection of posted workers and space for regional protection, but not for collective negotiation. This indicates stark shortcomings in proposals for the revision of the PWD.
Laval was a case of a trade union trying to improve conditions for a group of workers. This was generally seen as problematic. Collective negotiation and action could only be permitted in the context of social dumping. This is a very controversial judgment and has been heavily criticised. Laval had a negative impact on the ability of trade unions to call for action with cross-border effects. There is a strong clash between the EU approach and international standards, which cannot be easily reconciled.
Ruffert adopted the Laval approach whole-heartedly on the basis of another rigorous reading of the PWD and, in particular, about Art 3(8) setting out the ways in which collective agreements can be declared generally applicable. Ruffert failed to meet those. MS could exclude the construction industry from these requirements under Art 3(10) PWD, but that did not save the situation either. The imposition of such large limitations on the collective setting of rights for posted workers’ rights led to an understanding of the PWD as a ceiling rather than a floor of employment rights. This could not be overcome as a result of the Monti II Regulation, which was abandoned for different reasons.
It may be worth revisiting these issues by going back to the basics of the need for the PWD, particularly in view of the vulnerability of posted workers, which supports the case for their access to collective representation. It is also worth stressing that the capacity of labour inspectorates across the EU has been severely eroded as a result of the financial crisis. Additionally, memoranda and other crisis-related recommendations have been in line of flexibility and minimising collective negotiation to enterprise level-agreements. Overall, this makes the requirement of universal application stressed in Laval and Ruffert seems very outdated in the context of 2016.
Currently, the number of posted workers is at about 1.9 million and has increased by 49% compared to prior to the crisis. The treatment of posted workers is also reported to suffer from 51% lower wages, higher instances of work-related accidents and displacement issues. This can be triggering a mild shift of the case law regarding collective bargaining.
In Elektrobudwa, there was support for regional collective action on behalf of posted workers. This is linked to the issue of individual claims because in this specific case, there is direct representation by the trade union. There is nothing to indicate sympathy for collective bargaining for posted workers, but it could be seen as a first step in that direction. In RegioPost you can also identify a first step away from Ruffert, but they stress that there was no collective agreement and, therefore, the distinct treatment between public and private workers did not matter. However, none of these cases make significant inroads into collective bargaining in public procurement. RegioPost was very cautious in the way it treated collective agreements.
Commission’s proposals from February 2016 can potentially make a difference around collective agreements that could have a spillover effect on procurement. Of these proposals, the rules concerning subcontract chains, including those that foresee the posting of workers, can have significant effects. But, for this to be relevant, there has to be a move beyond ‘minimum rates of pay’ (absolute minimum) towards ‘remuneration’ (so as to cover a variety of different elements), which should then be equally applicable to all employees regardless of subcontracting chains. This has a connection with Art 71(6) Dir 2014/24 in terms of control of subcontracting chains. It is also a nod to international standards, but a timid one.
Overall, however, this seems very unlikely to be adopted in the near future, and it may well be only after a monitoring of the implementation of the PWD enforcement measures. However, a case could reach the CJEU on the basis of a case based on strike action including both posted and non-posted workers, which will trigger issues of evidence-based social dumping and may not allow the CJEU to set aside this type of collective action as easily as in the past.
DEBATE
focused on issues of localism and devolution, and the way that this can impact the use of procurement to enforce labour standards, particularly in the UK. It also explored the implications of the post-Lisbon social market economy on the issue of the ‘exceptionalism’ of labour law. The audience also questioned whether Laval is really not still the relevant standard and whether the restrictive approach to collective bargaining is not still the rule. There was also discussion on whether wage-based advantages deserve a different treatment where there are and where there are not posted workers, as well as what actually amounts as a restriction on the freedom of provisions of services in terms of two-tier employment scales and issues of discrimination / disadvantage of workers within one same undertaking.
Panel 4: Procurement and Labour Standards (III):
Domestic UK Perspective
Labour standards, domestic law and public procurement
Michael Ford focused on how non-pay labour standards (such as blacklisting [note: of workers involved in trade union activities, not of undertakings from public procurement procedures] or discrimination rules) can be applied in the public procurement setting. UK history shows that the underlying issues have been discussed repeatedly in the past. However, there have been significant developments, such as the use of procurement to promote non-discrimination law. Section 149 Equality Act 2010 (EA 2010) imposes an explicit duty on public authorities to prevent discrimination and give effect to advancing equality law. It is also important to stress the importance of sectoral collective bargaining and quasi-collective bargaining in the UK, which lead to legally binding pay rates and holiday terms. Currently, though, this has been discontinued and there is no legal mechanism for the determination of sectoral pay. Query is whether this will not change again in the future.
From a practical perspective, looking at procurement litigation, it is worth reminding that this is an area institutionally dominated by large commercial organisations with large budgets to litigate, which skews the litigation field. It is also affected by other pragmatic tensions, which raises issues of the different access to statutory review vs judicial review of procurement decisions. Pragmatically, it is also very difficult to apply standard legal tools (proportionality) to non-pay labour standards and, in particular, in issues of non-discrimination—not least due to the absolute protection of non-discrimination concerns over economic issues. Thus, even if it is fundamentally difficult, pay is relatively straightforward compared to non-pay labour standards.
The counterfactual question is, though, what would have happened in EU procurement law if there had been no PWD? Would the CJEU engaged in an untrammelled proportionality test based on ultimate considerations of discrimination? That would have been highly political and this is why the CJEU has sheltered behind the PWD, which has effectively provided the CJEU with a relatively easy answer compared to the alternative of having to legitimise its decisions. This is exemplified in Bundesdruckerei in that there was not AG Opinion to support the CJEU, which considered the use of the PWD straightforward.
However, let’s assume that the PWD is a useful point of departure. Can the government use 'administrative provisions' [which are not defined, under Art 3(1) PWD] to enforce pay policies, particularly reinvigorating sectoral rate setting mechanism? This raises a set of issues: would it still qualify as minimum wage of pay despite the existence of a lower universally applicable minimum wage? Yes, it would. Would it be possible to give legal effect to the result of the collective bargaining? Yes, it would because the rate, despite the collective bargaining origin, derives from law. Could you use a RegioPost type system where you already have a national minimum wage (ie creating a higher minimum wage only for public contracts)? It looks as if the CJEU considered it central that in RegioPost there was no minimum wage, but it is not clear why it would not be possible to go above that ceiling with a RegioPost-like mechanism.
An alternative to the legal enforcement of rates of pay, which is not in line with UK tradition, would be to rely on Art 70 Dir 2014/24 rather than on Art 3(1) PWD (ie base it on discretion of the contracting authority). However, this is still a confusing environment.
A connected issue is blacklisting, in relation with the ILO conventions, which is now illegal under UK law. However, this could be possible under Art 18(2), Art 57(3) and Art 70 Dir 2014/24 by focusing on the tender rather than the tenderer [as in the enactment of reg.56(2) PCR2015]. This should not be subjected to a proportionality analysis under Art 18(2) Dir 2014/24, which only requires proof of breach of any of the international standards.
Another issue is whether there is a tension between the public sector equality duty under the EA 2010 and public procurement. One difficulty is whether you can use procurement as a preference for undertakings that have equal opportunity policies, equal pay audits, etc. This would fit within Art 70 Dir 2014/24, complemented with the relevant ILO conventions. There is again a tension with the issue of minimum standards in the PWD or not.
The answer is that PWD, even when it applies, it does not give the answer—particularly outside the area of pay, it is very difficult to figure out how to effectively carry out a proportionality assessment when there are procurement measures that go beyond agreed (EU) standards.
Discretion and labour objectives
Richard Craven presented preliminary findings of on-going research funded by the British Academy and Leverhulme, where he assesses practitioners’ reactions to existing rules on the possibility to enforce labour standards within the limits of discretion given to public procurement officers.
DEBATE
focused on the difficulties of extrapolating qualitative insights and the insufficiency of public procurement data, which could allow for complementary quantitative research.
