Vaxholm case

A very important EU Court case from 2007 permitting foreign workers to be paid less than the normal salary.

A Latvian construction company, Laval, operating in Vaxholm in Sweden wanted to pay lower wages to the Latvian construction workers building a Swedish school.

The Swedish Building Workers’ Union demanded that Laval respected the Swedish collective agreements and paid their workers a normal Swedish salary in Sweden.

Swedish trade unions began an industrial action with a blockade against Laval which meant that the company could not receive any benefits where Swedish workers organised in a trade union were involved.

After this Laval was declared bankrupt. They brought a case before the Swedish Court who referred the case to the European Court having the sole right of interpreting the rules of the European treaties.

In the European treaties strikes, blockades and lockouts are explicitly exempted from European competences.

But the European Court interprets the right to conflict against other principles in the EU hereunder the free movement of goods, services and capital and the non-discrimination principle.

In the Vaxholm case the Swedish blockade was declared illegal. The judges did not find that the blockade was necessary according to their interpretation of the principle of proportionality.

The blockade disturbed the free movement for services as mentioned in the European treaties and in the directive on posting of workers.

Discriminatory practice of the trade unions' treatment of domestic and foreign-owned is not allowed unless it is justified in "only on grounds of public policy, public security or public health". This is stipulated in the 18.12.07 judgement.

In e.g. Ireland the implications is that no trade union can act legally for salaries above the minimum salary around 9 € an hour.

In Denmark there is an equivalent uncertainty on the so-called area for minimum wages where the minimum wage often is half of the actual average wage for for instance many construction workers.

The European Court might also declare a Danish conflict illegal if a foreign-owned company pays the agreed minimum wage according to the collective agreement but refuses to pay the usual salary.

Under the reading of the so-called services directive in the European Parliament a majority of the members voted down an amendment demanding that companies must respect national agreements.

The Laval-Vaxholm court case was accompanied by the Viking case from 11 December 2007 and the Rüffert case from 2008. In the last case a German state was forbidden the right to require respect for the normal salaries in public construction work.

With the Lisbon Treaty it is possible to establish a special European Union labour court by qualified majority voting in the Council.

Links

See Strikes and Services directive.