Areas of evolution, with adjustments towards flexibility

Author:Silviana Sciarra
Profession:Professor of Labour Law
Pages:37-44
SUMMARY

1. Fixed-term contracts. 2. Part-time work.

 
INDEX
CONTENT

Page 37

In this section, the evolution of labour law will be evaluated in two main areas - fixed-term contracts and part-time work - both characterised in the majority of cases by national legislation pre-dating the years covered by the present study and then adapted and modified by subsequent measures.

The enforcement of the fundamental right to equal treatment constitutes a significant step forward and has given impetus to the evolution of national labour law. However, in a comparative perspective it remains to be seen how the link with employment policies functions.The open question is how to evaluate the trade-off between levels of protection and promotion of employment.

The great diversity of solutions adopted by Member States seems to suggest that the principle of non-discrimination does not, in itself, suffice to introduce comparable standards of protection, when fixed-term and part-time workers find themselves in a marginal position in the labour market and therefore not entirely free to enter such contracts of employment.

Examples selected from country studies reveal fragmentation, rather than consolidation, of national legislation.They also reveal new areas of work performed in situations of uncertainty, both for economic and normative conditions. All these elements have provoked debate on how to enhance a more harmonious and effective way to combine European soft and hard law.

Fixed-term contracts

The assumption that fixed-term contracts, like other flexible contracts, bring about a significant increase in employment is not fully proved. Changes to legislation have also occurred because of an altogether different function of fixed-term contracts.This mainly reflects changes in work organisation, both in traditional areas of production and in new areas of the service sector and the public sector.

Apart from the Greek case, we encounter a fairly homogeneous evolutionary trend in most countries. One unsolved contradiction seems to be in the combination of traditional sanctions - typically the conversion of the contract into an open-ended one - and new aspirations of the fixed-term workers, often marginalised in unskilled areas of the labour force. In such cases conversion into open-ended contracts might not necessarily fulfil the aspirations of fixed-term workers.

Moreover, it should be noted that fixed-term contracts are adopted in diversified areas of labour law (agency work, contracts for workers over a certain age, contracts with mixed scope such as work and training). Better coherence should be established in legislation covering fixed-term contracts and other specific measures concerning recourse to such contracts. A unitary floor of rights and obligations might be the result of linking together what appears to be a rather fragmented system of rules.

Page 38

Part-time work

In most countries we encounter a series of acts, amending previous legislation and re-entering a controversial terrain.This shows that, despite the fact that in several Member States legislation first appeared in the 1980s, there is still a need to specify the function of part-time work.

Examples taken from national legal systems show that legislative approaches on part-time work and solutions adopted can be very different.This is probably due to the fact that social phenomena behind this type of contract reflect diverse traditions.Very different gender balances in the labour market, reflecting cultural approaches and economic disparities, may influence the legislature.

In legal systems in which civil codes still provide continuity in the evolution of labour law, resistance to flexibility measures is - almost unconsciously - put forward as a fear to alter a traditional equilibrium in contracts of employment.

In this section the evolution of labour law will be evaluated in two main areas - fixed-term contracts and part-time work - both characterised in the majority of cases by national legislation pre-dating the years covered by the present study and then adapted and modified by subsequent interventions.

Furthermore, both areas are dealt with in the previously mentioned Framework Directives.The transposition of both Directives has given rise to adaptations in national legal systems, even when the subject matter was already widely covered by previous legislation.This has, in some cases, initiated a debate on the comparability of national and supranational standards and on the possibility of lowering previous levels of guarantees, while transposing a directive. For example, the ongoing Italian debate on 'clausole di non regresso' shows the complexity of this legal issue, raised by the language of both Framework Agreements, when mention is made to the fact that no reduction of 'the general level of protection afforded to workers' should occur, when implementing European sources (respectively Clauses 8 and 5 of the Fixed-term and Part-time Agreements)107.

The enforcement of the fundamental right to equal treatment constitutes a significant step forward and has given impetus to the evolution of national labour law. However, in a comparative perspective it remains to be seen how the link with employment policies functions, since fixed-term and part-time contracts have been repeatedly regarded by European institutions as appropriate measures to combat unemployment. The open question is how to evaluate the trade-off between levels of protection and promotion of employment.

The great diversity of solutions adopted by Member States seems to suggest that the principle of non-discrimination does not, in itself, suffice to introduce comparable standards of protection, when fixed-term and part-time workers find themselves in a marginal position in the labour market. It represents a most significant guiding principle in enforcing equality when workers are somehow inserted in an organisation and comparability in all working conditions is made possible. But this is not always the case, especially in some areas of production.

National legislation in these fields is thus characterised by the many changes which have occurred, particularly in the implementation of the Directives' clauses in which ample space is left to national measures for the concrete fulfilment of flexibility. There is space to intervene at a supranational level and to specify how the principle of non-discrimination should expand its beneficial effect before fixed-term and part-time contracts are entered into. Once more, it is the feeble position of those who do not enter freely into such contracts, starting from a position of social exclusion or marginality, which should be better focused on in the future108.

Page 39

1. Fixed-term contracts

In dealing with this important chapter of national labour law, one can visualise the shift from traditional protective measures to flexibility and confirm that the scope of labour law has been adapted to different economic circumstances.The assumption that fixed-term contracts, like other flexible contracts, bring about a significant increase in employment is not fully proven. Changes to legislation have also occurred as a result of an altogether different function of fixed-term contracts. This mainly reflects changes in work organisation, both in traditional areas of production and in new areas of the service sector and of the public sector.

In Portugal - where Directive 1999/70/EC was implemented in 2001- the 2003 Code introduces a most significant change in Article 129, bringing up to six years the maximum duration of fixed-term contracts. It also imposes higher contributions on the employer (taxa social nica) according to the number of workers and to the length of the contracts, thus showing a visible preference for open-ended contracts.

This is also the case in Spain, where 'compensation for insecurity' was introduced as a way to combat fixed-term contracts.This was the response of the legislature to what was considered an excessive increase in the number of fixed-term contracts. In 1994 more space was given to collective bargaining, with the intention of providing specific reasons for entering into such contracts.

Belgium, on the contrary, offers the example of progressive relaxation of the limits on fixed-term contracts. In 1994 and subsequently in 1998, legislation went in the direction of allowing successive contracts, without having to give reasons and without having to consider them permanent.

In Italy, the notion of 'technical, productive, organisational and substitutive reasons', introduced in the transposition of the Directive109, has widened the scope for the recourse to fixed-term contracts, thus giving rise to criticism, since this measure might go beyond the purposes of European law and therefore be considered disadvantageous.The previous technique, namely the indication of binding criteria in which fixed-term contracts were allowed, is substituted by a broad definition, which will be open to the evolution of case law.The still relevant requirement of the written form indicates that some form of evaluation of the reasons for entering such contracts will be necessary.

In France, there is a tradition of judicial control over abuses in the recourse to such contracts. Recent case law110, however, accepts that a correct recourse to fixed-term contracts may occur in cases in which the law recognises 'contrats d'usage '.This implies a less strict attitude of the court and an acceptance of the fact that employers must have a wider option for flexible employment, particularly in certain areas of economic activity.

In Germany, legislation in this field originated in a constant growth in these contracts - up to 9% of the total work-force in 2000 -albeit in jobs with low qualifications.The leading principle in case law is that employers must have an objective reason to hire workers for a limited time. Legislation approved in 2003, lasting until December 2006, specifies that workers over 52 (no longer 58, as suggested by the Hartz Committee) can enter fixed-term contracts without an objective reason, thus raising the doubt that there might be ground for age discrimination. Renewal can occur three times, but collective agreements can derogate even in pejus from this limit. Field research shows that fixed-term contracts are more frequent among unskilled workers, who are more liable not to benefit from renewals.This flexible measure is, on the whole, considered not very relevant for the expansion of working opportunities111.

Page 40

In Sweden, numbers of fixed-term contracts increased in the 1990s, rising to one-sixth of the total labour force. The adoption of the 1999/70 Directive and the enforcement of the principle of equal treatment seem to have improved individual guarantees.

In the UK, the consultation preceding the transposition of the Directive was very long.The government took advantage of a provision in the Directive allowing one more year for 'special difficulties'. Primary legislative powers were taken in the Employment Act 2002.The decision was to treat employees hired on subsequent contracts as permanent employees after four years. But a number of not very precise references in the Regulation make this protective measure debatable. In particular, it is indicated in Clause 8 (5) of the Regulation that the four years statutory standard can be overcome by a different standard provided for in a collective or workforce agreement.This is seen by some commentators as a risk for employees not covered by collective agreements and forcefully made more adaptable to the employer's needs112.

A problem arose in Greece when fixed-term contracts began to become widespread in the public sector and ended up covering permanent positions, first presented as temporary. Both Article 103 of the Constitution of 1975/1986 and subsequent legislation113 stated that hiring workers with private law contracts in the public sector was allowed only under extraordinary circumstances, such as filling unforeseen, emergency or temporary positions, which could only be covered by fixed-term contracts.

A legal issue arose as to the reiteration of such contracts.Would Article 8, paragraph 3 of Law 2112/1920 (providing that, in the private sector, after several renewals contracts are intended as open-ended) be applicable also in the public sector? The Supreme Court, in a series of cases in the 1990s, answered in the negative.

The Constitution, as amended in 2001, supplemented Article 103 with a new paragraph (8), which, for the public sector, forbade the transformation of successive fixed-term contracts into open-ended ones.

In the meantime, the Council Directive was, with some delay, transposed into Greek law114. Following several complaints and an investigation into possible non-compliance with Art. 5 of the Directive (abuse in use of successive fixed-term contracts in the public sector), the Commission is likely to bring an action before the ECJ.

The distorted recourse to successive fixed-term contracts in the Greek public sector is a legal question with considerable social and political implications, which involves almost 45 000 persons. It is very interesting that, rather than referring preliminary rulings to the ECJ, from April to June 2003 a number of Greek courts decided to enforce directly the 1999 Directive and to convert successive fixed-term contracts into contracts of indefinite duration.

It can be argued that in such a peculiar case, resistance to EU law is motivated by domestic political and financial difficulties and that courts have proved to be independent actors in complying with such specific legal provisions.

Page 41

Apart from the Greek case, we encounter a fairly homogeneous - and yet not uncontroversial - evolutionary trend in most countries. One unsolved contradiction seems to be in the combination of traditional sanctions - typically the conversion of the contract into an open-ended one - and new aspirations of the fixed-term workers, often marginalised in unskilled areas of the labour force. In such cases conversion into open-ended contracts might not necessarily fulfil the aspirations of fixed-term workers.

Moreover, it should be noted that fixed-term contracts are adopted in diversified areas of labour law (agency work, contracts for workers over a certain age, contracts with mixed scope such as work and training).

Better coherence should be established in legislation on fixed-term contracts and other specific measures, which also imply the recourse to such contracts. A unitary floor of rights and obligations might be the objective to aim for, when intervening in this rather fragmented system of rules.

2. Part-time work

In most countries we encounter a series of acts, amending previous legislation and re-entering a controversial terrain. This shows that, despite the fact that in several Member States legislation first appeared in the 1980s, there is still a need to specify the function of part-time work.

There is, however, the case of Portugal, where the transposition of the Directive (Law 103/1999) represented the first occasion to regulate part-time work115.

In Greece, part-time work was first regulated in 1990.Amendments intervened in 1998, while dealing with Directive 97/81. Part-time was extended to the public sector, in line with the indications of the 1997 'Confidence Pact', signed by the government and the social partners. In August 2003, a new Law (3174/2003) on part-time was enacted. It provides for public sector organisations to recruit unemployed people and other marginal groups in the labour market with a combined formula of part-time/fixed-term contracts, in order to provide social services. Employment under such contracts should not exceed 20 hours a week; they can last up to 24 months.After termination, such contracts may be renewed with the same worker only after an interval of two months. Social services such as home care, assistance in schools, children's road safety or social integration of immigrants are indicated and funding is provided either by the state or by EU programmes. Candidates must be selected from specific target groups, such as unemployed, young people, people with disabilities, following certain percentages116.

Figures reported in national studies are very different. To quote only a few examples, in Germany there is an increase from 15% in 1991 to 25.6% in 2001. In Ireland figures grew from 8.1 % in 1990 to 16.7 % in 1998. In 2002 in Greece the rate is 4.3% and in Italy it is around 8%.

Between 1965 and 1980, Swedish part-timers doubled from half a million to one million, and have since then covered 23-25% of the working population.Women represent over 80% of all part-timers. This peculiarity justifies the Swedish approach, described as prevention of involuntary part-time, in the framework of the 1995 Parental Leave Act117.

Page 42

In the Netherlands, the 'miracle' that occurred in the 1990s was mainly due to the return of women with children into the labour market118. The Dutch legal system reacted promptly to a spontaneous process and successfully regulated part-time work.The principle of equal treatment between part-time and full-time workers had already been part of the Civil Code since 1996. Legislation encourages voluntary part-time, establishing the right of the individual worker to ask for a reduction of working time up to 20%.The employer must, within three months, indicate the organisational reasons which impede the recourse to part-time.The percentage of companies employing more than 10 people and having at least one part-timer is very high. The obligation, arising from the Directive, to eliminate obstacles to the creation of part-time work, was on the whole already fulfilled by previous legislation.

In 2001, in adopting the 97/81 Directive, German law introduced an original definition of the right to part-time work for workers employed in firms with more than 15 workers, whose contract had lasted for at least six months. In case of refusal, the employer has a duty to prove that there are organisational reasons impeding the reduction in working hours. Collective agreements can regulate such cases.There are indications that this law is successful.This would prove that flexible measures function in a more efficient way when individual workers are put in a position to enter freely non-standard forms of work.The national report on Germany stresses the fact that legislation goes beyond the scope of the Directive and facilitates potential links with full-time work.

To confirm the tireless attitude of the German legislature, in 2003 a law on the so-called 'mini-jobs' was approved. The number of casual jobs had expanded considerably and, after 1998, the legislature tried to find disincentives for the recourse to such contracts, imposing at least some form of contribution. The new law regulates employment contracts providing up to EUR 400 per month.The employer pays a very small social contribution, namely 23% for social security and 2% in tax. In a few months there was a significant increase in mini-jobs, although this phenomenon does not necessarily count for an increase in the overall employment figures. For 'mini-jobs' in private households the employer pays only 12% contributions (10% in social security and 2 % in taxes), in view of fighting illegal work.

An original sample of legislation is the 1996 Act originating from the 'Alliance for Work' (Bndnis fr Arbeit) in Germany, to promote part-time contracts for workers aged over 55. The rationale behind this law is that if older workers are supported to move from active working life to retirement, new jobs can be offered to unemployed younger workers. The employer has to compensate the loss in pension resulting from the reduction in working hours paying into the fund, as if the worker's income was equal to 90%.These sums are reimbursed to the employer by the Federal Employment Service if the newly employed are registered unemployed workers having completed their training.There is no individual right to enter these part-time contracts, but the incentive for employers is to benefit from the skill and experience of older workers, while creating new opportunities for the unemployed.

In Austria, an allowance for old-age part-time is paid to the employer as a reimbursement for the payment made to workers.Workers who choose to work part-time are entitled to at least 50% compensation of the loss of earnings due to the reduction of working hours.The success of this measure will almost certainly lead to restrictions, such as limiting the choice of this scheme to five years before pension and imposing on the employer the obligation to hire an unemployed person as a replacement.

In Italy, a very different scenario is offered in the new reform of the labour market, amending previous legislation119. There is now a much more flexible recourse to part-time, due to the so-called ' clausole elastiche', now provided for even in the absence of a collective agreement.This implies that individual workers have to give their consent to anPage 43 employer's request.' Elasticit' or 'elasticity' thus risks being an unbalanced exercise, even though there is protection against unjust dismissals following workers' refusal to consent.

Furthermore, overtime is governed by the same principle of individual consent, when there is no collective agreement. In this case, there is no maximum number of hours and no guarantee that the salary will be increased accordingly.

A complete novelty in the Italian system is the introduction of ' lavoro intermittente ', an extreme form of part-time, whereby the employer can, in a very discontinuous way, request that work is performed in areas of production indicated by collective agreements. In an experimental way, such contracts will be favoured for young unemployed people under the age of 25 and unemployed people over 55, who have been made redundant.

The contract of employment must be in writing, with all necessary details of the parties' obligations. It may provide that, if workers declare their availability even when work is not requested, an indemnity for the period of non-work is due. Refusal to work can only occur in case of illness or any other serious impediment. Even in such cases of refusal to work for legitimate reasons, workers will lose their indemnity. In all other cases, refusal to work may lead to the termination of the contract for just cause and will also imply the payment of compensation for damages caused to the employer.

In this last example of intermittent work and in the regulation of part-time work we find one of the most controversial parts of the new Italian reform.The legislature has, as one can see, expressed a precise philosophy of individualisation in employment contracts.This choice may give rise to an imbalance, particularly in those contracts characterised by a significant disparity in exercising bargaining powers.

The whole equilibrium between collective agreements and individual contracts of employment is put at risk. It must be said, however, that spaces for collective agreements are left open throughout the new discipline. Should the social partners take this opportunity, this could represent a way forward in a balanced interpretation of the new Italian way to flexibility.

An equally controversial solution - but for reasons related to the way in which the Directive was brought into domestic law - is the one offered by the British legislature.The Directive was transposed by the 'Part-time Workers - Prevention of less favourable Treatment Regulations' in 2000, which covers in a highly technical and detailed way the issue of comparability with full-time workers. Some commentators believe that, because of serious difficulties for the majority of part-timers in finding suitable comparable workers, issues of unequal treatment will continue to be dealt with more successfully via the sex discrimination law120. It is also suggested that the way in which the government chose to consult and to transpose, through the Regulations, led to 'minimal implementation'121.

Examples taken from national legal systems show that legislative approaches to part-time work and solutions adopted can be very different.This is probably due to the fact that social phenomena behind this contract of employment reflect diverse traditions. Very different gender balances in the labour market, reflecting cultural approaches and economic disparities, may influence the legislature.

In legal systems in which civil codes still represent a form of continuity in the evolution of labour law, resistance toPage 44 flexibility measures is - almost unconsciously - put forward as a fear to alter a traditional equilibrium in contracts of employment.

In the theory and in the practice of labour law the challenge is to avoid interrupting a tradition of social protection, and to begin new policies of emancipation for new categories of under-protected workers.

This section focused on examples revealing fragmentation, rather than consolidation, of national legislation. It also revealed new areas of work performed in situations of uncertainty, both for economic and normative conditions.All these elements encourage debate on how to achieve a more harmonious and effective way to combine European soft and hard law.

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[107] See on these points the report on Italy, Chapter III, sections 2 and 4.

[108] See Concluding remarks.

[109] Decreto legislativo 6 September 2001, n. 368. Previous legislation from the 1960s with subsequent amendments in the 1980s, is explicitly abrogated.

[110] Cour de Cassation 26 November 2003, mentioned in the French Report, Chapter III, section 2.1.

[111] See M. Fuchs,'Recenti riforme del diritto del lavoro Tedesco', forthcoming in Giornale di diritto del lavoro e di relazioni industriali.

[112] C. Kilpatrick,'Has New Labour Reconfigured Employment Legislation?' (2003), Industrial Law Journal Vol. 32, Issue 3, pp. 153-161.

[113] Article 103 paragraph 2 of the 1975/1986 Constitution.'No one may be appointed to a position which has not been provided for by law. Exceptions may be provided for by special law, so that unforeseen or emergency needs can be covered with staff that will be employed for a fixed-term under private law'. Law 993/79 was passed to give effect to this Constitutional provision.This law, together with subsequent supplementary and amendatory provisions, was codified into a unified text - Presidential Decree 410/1988 'Codification in a unified text of provisions of the existing law referring to staff with a private employment relationship in public administration, organisms of local government and legal entities under public law', Government Gazette A 191-30-8-88.

[114] Presidential Decree 81/2003.

[115] European Industrial Relations Review (1999), n. 309, pp. 10-11.The employer has an obligation to take into account requests to opt for part-time work and has to publicise part-time opportunities. In Ireland too the solution (in the 2001 Act which repeals previous legislation) is not to put an obligation on the employer. In addition the Labour Relations Commission carries out a study on the obstacles to the performance of part-time work.

[116] See extensively, on the details of this legislation, the Greek Report, Chapter III.

[117] See the Swedish report.

[118] J.Visser and A. Hemerijck,'A Dutch Miracle'. Measures on maternity and parental leave, proposed by New Labour in the UK, are presented under this label. See L. Dickens and M. Hall, 'Labour Law and Industrial Relations: a New Settlement?' in: P. Edwards (ed.), Industrial Relations:Theory and Practice, 2003, 2nd ed, Blackwell, Oxford, p.131. Job growth,Welfare reform and Corporatism in the Netherlands, 1997, Amsterdam University Press, Amsterdam.

[119] D. legislativo 276/2003, art. 46. A first account of the discipline, as related to previous legislation, is given by A. Lo Faro in: S. Sciarra, P. Davies and M. Freedland, Employment policies and the regulation of part-time work in the European Union. A comparative analysis, 2004, CUP.

[120] S. Deakin and G. S. Morris, Labour Law, 2001, 3rd edition, Butterworths, London, p. 203 referring to the case law of the ECJ.

[121] C. Kilpatrick,'Has New Labour Reconfigured Employment Legislation?' (2003), Industrial Law Journal Vol. 32, Issue 3, pp. 152-153.