Finnish pay dispute settlement affects the whole of Europe

“The judgement settles the issue of the terms and conditions on which European Union businesses may operate in other Member States,” explains Jari Hellsten, a lawyer engaged on a European Union collective bargaining project for SAK and the Finnish trade union movement.

Hellsten has been involved from the very outset in representing the pay claims of Polish electricians that led to the ruling.

He explains that the ECJ ruling strengthens the practice of concluding employment contracts based on generally binding collective agreements that is applied in Finland and in many other Member States. The ruling finds that in addition to basic wages, employees must be paid the holiday bonuses, guaranteed piecework rates, per diem allowances and other benefits stipulated in the generally binding collective agreement.

According to the preliminary ruling issued by the ECJ on Thursday, it is irrelevant that the business sending the employee is based in another Member State. All employees working in Finland must be paid according to Finnish pay scales, and a business coming from another Member State to Finland must comply with the pay regulations of the generally binding collective agreement.

Background: the Polish electricians’ dispute

The preliminary ruling concerns an action brought by the Finnish Electrical Workers’ Union seeking a total of more than 6.5 million euros in outstanding pay claims against a Polish company. This company had hired 186 Polish electricians for temporary work on the construction site of the Olkiluoto 3 power plant. All of the electricians joined the union.

The District Court of Satakunta referred to the ECJ for a preliminary ruling on how to interpret the concept of minimum rates of pay in the Posting of Workers Directive.

The District Court also asked the ECJ to express an opinion on whether Polish employees were entitled to assign their pay claims to the Electrical Workers’ Union for collection, even though such assignment is prohibited under Polish law. Finding that the right to assign pay claims to the Electrical Workers’ Union was based on the Charter of Fundamental Rights of the European Union, the ECJ judgement set aside the ban in Polish law.

Generally binding collective agreements govern terms and conditions of employment in Finland with respect to such matters as wages, holidays and working time. These agreements are generally concluded between the trade union and employers’ federation for a certain industry or collective bargaining sector. If an agreement is universally binding, then all employers operating in the same industry or sector must comply with the collective agreement, regardless of whether they belong to the employers’ federation that negotiated the agreement.

Further details of the preliminary ruling are available on the ECJ website.