Key facts of the case:

Laval un Partneri Ltd, a Latvian company, posted workers from Latvia to work in Sweden. The work was carried out by a subsidiary, L&P Baltic Bygg AB, and included the renovation and extension of school premises in the town of Vaxholm.

Laval and Baltic Bygg, on the one hand, and the Swedish building and public works trade union, Svenska Byggnadsarbetareförbundet, on the other, began negotiations with a view to determining the rates of pay for the posted workers and to Laval’s signing the collective agreement for the building sector. However, the parties were unable to reach an agreement. In September and October, Laval signed collective agreements with the Latvian building sector trade union, to which 65% of the posters workers were affiliated.

Byggnadsarbetareförbundet began collective action in the form of a blockade (‘blockad’) of all Laval’s sites in Sweden. The Swedish electricians’ trade union joined in with a sympathy action, the effect of which was to prevent electricians from providing services to Laval. None of the members of those trade unions were employed by Laval. After work had stopped for a certain period, Baltic Bygg was declared bankrupt and the posted workers returned to Latvia.

The Arbetsdomstolen, before which Laval brought proceedings, inter alia, for a declaration as to the lawfulness of the collective action and for compensation for the damage suffered, asked the Court of Justice of the European Communities if Community law precludes trade unions from taking collective action in the circumstances described above.

Results (sanctions) and key consequences of the case:

The ECJ held that “Articles 49 EC and 50 EC preclude a prohibition in a Member State against trade unions undertaking collective action with the aim of having a collective agreement between other parties set aside or amended from being subject to the condition that such action must relate to terms and conditions of employment to which the national law applies directly. Such a prohibition discriminates against undertakings which post workers to the host Member State in that it does not take account, whatever their content, of collective agreements by which those undertakings are already bound in the Member State in which they are established, and treats them in the same way as national undertakings which have not concluded a collective agreement.”

Interpretation of article(s) and implications for the resolution of the case:

FRC - Article 28: “Although the right to take collective action must … be recognised as a fundamental right which forms an integral part of the general principles of Community law the observance of which the Court ensures, the exercise of that right may none the less be subject to certain restrictions. As is reaffirmed by Article 28 of the Charter of Fundamental Rights of the European Union, it is to be protected in accordance with Community law and national law and practices.(para 91) Whilst the protection of fundamental rights is a legitimate interest which, in principle, justifies a restriction of the obligations imposed by Community law, even under a fundamental freedom guaranteed by the Treaty, the exercise of such rights does not fall outside the scope of the provisions of the Treaty and must be reconciled with the requirements relating to rights protected under the Treaty and in accordance with the principle of proportionality. It follows that the fundamental nature of the right to take collective action is not such as to render Community law inapplicable to such action, taken against an undertaking established in another Member State which posts workers in the framework of the transnational provision of services.” (para 92)

General Remarks
The ECJ also held that “It should be added that, according to Article 3(1)(c) and (j) EC, the activities of the Community are to include not only an ‘internal market characterised by the abolition, as between Member States, of obstacles to the free movement of goods, persons, services and capital’, but also ‘a policy in the social sphere’. Article 2 EC states that the Community is to have as its task, inter alia, the promotion of ‘a harmonious, balanced and sustainable development of economic activities’ and ‘a high level of employment and of social protection’. (para 104) Since the Community has thus not only an economic but also a social purpose, the rights under the provisions of the EC Treaty on the free movement of goods, persons, services and capital must be balanced against the objectives pursued by social policy, which include, as is clear from the first paragraph of Article 136 EC, inter alia, improved living and working conditions, so as to make possible their harmonisation while improvement is being maintained, proper social protection and dialogue between management and labour.” (para 105) “In that regard, it must be observed that, in principle, blockading action by a trade union of the host Member State which is aimed at ensuring that workers posted in the framework of a transnational provision of services have their terms and conditions of employment fixed at a certain level, falls within the objective of protecting workers.” (para 107)