Temporary agency work

July 7th, 2016 by James Goudie KC

Article 1 of Directive 2008/104/EC on Temporary Agency Work defines its scope. Two concepts that are involved are “worker” and “economic activity”.  Both have been considered in an Advocate General’s Opinion on 6 July 2016 in Case C-216/15, Betriebsrat der Ruhrlandklinik v Ruhrlandklinik.

Article 1 of the Directive provides that the Directive applies to “workers” with a contract of employment or employment relationship with a temporary-work agency who are assigned to user undertakings to work temporarily under their supervision and direction. It applies to public and private undertakings which are temporary-work agencies or user undertakings engaged in “economic activities” whether or not they are operating for gain.

Article 2 of the Directive provides that its purpose is to ensure the protection of temporary agency workers and to improve the quality of temporary agency work by ensuring that the principle of equal treatment is applied to temporary agency workers, and by recognising temporary-work agencies as employers, while taking into account the need to establish a suitable framework for the use of temporary agency work with a view to contributing effectively to the creation of jobs and to the development of flexible forms of working.

Article 3 contains definitions including that “worker” means any person who, in the Member State concerned, is protected as a worker under national employment law; “temporary-work agency” means any natural or legal person who, in compliance with national law, concludes contracts of employment or employment relationships with temporary agency workers in order to assign them to user undertakings to work there temporarily under their supervision and direction;  “temporary agency worker” means a worker with a contract of employment or an employment relationship with a temporary-work agency with a view to being assigned to a user undertaking to work temporarily under its supervision and direction.  The Directive is without prejudice to national law as regards the definition of pay, contract of employment, employment relationship or worker.

The reference to the ECJ asks, first, whether members of an association working under the authority of a third party should be classified as “workers”, even though they are not classified as such under German law, and, secondly, whether the association’s assignment of its members in return for payment of compensation by the third party constitutes an “economic activity”.

The German Red Cross association of nurses of Essen is a registered not-for-profit association affiliated to the Federation of associations of nurses of the German Red Cross. It has been licensed to supply staff. Since 2003, the association of nurses no longer concludes any contracts of employment with nurses and admits them only as members of the association. Under the rules of that association, its members, who must be qualified to work in medical and health care, must work entirely either within the association of nurses or in medical and health care institutions under secondment contracts.  Where they are assigned to a third party, members of the association of nurses are subject to the latter’s functional and organisational instructions.

Under its membership rules, the association of nurses pays its members monthly remuneration, calculated according to the usual criteria for the particular activity, together with reimbursement of certain travel and relocation expenses. Members are also entitled to the paid holiday and additional retirement pension provided for under the rules applicable in that sector, and to continued payment of their remuneration and additional allowances in the event of incapacity for work caused by illness or an accident.

The Defendant (“R”) operates an in-patient clinic in Essen. In 2010 it concluded a secondment contract with the association of nurses, under which that association undertook to supply nursing staff from among its members. Under that agreement, the association of nurses receives, in return for each secondment, a payment covering the gross personnel costs plus a 3% flat-rate administrative charge. Members of that association assigned to R receive the same remuneration as workers directly employed by that clinic and are subject to rules and conditions of employment that are virtually the same.

Ms K. is a member of the association of nurses. She was due to be assigned to the nursing service of R, with effect from 1 January 2012, on the basis of the secondment agreement between the latter and that association. By letter of 2 December 2011, the Claimant (the works council of Ruhrlandklinik), refused to give its consent to that measure on the ground that the assignment of Ms K. was not designed to be temporary. R considered that refusal to be unfounded. It therefore decided to recruit the person concerned on a temporary basis and to initiate proceedings in order to obtain a judicial decision authorising it to recruit her on a long-term basis.

On the concept of “worker”, the Advocate General said:-

“24.      From the outset, I should like to point out that the wording of both Article 1(1) and Article 3(1)(c) of Directive 2008/104 appears to justify the adoption of a flexible, indeed broad, interpretation of the concept of ‘worker’ for the purposes of defining the scope of that directive. It is expressly stated in those provisions that the legal basis of the link between a temporary-work agency and a worker whom it has recruited for the purpose of assigning him to a third party may be ‘a contract of employment or employment relationship’, an alternative which also appears in other provisions of that directive and in other directives on social protection for workers.

  1. I note that, according to the case-law of the Court, there is no single definition of ‘worker’ in EU law,  it must, in principle, be defined according to objective criteria that characterise the employment relationship, having regard for the rights and duties of the persons concerned, in order to ensure equivalent protection for workers in the various Member States. It has been repeatedly held that ‘the essential feature of that relationship is that, for a certain period of time, a person performs services for and under the direction of another person in return for which remuneration is received’.
  2. As the Commission notes, that characterisation is generally acquired in EU law if the abovementioned conditions are met, irrespective of whether or not an employment contract has been concluded by the person concerned and irrespective of the consequences derived from it for the purposes of national law. The situation at issue in the main proceedings appears to meet all those conditions, since the members of the association of nurses carry out their professional activities for and under the direction of the medical and health care institutions to which they are periodically assigned by that association, which pays them remuneration in return.
  3. Thus, in EU law, and contrary to what happens in German law, it appears to be irrelevant, in order for that directive to be applicable, whether or not a contract has been concluded by the parties concerned. The national court is right therefore to note that, in view of the wording of the abovementioned provisions of Directive 2008/104, it seems that ‘the legal relationship between the supplier of labour and the person assigned for the performance of work is of no significance’.
  4. Some doubt may nonetheless persist in the present case since, in order to define the status of ‘worker’ within the meaning of Directive 2008/104, Article 3 of that directive makes two references to the law of Member States. …
  5. In my opinion, the fact that those provisions of Article 3 maintain the view held by Member States of ‘workers’ who must be protected under their domestic legislation, a point of law which Directive 2008/104 does not aim to harmonise, as indicated in paragraph 2 of that article, cannot be construed as the EU legislature deciding not to exercise its own power to define the scope ratione personae of that directive.
  6. If the extent of that scope was liable to vary depending on the different approaches adopted at national level, it would provide a significant source of legal uncertainty, given that the preamble to that directive notes that ‘there are considerable differences in the use of temporary agency work and in the legal situation, status and working conditions of temporary agency workers within the European Union’.
  7. I take the view that, far from delegating to the authorities of the Member States the power to define the scope of Directive 2008/104, Article 3(1)(a), in conjunction with Article 3(1)(c) of the directive, defines it itself, stating that the concept of ‘worker’ for the purposes of that act of EU law encompasses any person who carries out work and who is protected as such in the Member State in which he performs his activity, whatever the nature and form of the relationship that links him to the temporary-work agency.
  8. Since that article does not make a straightforward reference to the law of the Member States, in my view, if the more restrictive definition of ‘worker’ adopted at national level happens to conflict with the provisions of that directive, those provisions must take precedence. In the present case, the fact that under German law an individual has the status of ‘worker’ only if he has concluded a private-law contract cannot lead to reduction of the scope of Directive 2008/104, when the wording of that directive seeks to place under its protection those who are bound by a contract of employment and those who are bound by an employment relationship, without distinction.”

“34.       It is apparent that although certain terms used in provisions of EU law may be defined in the light of the legislation and/or practices in force in the Member States, the latter are still required to take care, first, to safeguard the objectives of the act in question and, secondly to observe the general principles of EU law.  In particular, the Court has ruled that a Member State must not, at its discretion, exclude certain categories of persons from receiving the protection intended by the act concerned, otherwise the effectiveness of that act will be jeopardised and the general principle of equal treatment established in it will be infringed, since those are rules of EU law of particular importance, from which each worker must benefit. Such exclusion can be permitted only where different treatment of those categories is justified on objective grounds and in particular by the specific nature of the underlying employment relationship.

  1. In the present case, I am of the view that, by analogy, a Member State must not be permitted to apply domestic rules in such a way that it jeopardises achievement of the objectives pursued by Directive 2008/104 and thereby deprives it of its effectiveness. In particular, the definition of the concept of ‘worker’ adopted in national law cannot, in the absence of objective grounds, lead to the exclusion of certain categories of professionals from that classification and hence from the resulting benefit of the protection offered by that directive.”
  2. … I … take the view, … that, since the employment relationship between the association concerned and its members is not, by its nature, fundamentally different from that of workers who are protected under national law, exclusion from the benefit of the protection guaranteed by Directive 2008/104 does not appear to be justified in the present case.
  3. As has already been stated in the context of previous cases, I am of the view that the form of the legal relationship which underlies the job at issue cannot in itself define the objective difference between situations which is required in order to justify a variation in treatment in the light of the abovementioned case-law, a difference which should in my view be based on substantive, not formal, considerations.  In the present case it should not, in my view, be possible to base the exclusion of a category of persons from being classified as ‘workers’ and therefore from the scope of Directive 208/104, solely on the ground, adopted in German law, that the persons concerned did not conclude a private-law contract, otherwise the effectiveness of Directive 2008/104 would be jeopardised.”

“41.      … I consider that, in a context such as that of the main proceedings, members of an association must be classified as ‘workers’ within the meaning of Article 1(1) of Directive 2008/104, where they are assigned to an undertaking for the performance of work under that undertaking’s supervision and direction, in return for remuneration paid to them by the association. Those members must not be excluded from the scope ratione personae of that directive merely because, as they have not concluded a contract of employment with that association, they are not classified as ‘workers’ under the relevant national law.”

As regards the concept of undertakings engaged in economic activity, the Advocate General said:-

“46.      According to the actual wording of Article 1(2) of Directive 2008/104, it is irrelevant whether the entity supplying temporary agency workers is in this case a charitable association and whether the sums received in return for supplying staff would bring it any gain, as Ruhrlandklinik contends. The only criterion that is really decisive is whether the entity in question, whether it belongs in the public or the private sector, engages in economic activities.

  1. However, the definition of the latter concept is not clear from the content of Directive 2008/104, or from the preparatory work relating to it.  I am of the view that it should be interpreted in the light of the case-law of the Court identifying the factors that constitute ‘economic activity’ in other areas of EU law …
  2. I note that the concept of ‘economic activity’ within the meaning of EU law has been developed in close correlation with the concept of ‘undertaking’ in the context of the provisions of the TFEU relating to the internal market, in particular with regard to Articles 49 and 56 TFEU concerning freedom of establishment and freedom to provide services, respectively, and in the context of competition law. Those concepts were both devised by the Court to be non-restrictive, since their purpose is to define the field of application of fundamental freedoms guaranteed by the Treaty.
  3. The same should apply, in my view, with regard to the concept of ‘economic activities’ within the meaning of Directive 2008/104, not only because the preamble to the directive states that it ‘should be implemented in compliance with the provisions of the Treaty regarding the freedom to provide services and the freedom of establishment’, but also to ensure the attainment of all the objectives referred to in that directive and to avoid unfair competition.
  4. According to settled case-law, the concept of ‘undertaking’ includes ‘any entity engaged in an economic activity, irrespective of its legal form and the way in which it is financed’ and ‘any activity consisting in offering goods and services on a given market is an economic activity’. Furthermore, the Court has consistently held that ‘the pursuit of an activity as an employed person or the provision of services for remuneration must be regarded as an economic activity within the meaning of Article 2 of the [EC] Treaty’, that is to say performance of work generating a financial consideration.
  5. It follows, in the first place, that the judicial status of the entity concerned, in the present case an association, does not affect the possibility that the latter may be classified as an ‘undertaking’ within the meaning of EU law and does not prejudice the possible economic nature of the activity in which it engages. The text of Article 3(1)(b) of Directive 2008/104 is in the same vein, since it includes in the concept of ‘temporary-work agency’, within the meaning of that directive, ‘any natural or legal person’, regardless of its legal form, engaged in activities relating to temporary work under the conditions laid down in that provision.
  6. Secondly, the classification as an undertaking which engages in economic activities relating to temporary work, within the meaning of Directive 2008/104, should in my view be adopted where the entity in question offers a service consisting in the supply of workers with whom it alone has established employment relationships specifically in order to assign them to third-party undertakings. That is in fact the case as regards the association of nurses. The purported social purpose of the operator in question is not, in itself, sufficient to prevent its activity from being classified as an economic activity.  Furthermore, the activity concerned is carried out on a given market, in the present case the market for health services, in which other operators are active in the same way, namely traditional temporary work agencies, which also offer to supply nurses.
  7. … I take the view that it is irrelevant as regards Directive 2008/104 that the activities of the entity in question are not limited to the assignment of workers to third parties, bearing in mind the fact that in the present case members of the association of nurses may, under their rules, also work directly for the association. There is no tangible evidence, either in Article 1 or in Article 3(1)(b) of the directive, that in my view permits its scope to be limited to undertakings whose exclusive activity is to supply staff to user undertakings.
  8. Thirdly, according to the case-law of the Court and pursuant to Article 57 TFEU, all services provided for remuneration must be classified as economic activities, it being understood that it is necessary, but sufficient, that there should be some consideration.  The fact that the activity at issue may not be as profitable as comparable services provided by other operators does not preclude it from being of an economic nature.  In the present case, the association of nurses supplies staff to third parties effectively in return for the payment of financial consideration by the latter, namely compensation for the personnel costs and administrative costs incurred in the transaction, bearing in mind the fact that it is irrelevant that such consideration does not bring it any profit.
  9. Lastly, … it appears to me adequate, in particular in order to ensure the full effectiveness of Directive 2008/104, to include within its scope entities such as that at issue in the same way as temporary work agencies of a commercial nature since, otherwise, the former would be subject to less stringent legal constraints than the latter although they offer similar services on the same market, which might lead to distortions of competition. This latter concern, … is much less negligible since in this case a large number of workers are potentially concerned.
  10. Consequently, I am of the view that a supply of services such as that in the main proceedings does fall within the provisions of Article 1(2) of Directive 2008/104, since the association concerned provides services which are equivalent to those of a temporary-work agency, by supplying staff to third parties on the market for health care staff, services in return for which they receive financial compensation.”

James Goudie QC


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