Paul Noll

Let me first congratulate the HLD Organizing Committee for the perfect organisation of the conference. Furthermore, I would like to thank them for all efforts and arrangements.

Having said that, I would like to come back to the interesting theme “La-bour clauses in public contracts” and the ILO-Conventions we’ve dis-cussed briefly en passant during session 1 and 3 and after the meetings (at this point I would like to thank Mr Edström for the fruitful discussions). The dimension of this topic is complex and received recently new impetus from a decision of the European Court of Justice, which I consider impor-tant for the international employers-community and TU-community.
In the so called “Rüffert-case” (C-346/06), the Law of the Land of Lower Saxony on the award of public contracts states, among other things, that public works contracts may be awarded only to undertakings which under-take in writing to pay their employees at least the remuneration prescribed by the applicable collective agreement. The contractor must also under-take to impose that obligation on subcontractors and to monitor their com-pliance with it. Non-compliance with that undertaking triggers the payment of a contractual penalty. The ECJ stated, that a local collective agreement cannot be used as national standard for public procurement, if it doesn’t have a “erga-omnes”-effect. Only national minimum wages, or as it is the case in Germany, where there is no fixed minimum wage, collective agreements with “erga omnes-effect”, have to be considered for public procurement. Therefore, the legislation of the Land does not comply with the provisions of the Community directive on the posting of workers. The Court adds that such an interpretation of the directive is confirmed by reading it in the light of the principle of the freedom to provide services. More specifically, it considers that the restriction on the freedom to provide services resulting from the obligation to pay employees the remuneration laid down by the applicable collective agreement is not justified in this case by the objective of ensuring the protection of workers. This judgment was recently confirmed in the case “Commission vs. Luxembourg” (C-319/06).

After the court decision in the “Rüffert-case” some stakeholder in the EU rediscovered Convention No. 94 (Labour clauses (Public Contracts) Con-vention), dating from the year 1949 and claimed this should be the general norm to apply for public procurement (Convention No. 94 is identical in context to the Law of the Land of Lower Saxony, which declared the ECJ as incompatible with European Law). This position is highly questionable and leads to the general question whether Convention No. 94 gives the opportunity to circumvent the ECJ-judgements.

As already stated, the dimension of this topic is very complex, however, I would like to make six comments:
-    Firstly, Convention No. 94 has a low ratification rate (only 59 states ratified the Convention, the UK denounced on 20.09.1982),
-    Secondly, those countries which have ratified the Convention, are in many cases applying it incorrectly (studies have shown that only 15 ILO member States actually apply it),
-    Thirdly, it must be noticed that Convention No. 94 is protective and interferes with sound public procurement policies and the function-ing of markets,
-    Fourthly, it is questionable why criteria that are not foreseen in the awarding of contracts should belong in public procurement,
-    Fifthly, why should the protection – resulting from such a rate of pay – should be necessary for a construction sector worker only when he is employed in the context of a public works contract and not when he is employed in the context of a private contract?”
-    Sixthly, it is highly questionable whether Convention No. 94 is in compliance with EU-Law. In the “Rüffert” and “Luxembourg-cases” the ECJ did not say anything about Convention No. 94 because Germany and Luxembourg didn’t ratified it and thus the ECJ had no reason to do so. However, it is highly disputable whether this is the case.

If Convention No. 94 doesn’t comply with EU-Law, Article 307 TEC deter-mines as a legal consequence that “the Member State or States con-cerned shall take all appropriate steps to eliminate the incompatibilities established”. 

I am sure that the discussions concerning this questions will continue.