§ 9.38 p.m.
§ The Under-Secretary of State for Employment (Mr. John Grant)
I beg to move,That this House takes note of Commission Document No. R/1123/76 on Conflict of Laws on Employment Relationships in the Community.The Commission's proposal on this matter was discussed at several meetings at official level in the Council machinery during the period of the United Kingdom Presidency in the first half of 1977, but discussions have been suspended since then to allow the Commission to review its proposal. We do not know when they will be resumed.
The Select Committee, in its report of 9th March 1977, recommended the proposal for debate, and I understand that it has since reconfirmed this recommendation on 1st February this year on receipt of our up-dated memorandum. Therefore, this debate has been outstanding for some time. That is really why we are here this evening, and not—let me be quite candid—because I believe that a debate on this document in the present state of uncertainty about it is likely to throw any blinding light on this very complex matter. However, at any rate I can welcome the views of hon. Members, and there is no question but that they will be taken very fully into account.
The purpose of the draft regulation is to provide a common approach throughout the Community in deciding which national law should be applied to emloyment relationships. In recent years this question has become increasingly important as a result of the expansion of companies' overseas activities. Employees may be transferred temporarily or permanently, from one establishment to another in a different country, and it is becoming common for people to be employed under contracts where their work is carried out either wholly or partly abroad for certain periods.
The need for clear rules in the Community is further reinforced by the Treaty of Rome provisions on the free movement of labour, which, as the House knows, provide that people may move freely between the member States of the 1834 Community to take up jobs. As a result, contracts of employment with an international element are likely to become more common.
The present rules of private international law vary widely from country to country and the situation is undoubtedly confused in relation to contracts of all kinds and to civil wrongs. Therefore, action by the Commission to clarify the situation is to be welcomed. I shall come later to whether the proposals are considered to be the best and most suitable way forward.
First, let me give a little of the history. The Commission was invited to study problems of conflict of labour laws following the adoption of Regulation 1612/68 on freedom of movement of workers. Its first proposed draft regulation was forwarded to the Council in February 1972 and was subsequently amended to the present version in the light of comments made by the European Assembly and the Economic and Social Committee in 1972 and 1973. The House will have seen from the explanatory memorandum that the Government consider the draft contains some technical faults and needs further clarification, and I shall try to explain some of the main points of difficulty.
Article 1 defines the regulation's scope as relating to all employment relationships to be fulfilled in the Community. Thus, it applies regardless of the nationality of the employee to avoid the application of more than one set of conflicting rules to work done in the Community. However, the question of what constitutes an employment relationship is left to the laws of each member State, with no indication as to which law is to decide this question; and this could create potential difficulties. For example, Dutch law might regard a particular contract as creating an employment relationship in circumstances where English law might not, so that the outcome of litigation would depend on which court was involved. It is clear also that the scope of the regulation would have to be confined to work done principally or normally within the Community for the sake of consistency with the subsequent articles.
Article 2 contains a very broad definition of labour law which needs clarification. It also excludes capacity to enter 1835 into contracts of employment. This could be unfortunate in that it would allow one set of rules to govern contractual capacity and another to govern the validity of the contract. Article 3 lays down as a basic principle that the employment relationship is to be governed by the law of the member State in which the worker normally carries out his work. The employment relationships of workers on ships flying the flag of a member State are to be subject to the law of the flag; those in international land, air or inland water transport by the law of the member State within which their employer has its registered office or branch. The basic principle is, of course, similar to that underlying our own labour statutes, although our recent experience of these indicates that the word "normally" needs definition, particularly if contained in an instrument of direct applicability like a regulation.
For example, it is not clear whether the concept used is meant to exclude there being more than one country where an employee can be said "normally" to work. It is also not clear whether it refers to the whole period covered by the contract of employment. Some indication that it does not do so seems to follow from Article 4, which is intended to lay down a special rule for workers sent temporarily to a member State—that is, as defined, for a period not exceeding 12 months. As drafted, the rule for these workers is not clear, but it is arguable that this provision might be unnecessary in any case if the basic rule of Article 3 applied to the contracts as a whole.
Article 5 is intended to allow some further choice to the contracting parties if an employee is transferred from an establishment in one member State to an establishment in another member State.
Article 6 is meant to cover workers who work for some of their time in a member State but have no normal place of employment. It allows a fairly wide degree of choice provided that the law of a member State is chosen, but it is not clear what would happen if a different choice were made, particularly if that choice were made outside the EEC. There is also no provision for situations where no choice is made.
Article 7 is the one provision allowing a free choice of law, including the law 1836 of a third country. However, this applies only to a particular group—managerial or highly specialised employees—for which there are difficulties of definition, as pointed out by the Select Committee.
Article 8 as drafted applies certain mandatory provisions at the actual place of work rather than the normal place of work, but only to cases falling under Articles 4 to 7, although it may well have been intended to override the basic rule in Article 3 as well. Some of the provisions listed certainly seem inappropriate to the type of case covered by Articles 4 to 6, temporary postings and work in more than one State. On the other hand, the list fails to catch all present provisions which might reasonably be classed as "mandatory rules"—for example, those relating to sex and racial discrimination, and, as has been pointed out by the Select Committee, to unfair dismissal and redundancy.
The regulation as it stands would need to contain some transitional provisions if it were to go ahead. However, this brief outline of some of the problems associated with it in its present form may be enough to indicate that a regulation may not perhaps be the most appropriate instrument for dealing with rules of private international law in this field.
I now turn briefly to a further basic issue which needs to be considered. That is whether it is desirable to have special rules on this subject applying only to employment in the European Community or whether it would not be better to apply to contracts of employment in the EEC general rules applicable to contracts of employment anywhere, and, indeed, to have those general rules for contracts of employment modelled as closely as the circumstances permit on the rules for contracts generally.
Discussions are actually going on in Brussels between experts from member States on a draft EEC convention on conflicts of laws relating to contractual obligations as a whole. Such a convention, while of much wider scope, will, of course, in its application to contracts of employment, cover the same ground as the draft regulations.
The discussions, I understand, are based on a draft convention entitled "Convention on the Law Applicable to 1837 Contractual and Non-Contractual Obligations", and in due course the House will no doubt have an opportunity to consider any texts that may be put forward. The draft was initially prepared in 1972 at the initiative of the Benelux States by a Commission working group of legal experts from the member States and is currently being revised. Texts of the preliminary draft were circulated to people and bodies in this country likely to be interested in such subjects by the Law Commission in 1974.
As is pointed out in the memorandum, the two instruments would probably produce the same result in many cases, but this would result in complex legal distinctions, and it is difficult to justify the existence side by side of two such instruments containing minor variations.
§ Mr. J. Enoch Powell (Down, South)
The hon. Gentleman said that the House would have the opportunity to see the draft convention. Is the convention an instrument which falls within the rules which bring documents before the House after recommendation by the Select Committee?
§ Mr. Grant
My understanding is that it would fall to the House to consider it. I am not clear about the point the right hon. Gentleman makes about the Select Committee, but I shall take advice on it and try to reply later.
I was saying that it would be difficult to justify having two instruments of this kind running side by side. It would be pointless. It is doubtful whether it would produce any worthwhile clarification of the existing situation. In principle, one instrument having worldwide effect seems preferable, more particularly if as seems likely—and this is still a working document—the convention accords better with the rules which operate in the rest of the world than do the likely EEC regulations.
It is not known when the Commission will present its revised proposal for a regulation, but it now appears that the convention may be finalised quite soon. It may be that the case for an instrument supplementing the convention's provisions on employment contracts should be looked at then, in the light of the text of the convention once it is sent to the Council of Ministers.
§ 9.50 p.m.
§ Mr. Fred Silvester (Manchester, Withington)
The regulation that we are discovering, or, rather discussing—
§ Mr. Silvester
It has been around for quite a while, although perhaps the House has not discovered it before. Most people, in discussing the European Economic Community, even if against it, would reckon that it has a perfect right to intervene in such matters as we are discussing tonight, since it is concerned with international activities. The regulation should have no effect on firms operating in this country with only English staff, but there is undoubtedly a problem. There do not seem to be many figures available, but those that I have managed to find indicate that about 1.7 million EEC nationals are working in countries other than their own. Therefore, substantial numbers of people are involved.
The problem is whether the proposals before us are likely to help or hinder in that situation. The question is answered by the EEC in two ways. Since there are now so many international companies operating, Document R/1123/76 points out that, in the event of a legal dispute, venues can be established in several member States. The venue can be established by the registered office of the undertaking, the branch or the place of performance. It can be established by agreement or through the entering of an appearance. The document adds thatSince each court must establish the applicable labour law according to the conflict of law rules of the lex fori, it is evident that similar cases of dispute affecting other States may be decided differently depending on the State in which the court seized of the matter is located.I think we would all agree that it would be nice if we could achieve a greater uniformity of law in this matter for countries operating across borders.
The other matter which occupied most attention in the European Parliament was the need, having established the free movement of labour, to make sure that the laws operating in the various countries do not weaken the protection and do not cause ill feeling between different employees in the same firm.
1839 Obviously, it is theoretically possible that a worker coming in from another country and previously employed under different rules from those applying in the country to which he was going could bring with him employment conditions which were worse than those of the workers in the establishment in which he was to be employed. There could, therefore, be workers working side by side in the same establishment according to different rules, and workers could thereby suffer disadvantage. I do not know how real that danger is. It may become more real as the Community extends and takes in countries where the laws may not be what the Community would regard as advanced. I am not absolutely convinced, however, that this is a real danger facing us at the present time, although it may be a problem for the future.
The regulation seems to me to be quite sensible. If we are to choose one law, it seems to me that to choose the law of the place where the work is being done would be likely to lead to the least objection and also to the least upset in the working conditions of the countries concerned. But the regulation is obviously too broad, because the Commission has put down a number of exceptions, in particular to Article 7, to which the Minister referred, which allows special categories of people to be excepted. I believe that that could lead to very grave difficulties, and I do not know the way in which it will be applied.
I am sure that hon. Members will have read the article, but I remind them that the people who can be excepted, if they produce a written agreement, are those in a special position. It can also be because of the special nature of the work. The article states thatA special position of the worker in the establishment exists where the latter carries out managerial or advisory functions. Work of a special nature means activities which require a high degree of specialisation on the part of the worker.Such phrases are open to much interpretation.
The Trades Union Congress, in its representations to our Select Committee, draws attention to this particular point. It objects to managerial and professional people being taken out of the list, on the ground, I think, that we should treat everyone the same. In a sense that is 1840 a laudable objection, but the work of international companies would grind to a halt if they were unable to make special concessions for some of their leading staff if they wished them to go to other EEC countries. The practicality of the matter is that the Commission will have to find a way round this problem, and it has done so by Article 7. Personally, I believe that this article will lead to considerable difficulty.
The other point which the Minister made, and with which I entirely agree, relates to the big problem of the convention. I agree with the right hon. Member for Down, South (Mr. Powell) that it is an entirely different kind of animal. It is not one to which we shall be committed in the event of its being an agreement. It is not automatically binding like the regulation.
In those circumstances, we shall be in a difficult position because it will be possible for different laws to apply, for example, according to whether a worker was from an EEC country or from outside the EEC. The convention will apply to countries which are outside the EEC as well as to the EEC. We shall, therefore, be faced with two highly complex pieces of law operating simultaneously. I do not think that can conceivably be right.
What worries me slightly is that the Minister said that he was hoping that the convention would be agreed shortly. The consultative document put out by the Law Commission was very ambivalent about the convention. It will be interesting to hear whether the position of the Law Commission has changed as a result of its consultations.
The Commission says that it is consulting about whether it is desirable to have such a convention at all. It goes on to say:In any case, it is for consideration whether it would not be better to deal with the matters proposed in the Convention in a series of more limited conventions dealing with each matter separately".Those of us who have tried to wade our way through that convention would agree that it gets impossibly complex.
As the Minister will know with regard to law relating to employment contracts, the convention contains a different set of rules from those applying to workers generally. His theory that we should wait for the convention, that the convention 1841 will be binding and that we shall then have a common set of rules for all contracts, including employment contracts, is not justified. He might like to comment on that.
My understanding from the convention is that the rules relating to employment are different from those relating to other forms of contract. It therefore means that this regulation—which, in a sense, is one which we can agree was an appropriate matter for the Commission because it does something in pursuit of having free movement of workers—is one that should certainly be considered.
The particular documents before us are defective. I hope that it will be possible, without stopping the enthusiasm for getting some kind of common denominator for companies operating within the EEC, not to press ahead with either of them in its present form, because time is not of the essence.
It would be much better to have a form of law which can stand the test of time and which would not lead, as I suspect this one would, to a great deal more litigation than it will solve.
§ 10.0 p.m.
§ Mr. Max Madden (Sowerby)
Whether the documents before us are defective I am not qualified to say, but it would not be unknown in Common Market matters for documents to be defective. They are invariably defective or unavailable or they have been preceded or overtaken by events. However, we must assume that these documents are proper, although I must say that, if nothing else, my hon. Friend the Under-Secretary has demonstrated in this brief debate that there is no burning enthusiasm for these regulations coming from St. James's Square. The Department of Employment certainly does not regard these matters with any great zeal or enthusiasm. I sense that it regards them as something of a hornet's nest, an opinion which a number of Government supporters share fully.
I should be grateful if my hon. Friend could comment on a number of matters to which I shall refer and give some answers to certain questions.
Essentially, we are concerned in this debate with one of the major principles of the Common Market, namely, the free movement of labour within the Mar- 1842 ket, and, in the context of other debates which are raging in the country about the ability of people to come here or of United Kingdom nationals to go to other countries, it is important to try to establish some facts about the free movement of labour within the Common Market.
To place the facts on the record, it is useful to quote the rights of European Community nationals. I understand them to be as follows:Nationals of member states of the European Community do not require work permits and are admitted freely to take or look for employment or set up in business. They are normally admitted for six months in the first instance. When a European Community national has entered employment he applies for and is issued with a residence permit which is normally valid for five years. After four years in employment the time limit on his stay may be removed. If the duration of the employment is expected to be less than 12 months the permit is issued for the period of employment only. If a person has not established himself in employment or in a self-employed occupation by the end of six months he may be refused a residence permit, although a short extension of his stay may be granted if it is needed to complete arrangements for employment. The spouse, children under 21, older children if still dependent, and dependent parents and grandparents of a national of a member state of the European Community coming to take employment may be given permission to enter the United Kingdom for the same period. Students and other temporary visitors from European Community countries are treated like other foreign nationals.I understand that this is not altogether academic since, between 1973 and 1976, the number of residence permits issued to EEC nationals wishing to come to the United Kingdom totalled more than 10,000 in 1973, more than 11,000 in 1974, more than 8,000 in 1975 and more than 7,000 in 1976. The figures for acceptances for settlement were in the same years more than 1,000 in 1973, more than 1,000 in 1974, nearly 2,000 in 1975, and 1,600 in 1976. Those figures do not take account of citizens of the Irish Republic who do not have to obtain residence permits to come to the United Kingdom.
I should like to hear from the Minister whether he can give us any later information, since my figures relate to the period up to 1976. If he has any further information, I am sure that it will be useful. But the clear fact remains that there is an obvious right for EEC nationals and their dependants either to seek residence permits or to seek to be accepted for settlement.
1843 The other matter that I wish to refer to concerns the position of migrant workers from non-EEC countries who seek employment within the Common Market. The figure is again far from being insubstantial. I understand that in 1975 there were nearly 4.5 million migrant workers in the Common Market. They came from Spain, Greece, Portugal, Turkey, Yugoslavia, Algeria, Morocco and Tunisia. There was a miscellaneous group of 365,000, bringing the total to nearly 4.5 million. This figure referred to the position in 1975 and clearly, with mounting unemployment, there has been pressure from a number of Common Market member States, notably Germany and, to a lesser extent, France, to reduce the number of migrant workers within their countries.
I should like to know from the Minister what the latest estimates are about the number of migrant workers within the EEC at present. Second, can he give any estimate of the likely number who can be expected to be seeking employment in future? I should particularly like to know the situation regarding Turkish workers because I understood that the intention was progressively to give to Turks the right of full freedom to seek work within the EEC by 1986. Pressure has been exerted by the Germans. I understand that the position may be that, despite the agreement to which I have referred, all that the Common Market has offered to the Turks, following German pressure, is security of tenure for their workers already in Europe.
I understand that, of the migrant workers from Greece, Portugal and Spain, only the Greeks have tended to concentrate in West Germany. In 1975 there were about 196,000 in West Germany of the total of 260,000 Greeks in the Community. The Portuguese and Spanish have tended to make for France. In 1975 there were 265,000 Spanish workers and 475,000 Portuguese workers in France. More than half of France's immigrant labour population comes from the three Mahgreb countries of Algeria, Morocco and Tunisia. The Algerians are in the majority. The Portuguese are only a short way behind, followed closely by the Spanish immigrants.
Bearing in mind the rights of EEC nationals to residence and settlement, and 1844 bearing in mind the potential increase in the number who would have this right, should the Common Market be extended to include Spain, Portugal and Greece, this is a factor to be taken account of. Does the Minister agree that if any Government were to seek to vary the rights and conditions on which others were allowed to enter this country the Common Market would insist on rights comparable with those extended to EEC nationals? Clearly those rights are far more favourable than currently exist for some other nationals and are far more favourable than other rumoured suggestions which we see, even in today's newspapers.
If the Leader of the Opposition wishes to offer the British people an end to immigration, or even the prospect of an end to immigration, does the Minister agree that we must expect the Conservative Party to hurl itself into opposition to the Common Market and to campaign for Britain's withdrawal, since so long as we remain a member and the Community has the free movement of labour as one of its fundamental principles no one, not even the right hon. Lady, can offer the prospect of an end to immigration into the United Kingdom on the part of substantial numbers of working men and women from a considerable number of countries?
§ 10.10 p.m.
§ Mr. J. W. Rooker (Birmingham, Perry Barr)
I know that the Select Committee has recommended that the House should discuss the draft instrument. I am aware of the comments in paragraph 6 of the memorandum submitted by the Department of Employment, which says:The underlying intention of many of the detailed provisions of the draft Regulation as it stands is, however, still not clear.That is putting it at its mildest. Having read through the document, I agree that it certainly is imprecise, and lacking in sensitivity. It is what one of my hon. Friends earlier today termed "punk law". It could not be implemented in any way as it stands.
In the memorandum, my hon. Friend the Minister makes the point that under under Article 8 certain legislative provisions in force at the place where the work is carried out cannot be excluded even in the exceptional case where the 1845 labour laws of that country do not apply. That takes a little understanding, and it is not exactly precisely drafted. Article 8, on page 5, lists an incredible amount of labour legislation covering about a dozen subjects. It is quite clear that the individual laws of the countries concerned override the provisions of a Articles 4, 5 and 6.
Provision (b) of Article 8 relates to the maximum daily and weekly working hours and permission to depart therefrom. It is well known that this country alone in the Common Market does not have any restrictions whatever on the weekly hours that can be worked by adult males. There are no restrictions at all on overtime.
I am in favour of statutory restrictions on overtime, especially as they apply in Germany. Holland and other EEC countries except Denmark—which is hardly our economic competitor in the sense that Germany is. This is one of the areas excluded from the provisions of Articles 4, 5 and 6.
The hon. Member for Manchester, Withington (Mr. Silvester) mentioned that it was not a major problem that workers could come in from abroad and work in Britain. But there are, for example, German-controlled factories in this country—there is one in Basingstoke—so how can German nationals working here square their circumstances with ensuring that at the employer's behest they do not work themselves into the ground? There is nothing to stop them from working 160 hours a week. How can we stop this loophole?
The hon. Member for Withington did not refer to the fact that at the moment there is a massive campaign being orchestrated by the Conservative Party and its allies outside the House against many of the protective laws that we have implemented in the last few years. One of our arguments has been that we are only dragging ourselves up to the level already enjoyed by the rest of the Common Market. Certainly in Germany the protective laws have been much wider and more precise than those in this country.
I understand why there is a certain degree of ambivalence from the hon. Member. What the Common Market is seeking to do is to codify and uplift job protection rights throughout the EEC 1846 because in the past immigrant workers have been treated shabbily by Germany. The moment there is a downturn, they are packed on cattle trucks back to Yugoslavia by the trainload. These migrant workers are devoid of civil rights and the ordinary protection given to citizens of Germany.
This is an attempt by the Common Market to improve job protection rights of Europe's workers, whether they be the present group or Spanish, Greek and Portguese workers in future. While this is all happening, the so-called European party in this country is orchestrating a campaign against our protective laws. That campaign is to be noted both in this House and outside.
The hon. Member for Withington owes it to his electors to make the Conservatives' position clear. Do the Conservatives agree with what the Common Market is seeking to do in an expanding area of job protection? If they do not agree, let them say so. Let us have no more of this hypocrisy about the meagre gains we have made in this country in the last four years.
§ 10.16 p.m.
§ Mr. John Grant
This has been a brief but useful debate, and it has succeeded in underlining the disquiet felt in the House about the proposals that are before us.
The hon. Member for Manchester, Withington (Mr. Silvester) said that there would be difficulties in regard to Article 7. He was right to take that view. The argument advanced to grant a free choice to the worker under Article 7—that is to say, managerial or highly specialised employees—is that they are assumed to be more knowledgeable about the range of laws available and better able to negotiate an employment contract that is favourable to them. Whatever the validity of those assumptions, it must be said that by offering a choice to some workers rather than others the article would create a more privileged class of worker. That is the TUC's view. Therefore, we have asked that Article 7 should include everybody or that it should be dropped.
The other main point raised by the hon. Gentleman related to the convention and the view of the Law Commission. It was proper to mention that matter, but I wish to point out that we are not debating that convention tonight. Since I have 1847 not seen the updated proposals, which may soon be with us, I do not think I can say anything useful about the situation.
The right hon. Member for Down, South (Mr. Powell) asked whether this matter would come before the House. The answer is in the affirmative. Examination of the draft convention when it has reached a sufficiently settled stage of documentation to warrant showing to Parliament would have to be settled by inter-State negotiations undertaken by the Government. That stage has not yet been reached, and the document which is still being examined at this stage is not much more than a matter of academic interest.
My hon. Friend the Member for Sowerby (Mr. Madden) suggested that the Department of Employment was not viewing this proposal with any great zeal or enthusiasm. I certainly treat all these matters with great zeal and enthusiasm—although perhaps some with more zeal than others.
My hon. Friend asked me many questions about figures. I am sure that all that was strictly in order within the terms of the proposals, or the Chair would have stopped him. The point relating to residence permits is a matter for my right hon. Friend the Home Secretary.
§ Mr. Speaker
Order. I hate these snide digs, whoever is in the Chair. These are complicated and wide matters, and I advise the Minister to read the documents as well.
§ Mr. Grant
I have had my difficulties, Mr. Speaker.
I cannot answer all the statistical questions put by my hon. Friend the Member for Sowerby, but I think he will find that many of them will be answered in the White Paper on enlargement which is to be published in due course. If my hon. Friend wishes, I shall try to deal with the appropriate points in writing.
I do not believe that I should follow what my hon. Friend said about the Leader of the Opposition's suggestion that we can see a clear prospect of an end to immigration, except to say that broadly I share his view that this is a fallacious and phoney argument. How- 1848 ever, it is not appropriate to the discussion of the document.
My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) suggested that I had been mild in saying that the document was not clear. I was indeed being mild. There is a great deal of confusion.
My hon. Friend asked about Article 8 and how German workers would fare, bearing in mind the overtime restrictions there, if they came to work in this country. The national mandatory laws of the State where the work is done would over-ride Articles 4 to 7, including hours of work if there were laws on that.
I share my hon. Friend's view about the orchestrated campaign against certain protective measures passed by the Government, particularly the Employment Protection Act. I shall not labour the point because it is not strictly relevant to the document, but it is most unfortunate that the Leader of the Opposition has seen fit to join the campaign and make such attacks.
I do not believe that anything in the document would adversely affect our protective legislation, and it could be that we may be helped to some extent in furthering our aims if we can get some clarity and harmonisation here.
§ Question put and agreed to.
That this House takes note of Commission Document No. R/1123/76 on Conflict of Laws on Employment Relationships in the Community.