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Thursday, 14 December 2017

(Re)constructing the employment law hierarchy of norms: The Charter will not, should not and need not apply?



Niall O’Connor, Lecturer in Law, University of Essex

The Charter and Brexit

During the Brexit referendum campaign, it was Boris Johnson who led the way in deriding the Charter’s influence over British law. In the Telegraph article in which he first threw his support behind Brexit, Johnson wrote ‘[u]nder the 55-clause “Charter of Fundamental Human Rights”, including such peculiar entitlements as the right to found a school, or the right to “pursue a freely chosen occupation” anywhere in the EU, or the right to start a business (…) These are not fundamental rights as we normally understand them, and the mind boggles, as to how they will be enforced’.

For some eurosceptics, such as Johnson, the Charter is an unacceptably powerful weapon in the EU Court’s (CJEU) arsenal, capable of over-riding national sovereignty. Any law student could point out the inaccuracy of Johnson’s perception of the Charter. Indeed, anyone could highlight the inconsistency between raising fears of the Charter’s influence while simultaneously sneering at the difficulties associated with enforcing its admittedly rather nebulous provisions. Nonetheless, the mischaracterisation of the Charter and indeed the role of the CJEU more generally has gained traction and has, to an extent hamstrung the Brexit negotiations from the outset. Particular suspicion has been directed at the Charter’s Solidarity Title (Title IV).

The Solidarity Title

Title IV of the Charter contains a number of fundamental Employment Rights, including article 27 on information and consultation, article 28 which grants workers the right to collective bargaining, article 30 which provides for the right not to be dismissed unfairly and article 31 on the right to fair and just working conditions, Collectively, these rights will be referred to as the ‘Employment Rights’, that is to say those rights that have a particularly close connection to the contract of employment rather than the broader notion of ‘social’ or ‘labour’ rights. The Charter has been praised for its inclusion of social and economic rights alongside more traditional civil and political rights, but it has always been open to question whether the Charter’s Employment Rights are, or should be, considered human rights in the first place. 

Space precludes a more in-depth analysis of the human rights pedigree of social rights but the most obvious answer to this question is that the Charter’s Employment Rights are included in a fundamental human rights document and must therefore be human rights. (See for further detail, Virginia Mantouvalou, ‘Are Labour Rights Human Rights?’ (2012) 3 ELLJ 151.) This assertion is strengthened if we look to the Charter’s Explanations, which act as interpretative guidance. We can see that a number of the Employment Rights derive from earlier fundamental rights texts such as the European Social Charter (ESC) of the Council of Europe, the European Convention on Human Rights (ECHR), International Labour Organization (ILO) Conventions, the International Covenant on Economic, Social and Cultural Rights (ICESCR) and the UN Declaration of Human Rights (UNDHR). It would seem, then, that the Employment Rights have long been considered rights worthy of international protection.

In addition, many of the arguments levelled at the justiciability of social rights generally do not apply to the Charter’s Employment Rights specifically. First, none of the four Employment Rights necessarily entail any state expenditure and do not, therefore, involve the distribution of resources, although there are likely to be costs involved for employers (including in the public sector). Second, the four rights considered have largely been fleshed out in legislation and so in this respect cannot be criticised as being vague, abstract standards. In any event, article 1 of the Charter which protects human dignity is said in the Explanations to constitute ‘the real basis of fundamental rights’. It is clear that human dignity is the value underpinning all of the Charter’s rights, including the Employment Rights.

British antipathy to the Employment Rights has a long pedigree. It has been thought that the UK had achieved an opt-out from the Charter but this notion was dispelled by the courts (NS judgment). Catherine Barnard has suggested that there is only one true UK opt-out from the Charter. (‘The Opt-Out for the UK and Poland from the Charter of Fundamental Rights: Triumph of Rhetoric over Reality?’ in Stefan Griller and Jacques Ziller (eds), The Lisbon Treaty: EU Constitutionalism without a Constitutional Treaty (Springer 2008).) This is to be found in article 1(2) of Protocol 30 which provides that ‘[i]n particular, and for the avoidance of doubt, nothing in Title IV (…) creates justiciable right applicable to (…) the United Kingdom except in so far as (…) the United Kingdom has provided for such rights in its national law’. This provision serves the role of ‘making sure that if any of the provisions of Title IV are in fact classed as rights they are not justiciable in respect of the UK’.

In other words, if any of the provisions in Title IV are found to be ‘rights’ as opposed to ‘principles’ then they will not be directly justiciable in UK courts. To a large extent, even this provision may not have been necessary. Article 52(5) of the Charter already provides that the principles (which the Employment Rights are presumed to be) only lead to rights to the extent that they are implemented in EU or UK law. Article 52(1) further emphasises the rights/principles distinction, providing that rights must be ‘respected’, whereas principles must merely be ‘observed’. (See further Case C-176/12 AMS (discussed here), the opinion in Case C-282/10 Dominguez; and Case C-356/12 Glatzel).

The right has viewed the Employment Rights with suspicion, fearing that they would ‘provide the basis for a judicial assault upon the UK’s (neo-) liberal employment legislation’. (Michael Dougan, ‘The Treaty of Lisbon 2007: Winning Minds, Not Hearts’ (2008) CMLRev 617,666.) Labour lawyers and trade unionists, on the other hand, have tended to be more supportive, indeed the Labour party’s shadow Brexit minister, Keir Starmer continues to insist that the Charter should be preserved post-Brexit, with one of his six red lines for supporting the final deal being the defence of rights and preventing a race to the bottom. A consideration of the effects of the constitutionalisation of Employment Rights in the Charter shows that both views may have been somewhat misconceived.

The Consequences of Constitutionalisation

The most concrete expression of the constitutionalisation of the Employment Rights can be seen in their use as both a standard of review and as a tool of interpretation. Human rights as general principles have been used to interpret EU law from the earliest days of the Union’s existence (see Stauder). It is unsurprising, then, that it is in the interpretation of EU law that the Charter’s impact has been most keenly felt.

First, it should be noted that the CJEU has long adopted a purposive or teleological approach to interpreting EU employment legislation. A good example is the Working Time Directive (WTD). The purpose of that Directive is to lay down minimum requirements intended to improve living and working conditions. The CJEU has consistently held that the Directive must be interpreted broadly and purposively as any other interpretation would frustrate the objectives of the legislation (see Jaeger). Thus, the purposive approach was adopted long before the introduction of the Charter with its recognition in article 31 that limited working time and paid annual leave are fundamental human rights.

Since the Charter’s adoption, the CJEU continues to adopt this purposive approach, referring to the recitals and the objectives of the legislation but now simply adding the Charter into the teleological mix. (See my article, ‘Interpreting Employment Legislation through a Fundamental Rights Lens: What’s the Purpose?’ (2017) 8 ELLJ.) For example, in one recent judgment (ANGED), the CJEU starts by reaffirming that paid leave is a ‘particularly important principle of European social law’. It then notes, almost in passing, that the right is also found in the Charter. It then moves on to look at the objectives of the legislation to find that the Directive must be interpreted broadly. In other words, the effect of the inclusion of paid leave in the Charter is merely confirmatory of the conclusion the CJEU would have arrived at using existing purposive methods of interpretation.

Human rights as general principles of EU law have also long been used as a ground for reviewing not only the legality of EU acts, but also Member State acts falling within the scope of EU law. This role has now been taken up by the Charter. As there is no case law on the matter, the potential for the Employment Rights to act as a standard of review of EU legislation must be largely speculative, although the equality field provides a useful example of the Charter’s potential. In Test-Achats, articles 21 and 23 of the Charter on non-discrimination and equality were relied on to strike down EU legislation permitting difference of treatment between men and women in calculating insurance premiums. It might be that the granting of constitutional status to the Employment Rights may also have the effect of limiting the ability of the Union to adopt legislation derogating from those rights. For example, article 31 may prevent further derogation from the Working Time Directive. (In relation to article 27 see Peter Herzfeld Olsson, ‘Possible Shielding Effects of Article 27 on Worker’s Rights to Information and Consultation in the EU Charter of Fundamental Rights’ (2016) 32 International Journal of Comparative Labour Law and Industrial Relations 251.)

The Employment Rights have already been used as a standard of review of national legislation, although it is somewhat difficult to separate issues of review and interpretation. In many cases the CJEU is first asked to interpret EU legislation or the Charter before then considering the compatibility of national legislation with that interpretation. The CJEU does not have the competence to review national law directly.

Article 30 has been a weak standard of review of national law, with the CJEU usually finding that the issue is outside the scope of EU law and so the Charter is of no application (For instance, see Case C-117/14 Poclava). Article 27 has served litigants little better (see AMS, where the ECJ ruled that this Article had limited legal effect). Article 28 has been confined to considering whether rules set down in collective agreements could be reviewed for compatibility with EU law (Case C-297/10 Hennigs).

Article 31 is the Employment Right that has been most frequently invoked in the review of national legislation, although this may be a reflection of the fact that the WTD (which is stated in the Explanations to be a source of article 31) has been the subject of the most litigation. In King, the question for the CJEU was whether a worker who had been afforded a right to paid leave only part way through the employment relationship (if at all) lost that right if he did not take steps to invoke it. The UK Working Time Regulations stipulated that employees must take their paid annual leave in the relevant year or it is extinguished. AG Tanchev concluded that ‘in the light of the considerable normative weight of the right to paid annual under EU, international and Member State law, requiring a worker rather than an employer, to take steps to create an adequate facility for the exercise of paid annual leave would unlawfully make the existence of the right subject to a pre-condition’.

Overall, the influence of the Charter’s Employment Rights has represented an exercise in continuity. The extent of the Charter’s added value appears to be that the CJEU is more comfortable in relying on a written human rights text. To this extent, the CJEU has been emboldened in that its long-held approach to treating the provisions of employment legislation (most notably the concept of paid annual leave) as important social rights has now essentially been codified in the Charter, although there is a certain irony in a return to textualism to bolster a purposive approach. More democratically legitimate it may be, revolutionary it is not. (The same cannot be said of article 16 which provides for the freedom to conduct a business which has been used to radically disrupt existing approaches to the interpretation of the Transfer of Undertakings Directive. See Case C-426/11 Alemo-Herron.) Does employment law really have anything to lose, then, in the Brexit process?

The Effect on the Employment Law Hierarchy

Traditionally, the relationship between EU law and national law has not strictly been viewed as hierarchical. Rather, the interaction between the CJEU and domestic courts has been seen as one of cooperation rather than confrontation. With the enactment of the Charter, a new constitutional dimension has been added. Most civil law countries are used to conceiving of the employment relationship as consisting of a clear hierarchy of sources. This has not been true of the common law. It really makes no difference in what order the sources of labour law in the UK are discussed and the hierarchy at national level, to the extent that one can be said to exist, is capable of evolution or indeed inversion. It is useful, then, to bear in mind that there are currently a number of confused hierarchies in UK employment law (1) between EU law and domestic law and (2) within domestic law itself.

The EU-domestic hierarchy (1) can rather crudely be characterised as follows: (A) The Charter, as a constitutional human rights document sits at the pinnacle of the hierarchy of norms; (B) general EU law comes next as it must comply with the Charter but can also be used as a standard against which national law must comply; (C) this is followed by domestic law. The hierarchy at domestic level (2) (with a focus here on legislation and the common law) has never been clear and may now be in a double state of flux due to the Charter and Brexit. At domestic level (where the legislation is outside the scope of EU law), the classification of the Employment Rights as fundamental human rights in the Charter appears to have made very little difference.

The relationship between the common law and employment legislation has always been intimate. We need only think of the fact that access to protective legislation usually depends on classification as a worker or an employee, the tests for which derive from the common law. The common law has at times, therefore, had the effect of impeding access to employee-protective measures (Tanton [1999] EWCA Civ 949). By and large, this has been an entirely domestic matter, with little consideration given to the human rights nature of legislation outside the scope of EU law.

Article 30 for example, provides that the right not to be unfairly dismissed is a human right, yet the EU has not adopted comprehensive legislation governing this right. This has meant that in the context of unfair dismissal, the UK courts have been free to adopt a largely employer-friendly approach. Indeed, contrary to the CJEU’s purposive approach in the employment field, common law judges tend to exaggerate contract law tests when applied to employment legislation. (Steven Anderman, ‘The Interpretation of Protective Employment Statutes and Contracts of Employment’ (2000) 29 ILJ 223.)
In certain circumstances, however, the common law has been malleable to legislative intervention, leading to an absorption of social rights standards. A particularly good example is the common law implied term of mutual trust and confidence. It was the need to come to a definition of the constructive dismissal concept that led the courts to develop this implied term in order to modify the notion of repudiatory breach found in commercial contracts (Malik [1997] UKHL 23).

Overall then, the fact that certain pieces of domestic legislation (outside the scope of EU law) have fundamental rights implications has largely been irrelevant to the domestic hierarchy of norms. Sometimes the common law impedes social legislation, sometimes it facilitates it. What, then, are the implications of Brexit for these already unstable hierarchies?

The EU Withdrawal Bill

The UK Government has made it clear that, in its opinion, there can be no real Brexit without removing the UK from the somewhat ambiguously termed ‘direct jurisdiction’ of the CJEU although there are currently ongoing attempts from both the Labour party and a number of Conservative backbenchers to ensure that the Charter is codified in UK law. Just two weeks ago, the Government was forced to postpone consideration of the Charter’s future role. In any event, it will fall on the UK courts to take on the full range of tasks associated with the interpretation and application of (former) EU employment legislation. Clause 2(1) of the Bill provides that EU-derived legislation applicable before Brexit will continue to have effect in UK law. Clause 5(1) makes clear, however, that the principle of supremacy of EU law will no longer strictly apply, although it will, according to clause 5(2) continue to govern the ‘interpretation, disapplication or quashing of any enactment or rule of law passed or made before exit day’.

This may have continued significance for the ability of litigants to enforce their EU-derived employment rights. In Benkharbouche, workers at the embassies of Sudan and Libya were found to be entitled to have their EU-derived employment law (discrimination and working time) claims heard in a UK Employment Tribunal despite the presence of an apparent conflict with the State Immunity Act 1978. Preventing reliance on these EU rights would breach article 47 of the Charter, which guarantees access to justice. (The Charter issues were discussed more fully in the Court of Appeal ruling, discussed here).

This judgment should also remind us of the protection that will continue to be provided by article 6 of the ECHR, the Convention right to a fair trial. Lord Sumption held that ‘a conflict between EU law and English domestic law must be resolved in favour of the former, and the latter must be disapplied; whereas the remedy in the case of inconsistency with article 6 of the Human Rights Convention is a declaration of incompatibility.’ (para 78)

Echoes of this judgment could also be seen in Unison, in which the Supreme Court quashed the order introducing Employment Tribunal Fees. That judgment starts by noting that many of the rights which are enforceable before Employment Tribunals are EU-derived rights which thus engages article 47 of the Charter. That judgment is also significant for the Court’s exploration of alternative avenues to human rights protection, notably the right to access justice at common law.

The effect of clause 5(2) is to create a new category of ‘retained EU law’ that must, somehow, fit into the existing hierarchy of norms. For employment law purposes, this may not an immediate issue. Much of the existing EU employment acquis has already been implemented in domestic legislation. However, there still remain serious doubts as to the precise status of post-Brexit CJEU case law (clause 6 retains that court’s pre-Brexit case law, with more flexibility to amend that case law) and whether this can be applied or departed from by the domestic courts. Lady Hale, the newly appointed President of the Supreme Court has called for clarification in this area. Most importantly, for our purposes, the Bill is clear that the Charter will not apply.

The Charter Will Not, Should Not and Need Not Apply?

Will Not?

Clause 5(4) of the Bill provides that ‘the Charter of Fundamental Rights is not part of domestic law on or after exit day’. This presents some major practical difficulties. First, it is often impossible to pinpoint precisely the influence of the Charter in CJEU decisions. Sometimes, the Charter is front and centre in employment law decisions. In others, it is barely mentioned (if at all). In earlier cases, the CJEU may simply have been reticent in its use of the Charter, recognising the sensitive nature of social rights and grappling (as it continues to do) with the distinction between rights and principles.

 Despite the somewhat sceptical view of the Charter’s influence in this field of law outlined above, it may well be that CJEU is simply not being explicit in its use of the Charter, relying instead on existing interpretative methods, but with an eye to Charter for guidance. In any case, the Charter and employment legislation enjoy a symbiotic relationship. It has been noted that the Explanations act as interpretative guidance. The explanations to the Employment Rights refer to existing EU employment legislation. Therefore, employment legislation must be interpreted in light of the Charter which must itself be interpreted in light of that very legislation. Decoding this cycle may prove an impossible task.

Should Not?

It has been argued that incorporating the Charter into domestic law post-Brexit would be undemocratic. This is because the interpretation of the Charter rights is entirely a matter of the CJEU. Eduardo Gill-Pedro argues in a recent blog that the CJEU interprets the Charter in the light of the objectives of the Union. Once the UK leaves the Union it will no longer share those objectives and so it would be undemocratic to rely on the Charter.

I would argue that the Charter does not merely serve as an overarching political guide to the future direction of the Union. Certainly, in the employment context it has a less ambitious remit, steering as it does, the interpretation and review of employment legislation. If the Government is committed to preserving the existing employment law acquis it should have nothing to fear from retaining the Charter. In any case, stripped of its constitutional status into the future, the Charter may prove little threat to the amendment or repeal of domestic employment legislation save to the extent that the supremacy principle continues to apply on a limited basis. There would, therefore, be no ‘intrusion’ of external values into the legislative process.

Need not?

Finally, it could be argued that whether the Charter applies or not really makes very little practical difference. First, as was noted at the start of this blog, the effect of the Charter’s Employment Rights, largely dismissed as mere ‘principles’ has been somewhat disappointing. Second, and more significantly, the Repeal Bill itself which at clause 5(5) preserves fundamental rights that exist autonomously of the Charter and ‘references to the Charter in any case law are, so far as necessary for this purpose, to be read as if they were references to any corresponding retained fundamental rights or principles’.

It is clear, then, the Charter will continue to play a role in the guise of those provisions that are already reflected in the general principles of EU law (although Schedule 1 to the Withdrawal Bill will limit the legal effect of those general principles). In many areas, but notably the equality field, it was the general principles that opened the way to the application of fundamental rights in employment law, although I accept that the adoption of the Charter had an emboldening effect even prior to its granting of full legal effect. (Compare Case C-144/04 Mangold and Case C-555/07 Kücükdeveci) Although, admittedly the status of the Employment Rights as general principles remains unclear and the Withdrawal Bill makes it clear in any event that the general principles cannot act as a standard of review for retained EU law.

Separating the role of the Charter and the general principles will in any case be difficult. We need only look to Norway to see how the general principles can have an effect on those not formally bound by the Charter. The European Free Trade Association (EFTA) Court has from the outset referred to judgments of the CJEU. The ‘homogeneity’ principle has had a profound impact, leading the EFTA Court to apply CJEU decisions that post-date the EEA Agreement. (Carl Baudenbacher, ‘The Relationship Between the EFTA Court and the Court of Justice of the European Union’ in Carl Baudenbacher (ed), The Handbook on EEA Law (Springer 2016) 179, 184.)

This principle governs the relationship between the European Economic Area (EEA) Agreement and EU law. Article 6 of the EEA Agreement provides that ‘[w]ithout prejudice to future developments of case-law, the provisions of this Agreement, in so far as they are identical in substance to corresponding rules of [the EU Treaties] and to acts adopted in application of [those Treaties], shall, in their implementation and application, be interpreted in conformity with the relevant rulings of the [CJEU] given prior to the date of signature of this Agreement’. The EFTA Court has held that ‘the objective of establishing a dynamic and homogenous European Economic Area can only be achieved if EFTA and EU citizens, as well as economic operators enjoy, relying on EEA law, the same rights in both the EU and EFTA pillars of the EEA’. (Case E-18/11 Irish Bank Resolution Corporation v Kaupping para 122.) The homogeneity principle extends to fundamental rights, with the Court referring to judgments of the ECtHR and CJEU as well as AG Opinions in fundamental rights cases (Case E-2/03 Asgeirsson and Others para 23; Case E-8/97 TV 1000 para 26).

Conclusion
The instincts of both labour lawyers and Charter sceptics may have been wrong. Far from representing a Trojan horse, bringing in its wake alien social rights to disrupt the common law’s traditional flexibility, the Charter’s Solidarity Title has proven to be rather a damp squib, except of course that it has actually had the effect of promoting the development of a countervailing business freedom found in article 16. In AGET Iraklis, for example, the CJEU held that article 16 is closely related to the four economic freedoms contained in the EU Treaties and can be used to defeat competing employment rights. (See also Alemo-Herron)

And yet, it is possible that we labour lawyers simply expected too much from a document that was explicitly adopted to codify the existing, cautious and piecemeal approach to fundamental employment rights. And yet still, it is possible to be too sceptical. The reality is that the Charter’s Employment Rights do have the potential to act as a bulwark against legislation that might undermine the rights of workers – in particular against any attempt to lower the standard of protection for employment rights below the level established by retained EU law.

The Charter’s use as a standard of review is perhaps its most powerful function and yet, at least in the employment field, this function has yet to be fully tested. It may be that we are leaving the Charter party before it has even got started. There is no doubt that the hierarchy of employment law norms is now in a state of flux and we do not know where the pieces may fall. What we do know is that, if the UK government gets its way, the Charter will not be among them. Without the Charter, the human rights landscape in the employment field will be somewhat impoverished. Left at the mercy of the common law, it is likely that UK employment legislation will travel in an altogether more deregulatory direction.

Barnard and Peers: chapter 9, chapter 20

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