Burrows

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Opting in to the opt-out: The UK and European Social Policy

Noreen Burrows LL.B. Ph.D.

Copyright © 1997 Noreen Burrows.
First Published in Web Journal of Current Legal Issues in association with Blackstone Press Ltd.

Summary

This article explores three issues which have arisen out of the decision of the UK government to end the UK opt-out of social policy; representation in the Council, the requisite Treaty amendments, and new UK legislation. It argues that a period of time will be necessary in order to complete the European and UK legislation to bring the UK fully into line with its European partners. Opting in to the opt-out is not as simple a step as it might have first seemed.

Introduction

There were times, in the run-up to the general election, when it was not clear whether a new Labour government would take the plunge and end the UK opt-out of social policy which had been enshrined in the Treaty on European Union in 1992. However, four days after the election, Robin Cook, the new Foreign Secretary, announced that the UK was ready to accept the Social Chapter as part of Labour's new, more open, approach to Europe.⁽¹⁾ This was just what the negotiators at the IGC were hoping to hear. The question of the Social Policy opt-out had been left open during the earlier part of negotiations. This is clear from the diplomatic language of the Irish Presidency draft which spoke of the 'widespread view' to leave any decisions on the Social Chapter provisions to 'a later stage of the Conference', the later stage being after the UK election.

This article explores the legal questions arising out of this dramatic change in UK policy. It identifies three outstanding issues which require to be resolved in the next few years before the UK can be said to be fully reintegrated into the mainstream of European activities in the social policy sphere; reintegration into the decision-making procedures; 'signing-up' to the Social Chapter; and catching up with legislation adopted by our European partners during the UK's wilderness years. It concludes that, in legal terms, reintegration of the UK into European social policy is not just a simple matter of expressing an agreement to be bound by existing provisions but necessitates key Treaty amendments and new UK legislation.⁽²⁾

The Social Affairs Council

The UK assumes the Presidency of the Council in January 1998. Under the opt-out provisions, the UK would have been unable to take the chair at meetings of the Social Affairs Council where matters for discussion arose under these provisions. This would have been the first time that the Member State holding the Presidency was excluded, not only from chairing but also even attending meetings where key policy issues were discussed. The loss of political influence would have been enormous and would have highlighted the distance between the UK and its European partners on a key issue of European policy at a time when the UK had the opportunity to direct and guide the European Union on an agenda partially set by itself.

In legal terms, the situation would have been ambiguous. If the UK did not take the chair of the Social Affairs Committee, who would? The Protocol on Social Policy does not provide guidance on this question. It merely states that the UK 'shall not take part in the deliberations and adoption by the Council of Commission proposals made on the basis of this Protocol'. It is clear that the UK could not chair meetings of which it could take no part but the Protocol does not determine which Member State would take the place of the UK. No doubt this issue would have been settled amicably, perhaps with the immediate past chair continuing in office or the Austrians, who will take up the Presidency after the UK, taking the chair ahead of their turn and holding it for two consecutive sessions.

As will be seen below, the UK will not be a full participant in the Social Chapter until the new Treaty of Amsterdam comes into force. Until this time the Proposal and the Agreement on Social Policy remain as legally binding instruments. In order to solve the problem of participation, therefore, a political compromise was reached at the Amsterdam summit. In the conclusions of the Presidency⁽³⁾ the change of policy by the UK was welcomed wholeheartedly by the other fourteen and, in view of the willingness to adopt the directives already adopted before the new Treaty is due to come into force, the UK was invited to participate by expressing its views on matters covered by the Protocol. The Presidency and the Member States agreed to endeavour to take these views into account when reaching decisions whilst respecting the procedural rules of the Council. This is a neat way of avoiding the legal problem in the interim period between repeal of the Protocol and the adoption of a new Treaty text. The UK has now resumed its place in the Social Affairs Council and it is clear that David Blunkett will take up the chair, Cabinet reshuffles excepted, with the UK Presidency in January 1998. Again this is made possible by a political agreement arrived at during the Amsterdam summit. The fourteen Member States who are parties to the Protocol agreed that if the Treaty of Amsterdam were not to enter into force by 1 January 1998, the chair could be taken by the representative of the UK. David Blunkett has indicated that his policy at this time will be based on the themes of job creation, employability and social cohesion.⁽⁴⁾ These concerns are already laid down as policy within the Council and so the UK Presidency appears to be following certain well defined themes.⁽⁵⁾

Participation in the Social Affairs Council is not merely a question of taking the chair when the time comes. Acceptance in principle of the whole social agenda also means that the UK is now included in all Social Council meetings in accordance with the decisions of the Amsterdam summit. The significance of this lies in the fact that at its meeting in June 1997, the Council was able to agree on a Joint Position within the Council on a Directive on the burden of proof in sex discrimination cases. This directive was initially proposed in May 1988 and had remained blocked in the Council (see Prechal and Burrows,1990). This directive will be the first 'success story' of the new government's participation in social policy. In fact, UK law already reflects the provisions of the directive on questions of burden of proof and no new UK legislation will be required.

UK participation in meetings of the Social Affairs Committee may lead to further measures being unblocked in the near future. At the July informal meeting, for example, ministers expressed broad support for proposals on employee involvement and the European Company Statute.⁽⁶⁾ Given UK support for the whole field of social policy, irrespective of the views of the government on any one particular issue, it is now possible for the Commission to propose that any such measures should be based on the provisions of the Treaty establishing the European Community rather than on the base of the Agreement on Social Policy, as was done in the case of the burden of proof proposal. The advantage of this is to involve the UK in the entire process of legislation, including the adoption of any final text. Directives adopted following these procedures bind all the Member States. Directives adopted under the Agreement bind only the fourteen.

Amending the Treaty

Negotiations on the amendment of the Treaty in relation to social policy were difficult during the early stages of the IGC. The flavour of the negotiations is reflected in the comments made by the Irish Presidency in the outline for a draft revision of the treaties.⁽⁷⁾ As late as December 1996, there were no concrete proposals in this area. Instead, as the Irish Presidency states, there were polarised views with one Member State, the UK, opposed to any change in the status quo, and fourteen Member States in favour of incorporating the Agreement on Social Policy into the text of the Treaty itself. Arguments in favour of incorporation were based on the desirability of having a 'single, coherent and effective legal framework for action'. From this it is clear that the UK opt-out was considered undesirable by all other Member States and that its continued operation was opposed by them.

The IGC in Amsterdam agreed to the incorporation of the Agreement on Social Policy into the text of the Treaty itself. The inevitable consequence of this is that, when the Treaty comes into force, the Protocol and the Agreement as self-standing instruments will be repealed. Until this time, the Protocol and the Agreement remain in place alongside the existing Treaty provisions in Articles 117 to 122. It is early days to say when the Treaty of Amsterdam will come into force. The final text is due to be agreed in October 1997 but, if the ratification process of the Treaty on European Union is a guide in these matters, then Amsterdam may not come into force for some time after that. Denmark has indicated the need for a referendum and again, if the past is a guide to the future, this may have the effect of delaying the entry into force of the new Treaty.

If and when the new Treaty comes into force the UK will be bound by it. It is therefore worthwhile examining the amendments contained within the Treaty of Amsterdam (Barnard 1997). Essentially, the drafters have amended Articles 117 - 120 and brought the substantive provisions and the social dialogue procedures of the Social Policy Agreement into the framework of the Treaty. The easiest way to see this is to juxtapose the relevant provisions. The table below lists the provisions of the existing Agreement in the first column and gives their new position in the Treaty in the second. This column also indicates where changes have been made, the most significant being the change in voting procedures in relation to the adoption of directives under Article 2 of the Agreement (new Article 118 (1) and (2)) and the amendment of Article 119 to include equal opportunities and positive action.

The provisions which will eventually bind the UK are, therefore, essentially those which bind the fourteen other Member States at present. The most significant change which has taken place in the process of incorporation has been the shift from the use of the co-operation procedure under the Agreement to the use of the co-decision procedure.⁽⁸⁾ The co-operation procedure, which allowed the European Parliament two readings of Commission proposals and to propose amendments, was first introduced by the Single European Act in 1986. Co-decision, introduced by the Treaty on European Union, gives the European Parliament greater powers by allowing Parliament to reject certain proposals and, in certain circumstances, to adopt legislation jointly with the Council. The move from co-operation to co-decision is in line with other changes in the Amsterdam Treaty since it is intended that co-decision will be the general rule whenever legislative procedures are envisaged, except where there is an express derogation from this rule, such as in the new Article 118(3). The expansion of the use of the co-decision procedure extends the powers and influence of the European Parliament in the development of social law, including now equal opportunities for men and women under the terms of the new Article 119(3). In signing up to the Social Chapter, therefore, the UK has indicated a willingness not just to accept its substantive provisions but also to enhance the level of democratic participation, via the European Parliament, in the adoption of legislation in this area.

Opt-out legislation

Until the new Treaty comes into force, the UK is participating in the development of social policy and law in matters governed by the Agreement on Social Policy on a purely political or pragmatic basis. The quid pro quo for the inclusion of the UK in the Social Council is, as has been seen, the fact that the UK has agreed to implement the directives which were adopted during the period when the UK was not an active participant in the development of social law. Two such directives were adopted; Directive 94/95 on European Works Councils⁽⁹⁾ and Directive 96/34 on parental leave.⁽¹⁰⁾ The UK government has agreed to implement both of these Directives and initially set a time-table of Amsterdam plus 2, at the latest, for the adoption of the necessary legislation⁽¹¹⁾.

This policy has been superseded by the decision of the July Budget Council which noted that the UK government agreed to implement the directives which had been adopted under the terms of the Agreement on social policy and any further directives to be adopted thereunder. The Council noted the need to find a solution to the problem and stated that the Council and Commission agreed that 'mini-directives' would be adopted on the basis of Article 100TEC which would make the transposition of the Directive on works councils and that on parental leave compulsory within the UK. The Commission was asked to draw up proposals for such directives as soon as possible.⁽¹²⁾ The mini-directive would give the UK a period of two years to implement the provisions of the original directives fully into UK law. It was also agreed that this procedure would be followed for any further directives to be adopted under the Agreement. It is clear that the Council and Commission do not intend to open any debate on the substance of the directives. The sole purpose of the mini- directives is to provide a mechanism to bind the UK.

This solution avoids many of the problems posed by the fact that the directives had been negotiated by way of a procedure which excluded the United Kingdom. These are problems at the level of European law and at the level of UK law. At the level of European law there was the need to ensure that the UK was bound by a Community instrument, thereby subjecting the UK to the remedies available in European law both for the Commission, should the UK fail to implement the directives correctly and on time, and for individuals who might wish to rely on the provisions of the directives in UK courts. Furthermore, UK courts will now be in a position to make references to the European Court of Justice should questions of the interpretation of the directives arise in cases being heard in the UK. In the absence of a Community instrument binding the UK, the alternative would have been for the UK to arrive at a political agreement whereby the UK would adopt legislation parallel to Community directives on a voluntary basis. It is here that domestic legal problems would arise since such parallel legislation would be time-consuming, in terms of parliamentary time, if primary legislation was envisaged. If delegated legislation was envisaged there would be the need to determine an appropriate parent act since the European Communities Act provides only for the incorporation of Community legislation by way of statutory instrument. It may therefore have been ultra vires to use that Act to incorporate legislation which is not binding on the UK and which has been adopted under the framework of the Protocol and Agreement on Social Policy. However, it seems that these problems will not arise assuming, of course, that the European Parliament works with the Council and Commission to facilitate the adoption of the mini-directives.

European Works Councils

It is not the purpose of this article to describe the contents of the European Works Council Directive (see Bercusson 1996; Burrows and Mair 1996) but to concentrate on the legal implications of its implementation in the UK and the questions which have to be addressed by coming late to its implementation. The Directive requires Member States to ensure that Community scale enterprises establish either a works council or an alternative procedure for consultation of employees. Central management is given the task of setting up a negotiating machinery, either on its own initiative or at the request of employees. This negotiating group will determine the content of the agreement setting up the works council. National law must determine who may participate in such negotiations. Equally national law is to determine who is to represent the interests of workers within the works council. If agreement cannot be reached within the negotiating body, then the subsidiary requirements outlined in the Annex to the directive come into play. These subsidiary requirements must be laid down by national law and will cover such matters as competence and composition of works councils, timing of meetings and so on. The original directive was to have been implemented by 22 September 1996. Enterprises which had already established works councils by that date were exempted from its provisions.

The original fourteen Member States had been given two years to implement this directive starting from the date of is adoption. The UK government now has two years from the date of the adoption of the mini-directive to adopt legislation requiring relevant UK companies to introduce European Works Councils. Any UK legislation must provide: the definition of who is to be covered by UK law; the definition of who are representatives of workers for the purposes of the composition of the negotiating group and the works council itself; the detailed rules set out in the Annex of the directive which will come into play where negotiations fail; rules on protection of confidentiality of information within works councils; and the nature of any remedies for breach of the obligations under the national law which is to implement the directive.

Presumably UK legislation will also provide for an exemption, as contained in the original directive, for enterprises which establish works councils before the date of implementation of the directive. Many companies, including several major companies in the UK, had established works councils prior to September 1996 (Carley et al 1995). UK legislation will presumably provide for a period of time in which preemptive agreements might be adopted. It has been estimated that 326 companies in the UK would have been affected if the directive had been applied in the UK.⁽¹³⁾ These are the companies which will now be affected. Some of these will have already have established works councils of their own volition and others may have been required to do so because of their operations in other European⁽¹⁴⁾ countries.

Parental Leave

The directive on parental leave⁽¹⁵⁾ is a rather more complex piece of legislation than the directive on European works councils. For this reason its implementation in the UK may be a more complex business. A directive on parental leave was first proposed by the Commission in 1983 but agreement could not be reached within the Social Affairs Council. An impasse was reached in 1993 and, at this stage the Commission turned to the provisions of the Agreement on Social Policy to involve the social partners in a dialogue on the appropriate form of action to be taken. Under the auspices of the Commission, the three organisations which are recognised by the Commission as having sufficient representative status to negotiate agreements under the Agreement on Social Policy began to elaborate a framework agreement on parental leave. A framework agreement was concluded in December 1995 and the social partners requested the Commission to implement the framework agreement by way of a Council decision.⁽¹⁶⁾ The Commission adjudged that the most appropriate form of decision would be the adoption of a directive which would lay down the obligations of the Member States in ensuring the application of the framework agreement but which would not specify the obligations of the social partners. The structure of the directive is, therefore, relatively simple with two Articles laying down the obligations on the Member States and an Annex to the directive merely repeating the text of the framework agreement.

Article 1 of the directive states that its purpose is to put into effect the framework agreement and Article 2 gives a choice to the Member States either to legislate to implement the provisions of the framework agreement or to ensure that management and labour have introduced the provisions of the agreement by way of collective agreement(s). If the latter route is chosen, Member States must be in a position to verify that the necessary action has been taken. The date for implementation of the directive is given as 3 June 1998 but a Member State may have an additional period of one year where there are special difficulties or where implementation is by collective agreement. In order to avail themselves of this extra year, the Member State concerned must inform the Commission. Any national implementing measures must make reference to the directive. Member States may not use implementation of the directive as a means of lowering existing standards in the areas covered by the framework agreement.

The framework agreement provides certain minimum guaranteed standards, such as the right to a period of parental leave of at least three months and leave for family reasons such as the sickness of a child or other urgent family reasons. However, the conditions surrounding access to and application for such leave is left either to national law or to be negotiated within the terms of a collective agreement.

The UK is one of the few countries within the European Union which does not have some form of statutory parental leave or leave for family reasons and, therefore, action will be required by the government to introduce measures into the UK. Whilst the directive leaves a choice as to how it can be implemented, in reality the UK does not have such a choice. The nature of collective agreements in the UK is not such as to ensure that the directive could be implemented via this route and the UK does not have any mechanism for the registration of collective agreements or any other system of verifying that they would comply with the terms of the directive. Unless the government wishes to overhaul its system of labour law, therefore, legislation will be necessary to specify how a scheme of parental leave will apply in the UK.

Opt-Out Agreements

Two further directives are in the process of negotiation, both of these are under the Social Policy Agreement and will, therefore, require a mini-directive addresses to the UK instructing the UK to implement them. Presumably this will be done at the stage of the adoption of the substantive directive itself.

European Framework Agreement on Part-Time Work

In June 1997 the social partners adopted a European Framework Agreement on Part-Time Work.⁽¹⁷⁾ As was the case with parental leave, the Commission had found its own proposals for legislation blocked within the Council and therefore turned to the provisions of the Agreement on Social Policy to encourage the social partners to work towards an agreement.⁽¹⁸⁾ The framework agreement on part-time work reflects many of the concerns and proposes several of the solutions favoured by the Commission in its original proposals. However, like the parental leave agreement, it leaves a great deal of discretion to the Member States in determining the exact scope and content of the rights of part-time workers. The Commission adopted a proposal for a directive in July which incorporates the framework agreement.

Plans for consulting employees

The day before the agreement on part-time work was adopted, the Commission approached the social partners again. This time the Commission wanted to open a discussion on national level arrangements for consulting and providing information to employees.⁽¹⁹⁾ Again, this is an area where legislation has been blocked within the Council both on national level works councils and on the integration of worker participation proposals as part of the proposed European Company Statute. It is not clear what will be the responses of the social partners to this initiative by the Commission but there is a possibility that legislative proposals may emerge.

Conclusions

Opting in to the Social Chapter may prove to be a more difficult and lengthy process that it appeared at first sight when Robin Cook first announced the end of UK isolation in this area. One major obstacle has been overcome and that is the reintegration of the UK into all the meetings of the Social Affairs Council. This has been achieved by a political compromise which reflects the good will shown by all parties and a recognition of the genuine desire on the part of the UK to accept in full the same obligations in the social sphere as have been accepted by the other Member States. However, in order to opt into the social chapter, the UK will have to ratify the new Treaty of Amsterdam which will repeal existing arrangements. From the date of the entry into force of the Amsterdam Treaty, therefore, the UK opt-put will have ended and not before. The UK is also required to introduce legislation to bring UK law into line with the two directives already adopted under the Social Policy Agreement and the two further directives which are likely to be adopted in the near future. The legal obligation on the UK to do so will arise from the terms of the mini-directives, addressed solely to the UK, and requiring legislative action on its part. This solution avoids several of the legal problems which would have arisen in the absence of a legally binding European obligation. In particular, it will allow the adoption of secondary legislation under the European Communities Act and will ensure that national implementing legislation is subject to overall European control.

Bibliography

Barnard C (1997)'The UK, the 'social chapter' and the Amsterdam Treaty' 26 Industrial Law Journal (forthcoming).

Prechal S and N Burrows (1990) Gender Discrimination of the European Community (Aldershot: Dartmouth)

2. The experience of the UK opt-out may well be worth careful consideration if there is to be any significant use of ‘flexibility’ in the development of the European Union in the future. Reintegrating into European law and policy is not a simple matter. The UK opt-out lasted effectively only for a couple of years but it will take the same length of time to catch up. It may be more difficult to reintegrate into policies which run deeper than social policy and involve more complex organisation. Back to text.

4. Department of Education and Employment Press Release, 167/97 of 27 June 1997 which states that by the ‘agreement reached at Amsterdam we will be able to take the chair of the Council for all social affairs business during our Presidency’ (emphasis added). Back to text.

5. See the Conclusions of the Presidency, note 3 above. ‘The European Council noted with approval the decision of the IGC to incorporate both the Social Agreement and a new title on employment in the Treaty. The Council should seek to make the relevant provisions of this title immediately effective. This underlines the vitally important link between job creation, employability and social cohesion’. Back to text.

7. Adapting the European Union for the benefit of its peoples and preparing it for the future: a general outline for a draft revision of the treaties CONF 2500/96, Brussels 5 December 1996. Back to text.

8. This is an amended and simplified co-decision procedure since the Treaty of Amsterdam also aims to reduce the time taken to adopt legislation and to make the law-making process more transparent. The Article 189b procedure for the adoption of social law under the Treaty of Amsterdam is, therefore, the new 189b procedure envisaged in the Treaty itself. Back to text.

9. Council Directive 94/45/EEC of 22 September 1994 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees OJ L254/64. Back to text.

10. Council Directive 96/34/EC of 3 June 1996 on the framework agreement on parental leave concluded by UNICE, CEEP and the ETUC OJ L145/4. Back to text.

11. Information provided by the DTI, 11 July 1997. Amsterdam plus two was to be two years after ratification of the new Amsterdam Treaty. Back to text.

12. See PRES/97/248/0/RAPID. I am grateful to Barry Fitzpatrick for drawing my attention to this statement of intention. The proposals were not available at the time of writing. Back to text.

14. The directive is one which has EEA implications and therefore it applies to 16 States at the moment. The UK will make bring this to a total of 17. Back to text.

15. An explanation of the history and procedures which were followed in the adoption of the directive can be found in COM (96) 26 final of 31 January 1996, Proposal for a Council directive on the framework agreement on parental leave concluded by UNICE, CEEP and the ETUC. The validity of the directive has been questioned by the European Association of Craft, and Small and Medium Enterprises (UEAPME) on the ground that it is not representative of the views of all the social partners. In particular. UEAPME argue that it should have been involved in the negotiations and has launched a challenge to be heard in the Court of First Instance - see Case T- 135/96, UEAPME v Council. Back to text.

16. The term decision in this context is not a decision in the formal sense of the word used in Article 189 TEC. Back to text.

18. The Commission’s proposal for a Council Directive on certain employment relationships with regard to working conditions can be found in OJ (1990) C 224/4 and the rationale for the Commission’s proposals in COM (90) 228 final of 13 August 1990. Back to text.

Agreement on Social Policy	Treaty of Amsterdam
Article 1	New Article 117
Article 2(1) except provisions re social exclusion	Article 118(1). Social exclusion measures -118(2) para 3
Article 2(2)- procedure for adoption of directives - Article 189c	Article 118(2) paras 1 and 2- procedure for adoption of directives - Art 189b
Article 2 (3) to 2 (6)	Article 118(3) to 118 (6)
Article 3	Article 118a
Article 4	Article 118b
Article 5	Article 118c which amalgamates existing Article 118TEC with Article 5 Agreement
Article 6 (1) and (2)	Amended Article 119 - identical to 119 TEC except omission of reference to the end of the first stage
Article 6 (3) delete	Add two new paras to 119 as follows: 3. The Council, acting in accordance with the procedure referred to in Article 189b, and after consulting the ECOSOC, shall adopt measures to ensure the application of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation, including the principle of equal pay for equal work or work of equal value. 4. With a view to ensuring full equality in practice between men and women in working life, the principle of equal treatment shall not prevent and Member state from maintaining or adopting measures providing for specific advantages in order to make it easier for the underrepresented sex to pursue a vocational activity or to prevent or compensate for disadvantages in professional careers.
[Old Article 120 TEC]	[New Article 119a]
Article 7	Article 120
Declarations attached to Agreement	Declarations to the Final Act

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