Recent distressing cases, in one of which six people died, have highlighted problems in the European legal systems where a foreign company has penalties awarded against it in a Member State. When infringement of health and safety laws are involved the consequences can be more than financial. We examine how some foreign companies can currently ignore health and safety laws and what the EU is doing about it.
In 1994 six building workers employed at Port Ramsgate died when a walkway collapsed. Several companies were involved in the project. The Central Criminal Court fined the firms but, although the British contractors payed up, the court did not receive a penny of the total of £1 million in fines and £251,000 costs which two Swedish ones (FEAB and FKAB) owed. In the same year a tunnel, being built for the new Heathrow Express train to take passengers from the airport to central London, collapsed. It was only by sheer luck that there were no fatalities. The Austrian firm Geoconsult were fined £500,000 with £100,000 costs. Again none of the money was ever received and, in the Ramsgate case, the court has written off the fine.
The companies involved can get away with this because they have no base in the UK and so do not fall under the British courts' jurisdiction. The construction industry is particularly affected by this as foreign firms bid for each project on the basis that they will work from their headquarters in their own country. As well as the loss of revenue to the UK exchequer and the Health and Safety Executive, there is a fear that foreign companies will routinely ignore safety provisions. Coupled with the obvious risk to workers, British employers are worried that this will enable them to undercut UK bids for projects. Shortly after the Ramsgate disaster one of the companies which had lost out on that contract, John Smith of Keighley, went bust.
It was therefore possible for the TUC to join forces with British employers in the shape of the Construction Confederation to campaign for a change in European law. Last summer the Commission published a communication on mutual recognition of final decisions in criminal matters which was taken up by France, Sweden and the UK and applied to financial penalties in proposed legislation. Now the European Parliament has voted in favour, with some amendments, and returned the measure to the Council of Ministers. Labour MEP Peter Skinner told the parliament 'W e cannot bring back those who died at Port Ramsgate, but we can tighten the law to enforce tough penalties which remind those in business that any kind of negligence will be caught by the law. By stepping up EU co-operation we are sending a strong signal to companies who do not respect health and safety'. The Commissioner for Justice and Home Affairs, António Vitorino, indicated in the debate that the Commission would also back the reform and pointed out that all the Member States had signed the European Convention of Human Rights and the Charter of Fundamental Rights of the European Union. He commented that 'we are not, in this field, working with a blank piece of paper: we are working within a legal framework which exists'.
To become law the proposals now have to be approved by the Council of Ministers and the TUC will continue the campaign with the EU Presidency, currently held by Spain.
A case from Germany has clarified the position of companies and their employees working in a foreign country. A Portuguese construction firm, Portugaia Construções, had carried out structural building work in Germany during 1997. The local employment office carried out an investigation of the company and found that it had been paying its workforce, who were Portuguese, at rates below the national minimum wage for building workers in Germany. It demanded the sum of 138,018 deutsche marks and 52 pfennigs (£43,174) as being the total difference between the wages payed and the total that would have been payed at the minimum rate.
The Portuguese company complained to the court on two counts: 1) that forcing it to pay the minimum wage restricted the free provision of services throughout the EU as guaranteed by EU directives and 2) that German firms were at liberty to conclude individual agreements that undercut the minimum wage. The Court ruled that the minimum must be applied by all companies as long as its purpose was to protect all workers and not to freeze out foreign competition and, therefore, there could be no agreements, which only applied to local employers, that undercut this wage rate.
The European Review has chronicled the progress of the Working Time directive, first passed by the EU in 1993, both in its effects on workers who were included (issue 8 page 4) and in the efforts to extend it to those who were excluded (issue 11 page 4). The costs to those left out was highlighted in a recent ECJ case from Kent. A Mrs. Bowden and her colleagues worked for a road parcel delivery firm, Tuffnells. They had no paid annual leave although their full time co-workers did. They therefore brought a case under the Working Time Regulations which lay down a minimum of 4 weeks annual paid holiday. The employees had no contact with the actual transport of goods and their contract forbade the company from asking them to work on the vans. However, because they worked in the transport sector, which was excluded from the original directive, the Court found that they had no right to paid holiday. This situation will be remedied by August 2003 when UK legislation must be passed to include 'non-mobile' transport workers in an amended directive.