Law

Is the EU totally committed to open-ended contracts?

Contracts of an indefinite duration (open-ended contracts) remain the general form of employment relationship between employers and workers. They can be distinguished from non-standard forms of work: part-time work (regulated by a directive of 1997), fixed-term work (regulated by a directive of 1999) and temporary agency work (regulated by a directive of 2009).

But does this statistical majority of open-ended contracts reflect a full commitment of the EU to that form of employment relationship? This paper will argue that it is above all a verbal commitment and that the reality is more nuanced. 

Open-ended contracts are traditionally favoured for various reasons.

First, they provide more “economic security” to the workers and their families, enabling them to make plans for the future (buying a house, having children) and to increase their consumption of goods and services, thus stimulating economic growth. Furthermore, for the workers, it is the most protective form of employment. And since it contributes to a higher stability in the workforce, it reduces the costs of training for the undertakings and of unemployment benefits for the State. For all these reasons, other contractual employment relationships, such as fixed-term work, were discourages.

As for part-time work, it is worth noting that it can be a choice (e.g. to balance work and family life) or an obligation (especially when jobs are scarce).

However, a new period opened in the 1990s, which Countouris names “social dialogue period”. Social partners focused on alternative forms of employment, which were developing and therefore needed to be better regulated. Two directive – on part-time work (1997) and fixed-term work (1999) – were adopted to implement agreements between social partners at EU level, in conformity with what is now Article 155 TFEU.

These two directives aim at guaranteeing the equal treatment of “atypical” and “typical” (i.e. with open-ended contracts) workers. But it was only a limited harmonisation and several important definitions (such as the one of “worker” were left to the Member States – NB: with the O’Brien judgment of 2012 (case C-393/10), the CJEU has started to give an EU meaning of this concept in the framework of the Directive on part-time work).

There was also a difference of approach between the two directives, as the one on part-time work encourages part-time work, while the directive on fixed-term work continues to limit the use of this form of atypical work.

The exceptions and limitations of rights reflected the emergence of a new paradigm in employment policy: flexicurity.

The employment policy (current Title IX of the TFEU) appeared with the treaty of Amsterdam (1997). It gave rise to the European Employment Strategy and several guidelines. One of the pillars is a higher flexibility, which is seen as a way of realising the full employment goals set in the Lisbon Strategy (2000) and EU2020 Strategy (2010).

A new period opened: the “employment policy period” (Countouris). This evolution was confirmed by the Kok report (2003) in the European Parliament. Security in employment rather than in a specific job became the new objective.

But flexicurity works only under certain conditions: strong trade-unions, a social consensus on this policy and a costly welfare State that pursues pro-active employment policies, including lifelong learning. This is not the case in all Member States. Tensions appeared, preventing an agreement on Temporary Agency Work between the social partners.

A directive was nonetheless adopted in 2009, providing for minimal harmonisation. It grants equal treatment only for basic working conditions, does not cover occupational pension schemes, does not clarify who really is the employer (the user undertaking or the agency?) and entails limitations (e.g. the possibility, for the Member States, to introduce a qualifying period). So, it is not satisfactory, there is too little progress. On the other hand, considering the context, it is already good that this directive was adopted at all…

In conclusion, there is a verbal commitment to privilege contracts of indefinite duration. However, much focus was laid on non-standard forms of work. The progresses were more or less important, depending on the directive.

Non-standard contracts were legitimised through the concept of flexicurity, which is not necessarily a bad thing, but the EU should check that the conditions for a successful combination of flexibility and security are met in the different Member States (competences to enforce these conditions are lacking at the moment, under the current Treaty rules).

Pierre-Antoine KLETHI

Note: This article is originally my answer to the following mock exam question in the framework of my course on European Labour Law (LLM 2012/13; KCL/UCL):

‘The parties to this agreement recognise that contracts of an indefinite duration are, and will continue to be, the general form of employment relationship between employers and workers.’ (Preamble to Council Directive 1999/70/EC concerning the framework agreement on fiexed-term work)

Is the EU fully committed to ‘contracts of an indefinite duration’ remaining the general form of employment relationship? Discuss by reference to the intervention of EU institutions in the fields of employment law and employment policy.

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