• Professional News
  • 30 September 2015

Advocate General suggests approval of minimum wage clauses in tender contracts

According to Opinion issued by Advocate General Mengozzi, the freedom to provide services should not prevent EU Member States from imposing minimum wage requirements for workers.

In an Opinion issued by Advocate General Mengozzi, the Advocate General states that the freedom to provide services should not prevent EU Member States from implementing labour clauses imposing minimum wage requirements for workers.

The case in brief
In 2013 Stadt Landau launched a tender procedure regarding a public contract for the city’s postal services. The contract notice stated that the tenderer and any sub-contractors would declare to commit to the regionally determined minimum wage of EUR 8.70 EUR/hour for public contracts.

RegioPost did not believe that this requirement was legitimate and argued against it. This led to a preliminary question to the European Court of Justice, to which the Advocate General has now given his Opinion (case no. C-115/14 RegioPost v. Stadt Landau).

Advocate General’s Opinion
The Public Procurement Directive states that contracting authorities may attach "Special Conditions" to the execution of the contract, including conditions regarding social considerations, as long as they comply with Community law. According to the Advocate General, this provision includes a demand for minimum wages.

The Posting Directive does not apply to the specific case, and thus it must be assessed on the basis of Article 56 of the TFEU, says the Advocate General. The assessment goes to whether a demand for minimum wages is a hindrance to the freedom to provide services, and if so whether such a hindrance may be justified as a means of preventing distortion of competition and protecting employees.

The Advocate General determines that a hindrance is justified on the basis of such considerations. He also states that it is not a demand that labour clauses be consistently applied to both private and public contracts. It is sufficient if they are applied to public contracts. 

Comments by Bech-Bruun
The Opinion of the Advocate General appears to diverge from the final decision of the CJEU in the case C-346/06 Rüffert in its assessment of whether a hindrance may be justified on the basis of the above considerations.

One of the Advocate General’s arguments for his Opinion is that Article 26 of the Public Procurement Directive was adopted after the Rüffert case, and thus considerations must be weighed differently now. However, the Advocate General has only loosely observed the principle of proportionality, and the reasons for his conclusion are relatively sketchy.

The CJEU is expected to give its final decision early in 2016.

In Denmark
The Danish Ministry of Employment has issued a circular letter concerning labour clauses in public contracts and a guide to them. From these it appears that labour clauses may or must be incorporated into public contracts, demanding that employees with suppliers and any sub-suppliers must be ensured wages that are not less favourable than what would apply to work of the same nature governed by a collective agreement.

If the CJEU allows the Opinion of the Advocate General, it will be a seal of approval of the Danish practice as being in compliance with EU law. On the other hand, the contrary decision may challenge the basis of the circular letter issued by the Ministry of Employment. 

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