Luxembourg, 18/02/2002 (Agence Europe) - In a "Portugaia Construcones" ruling, the fifth Chamber of the European Court of Justice, chaired over by Peter Jann, states that a Member State which authorises national employers to practice wages below the minimum wage set be collective bargaining may not prohibit employers of other Member States from "social dumping" on its territory.
The fact that a German employer may, through the collective agreement specific to an undertaking, practice lower wages than the minimum set in a collective agreement declared of general application, whereas a Portuguese employer established in Portugal may not do so in Germany, is an unjustified restriction on the free provision of services, the Court stipulates.
The German employment services had prosecuted a Portuguese company before the Tauberbischofsheim District Court for having paid posted workers to a German site a lower wage to that applicable in Germany in application of the collective agreement in the building industry. Before ruling, the Court had sent on the case to the European Court of Justice. It pointed out that, in German law, there was the possibility for German employers to practice wages below the minimum wage set through a collective convention. The Court replied that if this faculty existed for German employers working in Germany, it had to exist for employers established in other Member states that posted workers to German sites. And this, it goes on, in the name of the free provision of services.
Although "orthodox" - Community companies must have the same rights as national companies - this ruling is a "curiosity" for certain legal experts: a Portuguese company or any other non-German company would only have to "provide for wages lower than the German minimum wage by simple collective agreement specific to an undertaking to practice low wages in Germany. According to them, the only way to avoid this social dumping would be for Germany to abolish this practice of inferior salaries to the minimum wage. In which case, employers from other Member States could not make use of it. During the trial, the German Government said that to its knowledge there were in fact no collective agreements specific to an undertaking relating to the minimum wage. The Court replied that that made no difference. The simple legal faculty, even if not used, of setting lower wages was sufficient for granting this faculty to Community undertakings.