UK government targeting employers with EU citizens on their salary lists
Following a recent article stating that foreign university academics were being banned from advising the UK government on Brexit, Professor Dagmar Schiek asks whether this would be legal while the UK is still a member of the EU.
This is a headline from the Guardian on Friday 7 October 2016. The truth of the story is, as usual, a little more complex than the headline (as also duly reported in the paper). A London School of Economics (LSE) professor maintains that the Foreign Office communicated to LSE that for a certain type of contract, services by their employees who are not UK citizens will no longer be accepted. This would include EU citizens, while it was not clear whether the ban includes UK citizens who hold a second citizenship from another EU country. The Foreign Office duly claimed that it was all a misunderstanding.
Now, would the UK government be crossing the line towards violating EU law if the statement by Professor Featherstone were true? After all, EU law is still binding upon the UK government until such time as the UK ceases to be a member of the EU. Answering this question demonstrates just how important free movement of workers is, not only for workers, but also for business.
We are used to thinking of free movement of workers (Article 45 TFEU) as mainly protecting employees who move from one EU country to another. However, the Court of Justice (ECJ) has actually acknowledged that employers can also rely on free movement of workers, if suffering detriments because they employ EU citizens from other Member States. As early as 1998, a clause of the Austrian Trades Order (Gewerbeordnung), under which the owner of a trade may only appoint a person residing in Austria as a manager for trade law purposes only, was successfully challenged by a company called “Clean Car”. The Court coined the phrase that:
“in order to be truly effective, the right of workers to be engaged and employed without discrimination necessarily entails as a corollary the employer’s entitlement to engage them in accordance with the rules governing freedom of movement for workers” (paragraph 20 of the ruling).
The same reasoning was relied upon in 2012, when the Court ruled in favour of the Luxembourg company “Caves Krier”, stating that Luxembourg could not withhold a payment intended to support the reintegration of older workers into the employment market because the person actually employed had not paid into the Luxembourgish social security system. Again, in the Las ruling of 2013 the Court invalidated a Belgian rule according to which contracts of employment must be issued in Dutch for any employer active in the Flemish region of Belgium. This ruling also confirmed that any rule violates Article 45 TFEU on free movement of workers, if it
“is capable of (…) rendering less attractive the exercise by Union nationals of the fundamental freedoms guaranteed by the Treaty” (paragraph 20).
In other words, it is sufficient for government action to have a “dissuasive effect” (paragraph 22) on employees or employers.
If a UK university is restricted in making use of its most qualified employees for fulfilling or attracting government contracts because these employees do not hold UK nationality, but are instead EU nationals, this is certainly liable to dissuade the university from employing EU nationals. Accordingly, the government missive would constitute a restriction of free movement of workers.
Generally, restrictions can be justified, in which case it would not constitute a violation of EU law. However, there is a high threshold to overcome for such justification. A restriction of a fundamental freedom
“may be allowed only if they pursue a legitimate objective in the public interest, are appropriate to ensuring the attainment of that objective, and do not go beyond what is necessary to attain the objective pursued.” (ECJ, Las, paragraph 23 with further references).
A potential justification could rely on government concerns that EU nationals might convey sensitive information around the so-called BREXIT negotiations to governments of other Member States. While the UK certainly has a legitimate interest to avoid compromising their negotiation position, the question is whether banning their contractors from utilising their EU employees for giving advice on BREXIT is necessary to achieve that aim. The UK government could also require LSE to ensure in other ways that their EU employees do not disclose information they may receive in the course of providing drafts for government advice. Accordingly, the restrictive approach could not be justified.
In this instance, it appears that the LSE forwarded the UK government communication to its employees with EU citizenship, implying that it intends to comply with this command, albeit reluctantly. Instead, it could have challenged the legality of the additional contract condition relying on EU law. For example, the LSE could have raised a complaint with the EU Commission. It is the Commission’s task and privilege to raise infringement procedures against Member States that are non-compliant with EU law.
The majority of these procedures originate from a complaint. Further, the LSE could just have continued asking all its staff to contribute to contracts with the government and challenge any sanctions imposed as a consequence before national courts; requesting a reference to the Court of Justice if necessary. By passing the potentially illegal action taken by the government on to its employees, the LSE may as well have violated EU law: free movement of workers is effective between employers and employees. However, the UK government would also be well advised to continue complying with EU law – non-compliance may compromise its negotiating position much more severely than the unlikely passing on of information to foreign governments by university employees.