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    Chapter 10

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    Deniz Onal

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    2 oordnot Uae be 10 Labour law 10:1 The industrial revolution andthe emergence of labour law 410.2 International labour law 4103 Proper labour conditions ‘summary Practice questions \When countries industraize, labour law can prctect the Interest of employees. in this chapter, we wil frst explore the causal relation between industrialsaton and the emergence of labour la. Then, we wil explain how labour lw is developed on a glotal level. Furthermore, we wil discuss how ifferentlaga systems facltate the realization of proper labour conltions, In this ligt, we wil focus on the nature of labour contracts, the duration of| such a contract, minimum wage, labour coaitiens, noniserimination rules, ‘the right to organize and collective bargaining, and socal security systems, The industrial revolution and the emergence of labour law Labour law is not avery old legal subject. tis inexreabl linked tothe industrial revolution, which started around 4760 in England, and intaly ‘Spread throughout Western Europe, North Amefica and Australia. Before ‘that time, in these regions, the concept of working for someone else was ‘always in the sphere of elther involuntary work ich as slavery) ori the form of apprenticeship, a journeyman or ina master/servant relation. Those iho were self-employed worked as a free craftsman, andthe only legal ‘organization was a system of socalled gus, which labour coated aspects of those who wer inthe employment ofthese craftsmen were scussed and (loosely) regulated (Fnkin, 2006). However, the industrial revolution changed sockets significant, Both in positive and negative way 250 PkaT3 BUSINESS LAW 2 oardhol uitgever na postive way, it was now easler © produce products ona large scale {and offer them fora lover price. In at sense, the industvial revolution led tan increase in oreatvty, ideas and scientific progress (Winder, 2013). However there were also some troublesome sie effets, The fist was that ‘the working class moved from the countryside to the greater cities. This is called urbanisation. After all, making ving in the country side was next to impossibi, since the bigger factories were producing far lower costs than craftsmen Inthe country sie. The problem was however thatthe cities ‘ould not house al hese Inhabitants, and therefore ‘slums’ were bul at the borders ofthese cities, where people Ived in poor conditions. The ‘second consequence was that as & result of industrialzation, people lost ther jobs since machines took over manpower. This led to an ever Increasing income gap between the sompany owners and the working class. ‘The third effect was increasing damage to the environment. For the frst time in history, mankind was confronted with the boundaries of mass production, including the eects of using fossil fuels and pollution. For ‘employees this meant that they had to work in an unhygienic environment (Cinder, 2013, Wernaart, 2015. Its not surprising that inthis context, ‘thatthe socalled ‘social question’ «labour question’ was raised, ‘addressing the wellbeing of employees (Finkin, 2008), Simultaneously, the monarchs in Euope began to lose ther powers and these counties became increasingy more democratic. The resuk was that ‘the working class in the early 20” cantury had an increasing politcal Influence on law making, ‘Asa result, the legal postion of employees was gradually strengthened ‘through lw in several fields, The fasues dealt with can be sub grouped in recognizing proper labour condtons the right to organize and collective bargaining, and the adoption of socal securty standards Elsewhere in the world, counties inustraized considerably later, though also here, there seems tobe a link between industrlization and the creation of labour laws. This is especialy the casein the so-called Newly Developed Countries, such as the BIC countries (Braz, Russia India and China), the Asian tigers (Talwan, Singapore, South-Korea and the former Hong Kong) and move recent the Avab Emirates, Malaysia, Turkey and South Affica. OF course, the context difers rom the European context. ie The Asian industrialized countries mostly share colonial past, in which Insswalted _goncopts of law were alteady exporte from Europe. Furthermore, the con ‘ongoing trend of globalization played a significant roe in the debate on labour law in Asi. On the one hand, companies gladly made use ofthe ‘more flexible labour standards inthe upcoming Asian economies. However, these standards would usually have been considered inadequate inthe countries of origin of these compants. An example ofthis can be found in the case ‘Dell and the ICT Hel” (example 10.1). On the other hand, the creation of Iterational abou lw i the period ater the Second World War had some influence in the adoption of labour laws. This was most notably one bythe Intemational Labour Organization. As a result ofits work, labour laws have been adopted inthe enti reson (Sankaran, 2007) ‘mie In slam countries, the contexts ciferent: also here, industralization is a Indole’ trgger to adopt labour laws, and these laws are usualy inspired by a European concepts for varus reasons (including a colonial past). However, Ce Noordotf utgeversbv Baur iw 268 in Islamic countries, lawmakers attempt to unite principles of Islam, which ‘are God given, with cafe labour standards founded on a European ‘model, which are usually secular Zuligar, 2007). Established labour Principles in Islamic aw, deduced from religious texts such as the Quran ae for instance the right to a fat wage, good employership(the employee should be tested as a member ofthe family), and the right toa share in the profit ofa comaary. Dall and the 1CT Hell ‘Te wore’ largest ICT factories can be found in Shenzhen City, China. In 2043, the Danish human rights watchdog published a report in which the labour conditions within these factory walls was crtcized (Strack etal 2013). The Information substantiating the repart was gathered by Conducting risky undercover operations, since the Chinese authorities were ‘ot quite cooperative in gathering the relevant data. The report focused on the supplying factories forthe American basedICT company Dell although similar conclusion can be drawn forthe supplies of other ICT companies ‘such as Apple, Samsung, HP IBM, Fujitsu, Lenovo, Acer, Sony and Toshiba oor labour conditions Examples of the poor labour conditions are plenty. For Instance, employees \were bound to work over hours. Not only because they were foced toby thelr superiors, but also due to the fact thatthe salary ofa 40 hour working week was inadequate to make living. Furthermore, the work comes down. ‘to very long days of extremely boring production line work. Also, the ‘employees were forced to work with dangerous materials without proper protective measures, and were intimidated during work: employees ha to ask permission to assume another working position. Nexto that, the ‘employees usually Ive near the factory, and are housed en masse in very ‘small rooms (mostly 8 to 12 employees per rocm). Fan employee wants to ‘uit the job, he risks not being paid forthe previous period. During the ‘sumer season, alot of youngster are also employed in these factories, as {an intern’. However, practice, they simply prtcipate inthe production ‘ine work while their school receves a financia compensation fr this (anWatch, 2015). Delt ‘ell stated on several cocasions to share the concerns expressed by DDanwWaten For instance, in their annual Corporate Socal Responsibly Report, they state that ‘According to Verisk Mapleroft’s Human Rights Risk Alas, the information and communications technology industry manuractures In some ofthe highestrisk countries in the world. Challenges tke excessive working hours, Insufficient ransparency and violations of feel chosen employment standards are systemic and not specific to anyone compan. Del continually Works to eradicate these and athe issues" (Dell, 2025), Up to now, Danlatch holds that Del isnot ving upto thelr own | ‘expectations, and keep pressing thelr suppliers to lower thelr prices, Instead of improving the labour conditions of the Chinese employees. 20 cD usiess Lav 2 oordhtt Uae be International labour law ‘Since the emerge of international institutions after the Second Wold War, ‘also on an international level, labour standards were adopted by ‘organizations suchas the United Natons and the afllating International Labour Organization. Within the UN framework, the International Covenant on Economic, Social ‘and Cultural Rights (WCESCR) was alopted in 1966, which recognizes mary Fights for workers. On top ofthat, @ specialized agency was installed, with ‘the alm to protect and promote labour rights In the world: the International Labour Organization (ILO). Tis organization has drafted mary thematic conventions to improve the recognition of employees rights that may also ‘serve a8 a soure for inspiration for domestic labour laws. Furthermore, the ILO offers ts services in the iterational arena as @ consutant and ‘supervisor in the field of labour law. Fr instance, the ILO supervises the Implementation ofthe Bangladesh Accord, to improve the position and safety of employees inthe garment ndusty, ‘Aso on @ more regonal level, labour law i internationally embedded. For Instance, the European Socal Charters @ European treaty in which economic, social and cultural humar rights are recognized. Its wordings were greatly inspired by the ILO conventions, and have an explicit focus on labour law. The Charter recognizes fer example the right to safe and healty working conditions (A. 3), the right afar remuneration and a decent ving standard (Art 4), oe right to aganize (Art. 5), and the right to collective bargaining and to strike (rt. 6), the right to socal security (rt. 42) and te right to bene from social wofare services (rt. 14). Equivalent treaties can be found elsewhere In te word, such as the American San ‘Salvador Protocol, the African Banjul Charter, and the Arab Charter on Human Rights ‘Te legal eect of such treaties isin de hands of its Member States. On an international evel, ome rather Ineiective complains procedures were Installed as @ compromise batwoen those wi wanted the rgits to ave an ‘explicit effect, and those who conscer these rights as a reference pont for ‘the adoption of domestic policies. On a national ev itis up to the courts to enforce such rights. However, this isnot always easy, and pretty much depending on the kina of monism or dualism that exists in the Member State (Wernaart, 2013a). An example of how Intemational abour standards ‘may have legal effect ints Member States canbe found incase study 10.1 “Clumsy ministers and clever cours, vallabie onthe website Proper labour conditions In aitferent areas law can be adopted to protect employees against the! employers. These areas are most notably rules onthe nature of labour contract, the duration of a contact, minimum wage, labour conditions, oriscrimination, the right to organize and collective bargaining, and social secur © Noort Utgevers be vwasouR Uw ant 10.3.1 The nature of labour contracts in most legal systems, an employment contract Isa special type of contract ‘Where onthe ane hand the general principles of contract law app there is usually something special about a labour contact, Mostly, on top of normal contract law, being an emplayee gives access to certain rights and guarantees. Examples (depending onthe legal system) coud be pald maternity leave, pension rights, sick leave, the rgnt to benefit tom social benefits, or aid holidays. Furthermore, being an employee one cous benef fom collective bargaining and participate in vade unions. Last, being employed by someone usually esults in certain stability regarding someone's income, ‘securing the lvanoed ofthe employee. However, there are also other ways in hiring labour force than concluding an employment contract. ‘A company or employer may also hie seitempbyed people, They ar also called Rexworkers, casual workers, contactors, alypical workers, temporary Workers or feeters. What thoy havo in common is tat they are most hired for a particular task or short period as an extemal employee, and when this ‘task or period is completed they leave the ganization. They are therefore not an employee, and do not erjoy thee “speck status’. They have to take care of such things by themselves, which sometimes puts them in a more vulnerable position. tis therefore Important tobe clear on which workers {are employees, and which workers are seltemplayed, because it makes ‘Quite a ciference forthe worker valved, as we can See in example 10.2 Casualization in Nigeria In Nigeria, labour law is most noticeably regulated by the Nigerian Labour ‘Act (1990), The Act offers some basic protection for employees. For instance, the employee shouldbe paid in legal tenure, and (wth some exceptions) notin kind (Ar. 4). Als, the employee should be pals, even if ‘me employer has no work for her/him (Ar.47) and during ness up to @ ‘maximum of twelve days (Art. 46). Nest, an emoloyee has aright toa break ‘when he works six hours or more a day (Ast. 2), and has aright to 8 holiday ofa wook when he works for moce than twelve months forthe employer (18). Furthermore, an employee has the right to jin a trade union, ‘and may nat be fred due to trade union membership (Ar, 9). Itis remarkable however thet the law mains slenton the legal postion of ‘casual workers, nor Goes It define the dference between an employee and a ‘casual worker. Economic crises since 1986 creced a strong demand for more flexibility on the labour market. As a matter of fact, employees were fed en mass, and replaced by casual workers: a phenomenn called ‘asuaizaton. As a rest the companies could ct in their costs and become ‘more competitive, While the percentages ae hav to ver, some suggest that in 2012 in most economic sectors, approxnately 60 to 97 per cent of the Nigerian workers were casual workers (Fapohunda, 2012). These workers receved a considerable lower wage, had Ite labour rights, could not become ‘2 member ofa trade unin and could be fed instant. This ofcourse reflects the arguments against casualization. However, some are more optimistic, and point out that a a result, companies in some sectors are more compete, ‘and 3s a result there is more employment (Kaldaiye, 2014) ara pana Expo the BUSINESS LAW Noort Utgeve be ‘The legal problem seems to be that hlgerian law nor practice des not craw Aline between an employment contact and a causal worker. Even if ‘casual worker Works for years atthe same company in the same postion, ‘there Is no legal remedy tothe worker that could help her/him to get the status of an employee. The only provision that might help a bits article 7 ‘ofthe Labour Act. Tis Atole stipulates thatthe employer shoud inform ‘the employee within three months ater the begining of the worker's period of employment about the status andnature of the labour contract. At least, ‘this suggests thatthe worker knows what e is upto ‘Sometimes, there Is thin line between beng an employee or a settemplayed person. In Germary there ate atleast four types of labour relations that are Felevant in this context, One could work as an employee, a8 an employeertne person, as an execute sta member or as setfemployed Zenker, 2014). ‘This means that there are some shades of grey between employee onthe one ‘hand, and seltemployed onthe other. German law offers dierent kinds of protection to each. In German case law, an employee Is defined as someone whois obiges to ‘work for an employer based on a prnate contract, andthe relationship wth the employers of personal suborcratin. This suggests that the employee isan integrated person inthe organation ofthe employer, and the ‘employer stands hierarchically above the empoyee. The latter means that the employer may ge direction tothe work dane bythe employee, and the employee has to within the boundsies of the labour contract ~ obey these ‘rections. Incase of an employeetike person, the workers free to determine his own work within the organization, and isnot considered tobe integrated inthe ‘organization ofthe employer. Tere is no hierarchy between this worker and ‘he employer. On the other han, the employee-tike person isto a certain fextend economically depending on the employer, sie he works for 50 por ‘tor more forthe same organization, The employeerive person la net 02 protected as the employee. For instance, the rules on dismissal in Germany {do not apply to them, which means they ae easily fed. On the other hand, they do have access tothe labour ecurts, and may commence Itigation before this specialized body. In case of an executive staff member, they might work in employment ‘comparable to an employee, but have a managerial function. Due to this, ‘they practeslly act as an employer. As result the protection for employees only partly applies to executive staff members. J seifemployed porson isnot ina hierarchical relation with en employer, ‘and tee to organize his activities as they see fit. Furthermore, they usually ‘work for an organization only to comalete a specific job, task or period, and ‘then move on the next. They are therefere not economically depending on ‘one employer only. There Is hardly ary Protection for the selfemployed, Under German labour law In the common law legal family, an enployment contrac is often referred to 12 a contacts of service, where a lasaur contract with a selfemployed is ‘Noord Ugevr b sour vay 27a ‘named a contrat for service, However, In practee, this diferenc isnot ‘aluays 50 e89y to establish, especially when layour relations are undefined, flexible or unclear. In the ish legal system, the courts have developed several tests to determine the nature of the latour contrac: the control test, the intogration test and the economic rely test (Daly & Doherty, 2020). When applying the contol tes, the cout will assess to what extent the employer is able to exercise control over the dey ta day activites ofthe employes. The test therefore establishes whether or not there is @ hierarchical relation between the employer andthe worker. This fsa useful test in jobs where I is clear that a “superior gies direction to his personnel on a dally basis, but less useful in professions where employees: {enjoy a great deal of freedom in determining thar daly activities. ‘Another tests the integration test, which the courts will assess to what extent the worker forms an integral part of the organization ofthe employer, Tp illustrate: an accountant who works 40 hours @ week for a bank ‘permanent, wl pass the integration test, while an aocountancy acviso, ho advises the requenty though ineguary, wil not This test fs rather Useful incase of @ worker who enjoys a great deal of freedom in his dally otk, but seems to work rather permanent forthe organization. When the contractual status is unclear, the intogration test may help her/him out, and twill um out that he is an employee. However, this test Is less useful in the context of sub-contractors. While they may be ina hierarchical elation ‘with a superior in the organization, and work fo that organization on a more permanent basis, itis clear that he Is not an enplaee, ‘The last tests the economic realy test. napping this test, the courts assess who bears the financial sks in performing the Job the organization or {the worker. n practice, the application of the test might include elements of ‘the conto test and/or the integration test, as we can see in example 10.3 Ready Mixed Concrete Mictar Latimer owna his ov truck, and usoa th ruck exclusively to transport concrete to customers of Ready Mixed Concrete (RMC) id. Latimer ha @ labour contract in which it remained rather unclear whether thee was ' contract of service ora contract fr service. Inthe end, the nature ofthe labour relation vas disputed before the English High Court of Justice, ‘The court considered several facts that appeared from this parila labour relation. The most important circumstances were that frsty, Latimer owned his oon truck, but used equipment of the concrete company, Next to that, hhe wore company uniform and the compary Igo was printed on te car Furthermore, Latimer was allowed to appoint a driver in his absence, and {determine his own working hous, crving routes and holidays. The court, using an economic realy test, concluded that considering all these facts, the labour relation appeared to be mare a contac for serves than @ contract of services. The fact that Latimer enjoyed e great deal of freedom Ins work (element ofthe contro test), used hs own truck, and as @ ‘selFemployed person appeared to bear al the fnancial risks fortis tuck ‘’nd his on employment, were decisive (The High Court of Justice of England and Wales, 1968). antl Integton at emo ey rene ausmess AW Noort Utgeversbv 10.3.2 Duration of the contract (One possible way to protector guarantee a permanent income for ‘employees is to manage the expectations regarding the duration of an femployment contract. Most legal systems balance between two extremes. (On the one hand, there isthe employmentatwill doctrine, meaning that an employee can be fred or can quite the jb at any ime for any eason. AS We an see in example 10.4, n the U.SA. this approach Is mustered fora ong time in American labour law. On the ather hand, there isthe assumption that when an empoyee isn the empioyment of an employer, this jo is a Ielong positon. In other words: the contracts for an Indefinite period. This is the starting point In Sweden, as ve can see in example 10.5. In both ‘approaches, exemptions are build n that offer more protection to ‘employees in the employment twill approach, or cate more flexibly for ‘employers in the ‘indefinite contact epproact. ‘At will employment in the U.S.A. In the U.S.A. labour agreements are considered as ‘norm’ contracts that {gover a private relation. Thats, the relation between the employer andthe temployee, The idea Is thatthe goverment should net interfere with such privat relations, since individuals should be entiely fre to conduct their ‘own business, In a landmark ruling, the Supreme Court of Tennessee (1884) held that ‘Obviously the law can adopt and maintain no such stants for judging human conduct; and men must be left, without interference to buy and sell where they please, and to discharge of retain employees at wil for good ‘cause of for no cause, or even for bad cause without thereby beng gulty of an unlawful act perso. tis a right which an employee may exercise in the ‘Same way, to the same extent, fr tre same cause or want of cause as the employer. He may refuse to work fora man or compary, that trades with any ‘noxious person, or does ater things which he cistkes. He may persuade his fellows, and the employer may ese all his hands and be compelled to ‘se Iie doors; or he may lle to te demand ant witraw hia euatom of ‘a6e his dealings, andthe cbnoxlous person be thus injured or wrecked in business. Exceptions Ever singe, this Is the stating pointin American labour aw. However, In some statos, exceptions to this principle are accepted (Hackstock & Heyoth, 2002; Muhi, 2001; Summers, 2000). ‘The frst isthe pubis poly exceptien. This means that a dismissal of an ‘employee may not contradict the puoic poi ofthe state. For instance, ‘some rights of employees are publ protected, such as the protection of ‘whistleblowers and the dty to noty public authorties about minal ‘activities within a compary. I an employee is fed for such a reason, the dismissal il be ilegal. The second wellknown exception I the implied contact. In some labour relations, it becomes obvious that the employee may ressonably expect that his employment wll not be terminated ‘at wil. This could be deduced from ‘the companies writen policy not to fre empioyees when they function Onasch gener be sour LAN 278 propery, or from orl statements ofthe employer thatthe employee may ‘expect to be hired for particular or Indefinite period. [thie exception is that all U.S.A, citizens should comply wit federal laws. For instance, n the U.S.A, aiscrimination on gender, disability and age are forbidden atthe Federal level. A dismissal that seems to be discriminatory Is thereto legal. Fourth, in some states the principle of good fath and fair dealing is ‘recognized, which means that an employer may not fre an employee without 2 val, legal reason. Especaly when they have been employed for along ‘ime. Since this principe restricts the employment at wil doctrine ‘considerably is not widely accepted Permanent employment in Sweden ‘The starting point of Swedish labour law has abvays been that an employment contract was for an indefinite pered. Until today, this is stil the ieneral aporoact in law. During several reforms however, became more accepted to hire employees for a define period, Fst, xed term contracts were only alowed for specified situations or in certain sectors. This eventually evolved to a _Beneral rule in which a fixed term contrat was allowed in all situations and all sectors (In Swedish law called ‘aha. However, there are some “ules of the game" both contracting parties should stiok a, Fst, bath contracting partes should clearly consent tothe fixed term. Second, the fixed term cannot exceed the threshold of two years. Ti, when an employee works {or an employer longer than two years in a period of five years time, the Contract is assumed to be an employment contact for an indefinite period (Adlercreutz & Nystrém, 2010), 10.3.3 Minimum wage [Another matters that ofthe minimum wage. In ome counties, @ minimum wage is adopted to protect employees. The ies is that an employee should be entived to a certain fe standard that @ minimum wage should atleast guarantee. This enttlement is then established by la, andi isnot possible to deviate ftom this minimum standard by @ colectve or individual agreement. The matter af a minimum wage has alvays been a delicate issue In poles, and its advantages (for instance: Cara & Krueger, 2015, or Eyraud & Saget, 2005) and cisacvantages (for hstance: Friedman, 2014) are heated debated. Both ‘camps’ use an impressive arsenal of statistics ‘nd innovative methodology. However, their conclusions could not be more sstferent. ‘Those who suppor the idea of minimum wage usualy refer to the games in ‘consequences of industrialzaton n which comaanies try to produce forthe =P lowest possible cost in a "ace to the bottom". In ths race, they cut in the costs of wages, which go down unrestricted, due tothe fact that there is plenty of labour force, and fewer obs as a result ofthe fact that machines 276 PART USINESS LAW ‘oor Utgevers replace the manpower. When one weuld enforce a minimum wage, the ‘working class wil mos Ikely spené more money, the economy wil improve, ‘and even more jobs wll be created. Another effect is that due tothe creation ‘of more obs, the government wil have to spend less on social security ‘ystems, which encourages the ecorony in sel. Furthermore, people with {2 guaranteed minimum Income wil lead to innovation, for obs that are not ‘worth paying the minimum wage wil disappear and replaced by more ‘efficient or clever processes, Those who are used to working in such Jobs ‘willbe more motivated to continue SUdying, Jugiments Those whe oppose the idea of @ minimum wage refer tothe fact that in lempoyers are forced to hire persone for an amount that may exceed their ‘market value, IN other words: an employee ears more than supply and ‘demand would dita. This leads to economic obstruction, the loss of employment, and as a result, more people who depend on socal Benes. Another effect of @ minimum wage is that at some point, the consumer price will g0 up, since the company is bound to pay a higher rie for production costs compared 10 situation without the minimum wage. When consumer prices go un unnecessarily, sales wil op, and the economy is yet again obstructed In general, the existence of a minimum wage intel is probably not a {quarantee for an adequate income. There are counties with @ minimum ‘wage eet by law in which the law Is nt properly enforced, and as a result the effects are marginal, whic Is shawn inthe example of Afghanistan {example 10.6), Tere are also best practices of countries without a ‘minimum wage in which the average Income is relatively high, such asthe Scandinavian model (example 10.7). A condition for a market driven ‘minimum wage that Is not controle bya legislature seems to the existence of powerful trade unions. ‘Minimum wage in Afghanistan ‘The minimum wage for government employees in Afghanistan is determined by law. A government worker that shied under an employment contract ‘should earn 5,000 Afghanis per menth. Thee is also a minimum wage for ‘the atypical governmental worker: 6000 Afghanis. A minimum wage for private seotor workers was only established for atypical workers: 5.500 ‘ghanis, For employees In the pivte sector, no minimum law exists. In practice however, the aw is hardy maintained. According tothe U.S. human rights watchdog Humanrights.gov, ‘the labor ministry had only 20 inspectors for 34 provinces, and the Inspectors had no legal authority to enter premises or impose sanctions for violations. Resources, inspections, remediation, and penalties fr violations were inadequate and insufficient to deter violations’ Net to that, a majority ofthe workin Afghanistan is done informalty, meaning tat there is no ‘oficial’ contract between the worker ‘and the empoyer. Asa result, a significant part ofthe Afghani workers work In te legality, even beyond the corto of these inspectors’ (humanrigts ov, 2014) ‘2 noordotf ager bu sour LW a7 ‘The Scandinavian modet No minimum wage In Norway, Sweden, Finland Denmark and leelan, there is no minimum wage fhe by the law. Instead, a minimum wage fs negotiated per sector, betwoon employers and the labour/vade unions. Minimum wage therefore is out ofthe hands ofthe legisiature, and entrsted tothe process of collective bargaining. This means that in the Nordic countries, the labour ‘unions aivays have played an important role inthe adoption of labour ‘agreements (Andersen, 1996). This is also refacted in the high participation rate of employees in these unions. For instance, in leeland, 85 Ber cent ofthe employees is a member of a trade union (leelandic Confederation of Labour, 2010), n Norway andFinland the trade unions leven have an executive role, and oversee the enforcement ofthese ‘agreements. A simlar approach can be found in eelana, where the trade lions have the role of inspector, and thoroughly inspect whether the salary ‘and working conditions of employees are in ine with the collective ‘agreements. intresting the wages In the Norte country ar relatively high ‘compared to other European countries who have adopted @ minimum wage bylaw (Elerig &Alsos, 2012), 10.3.4 Labour conditions ‘One aspect of labour aw isthe entitlement of employees to proper labour conditions. The concept ‘proper conltions” is rather aiflerenty understood ‘around the world, and furthermore may be diferent per seotor. In the newspaper item Wwe see legal reforms in New Orleans, aimed to protect bar employees and musicians against the unhealtty effects of working in an tevironment with continuous cigarette smoke, h case study 10.2, available ion the website, we see the attempts ofthe United Arab Emirates to improve ‘the dreadful labour conditions of migrant workers, New Orleans Bars Issue Last Call for Smoking ny: EAMPHELL RonERTSON (2) Justatermidnight itbecameilegalto In late fal LaToya Canela City Council smoke in bars New Orleans. tmembe troduced a concrete propos Las Vegas, Philadelphiaand several other agaist smoking. After multiple revisions, large cies have not totally banned the council unanimously approved « smokinginbars,accordingtoacountkept smoking ban ordinance ceveral months bythe American Nonsmokers Rights late butnotbeloe heated discussion Foundation. ButNew Orleans, home of overpublc heats andlor revenues, bars thatnever close and beers ordered to and whatall his meant forthe identity of sg0,0as one ofthose places where people New Orleans. assumed e smoking ban would never By usness LW noord unger 10.3.5 _Nondiscrimination “The principle of non discrimination is generally recognized as an important clement of labour law. I isthe core orncile of most UN human right ‘teats, 2s well as ILO conventions. Furthermore, most constitutional law stipulates the prohibition to dlscrimnate Discrimination isthe unequal treatment in similar cases based on relevant factor. However, it is not always easy to poser define discrimination, and enforce nor-disrimination in practice. The problem lies in what is considered to be {an relevant factor. The understanding ofthe word "relevant may be ‘ferent. According to the ILO, discrimination based on race, colour, 8%, religion, poltical opinion, national erection or socal orgn re such ‘nelevantvaraoles (LO Corwention L11, article 1). Furthermore, it is ‘observed bythe LO that increasing, age, sexual orientation, HIV/AIDS ‘talus and cisabilly, are protected inder antedicrimination laws (LO, 2007) In essence, there are three types of discrimination: direct, inect anc positive cisermination, Please note thatthe concepts of direct and {iscrimination ere also discussed Inthe context of international economic cooperation, in chapters 6 and 7. Direct clscrimination isto explctly disadvantage someone based fon an ielevant factor ‘An example of this can be found in he website sample discussing the ‘WalMart policy towards same-sex caupls regarding spousal health insurance coverage. Such @ heath care Insurance can be obtained through ‘an employer, and also covers the haath care ofthe partner of the ‘employee. Uni 2014 this coverage was not accessible for same sex ‘couples, also when marred, That would be a form of erect ciserimination, ‘cansiderng the fact that same-sex marriages were recognized in Massachusetts. Afterall this Seems fo suggest that sexual preference is considered an irelevant factor for diferent treatment. Since 2014, the Company changed is policy, and all couples (martied or unmarried, same sex or tractional) are now covered WalMart Sued for Alleged Anti-gay Discrimination A lesbian couple says unfairness cost them $150.000 Te nation’s largest private employer Is being sued for alleged isrimination against same-sex couples. root Utgever be ubouR aw 279 ‘A Massachusetts lesbian couple on Tuesday announced the lawsuit against ‘WalMart, and theyre asking @ judge to ceri fas a class-ection to allow them to represent others. Jaqueline Cote and Diana Smithson say WalMart’s pre-2014 policy of ‘eryng benefits to same-sex couples — unless required by state law ~ cost them atleast $150,000 in medical ils. ‘Te couple formeriy worked together at WalMa't and married in 2004, when Massachusetts became the fist state to allow same-sex mariage. They ted unsuccessfully to enrol Smithson in WatWvar's spousal heath insurance coverege from 2008, when she lft te company to care for Cote's mother. ‘Smithson developed ovarian cancer in 2012, and the couple Is seeking to recoup costs Incurred through Jan. 1, 2014, wren the company expanded ‘coverage to all married and unmarried coupes. By. Steven Nelson sauy2015, Incivect iscrmination is when a non-iserininatory standord or niet Practice dsadvantages someone based onan inelevant factor, stein ‘An example of inarect discrimination can be ound in te falian Mailman case (example 10.8) ‘The Italian Mailman ‘case of indirect diacrimination Mr Giovanni Soigi isan Italian national, and an employee ofthe German Postal Service. When he was recruited forthe compare ied wih his famiyin tal. Because he works a lang distance from home, he reelved a special allowance on top of his nocmal wage. However, Mr Satu finds out that his colleagues wh lve in Germany atthe ine of eee | work a long distance from home and received 10 Deutsche Mark, while he ‘only receives only 7,50DM. As it appears, the regulation on these allowances ‘makes a distinction between employees residing in Germany (regardless their nationality at the time of recruitment, end those who did not. The fist are awarded a greater allowance compared tothe later category of employees. Mr Solgu feos discriminated based on his nationality, and sues his ‘employer. The German Postal Service held that here was no discrimination, since the regulation involved eid not make a distinction based on nationalty but on place of residence at the time of recruitment (which was not forbidden by any European iw) The European Court of Justice however, dlsagreed, The Court ruled that employees who are reruted abroad usualy donot have the German national, and those who are reruted in Germany wll mast ofthe time be German. While the regulation intel indeed does not ciserminate based ‘on nationality, il have the practical effect of doing so After all, the reguation wl result in the fac that most ofthe time foreigners are lisadvantaged compared to German nationals (€, Case 152/73, 1974) 90 paRT’3 sage rmuenare (UR), 19 1 Proof that women in boardrooms. business Uw © Noordhoff Utgevrsbv Positive discrimination i to expisity advantage someone who is cisadvantaged based on relevant factors. Law and poley makers might choose to adopt measures to counter existing ‘iscrmination of a particular group. One of the means todo so Is to require preferential treatment ofthe disadvantaged group. This phenomenen is Called posite discrimination. An exzmple of this is the fact that women are Usually undertepeented in the boaid of directors of companies. Some countries have therefore implemented a socalled woman quota to {duorantee tat a certain percentage of beard members will be female. Such 12 policy i widely debated, and the redia reports differently onthe success ‘of euch a quota (85 we can see in th two news tems), However, esearch seems to suggest that implementing a woman quota has only a limited ‘effect on the encouraging of equal pay and equal job opportunities between ‘men and women (Bertrand et al. 20:4) quotas work vs LAUREN DAVIDSON of beard seats closing non Finland's 29,9 Introducing quotas to boost the number of percent. ‘women in corporate boardrooms Companies listed in Stockholm have ‘working according oanew globalindex women in283per cent of thelr board from Catalyst, the non-profit organisation seas, ranking Sweden fourth on Catalyst’ for women in business census. ‘Nonway, the frst countryintheworldto—_(..) ‘mandate that women account for Ope of ‘The\ider pletureslss rosy however. Itsboard seats tops therankingof20 _Atdeottom end of Catalysts table, with counties across thee regions with 45,5 3,1 percent, Japan's female boardroom percentfemale representation on the representation sess shan a tenth that ot board of ts OM lsted companies, France, which gave ls companies until Anddespite the lengths taken by ahandlul January 2017 toreach the 40 percent —_ofecunries to legally mandate fairer ‘quota, Isfar ahead ofite20pc interim __gender balance in boardrooms not one fargetwith women accountingfor297pe hase full this allocation. © Noordott Utgewer by Lssour vay 268 ‘THE NATIONAL Post (CANADA), 14 JANUARY 2015 Norway, France and Finland tried to help women by using quotas on corporate boards. It hasn't worked. ay: jessica anose ‘where the percentage of female board ‘There’sapersistent gender dividein the members ranges fom 27 per ent to 35,5 Luppertie ofmostindusries in the United per eent Notcoincidentally these three Sates. Me magicnumberseemsto be just countries ls all have government. lunder20 per cent-tha'the percentage af mandated quots for women on corporate women who are equity partnersin law boards Atleastin sheer numbers, the firms (17 per cent) in Congress (18, per quota system seems tobe working. But cent) and onthe boards of SAP 500 despite what the Catalyst report highlights, companies(182per cent). Anew report tlooks ikea greater number of women on from theresearch am ofCatalyst(..) boards hash actually translated to big, ‘compares the numberof women on boards improvements for women working for IntheUS.withthenumberofwomenon those corporations And that’s because hoards in soveral other countries, withthe focusing on exeeutive-board bean takeaway beng that we'refalinghere. _countingisnot enough. ‘The top three countries fr women on ‘boards are Norway, Finland, and France, 10.3.6 The right to organize and collective bargaining [AS we Rave seen above, the industrial revolution led toa Society in which ‘employees were greatly depending on employers. Aer all industrialzation Jed toa shortage of jobs, and a surplus of labourers, This placed the wel- ‘organized employers in @ power poston that cauld easily lead to explotation {and other unfair practices. To offer some counterweight to the power position ‘of employers, the right of employees to veo thek eollativo clrangth i= recognized in most Industazed countries. This includes the right to form ‘Fade Unions, the right to collective bargaining, and the right to oily strike, In te exampie ‘the slaves of Dba" we have seen that prohibition to use such collective employee strength contributes t weakening the position of employees, especial in newly developed or incustaizing regions. In the example of ‘the Scandinavian model’ on the other hand, we have seen how trade unions might contribute to setting important labour standards such 2s ‘a minimum wage. ‘The right to collective action by employees played a signfcant role inthe garment industy of Bangladesh since 2043, While the absence of elective legal protection of employees created a compeltive advantage for many ‘Bangladeshi companies, the poor worklng condtions in the end could ony lead to a disaster. When the building of Rane-Paza collapsed in Api! 2023, all stakeholders, some intrinsically, some pushed by the public opinion, wanted to improve the situation (Wernaart, 2015). On the one hand, this was done by selreguaton to which all the Incved stakeholders consent: the Bangladesh Accord On the other hand, gal reforms in labour law were 282 aw 3 2usINEss LAW oordnot Ungerer be implemented by the Bangladeshi government. The most important changes ‘were the involvement of employees in assessing the safety of ther working Place, and lowering legal barriers to 2artcipate in Trade Unions, as we can see in example 10.9. The collapse of the Rana-Plaza building The Bangladesh Accord and legal reforms In Bangladesh, over 4 milion people work inthe garment industry. The county is attractive fr foreign comary due tothe low labour wages. Aer all, the minimum wage in Bangladesh n the garment industry is 5.300 Bangladeshi Taka (B01) per month in fll employment. This i approximately 667 US. dollars For longtime, the peor labour conaitions of Bangladeshi ‘workers inthe garment industry was etcized by mary Non Governmental ‘Organizations (NGOs). Especial the low wage and the harsh and dangerous. ‘working conltions were contested. On the 24” of Apel 2013, a nightmare ‘came true: a huge factory building (te Rana Plaza building) collapsed and a8 a result more than a thousand enployees died. This changed everything. Big brands that had outsourced ther production in that bullaing were now publicly named and shamed in theirhome countries, and massively a call for action was made. This resulted in landmark agreement botwaen the Involved companies, international ard local employer and employee ‘organizations, and quite lot of NGOs. This so-aed‘seltreguatlon’ aimed ft strengthening the position of emgloyees. The ILO serves sa neutral forum in which the implementation ofthis accord can be discussed by the various stakeholders, Key elements ofthis agreement were that from now on neural Inspectors ‘would check the safety ofthe workig conditions, employees aro trained ‘nd educated in haw to enforce thel rights, employees are actively involved in eoating a safer envionment, employees may nat be fred when they blow ‘the whistle about an unsafe workplace, ond both employers employees are ‘equally represented in @ supervisor body that oversees the implementation of this accord (Accocd on Fire and Bulg Safety Regulations in Bangladesh, 2013). In the same period, the govemmentof Bangladesh amended its tabour laws (Gangladesh Labour (Amendment) Ast, 2013) to strengthen the postion of trade Unions. Before these reforms, the names of trade union leaders were ‘communicated to their employers when @ new Trade Union was rogistere. This had deterrent effct on potertial Union leaders. This obligation is ‘om removed trom the Bangladesh fabour law. Furthermore, trade unions. ‘are now allowed to consult experts h the context of collective bargaining (Art. 202a, Bangladesh Labour Act 2013), which potential strengthens their bargaining position, These amendments certainly had some effect, ‘since in the last half of 2013, 152 new labour unions were registered, with 2 total of 29156 members (LO, 2014). On the other hand, the Iabour reforms were etcised, since according to the ILO they only patty ‘addressed the Labour issues in the county. (UN 2013) Noord Utgeven be UusouR Lan 29 10.3.7 Social security standards Due to various reasons, an employee may not ke able to make a ting for himself and his family anymore. Causes could te sickness, csabilty old age, materi, the death of a family member, o: simply losing a ob. States usually regulate a system of socal benefits to ereate a safety net fr those. individuals. Such a system of social benefits is then designed to secure ‘that an employee is unable to provide for thet - and thee family's ~ basic ‘needs. Furthermore, one could also argue that a social securty system Is developed to faciitate those who make use of ft find @ iting job that {enables them to provide for themselves without the help of social benefits (Pennings, 2012), ‘As we can seein example 10.10, socal security canbe financed by withholding money from the employees’ wages, oblgg employers to pay a ‘Sum por employee, or using tax revenue. ‘The social security system of Mexico ‘The current system of Mexico was established in 1942, and since then ‘requently amended. In general, the funds of these social benefts are collected by withholding salary ofthe employee, pal or by the employer lect, or funded bythe government. The type of social benefits can be classified under the categories sicknass and maternity, death and disabily, day-care, old age, occupational sks and nousirg (PWC, 2045), In case of iness, most healthcare costs are covered, When due to less ‘an employee cannot work, 60 to 100 per cent ef the salary is paid by the government, while sometimes employers pay fr the cfference between the Normal wage and the contribution of the government (depending on the applicable Collective Agreement). This also apples to absence during maternity, ‘When an employee is permanently disablo, a minimum of 36 per cent of his average wage wil be compensated by the goverrment. This percentage is increased when people depend on the income ofthe disabled person (or instance, an adltional 10 percent per child or cepending parent and 15 per Cent fora husband or wife) When an employee des, his relatives wil receive {8 percentage of his pension. Ths is normally 90 per cent ofthis pension when a husband or wife des, where an orphan wil receive 20 per cert. When an employee is atthe age of 65, she or he may rete, During his career the Retirement Savings Systems withholds 2 per cent of the wages, ‘and the Ola Age System withholds 3,25 percent. These combined should guarantee the retired employee a decent pension. The exact sum ofthe pension depends on the way the etree chooses tobe paid and what kind of an arrangement is made. ‘Axed percentage of the employee's wage is winheld to insure the professional against occupational risks. The percentage depends on the "isk category ofthe profession. in Mexico, there are fve socalled "sk aw 3 uSINESs LAW Noord Ungeve be clauses" in which a profession is reresented. The percentage paid for this insurance varies between 0,5 and 75 per cent af the employee's wage. For ‘example, an accountant would eppreximately pay 0,5 percent, whle & miner would pay 7,5 per cont. ‘The Constitution of Mexico stipulates that most employers should provide ‘or housing oftheir employees. To tis end, 5 percent ofthe normal wage of an employee is controuted to a fund. This fund may be used by the employer to buy a house, repair a heuse, or pay of @ mortgage. € NoordoftUtgever by Summary Labour law emerged as a result ofthe industal revolution > Industraization led to tree social challenges: urbanisation, a growing income gap and environmental damage. > As a result ofthese challenges, as wel as rereasing political influence by the working class in especially Europe, the wellbeing of employees was addressed ina legal content > Ona global level, labour standards were adopted within the United Nations including the International Labour Oganization. » Ona regional level, labour standards were acopte by regional human right bodies, such as the American San Salvador Protocol, the Afican ‘Banjul Charter the Arab Charter on Human Rights ad the European Socal Charter » To protect the interest of employees, counvies may adopt rules on the nature of a labour contrac, the duration of acontrect, minimum wage, labour condtions, noriscrimination, the rg to organize and clletve bargaining, and social secur. An employment is a special contract. Usually such a contract gives ‘access to certain guarantees and stability forthe employee. This is not 50 In case ofa self-employed person. Therefor, Is important tn aay define the nature ofthe labour relation, > In German law, a cistinction Is made betweer an employee, an employee lke person, an executive staff member and a selt-mpioyed person. In this order ther legal protection is reduced. » In common law systems, a distinction is made between contacts of service and contracts for service The frst resresents an employee contract where the later assumes the labouris done as a seltemployed person. To draw a line between the two, courts may apply the contol ‘est, the integration test and the economic reality test: + Wen applying the conto test, the court ill assess to what extent the employer is able to exercise contol over the day to day activities of the empioyee. + When applying the integration test, the courts wil assess to what ‘extent the worker forms an integral part ofthe organization of the employer. ‘+ When applying the economic realty test, the cout will assess who bears the financial risks in performing thojob: the organization or the worker BUSINESS LAN Noort Utpever bv > One possible way to protect or guarantee a permanent income for ‘employees is to manage the expectations regarding the duration of an, ‘employment contact. Most legal systems balance between two extremes: + There isthe employmentatwil doctrine, meaning that an employeo an be fred or can quit te jb at any time for ary reason. +The assumption that ven an employee is employed, this jo is a Ielong postion. > In some countries, a minimum wage Is adopted to protect employees. Arguments against a minimum wage suggest that It works counterproductive, where arguments to support it conclude that it has @ stimulating effect onthe economy. The concept ‘proper labour condhions' I fferenty understoad around the world and may be diferent per sector. > The principle of non discrimination is generally recognized as an Important element of labour iw > Discrimination is the unequal treatment in similar cases based on an ireievant factor. » There are three types of discrimination: direc, indirect and postive isermination. 4 Direct discrimination is to explity disadvantage someone based on fan relevant factor. 2. Indirect diserimination Is when @ nondisriminatory standard or practice disadvantages someone based on an ielevant facto. 4 Positive dscrimination isto explicitly advantage someone who Is lsadvantaged based on lrelevant factors. > To offer some counterweight tothe power postion of employers, te right ‘of employees to use ther collective strength is recognized in most Ineustained countries. This incudes the right to form Trade Unions, the fight to collective bargaining, anc the right to jointly stk. > states usualy reguate a system of socal benefits to create a safety net for those employees who cannot provide for themselves or tei families. Tis is especialy the case of sic«oss,aisabilty, old age, maternity, the death ofa family member, o losing a jb. Noort Utgever be Practice questions 04 102 103 Open questions Kart runs his Sole proprietorship, and is specialized in acvising ‘organizations on Lean Managerrent. He is hired by BMW fora period of aeady 5 years, as an external expert. His advisory role for BMW takes up 1080 per cent of his entire woraed, and even 90 per eant of his Income. He acvises the management board, So he does not really have @ superior ‘within the BMW organization, ‘What would be the egal employment relation between Kar and BNW ‘according to German law? Consider the case in question 19.1. What would be the legal employment relation between MEW according to common la? Before the industrial revolution In Europe took off, child labour was never really an issue. Could you imagine wy this was anissve all ofa sudden after the industialzation of the

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