Social aspects and the protection of staff in case of change of railway operator - The current situation

Social aspects and the protection of staff in case of change of railway operator - The current situation

Thursday, 31 October 2013

Even though current EU legislation does not impose the opening of the domestic rail passenger market to competition, some EU countries have indeed done so, either wholly or partially. In some countries (Sweden and the UK being the prime examples) these developments date back several decades, in others they are much more recent. In light of this developing competition, and with an increasing number of public service contracts being tendered out in passenger rail transport, the European social partner in the sector, ETF and CER, expressed their concern about the question of fair competition (creating a level playing field with regard to social conditions) and the of consequences of lost tendering procedures for the employees who performed the service before (protection of staff in the case of a change of operator).

Articles 4(5) and 4(6) of the PSO Regulation allow competent authorities to require public service operators to meet certain minimum social standards in relation to the employment of staff to deliver the service or to require a transfer of staff to the new operator within the meaning of Directive 2001/23/EC even if the conditions of the Directive are not fulfilled. It is entirely within the remit of the competent authority whether or not to make use of this possibility offered by the Regulation; there is no legal requirement to do so arising from the direct applicability of the Regulation.

The goals of the CER-ETF study aimed to:

  • Obtain a broad overview about the existent rules dealing with social standards and transfer of staff and determine the extent to which they set a binding frame of reference applying to all potential operators;
  • Establish the extent to which competitive tendering is used in the selection of passenger rail transport PSO providers;
  • Assess whether social criteria are included in tender criteria; which social criteria are used and the extent to which the provisions or the spirit of EU Regulation 1370/2007 (Articles 4(5) and 4(6) read in conjunction with Recitals 16 and 17) on Public Services Obligations are used in this context;
  • Establish the protections applied (if any) to safeguard social standards for staff in the case of a change  of operator and in the case of a transfer of staff when there is a change of operator as a result of public tendering.

Social standards (and employment) in tendering are most effectively protected in current practice through the application of the legislative provisions on the transfer of staff, particularly in the context of a transfer of undertakings (as defined in national legislation, even where there is no transfer of assets). In a limited number of cases this is achieved through the application of Article 4(5), but these cases tend to offer a lower standard of protection because of different regional and local interpretations.

In cases were staff transfer is not mandated, the existence of a social level playing field set in sectoral collective agreements (whether or not they are mentioned in tender documents) can offer a certain level of protection, if such standards are (effectively) universally binding. However, it must be noted that standards set in such agreements can be up to 20% lower than those set in the best company level agreements.

Given that currently no sectoral collective agreements in the sector are universally binding, the setting of social standards and social criteria in tendering would arguably provide for greater certainty.

In addition, it must be noted that a combination of provisions on transfer of staff and social standards set in tendering is the best way to ensure that employment is protected and a social level playing field is achieved for all operators, transferred employees and staff newly recruited to deliver the service.

The fact that around half of Member States currently do not provide for the transfer of staff and only in a minority of Member States sectoral collective agreements are in place protecting a social level playing field must be a matter for concern as the use of tendering for the award of PSO contracts becomes more widespread.

The current experience shows that non-binding provisions in this area are not suited to provide adequate protections, particularly for many of the countries only beginning to open their markets. This presents the risk social dumping and an associated lowering of the attractiveness of work in the sector at a time when skill shortages are likely to impact service provision as well as service quality.