It partly restricts the effects of earlier case law, such as Bauer and Willmeroth and Max-Planck. In those cases Article 31 of the Charter on the right to fair working conditions, including paid annual leave, was held to apply to private employment relationships. It applied to circumstances relating to payment in lieu and accrual of paid annual leave, respectively. This was despite the relevant directive not having direct horizontal effect, as it was ruled that Article 31 was specific enough to give rise to rights and obligations in its own right.
In TSN, however, the Court limited those earlier findings in a situation where the implementing legislation went further than the minimum required by the directive. In short, in TSN the Court has decided that although higher standards of protection of paid annual leave in sector-specific collective agreements are permissible, the Charter does not apply to them. The Charter therefore does not preclude private employers from breaching such collective agreements, as long as the minimum four-week period laid down in Article 7(1) of Directive 2003/88 has been complied with.
In my view, this finding is deeply problematic for two main reasons, which I briefly explore below.
- Inconsistency with existing case-law/legislation that sets a higher standard can still be implementing legislation
The first reason is that the Court has made substantive observations on what is a jurisdictional question, namely whether a Member State is ‘implementing EU law’ within the meaning of Article 51(1) of the Charter. The Court decided, at paragraph 52 of its judgment, that while the directive did not preclude higher standards in the implementation of its provisions, those higher standards were not part of the means of implementation of the directive, so they were beyond the scope of EU law. The Charter therefore did not apply either. Nevertheless, it does not follow from the fact that the implementing legislation set a higher standard that it does not amount to implementing legislation at all. This finding creates an uncomfortable relationship with pre-existing case law on fundamental rights review by the Court of Justice under Article 51(1) of the Charter, and appears to confirm significant limitations to the Fransson case law. It is also difficult to see how it can be consistent with seminal case law on derogations from EU law, such as ERT, where the Court had required compliance with fundamental rights.
Of course, it must be acknowledged that the Court would have found itself in a complex situation if it had decided the Charter was applicable, as it would have then needed very carefully to interpret the core content of Article 31. In my opinion however, the complexity of interpretation did not altogether justify a finding that the situation was not covered by the Charter’s scope of application, particularly in the absence of a clear revision of its earlier case law. On the contrary, finding that more protective measures were not covered by a substantive analysis of Article 31 could have more meaningfully justified a departure from Bauer and Max-Planck.
This had, indeed, been the position put forward by the Advocate General at paragraph 84 of his Opinion, who reached the same conclusion through an interpretation of Article 31 which drew on other provisions of the Charter, in particular the protection of commercial freedom enshrined in Article 16. Yet, in order to be internally consistent, such an approach would have needed to consider all Charter provisions relevant to this dispute (and, so in only referring to Article 16, the Advocate General’s analysis was problematic).
- Failure to examine the right to collective bargaining and action, which is undermined by this ruling
Indeed, in my view, the second reason for the key failure of the ruling is in avoiding mentioning Article 28 of the Charter, which explicitly protects the right to collective bargaining and action. This provision is clearly undermined by finding that higher standards developed by collective agreement are not covered by the Charter, whether that is because it is beyond its scope, as the Court finds, or because the content of Article 31 does not include them, as the Advocate General’s Opinion had suggested. It follows that the limitation of the reach of Bauer and Max-Planck in this ruling is problematic for other reasons too, and not only because it revives the more conservative stance towards Article 31 highlighted by cases such as Dominguez, where the constitutional protection found in Article 31 remains largely limited to the thresholds set by EU secondary legislation. Crucially, in finding that the case does not come within the Charter’s scope at all, the Court sidesteps a much-needed analysis of the fundamental character of the protection of collective bargaining and action, thus preserving a historically unsatisfactory accommodation of this par excellence ‘horizontal’ area of EU fundamental rights law.
Unfortunately, as Daniel Sarmiento notes, as a Grand Chamber ruling, TSN may be read as setting guiding principles for future case law in the field of social rights and, potentially, in other fields perceived as politically sensitive, thus suggesting a new form of deference in areas of minimum harmonisation.