## Facts

- Laval, a Latvian construction company, won a public contract to renovate a school in Vaxholm, Sweden and posted Latvian workers to perform the work.
- Sweden lacked statutory minimum wages; pay and many terms were primarily set through collective agreements and bargaining.
- Swedish building unions demanded Laval sign the standard Swedish construction-sector collective agreement, which included wage-setting by local negotiation and did not specify wage rates in advance.
- The demanded agreement imposed terms beyond the Posted Workers Directive’s listed core matters and beyond minimum protection levels.
- Laval refused and relied on a Latvian collective agreement covering its workers.
- Swedish building unions initiated a blockade of Laval’s worksites, and the electricians’ union supported with sympathy actions, halting the project; the municipality terminated the contract.
- Laval challenged the collective action as restricting its freedom to provide cross-border services.

## Issues

1. Whether trade-union collective action aimed at compelling a foreign service provider to sign a host-state collective agreement falls within EU law and restricts the freedom to provide services under Article 49 EC.
2. Whether, under Directive 96/71, a host state may effectively require a foreign provider to determine wages through site-level, case-by-case bargaining and to comply with a collective agreement that (a) is not universally applicable and (b) goes beyond the directive’s mandatory minimum framework.
3. Whether such collective action can be justified by worker-protection objectives and satisfy proportionality, including clarity and accessibility of the required wage obligations.

## Decision

- The ECJ held that collective action is a fundamental right, but when it makes cross-border service provision less attractive or impossible, it constitutes a restriction on Article 49 EC that must be justified and proportionate.
- The blockade and sympathy actions restricted Laval’s freedom to provide services because they prevented performance of the contract.
- Sweden, as applied to Laval, could not require wage determination through workplace negotiations compelled by industrial action where minimum rates of pay were not set using methods recognized by Directive 96/71.
- Article 3(7) of Directive 96/71 did not permit the host state to condition service provision on compliance with terms exceeding the directive’s mandatory minimum protection rules.
- The collective action was unjustified and disproportionate because the wage obligation sought was not sufficiently precise and accessible and because the demanded terms exceeded what the directive allowed to be imposed on foreign providers.

## Legal Principles

- Fundamental rights such as collective action apply within EU law when their exercise affects Treaty freedoms; restrictions on free movement may be justified only if they pursue an objective of general interest and are proportionate.
- Directive 96/71 sets the conditions under which host states may impose a defined “hard core” of employment terms on posted workers, including minimum rates of pay, through prescribed mechanisms (law/regulation or qualifying universally applicable agreements).
- If a host state has not determined minimum rates of pay through the directive’s recognized methods, it may not impose on foreign providers an obligation to negotiate wages locally on a case-by-case basis as a condition for providing services.
- Article 3(7) preserves the possibility of more favorable worker terms, but does not authorize additional compulsory host-state requirements beyond mandatory minimum protection.
- Proportionality in this context requires that obligations imposed on foreign undertakings be sufficiently clear and accessible so they can be determined in advance.

## Conclusion

The ECJ ruled that Swedish unions’ blockade and sympathy actions to force a Latvian company posting workers to Sweden to accept host-state wage bargaining and a non-universally applicable collective agreement restricted the freedom to provide services and, given the directive’s wage-setting requirements and the lack of clear, accessible minimum pay rules, could not be justified under EU law.


Laval un Partneri Ltd. v. Svenska Byggnadsarbetareförbundet, Case C-341/05 (E.C.J. 2007)