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By Andrea Barbara Schuessler
Sept. 30—Local minimum-wage regulations for public contracts do not automatically apply to subcontractors abroad, the European Court of Justice ruled Sept. 18 in a case involving a German printing company. In general, the protection of workers against significantly low wages would be justified, but the cost of living in a particular country would have to be taken into consideration, the Luxembourg-based high court said in its ruling (Bundesdruckerei GmbH v. Stadt Dortmund, Case C 549/13).
The German city of Dortmund offered a contract of 300,000 euros ($385,000) for digitizing files and converting data for urban-planning services. Businesses bidding on the contract were required to pay the minimum wage to both local and foreign contractors, a requirement Bundesdruckerei challenged. If it won the contract, the printing company wanted to transfer the work to a subcontractor in Poland where the minimum wage is significantly lower. Dortmund requires an hourly minimum wage for public contracts of 8.62 euros ($11.00), while the hourlyminimum wage in Poland is 2.30 euros ($3.00) an hour.
According to a release from the ECJ, “in a situation such as that at issue in the present case, in which a tenderer intends to carry out a public contract by having recourse exclusively to workers employed by a subcontractor established in a Member State other than that to which the contracting authority belongs, the freedom to provide services precludes the Member State to which the contracting authority belongs from requiring the subcontractor to pay a minimum wage to workers. . . . [S]uch legislation is capable of constituting a restriction of the freedom to provide services. The imposition of a minimum wage on a subcontractor established in another Member State in which minimum rates of pay are lower constitutes an additional economic burden that may prohibit, impede or render less attractive the provision of services in that other Member State.”
North-Rhine Westphalia, the state in which Dortmund is situated, is evaluating its collective agreements and procurement laws, according to a statement from the economics ministry. An amended law is expected in 2015 and will likely include a regulation related to the court's ruling.
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The text of the ruling is available at http://curia.europa.eu/juris/document/document.jsf?text=&docid=157851&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=286130, the ECJ news release at http://curia.europa.eu/jcms/upload/docs/application/pdf/2014-09/cp140129en.pdf, both in English.
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