While the accession of the 10 former Communist states was generally greeted with enthusiasm by much of the European political elite, the trade union movement in the West was concerned that cheap Eastern European workers would flood Western European labour markets, thereby undercutting Western wage rates. As a result, a number of the old Member States (but not the UK, Ireland and Sweden) imposed transitional restrictions on the right of individuals to come to the West to work. However, these restrictions did not extend to employers—in particular service providers—coming from the new Member States, bringing with them lower paid Eastern European labour to fulfil a contract.

European integration, the internal market and free movement of persons and services are important aspects of EC labour law and EU industrial relations. As a result of EU enlargement and the emphasis on free movement within the EU, the problems of posting of workers, low-wage competition and social dumping are high on the agenda. This is illustrated by the epochal and much-debated Laval and Viking cases from the European Court of Justice (ECJ).

It is more than 40 years since the Court of Justice first articulated in Van Gend en Loos the principle that has come to be known as the direct effect of Community law, and which means, in broad terms, that rules derived from the EC Treaty, so long as they are capable of being applied using ordinary judicial techniques, form part of the law available to courts and tribunals in the Member States for resolving disputes before them. As the Court famously stated:

In 2007, Brian Bercusson observed that:

Previously, deference to domestic labour legislation did not translate into judicial recognition of a right to collective bargaining or a strike. There was only speculation that this should be the case, accompanied by significant opposition from the UK to such a prospect. Judgment day has since come and we have been told that ‘[t]he right to take collective action, including the right to strike, must … be recognised as a fundamental right which forms an integral part of the general principles of Community law’. Indeed, it also seems that such a right extends at least in theory to secondary and transnational action.

The aim of this chapter is to argue that the European Court of Justice’s (ECJ’s) rulings in Viking and Laval raise a not completely explicit, but nevertheless significant, challenge to the role and function of national trade unions. Unions must face the dilemma of adjusting action taken to protect their members to the economic freedoms of the EU, whenever there is a situation of potential social dumping.

Leaving aside cases of overt discrimination and interventions aimed at favouring certain firms or modes of production, legislative and regulatory provisions may have such an impact on costs and prices that it will be necessary to consider with the greatest care whether, either by virtue of their own impact or by reason of disparities between two or more countries, some of them may have the effect of distorting conditions of competition among the national economies as a whole or in particular branches of economic activity … But at the same time it will be necessary to identify very precisely the limits of whatever action is necessary, and to dispel certain misunderstandings …