Summary:

I.

The referral concerns the question of whether § 1.1 second sentence of the Berlin Procurement Act (hereinafter: the Act) is constitutional. The provision makes so-called declarations of compliance with collective agreements a requirement for the procurement of public contracts, inter alia in the construction sector.

Pursuant to § 1.1 second sentence of the Act, in the context of the procurement of, inter alia, works contracts, Berlin authorities are required to make these contracts contingent on companies paying the remuneration determined by the applicable collective agreements. Other Länder set out similar statutory provisions on compliance with collective agreements. The Federal Court of Justice considered this provision unconstitutional, suspended its proceedings, and referred to the Federal Constitutional Court the question of constitutionality of the Act.

II.

The First Senate of the Federal Constitutional Court held that the provision is compatible with the Basic Law and with other federal law.

The decision is based on the following considerations:

The referral is admissible. In particular, doubts whether the provision is compatible with European Community law do not preclude specific judicial review proceedings. In the event that the legal situation under European Community and constitutional law is in dispute, there is no established hierarchy of interim proceedings (preliminary ruling pursuant to Article 234.2 or 234.3 of the EC Treaty or referral pursuant to Article 100.1 of the Basic Law) that might have to be initiated by the regular court.

The provision of the Act concerning collective agreements is compatible with the Basic Law and with other federal law. The Land Berlin was competent for enacting the provision; the provision does not violate fundamental rights or other federal law.

The provision on compliance with collective agreements does not violate fundamental rights. It does not affect the freedom of labour coalitions, nor does it violate the freedom of occupation.

The freedom of labour coalitions protects the right to establish labour coalitions for all persons and for all occupations. Furthermore, it protects the coalition as such and its right to pursue the goals specified in Article 9.3 of the Basic Law by specific coalition activities. The provision on compliance with collective agreements does not interfere with this scope of protection. The statutory obligation to comply with collective agreements in particular does not affect the scope of protection of Article 9.3 of the Basic Law also affording the right not to establish labour coalitions. Companies involved in procurement procedures are not forced to join the coalition negotiating the collective agreements. Even if, as members, companies would be able to influence future collective agreements to which they would be bound by the declaration of compliance with collective agreements, it seems unlikely that they felt compelled to join the labour coalition concluding the collective agreement because of their obligation to comply with collective agreements. The fundamental right not to form a labour coalition does not protect against the legislature drawing on the results of agreements concluded by labour coalitions as a constituent element of a statutory provisions. The statutory provision for a declaration of compliance with collective agreements also does not affect the guarantee of the existence and of the activity of labour coalitions pursuant to Article 9.3 of the Basic Law. Furthermore, the obligation to comply with collective agreements does not lead to state legislative activity taking priority over collective agreements reached autonomously between the social partners. The local collective remuneration agreements do not become part of the employment contracts of the workers carrying out the public contract by virtue of the state ordering their validity, but subsequent to the implementation of the obligation to comply with collective agreements in individual employment contracts by the employers.

The provision for compliance with collective agreements in the Berlin Procurement Act also does not violate the fundamental right to occupational freedom (Art. 12.1 of the Basic Law).

The scope of protection afforded by the right to occupational freedom is affected since the provision for compliance with collective agreements concerns contractual freedom in the field of business guaranteed by Article 12.1 of the Basic Law. The legislative provision also interferes with the fundamental right to occupational freedom. However, this interference is constitutionally justified. The Land legislature has pursued constitutionally legitimate goals by enacting the provision for compliance with collective agreements. The obligation incumbent on tenderers for a public contract to comply with collective agreements is a suitable means to achieve the goals pursued by the Act, and the statutory provision for this obligation is necessary to achieve the goals. Finally, the interference with the right to occupational freedom by the obligation to comply with collective agreements is also appropriate.

However, the obligation to comply with collective agreements imposed on construction companies by influencing contracts with workers and business partners concerns a major guarantee of the right of occupational freedom protected by Article 12.1 of the Basic Law. The freedom to freely negotiate the remuneration agreements with workers and sub-contractors is a major element of exercising an occupation. These contractual conditions particularly determine the economic success of the enterprises, and are hence characteristic of the activity serving to create and maintain livelihoods protected by Article 12.1 of the Basic Law.

Yet the weight of the interference is reduced by the fact that the obligation to pay collectively agreed wages does not follow directly from the statutory provision, but from an individual decision to submit a declaration of compliance with collective agreements in order to obtain a public contract. The impact of the obligation to comply with collective agreements is also restricted to the individual public contract. Only the content of the employment contracts of the workers deployed in implementing the respective public contract is prescribed, and then only for those working hours during which they are actively implementing the public contract.

By contrast, the reasons justifying the legislature enacting the provision referred for review have considerable weight.

The fight against unemployment in conjunction with guaranteeing the financial stability of the system of social security is a particularly important goal, and the legislature must be afforded relatively broad latitude for its realisation, particularly in today’s difficult labour market conditions. The public interest that the provision for compliance with collective agreements intends to accommodate takes on overriding significance.

The balancing by the legislature in favour of the public interests is unobjectionable. In light of the overriding important goals of the provision for compliance with collective agreements, it is within reasonable (zumutbar) limits for tenderers for a public contract to agree to applying remuneration rates in accordance with collective agreements in parts of their entrepreneurial activity.

Unequal treatment resulting from the provision of those tenderers who do not submit a declaration of compliance with collective agreements and, as a consequence, do not receive the public contract, and those tenderers who meet the requirements of the provision referred for review, also does not violate the general guarantee of the right to equality set out in Article 3.1 of the Basic Law. It is justified by the particularly important public interest described, which caused the Land legislature to enact the statutory provision. The provision for compliance with collective agreements is also compatible with other federal law.