The “Brussels” buzzword has through the decades come to be closely associated with over-regulation. It is hard not to immediately equate the EU Commission producing regulation after regulation with the burden placed on businesses at a national level. However, this is a misleading stereotype. Most times, it is Member States which over-regulate entrepreneurs during the transposition of directives into national law, through what is known as gold-plating.
What is gold-plating?
To understand what this practice is, we must take a step back and look at the different types of decisions which the EU can take on a legal level. Essentially, the EU produces two main types of legally binding secondary legislation: directives and regulations. The latter are binding in their entirety and they are directly applicable in all Member States. As such, there is no need for national government to pass further legislation enacting that regulation into domestic law.
On the other hand, directives set a goal which the EU wants all the countries to achieve. However, the exact legal measures to be put in place to achieve it are more flexible, and left up to each State. This requires the transposition of each directive into national law through a separate, domestic legal act. Very often, it is during this process that over-regulation happens. Gold-plating, also known as super-equivalence, happens when the national implementation of a directive goes beyond the minimum necessary to comply with it. It is this practice that leads citizens to believe that the culprit of over-regulation can be found in Brussels.
How is gold-plating used?
This non-minimalistic transposition can happen in a variety of manners, and not all of them are necessarily negative. For example, States may use it to remove the option of derogations or extensions which were present in the original directive. Another case might be that of retaining national standards which are more stringent or higher than those required in the directive, or even applying the directive earlier than the stated deadline. A fourth example is that the national transposition may have a wider scope and apply to situations which were not initially included in the European directive.
When this has a deregulatory effect, it is not inherently negative. However, in most cases gold-plating has the effect of overburdening the State, businesses, and citizens. This may lead to the rise of administrative and financial costs, or putting companies at a disadvantage if compared to other member States. Because of this, the term “gold-plating” has assumed a highly pejorative subtext in Brussels.
This practice has been highly criticised, and many States – amongst which the UK, Sweden, and the Netherlands – have strict “no-gold-plating” policies. The shared position, which is also supported by the EU, is to adopt a minimalist transposition where possible. Gold-plating should only be exceptionally justified in the name of public interest, security, increased business safety or internal coherence of the legal system.
Some concrete examples
1. UK – The Working Time Directive
The EU’s Working Time Directive regulates employees’ working hours, annual leave, and rest break allowances. The UK’s transposition contains many examples of gold-plating. For example, the directive stipulates 20 days of annual leave, while the UK regulations require 28. Moreover, the record-keeping rules are much more onerous than necessary and the exemption for workers who set their own hours has been transposed so vaguely that it fails to be of use.
2. Czech Republic – Coordination of procedures for the award of public works contracts directive
Czech legislation puts public contractors under much higher pressure regarding the anticipation of the exact scope of their works than the EU. In the original directive, public contracts could undertake additional works up to a maximum of 50% of their original contract. Under the Czech transposition, this was limited to 30%. Effectively, this means that in the event of unforeseen circumstances (for example if the state of the ground is worse than expected), the contractor may lose the contract on that site.
3. Portugal – Agricultural Fund for Rural Development
According to national rules concerning the support for agro-forestry and disadvantaged areas, the Portuguese government has implemented this policy in a manner which is too demanding on small and medium businesses. For example, to be eligible for certain funds, farms must comply with fixed amounts of stocking density conditions, which is much stricter than the flexible “ranges” of density which were initially set by the EU. Such criteria have proven difficult to comply with, and have been recognised as unnecessarily ambitious and costly in terms of the errors generated.
Best practices for the future
To ensure that gold-plating is eliminated, the EU governments have committed themselves to a deregulation agenda during the 2000 Lisbon Summit, with varying success so far. The UK has done a particularly good job at reducing gold-plating to a minimum. In particular, the government started two initiatives which may be of use to other States struggling with this issue.
The first is an approach called “One-in, One-out”: no legislation which would create new burdens on businesses may pass without the identification of an existing burden which may be eliminated. Secondly, the 2010-2015 UK government also launched a website titled “the Red Tape Challenge”. This allowed citizens and businesses to comment which regulations were working and which were not, which should be crossed out, simplified or remain intact.
Most importantly, it is necessary for us as EU citizens to be aware of the fact that the myth of the EU as an overbearing, over-regulating entity is not completely correct. It is too easy for member States to simply blame Brussels when implementing directives more strictly than necessary. It is time for our national governments to step up and take responsibility for their actions, instead of passing the blame onto Brussels.