The government of Greenland, Naalakkersuisut, has passed an amendment of the Large Scale Project Act, setting the framework for foreign mining and exploration companies to take advantage of the natural resources of Greenland as well as providing for employment of labour on conditions set by foreign collective bargaining agreements. The amended Act suggests significant changes in the scope of application of the legislation with regards to defining a “large scale project” as well as the extend to which a foreign collective agreement is allowed to regulate wages in relation to projects carried out in Greenland.

At the first reading, the Act was referred to the Business Committee of Greenland, which, along with other national organisations, proposed significant changes to the scope of application of the bill as well as the extend of legalisation of foreign collective bargaining agreements in large scale projects in Greenland. The Act was amended in early December and passed the closing third reading on 7 December 2012. The legislation is, however, not yet effectuated, as Greenland is semi-autonomous from Denmark and has not been granted the competency to enact legislation in this area. Thus an enactment of the legislation by the Danish government is required on top of the Greenlandic enactment. The processing by the Danish government has due to the complexity of the bill currently been postponed to early Spring 2013.

Changes in the scope application of the legislation

The proposed legislation still exclusively applies to establishment of large scale businesses for the exploitation of minerals, raw materials, or in connection with establishment of large scale business for exploitation of hydropower for generation of energy.

The previous bill set forth a threshold for a project to qualify as “large-scale” to DKK 1 billion. Now, however, the threshold has been increased to DKK 5 billion. Following this amendment, a project qualifies as “large scale” if:

a) the expected value of the project exceeds DKK 5 billion, and

b) the project’s need for labour in carrying out the construction activities must exceed the suitable, available and accessible workforce in Greenland, or

b) if the demand for technical or economic capacity of the companies performing the construction activities exceeds the Greenlandic companies’ capacity.

Changes in the impact on Greenlandic labour law

The bill has been heavily criticized for paving the way for companies to employ foreign workers at a lower salary than what the companies would be paying Greenlandic workers. The previous bill suggested that foreign workers could legally be covered by a foreign collective bargaining agreement, as long as the salary and employment conditions were deemed “acceptable” and “objectively and reasonably justified”. The passed revision of the bill tightens the regulation of minimum wages considerably. Legal basis for non-fixed minimum hourly wages pursuant to foreign collective bargaining agreements is now no longer to be found in the act.

Although the Large Scale Project Bill still forms legal basis for employment of foreign labour on foreign collective bargaining agreement terms, foreign collective bargaining agreements are now restricted from fixing wages lower than the minimum wage set forth by collective agreements of Greenlandic labour unions. This effectively narrows the prospect of employing foreign labour on less favourable employment conditions and without influence from Greenlandic collective bargaining agreements. Instead, the minimum hourly wage is now fixed at DKK 80.41 pursuant to national collective bargaining agreements. Notwithstanding the fixed minimum wage, the Act opens for the possibility of deducting room and board, clothing expenditures, free journeys and insurance, provided that the collective value is below a certain amount per week as set out in an executive order, which is yet to be introduced.

Eversheds notes

In conclusion, the enacted revision of the Large Scale Projects Bill has been tightened significantly in comparison to the very liberal first edition of the bill. Foreign companies, who look to initiate a large scale project in Greenland, are now required to meet the increased threshold in project value and must consider, whether their collective bargaining agreements comply with the requirements in the Act, e.g. on minimum wages. Notwithstanding the above, the Act continues to provide foreign companies great opportunities to use their own collective bargaining agreements, as the Act does not regulate e.g. overtime payment, holiday, etc.

This article is solely meant as an update to the more thorough introduction of the bill published on the Eversheds website 19 September 2012, which can be found here.