A posted worker is defined as ‘a person who, for a limited period of time, carries out his or her work in the territory of an EU Member State other than the state in which he or she normally works’ (Council Directive 96/71/EC).
The definition, used in several European Institution documents, regulations and research, underlines characteristics such as:
- a genuine employment relationship with the ‘original’ employer;
- the temporary nature of the activities performed.
Some people are subject to different regulations, as they do not meet the directive’s criteria of posted workers; these are:
- migrant workers;
- people who decide to seek employment in another Member State;
- sailors in the merchant navy;
- people who are self-employed.
The right of every citizen to move freely to another Member State to work and reside there has to be differentiated from the ‘freedom to provide services’, which gives businesses the right to provide services in another Member State. This is laid out in Article 56 of the Treaty on the Functioning of the European Union (TFEU) (1.41 MB PDF).
Posted worker arrangements are common in the construction sector, and are also found in transport, telecommunications, entertainment, repairs, maintenance and servicing. Data from a 2011 study commissioned by the European Commission (1.96 MB PDF) finds that there were 1,294,669 posted workers in the EU27 in 2007 (based on E101 social insurance forms). These included postings to a specific country and applications to work in the EU. The main sending countries were France, Poland and Germany.
Important issues related to posted workers are:
- workers’ rights;
- companies’ freedom and obligations.
The Rome Convention of 19 June 1980 held that, whichever law applies, workers should be protected by the laws applicable in the host country. This requires Member States to oblige posting enterprises to respect local legislation and collective agreements.
1996 Council Directive
In 1996, the Council adopted a directive to address the challenge of balancing the rights of workers and companies. The Council Directive 96/71/EC set out to avoid the risk of posted workers being misused or exploited by clarifying the regulations on posted workers’ working conditions. According to the directive, Member States have to ensure that companies give posted workers the minimum standard of employment conditions in the host country. The terms and conditions covered by the directive include:
- maximum work periods and minimum rest periods;
- maximum paid annual leave;
- minimum rates of pay (including overtime);
- conditions of hiring workers (especially for temporary agency work);
- health and safety;
- protective measures for pregnant women or mothers who have just given birth;
- equal opportunities and discrimination.
Main issues involved
In recent years, however, the implementation of the Posted Workers Directive has been a matter of much discussion. In 2006, the Commission published a set of guidelines (163 KB PDF) to help governments, enterprises and employees better understand the applicability of the directive and to ensure that they complied with minimum standards.
The Commission, however, was concerned that such control mechanisms should not impinge on Article 56 of the TFEU governing companies’ provision of cross-border services. It cited European Court of Justice (ECJ) rulings, saying that inspections must achieve their objectives with the minimum restriction to companies’ freedom.
In October 2006, the Commission launched a survey involving Member States, EU-level social partners and the European Parliament to see how the directive was being applied. The findings, announced in June 2007 (65 KB PDF), revealed that control mechanisms were still not completely effective.
The crux of the problem is deciding whether the working conditions of posted workers are governed by the rules of:
- the home country of the enterprise (and worker);
- the host country where the work is performed.
There is a risk that foreign businesses could undermine local labour standards by applying the lower conditions of their home country in countries with higher standards.
In the past few years, there has been renewed focus at EU level on the issue of posted workers. The issue has been highlighted by judgements by the ECJ in the cases of Viking (87 KB PDF) (EU0706029I, EU0605029I), Laval (99 KB PDF) (EU0801019I, SE0801019I, SE0706029I) and Rüffert (99 KB PDF) (EU0805029I).
In these cases, the ECJ ruled that industrial action in support of collectively-agreed terms and conditions for posted workers, and the inclusion of collectively-agreed terms in procurement contracts should not impede the EU principles governing:
- the free movement of goods and services;
- the freedom of establishment;
- the freedom to provide cross-border services.
In the Laval case, for example, the ECJ held that the right to strike could restrict the freedom to provide services. The ruling stated a strike could only be conducted under EU law to pursue a legitimate aim and if it was justified by overriding reasons of public interest. The ECJ noted that, while Article 3 of the Posted Workers Directive gave a right to minimum terms and conditions to posted workers, these rights had to have been underpinned either by law or universally applicable collective agreements. Without these provisions posted workers had no right to be paid the rate established by collective agreement.
Reaction of EU Institutions and stakeholders
As the 2010 Eurofound report Posted Workers in the European Union (TN0908038S) shows, the discussion on posted workers has mainly been at European level. In only a few countries, including those directly affected by the ECJ rulings, has action been taken by governments and social partner organisations.
The Council has never debated the consequences of the ECJ rulings for posting, either in an informal or institutional framework. However, on several occasions, government representatives have commented on the rulings. Individual Member States affected by the rulings – including Denmark, Sweden, Luxembourg and Germany – have reacted by bringing their laws in line with the rulings.
Debates about the issues raised by the implementation of the Directive have also taken place in the European Parliament, which has adopted several relevant resolutions. A 2008 resolution called on the Commission to continue examining the implementation, correct application and enforcement of the Directive, and suggested that it could mean some changes to the Directive.
In 2010, the European Economic and Social Committee asked for the Directive to be implemented more effectively. It also supported a Commission initiative to partially revise the Directive to clarify the legal obligations for national authorities, business and workers. This encouraged the Commission to exempt the right to strike from the internal market and to explore the idea of a ‘European Social Interpol’, supporting the activities of labour inspectorates of the various Member States.
The European Commission has launched several initiatives to address problems caused by the way in which the existing legislation is implemented, applied and enforced. An important initiative is the 2008 Recommendation on enhanced administrative cooperation (see also EU calls for urgent action to improve working conditions for 1 million posted workers). This followed the June 2007 Communication Posting of Workers in the framework of the provision of services: Maximising its benefits and potential while guaranteeing the protection of workers (65 KB PDF)).
Social partners’ points of views
The European Trade Union Confederation (ETUC), and trade unions generally, called the ECJ rulings a ‘licence for social dumping’. They claimed the Directive had been too narrowly interpreted, leaving little room for host Member States or social partners to improve the working conditions of posted workers. They were keen to clarify the role of trade unions in defending posted workers’ rights and asked for the Directive to be revised, and to introduce a clause giving priority to fundamental social rights over economic freedoms.
However, BusinessEurope and employer organisations stated the ECJ rulings clarified the legislation and helped to consolidate the Single Market.
The Commission and the EU Presidency invited the cross-sector European social partners – Business Europe, CEEP, UEAPME and ETUC – to deliver a report on how the ECJ rulings in the Viking, Laval, Rüffert and Luxembourg cases would affect workers’ mobility and rights. The document, adopted on 19 March 2010, expressed a number of common concerns and objectives but also exposed the social partners’ fundamental disagreements.
They agreed that the most relevant points for reflection were:
- the context of the Single Market and impact of ECJ rulings;
- the relationship between economic freedoms and fundamental social rights;
- the challenge of respecting the diversity of industrial relations systems and models;
- responses to the challenges raised by the judgements.
The Commission recognised the need to resolve the problems of implementation and interpretation of the Directive and on 21 March 2012 issued proposals for new rules governing the posting of workers in Europe (EU1204011I). The aim was to increase protection for posted workers and to clarify the debate around the primacy of freedom to provide services and employment rights that has resulted from ECJ case law.
Its proposal on the enforcement of Directive 96/71/EC (240 KB PDF) aimed to reconcile the freedom to provide cross-border services under Article 56 TFEU with appropriate protection of the rights of workers temporarily posted abroad for that purpose. The main objectives were to:
- set more ambitious standards to inform workers and companies about their rights and obligations (Article 5);
- establish clear rules for cooperation between national authorities in charge of posting (Article 6);
- provide elements to improve the implementation and monitoring of the notion of posting to avoid the multiplication of ‘letter-box’ companies that use posting as a way to circumvent employment rules (Article 3);
- define the supervisory scope and responsibilities of relevant national authorities (Article 7);
- improve the enforcement of workers’ rights, including the introduction of joint and several liability (261 KB PDF) for the construction sector for the wages of posted workers as well as the handling of complaints (Article 12).
There are risks that, in the single market, economic freedoms would prevail over the right to strike. The proposal stresses that there is no primacy between the right to take collective action and the freedom to provide services (Article 2). For disputes at EU level resulting from the exercise of the right to take collective action, including the right or freedom to strike in transnational situations or situations with a cross-border character, the proposal suggests the possibility of non-judicial settlements. It also sets out a new alert mechanism for cross border industrial conflicts which have severe implications (Article 4).
After some months of debate, the Council reached a compromise agreement on the two outstanding issues of national control measures and joint and several liabilities in subcontracting chains (EU1312011I).
Social partners’ reactions
The European Federation of Building and Woodworkers (EFBWW) and the European Construction Industry Federation (FIEC) had, in November 2013, sent a joint letter (81 KB PDF) to national employment ministers before the December Council meeting. They requested that, in Article 3, the directive should clearly state that all forms of fake posting (such as dependent employees posing as freelancers) be explicitly covered by the entire legislation of the host country, and that Article 9 should foresee an ‘open list’ of possible control measures. EFBWW and FIEC also asked for a mandatory prior notification of posting and an obligation to keep or make available copies of the workers’ employment contracts.
FIEC expressed its support for the compromise text in a press release (18 KB PDF). However, the EFBWW called the text ‘a disappointing agreement with low ambitions’. The text will now continue to make its way through the EU decision-making machinery.