Thematic feature - posted workers

This article examines the German situation, as of June 2003, with regard to: legislation and collective bargaining on the pay and conditions of posted workers (ie workers from one EU Member State posted by their employer to work in another); the number of such posted workers; and the views of the social partners and government on the issue.

EU Directive 96/71/EC concerning the posting of workers in the framework of the provision of services seeks to avoid 'social dumping' by ensuring that a minimum set of rights is guaranteed for workers posted by their employer to work in another country. The basic principle is that the working conditions and pay in effect in a Member State should be applicable both to workers from that State, and those from other EU countries posted to work there. The Directive covers undertakings established in a Member State, which, in the framework of the transnational provision of services, post workers to the territory of another Member State.

The Directive establishes a core of essential regulations aimed at ensuring employees' minimum protection in the country in which their work is performed. It guarantees the application of the host country's statutory and regulatory provisions relating to:

  • maximum work periods and minimum rest periods;
  • minimum paid annual holidays;
  • minimum rates of pay, including overtime rates (excluding supplementary occupational retirement pension schemes);
  • the conditions of hiring-out of workers, in particular the supply of workers by temporary employment agencies;
  • health, safety and hygiene at work;
  • protective measures with regard to the terms and conditions of employment of pregnant women or women who have recently given birth, of children and of young people; and
  • equality of treatment between men and women and other provisions on non-discrimination.

As well as these generally applicable statutory and regulatory provisions, a Member State's collectively agreed provisions on these issues must also be applied to workers in the construction sector (where these are based on 'collective agreements or arbitration awards which have been declared universally applicable').

The Directive allows for a number of exceptions to all or some of these 'minimum provisions' for: the crew of merchant ships; staff involved in the initial assembly and/or first installation of equipment; postings lasting less than a month; and where 'the amount of work to be done is not significant'. The Member States were obliged to transpose the Directive by 16 December 1999.

In 1999, the European Industrial Relations Observatory (EIRO) conducted a comparative study on posted workers and the implementation of the Directive. In June 2003, the EIRO national centres in each EU Member State (plus Norway), have updated the basic information in the earlier comparative study, four years on, in response to a questionnaire. The German responses are set out below (along with the questions asked).

Regulatory framework

What changes were made to national legislation in your country in order to implement the Directive? And have there been any further changes to the relevant legislation since then?

Please outline very briefly the current legal position of posted workers in your country - are they covered by specific or general employment legislation, what is their position with regard to social security (are they covered under the social security system in their country of origin or the host country?) etc. Also, have any specific measures been taken to prevent abuses arising from the posting of temporary agency workers (eg an agency hiring temporary workers through a subsidiary in a low labour cost country and sending them to work for a user company in a higher labour cost country)?

Have there been any collective agreements concluded on the issues covered by the Directive? Have the social partners been consulted as part of the legislative and policy-making process and, if so, in what way? Have the social partners taken any other initiatives related to posted workers?

The regulatory framework covering posted workers in Germany consists of a number of laws and collective agreements. The most important ones are:

The Posted Workers Act

In March 1996, the Posted Workers Act (AEntG) came into force even before the EU Directive on the issue was adopted. The law covers all posted workers in the construction sector, other construction-related services and navigation-related services (mainly concerning tugs) (Seeschiffahrtsassistenz). The bulk of posted workers covered by the law, therefore, are in a broad sense construction workers (in Germany, the posted workers issue is seen as relevant to the construction industry only, and there are no rules relating to posting in other sectors).

The Posted Workers Act provides the posted workers concerned with the protection of German statutory minimum standards in areas such as working time, paid leave, health and safety, maternity and equal treatment. Furthermore, the law provides that posted workers should be covered by the same minimum collectively agreed pay rates and collectively agreed provisions on paid holidays as German workers. This goal is accomplished by way of the extension of collective agreements. Such an extension applies the terms and conditions of a collective agreement to those employees who are not covered because they are either not members of the signatory trade union or because their employer is not a member of the employers' association which is party to the agreement.

After the adoption of the EU Directive, some details of the law were modified. The most important alterations came into force on 1 January 1999 with the revision of the law by the new 'red-Green' coalition government (DE9901291N). The Posted Workers Act was then extended for an unlimited period, there was a significant increase in the fines for employers which break the law and a new provision was added which makes user companies responsible when their subcontractors contravene collectively agreed standards. The most controversial alteration, however, was that the Ministry of Labour was enabled to declare wages and working conditions to be generally binding by a ministerial directive. This effectively allows the circumvention of the requirement of section 5 of the Collective Agreements Act (Tarifvertragsgesetz) (DE9905200F) which says that a 'committee on orders imposing extensions', consisting of three trade union and three employers' representatives (representing different industries), must approve the extension of a collective agreement by a majority of at least four votes.

The latter amendment was introduced in the light of a major controversy on the employers' side about the extension of collectively agreed minimum rates of pay in the construction sector, which began immediately after the Posted Workers Act came into force in 1996.

In April 1999, the collective bargaining parties in the building industry - the Trade Union for Building, Forestry, Agriculture and the Environment (IG Bauen-Agrar-Umwelt, IG BAU) and the two employers' associations, the Federal Association of the German Building Industry (Hauptverband der Deutschen Bauindustrie, HDB) and the Central Association of the German Building Industry (Zentralverband des deutschen Baugewerbes, ZDB) - agreed to raise hourly minimum pay rates from 1 September 1999. However, the Confederation of German Employers' Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände, BDA) and the three employer representatives on the committee on orders imposing extensions made clear that they would not approve an application for the extension of this agreement (DE9909117F). As a consequence, the Federal Ministry of Labour and Social Affairs decided to make use of its new powers and extend the collective agreement on construction minimum wages by way of a directive.

Further amendments to the Posted Workers Act came into force on 1 January 2003 with regard to temporary agency workers (see below).

Collective agreements covering posted workers

Posted workers in construction must be paid at least the minimum wages fixed in the collective agreement on minimum wages (TV Mindestlohn), which has been extended to the whole building industry by way of a directive (see above). In June 2002 the collective bargaining parties - IG BAU on the one hand and HDB and ZDB on the other - agreed on a two-stage increase in minimum wages from September 2002 and from September 2003 (DE0206204F) (see table 1) below. Furthermore they introduced a second level of minimum wage for skilled workers ('scale 2') from September 2003. The latter reflected a demand made by IG BAU.

Table 1. Hourly minimum wages in the building industry
. From September 2002 (EUR) From September 2003 (EUR)
Scale 1 western Germany 10.12 10.36
Scale 2 western Germany - 12.47
Scale 1 eastern Germany 8.76 8.97
Scale 2 eastern Germany - 10.01

Source: TV Mindestlohn.

The collectively agreed entitlement to paid leave (currently 30 working days, Monday to Friday, per year) and the collectively agreed provisions on leave pay have also been extended to the whole building industry and therefore apply to posted workers. Foreign employers have to pay contributions to 'the leave fund scheme for employers outside Germany and their workers posted to Germany' which is run by the Leave and Wage Equalisation Fund of the German Building Industry (Urlaubs- und Lohnausgleichskasse der Bauwirtschaft, ULAK). ULAK is a joint institution managed by IG BAU, HDB and ZDB. Foreign employers can be exempted from these payments if they already make contributions to similar funds in their countries of origin.

Act on Temporary Employment

On December 2002 the German parliament adopted a major alteration to the Act on Temporary Employment (AÜG) which reflected a decision of the European Court of Justice (ECJ) made on 25 October 2001 (in Case C-493/99, Commission v Germany). The ECJ ruled that a requirement imposed by the AÜG - that the hiring out of workers in the construction sector was not allowed unless the company that provided the workers was signatory to all the collective agreements applicable in the German construction sector - was a violation of the EU right of establishment and the freedom to provide services. As a result of this decision, the AÜG now allows companies that usually do business in construction, ie effectively foreign construction companies but not temporary work agencies, to hire out workers to German employers. They must, however, abide by the collectively agreed minimum wages and holiday provisions and participate in the building industry leave scheme. This was secured via a corresponding alteration to the AEntG, which came into force at the same time as the alteration to the AÜG on 1 January 2003.

Social security

Regarding social security the legal situation in Germany has remained unchanged: German posted workers who are sent to another EU country usually keep their German social security cover; and posted workers from other EU countries who work in Germany are not covered by the German social security system.

The workers affected

Please provide the latest figures available on the number of employees who are posted from your country to other EU Member States.

There are no official figures or even estimates available on the number of German employees who are posted elsewhere in the EU. It can be assumed, however, that there are only very few German posted workers. Usually these workers are employees with special qualifications or managers who have been sent to foreign subsidiaries of German multinational companies.

Please provide similar figures, if available, for employees posted to your country from other EU Member States.

Equally, there are no official figures available on the number of posted workers in the German construction sector. The Leave and Wage Equalisation Fund of the German Building Industry (ULAK), however, provides figures on the number of posted workers for which employers from outside Germany pay contributions to the building industry leave scheme - see table 2 below.

Table 2. Number of workers in the construction sector posted from EEA countries, 1997-2002
Country of origin of the employer Year
1997 1998 1999 2000 2001 2002
Austria 3,210 5,700 5,619 6,627 5,927 5,154
Belgium 704 1,017 969 865 1,029 973
Denmark 2,533 944 447 814 1,110 849
Finland 426 468 306 171 57 75
France 3,105 5,107 2,256 3,559 3,801 2,693
Greece 1,062 830 479 751 1,260 1,775
Ireland 1,147 429 144 51 16 6
Italy 5,041 2,871 1,739 869 710 577
Liechtenstein 29 50 46 46 42 60
Luxembourg 894 1,037 968 882 539 499
Netherlands 12,222 12,619 10,291 8,862 6,763 5,756
Norway 140 112 55 54 21 10
Portugal 25,463 16,563 9,276 5,003 3,507 3,181
Spain 629 282 105 102 132 197
Sweden 960 749 432 180 144 89
UK 8,361 6,148 2,424 906 202 227
UK-Gibraltar 49 74 31 0 0 0
Total 65,975 55,000 35,587 29,742 25,260 22,121

Note: Figures include those employees for which contributions are paid in the country of origin of the employer. Workers are counted only once, even when posted several times a year, as long as they stay with the same employer.

Source: ULAK.

In 2002, the ULAK counted another 93,258 posted workers from non-EU countries for which contributions to the building industry leave fund were paid.

There are no figures or estimates available on posted workers as defined by the EU Directive in sectors other than construction. Neither the Trade Union of Food, Beverages, Tobacco, Hotel and Catering and Allied Workers (Gewerkschaft-Nahrung-Genuß Gaststätten, NGG), the United Services Union (Vereinte Dienstleistungsgewerkschaft, ver.di) nor IG BAU think that there are posted workers in, for example, either private services or agriculture.

Workers in the construction industry

The EU Directive, although of general application, is aimed particularly at workers in the construction industry (building and public works), in which discrepancies between practice and legal standards are often observed. Has any special action been taken by the social partners or the state to address the situation of posted workers in this industry?

Apart from the alterations to the Posted Workers Act and the negotiation of connected collective agreements (see above), no special action has been taken to address the situation of posted workers in the construction industry by either the government or the bargaining parties.

The positions of the social partners and government

Please outline the stances adopted by the social partners and the public authorities/government on this issue. Particular attention should be given to unions and employers in the construction industry.

Since the adoption of the Posted Workers Act in 1996 and in the wake of the reform of the Act in 1998, the focus of the debate has concentrated on the new possibility for the Minister of Labour to extend construction industry collective agreements by law even without the support of both social partners (TN9909201S). As outlined above, the main opposition to this change came from employers' associations outside the construction sector. As far as the bargaining parties in construction are concerned, there is still no fundamental disagreement about the necessity for the Posted Workers Act and the extension of the collective agreements connected with it.

The stance of the government at the end of 2002 was to safeguard the provisions of the Posted Workers Act. This was demonstrated by the way this act was amended when the October 2001 ECJ ruling required alterations to the Act on Temporary Employment in order to legalise cross-border temporary work in the building industry. (Heiner Dribbusch, Institute for Economic and Social Research, WSI)

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