EU-Level: Posted workers proposal gets 'yellow card' from Member States

The future of an EU Commission proposal to revise the posted workers Directive is now uncertain after 10 Member States opposed it. This has triggered a ‘yellow card’ procedure, which will require the Commission to review the text. Employers’ federation BusinessEurope supports the 10 Member States, but trade unions favour the proposal's guarantee of more equal treatment for workers.

Background: European Commission’s revised proposal

On 10 March 2016, the European Commission issued a proposal to revise Directive 96/71/EC on the posting of workers in the framework of the provision of services. The revision aims to 'facilitate the provision of services across borders within a climate of fair competition and respect for the rights of posted workers’. Its main provisions are as follows.

  • All rules on remuneration that are applied to local workers should also be applied to posted workers. (In practice, this would mean that remuneration would not only include minimum rates of pay, as is currently the case, but also bonuses or allowances where applicable. Member States were also given the option of obliging subcontractors to grant their workers the same pay as the main contractor.)
  • National rules governing temporary agency work should apply when agencies post workers abroad.
  • If a posting exceeds 24 months, the labour law of the host Member State should be applied where this is favourable to the posted worker.

The Commission believes that these changes are necessary to ensure better protection for posted workers and to eliminate wage differences between posted and local workers, which can lead to unfair competition between companies. The Commissioner for Employment, Social Affairs, Skills and Labour Mobility, Marianne Thyssen, said: ‘I have said from day one of my mandate that we need to facilitate labour mobility, but that it needs to work in a fair way. Today's proposal will create a legal framework for posting that is clear, fair and easy to enforce.’

10 Member States oppose equal pay proposal

The proposal has encountered opposition from some EU Member States, largely in eastern Europe. Under EU rules introduced by the Treaty of Lisbon, Member States’ national parliaments can disagree with a proposal up to eight weeks after its publication. Under this ‘yellow card’ procedure, if enough Member States express a negative opinion, the Commission must re-examine its proposal, after which it can choose to amend or withdraw its draft.

A total of one-third of the votes assigned to national parliaments requires the European Commission to review a proposal. Two votes are assigned to each national parliament. In a bicameral parliamentary system, each of the two chambers has one vote. The total number of votes is at present 56 (twice the number of Member States). Thus, 10 Member States have between them 20 votes and this is sufficient to satisfy the one-third requirement.

By 10 May, ten Member States had criticised  the proposed changes on the grounds of conflict with the right to subsidiarity; the countries are Bulgaria, Croatia, the Czech Republic, Denmark, Estonia, Hungary, Latvia, Lithuania, Poland and Romania. This yellow card procedure has been triggered twice since 2009: once on the right to strike in cross-border situations (the ‘Monti II’ proposal in 2012, which was subsequently withdrawn) and once on the establishment of a European Public Prosecutor’s office (which was kept unchanged in 2013).

The main focus for criticism of the proposal is its principle of equal pay for equal work, which would apply to posted and local workers. Those Member States opposing the proposal believe it impinges on their national jurisdiction in setting wage levels, and want the text to be withdrawn.

There is certainly a discrepancy in hourly pay rates in different EU Member States. According to Eurostat data for 2014, an average hour of work (including pay and non-wage labour costs such as social security contributions) costs an employer €40.30 in Denmark and €39.10 in Belgium, but just €3.80 in Bulgaria and €4.60 in Romania.

Member States from Eastern Europe are reported to be unhappy with any plans to harmonise all elements of remuneration, seeing it as a threat to their competitive cost advantage.

Employers support Member States’ opposition

Employers’ federation BusinessEurope supports the 10 Member States that oppose the proposal. Director-General Markus J. Beyrer said the proposals may open a divisive debate among Member States and that the focus should be on fighting illegal practices and abuses through implementing existing rules. It calls on the Commission to withdraw its proposal.

The European Centre of Employers and Enterprises providing Public Services (CEEP) has not expressed an opinion on this latest development, but at an informal meeting of EPSCO (the Employment, Social Policy, Health and Consumer Affairs Council), CEEP General Secretary Valeria Ronzitti said that the proposal needs to clarify a number of issues within the 1996 Directive and bring legal clarity to the relationship between this directive and public procurement rules that seek to foster social criteria in tendering processes.

UEAPME, which represents SMEs, stated in a press release on 9 March that it regretted that the Commission had not consulted the social partners (PDF) before issuing the revised proposal. It believes that the directive’s approach to equal pay raises a number of practical questions and will create new legal uncertainties where there are no universally applicable collective agreements.

Trade unions favour more equal treatment

On the trade union side, the European Trade Union Confederation (ETUC) has written an open letter to Commissioner Thyssen urging the Commission to reject the 10 Member States’ arguments (PDF) and to go ahead with the proposal through the normal EU legislative channels. Luca Visentini, General Secretary of ETUC, said that the rules need to be revised to re-establish the fundamental principle of equal pay for equal work.

Social partners in construction sector criticise proposal

The construction sector will be significantly affected by any changes to rules governing the posting of workers. The European-level employer body for the construction sector, FIEC, stated in a press release in March that FIEC had not demanded any changes to the existing directive (PDF). However, it had taken a joint position with the European Federation of Building and Woodworkers (EFBWW) and had made a number of proposals aimed at improving the current situation and avoiding abuses. It said these measures could have been put in place without re-opening the directive itself, avoiding a potentially divisive debate.

EFBWW itself believes that the proposal does not go far enough. It feels that the text is contradictory and unclear in places and stresses that it cannot accept that some posted workers be excluded from equal treatment due to differences between national social models in Europe.

Commentary: Uncertain future for the proposal

The coming weeks are likely to see a great deal of interest in and significant levels of debate over the Commission’s proposal, for two reasons.

  • This is only the third time that the yellow card procedure has been invoked.
  • The situation may cause a potentially dangerous split in opinion between EU Member States, leading to a an east–west divide.

The Commission will ultimately need to decide whether to maintain, redraw or withdraw its proposal.

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