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Improving the monitoring of posted workers in the EU
The debate about the posting of workers in the EU, its economic and social consequences, and ways to manage it is hampered by the fact that reliable, comparable data on the phenomenon are lacking. Accurate statistics on the number of posted workers, their characteristics and working conditions are simply not available. This report maps existing information sources at the European and Member State levels, and identifies the gaps in, and the limitations of, data currently available. The report outlines what kind of data would need to be collected to allow for a better monitoring of the situation of posted workers across Europe, as well as how this information could be collected and what kind of analysis would be possible based on these improved data sources.
Member States still getting to grips with the single labour market
The European Platform Tackling Undeclared Work last year documented the case of a Dutch temporary work agency that hired workers of various nationalities to work for a construction company in Belgium. The wages were suspiciously low, and the Belgian Labour Inspectorate believed that EU law guaranteeing such workers minimum rates of pay was being breached. Inspectors monitored and visited the company over several years, but it was only when they collaborated with the Dutch authorities that both were able to gather the necessary evidence and take steps to resolve the situation.Stamping out fraud in hiring practices across Europe
Research Manager Isabella Biletta looks at fraudulent practices in the contracting of work. Such practices involve the abuse of legitimate employment relationships with the aim of sidestepping labour and social regulations and with the effect of undermining workers’ rights and fair competition in business. The article is based on several years of Eurofound research on the subject.Šī ir atlase no svarīgākajiem rezultātiem par šo tēmu.
20 January 2020
Improving the monitoring of posted workers in the EU
The debate about the posting of workers in the EU, its economic and social consequences, and ways to manage it is hampered by the fact that reliable, comparable data on the phenomenon are lacking. Accurate statistics on the number of posted workers, their characteristics and working conditions are simply not available. This report maps existing information sources at the European and Member State levels, and identifies the gaps in, and the limitations of, data currently available. The report outlines what kind of data would need to be collected to allow for a better monitoring of the situation of posted workers across Europe, as well as how this information could be collected and what kind of analysis would be possible based on these improved data sources.
27 July 2017
Fraudulent contracting of work: Abusing the posting of workers (Belgium, Finland and Italy)
Regulated at European level, the posting of workers is a practice used between companies located in different countries A worker is posted when their original employer sends them to work, for a temporary period, in another company. Posting has been defined as a specific form of labour mobility within the EU. Although posting only affects around 1% of the workforce in the EU, it has generated extensive debate due to fraudulent practices hampering the enforcement of, and compliance with, existing regulations. Changes in the location of work, raise various questions – namely, who is the employer and which national regulations apply. The use of temporary agencies, subcontracting and posting of self-employed workers gives rise to additional problems.
18 July 2017
Pay inequalities experienced by posted workers: Challenges to the ‘equal treatment’ principle
This EurWORK topical update summarises the views of European and national-level stakeholders on recent debates on implementing the principle of ‘equal pay’ for posted workers. Directive 96/71/EC foresees that posted workers must be granted the minimum standards of employment conditions applicable in the host country, including the minimum rates of pay. Given the variety of interpretations of this concept and various cases of social dumping, concerns have been raised, resulting in the need for clarification. In March 2016, the European Commission presented a targeted revision of the rules regarding the posting of workers, which addressed the issue of posted workers’ pay and the implementation of the principle of equal pay for equal work. Stakeholders at European and national levels are divided on these issues.
Introduction
A posted worker is ‘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).
One key consideration since the very beginning of the posting of workers’ regulation has been simultaneously guaranteeing freedom for businesses to offer services across the European Member States while ensuring standard working conditions for posted workers. Businesses should have a level playing field of competition, while it is expected that the principle of equal treatment for workers be implemented. Indeed, the Posting of Workers Directive 96/71/EC states that posted workers must be granted the ‘minimum standards of employment conditions’ that apply in the host country. One key element of the equal treatment principle – pay – has been extensively discussed.
The minimum rates of pay to which posted workers are entitled have been interpreted in very different ways by Member States and businesses. Concerns raised include the following:
cases of social dumping due to unscrupulous employers
posted workers being paid – on paper – according to the minimum standard while, in practice, fees are levied for accommodation, food and necessary work equipment
stripping posted workers of wages owed to them.
The overall discussions taking place in 2016 at European and national levels highlight some key challenges in implementing the principle of equal treatment – especially the principle of ‘equal pay for equal work’ – in the context of cross-border posting of workers.
Redefining 'minimum rates of pay'
It has been argued – given its existence for over 20 years – that the Posting of Workers Directive needs to be revised and clarified, especially in terms of the issue of pay. The directive (1996) states that Member States shall ensure that workers posted to their territory enjoy ‘the host country’s terms and conditions of employment regarding minimum rates of pay’ (Article 3, paragraph 1 (c)), including overtime rates. Precisely how this is implemented depends on national law and/or the practices of the host country. Some flexibility in the application of this provision is allowed, and the directive states that nothing should prevent terms and conditions of employment that are more favourable to workers being applied. Further specifications are limited to:
Allowances specific to the posting shall be considered to be part of the minimum wage, unless they are paid in reimbursement of expenditure actually incurred on account of the posting, such as expenditure on travel, board and lodging (Article 3, paragraph 7).
This issue has been hotly debated, especially in the wake of several rulings from the Court of Justice of the European Union (CJEU), particularly the Viking ruling (PDF) and Laval ruling (PDF), questioning what should be included in the minimum rate of pay.
Addressing the issue of social dumping, the more recent Enforcement Directive (2014/67/EU) highlights the need to ensure that posted workers are paid their rightful wages and to empower social partners in communicating with and informing workers about relevant minimum pay rates. The directive indicates what can be considered part of this minimum:
For the purpose of ensuring that a posted worker receives the correct pay and provided that allowances specific to posting can be considered part of minimum rates of pay, such allowances should only be deducted from wages if national law, collective agreements and/or practice of the host Member State provide for this. (Entry 35)
This minimum is also discussed in the case of subcontracting liability:
Such measures may include the introduction on a voluntary basis, after consulting the relevant social partners, of a mechanism of direct subcontracting liability, in addition to or in place of the liability of the employer, in respect of any outstanding net remuneration corresponding to the minimum rates of pay and/or contributions due to common funds or institutions of social partners regulated by law or collective agreement in so far as these are covered by Article 3(1) of Directive 96/71/EC. (Entry 36)
In 2016, while most Member States were still in the process of transposing the Enforcement Directive, the European Commission issued a proposal to revise Directive 96/71/EC (PDF) on the posting of workers.[1]
This targeted proposal was motivated by the observation that posted workers might earn up to more than 50% less than their local colleagues – particularly in high-wage countries. The proposal clearly stated that posted workers shall generally benefit from the same rules governing pay and working conditions as local workers. It also stated that the principle of ‘equal pay’ should apply:
The principle of equal pay has been implemented through secondary law not only between women and men, but also between employees with fix term contracts and comparable permanent workers, between part-time and full-time workers or between temporary agency workers and comparable workers of the user undertaking. (Entry 5)
The new text proposed replaces the reference to ‘minimum rates of pay’ by a reference to ‘remuneration’ stressing that it includes:
all the elements of remuneration rendered mandatory by national law, regulation or administrative provision, collective agreements or arbitration awards which have been declared universally applicable and/or, in the absence of a system for declaring collective agreements or arbitration awards to be of universal application… . (Article 1 paragraph 2 (a))
More detailed features have also been specified by the European Commission:
Remuneration will not only include the minimum rates of pay, but also other elements such as bonuses or allowances where applicable. Member States will be required to specify in a transparent way the different elements of how remuneration is composed on their territory. Rules set by law or universally applicable collective agreements become mandatory for posted workers in all economic sectors. The proposal also gives the possibility to Member States to provide that subcontractors need to grant their workers the same pay as the main contractor. Nevertheless this can only be done in a non-discriminatory way: the same rule must apply to national and cross-border subcontractors. (European Commission press release, 8 March 2016)
18 October 2016
EU-level: Member States' progress in transposing Enforcement Directive on posting of workers
This EurWORK topical update considers how EU Member States have dealt with transposing Directive 2014/67/EU to improve enforcement of European regulations as regards the posting of workers. The situation at mid-2016 is analysed, based on contributions and updates from Eurofound’s network of European correspondents from June 2016 onwards.
Enforcement Directive
The regulation of the posting of workers at European level, especially through Directive 96/71/EU, has recently come under discussion. To address some caveats of the 1990s regulation, a new ‘enforcement directive’, Directive 2014/67/EU, was adopted in 2014.
As noted by the EurWORK annual review on developments in working life in Europe 2015, this new directive was created to support the monitoring of the posting of workers, in order to ensure fair competition between businesses and that workers' rights be recognised.
As underlined by the European Commission, the 2014 Enforcement Directive provides for:
… new and strengthened instruments to fight and punish circumventions, fraud and abuses. It addresses problems caused by ‘letter-box companies’ and increases the Member States’ ability to monitor working conditions and enforce the rules applicable.
(COM(2016) 128 final, pp. 2–3)
In particular, this directive aims to:
increase awareness among posted workers and companies of their rights and obligations;
improve cooperation between national authorities in charge of posting;
deal with ‘letter-box’ companies that use posting to circumvent the law;
define Member States’ responsibilities to verify compliance with the rules on the posting of workers;
set requirements for posting companies to facilitate the transparency of information and inspections;
empower trade unions and other parties to lodge complaints and to take legal and/or administrative action against the employers of posted workers, if their rights are not respected;
ensure the effective application and collection of administrative penalties and fines across the Member States if the requirements of EU law on posting are not respected.
Member States had two years until the deadline of 18 June 2016 to transpose and adapt their national regulations.
More widely, in mid-September 2016, Marianne Thyssen, European Commissioner for Employment, Social Affairs, Skills and Labour Mobility, announced that the European Commission was launching infringement procedures against 15 Member States for failing to respect EU legislation on freedom of movement of workers. She said: 'Given that all Member States agree on the need for more effective instruments to fight abuses when it comes to labour mobility, I call upon these Member States to make use of the tools we have given them and make sure that the responsible authorities in their countries, such as labour inspectorates, dispose of the necessary instruments to do their job. The launch of the infringement procedures will serve as a means to keep the pressure to finish the transposition process as soon as possible'.
In the context of the Enforcement directive, infringement letters were sent to Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Greece, Hungary, Lithuania, Luxembourg, Portugal, Romania, Slovenia, Spain and Sweden.
The information collected through this topical update, which covers the situation across the 28 Member States and Norway at of mid-2016, gives an idea of the interests and issues discussed across Europe in relation to the posting of workers (see Annex).
State of play of transposition across Europe
Progress with the transposition process as of August 2016 is summarised in the table below (and detailed in the Annex at the end).
Half the Member States – mostly countries from the former EU15, plus Latvia, Lithuania, Malta, Poland and Slovakia – had almost finalised the transposition process by the deadline, while Luxembourg and Norway were ‘almost’ there.
Nine countries (all Member States that had joined more recently, plus Belgium) have discussed a draft transposition regulation, but have no dates for adopting and/or enforcing it.
However, three southern countries – Greece, Portugal and Spain – do not seem to have started discussing or even drafting specific regulations for transposing the Directive.
Source: Eurofound’s network of European correspondents, updated as of August 20_16 through the European Commission_ database.
Characteristics of transposition in Member States
Timing of the transposition
Most of the countries that have finalised their transposition regulations did so around June 2016. The exceptions are France, where the transposition process started in 2014 and continues through several texts modifying French labour law (Law no. 2014-790 of 10 July 2014; Decree no. 2015-364 of 30 March 2015; Law no. 2016-1088 of 8 August 2016 (Article 108)), and Germany where transposition has been more a step-by-step process. Most of these countries decided to bring the regulations into force on 18 June 2016, as per Directive 2014/67/EU. A few countries, Austria and Lithuania for example, chose 1 January 2017 as the implementation date. Most of the countries that are still drafting their regulations have no date for implementation and, when dates have been mentioned, they were highly unrealistic.
Process of transposition
Across Europe the process has mostly been legislative, with some prior discussion involving key stakeholders – including social partners.
Generally, specific legislation has been introduced for the transposition, except in Germany where transposition has been carried out through various issues being integrated progressively into German law.
Various countries have drafted or passed more than one bill to address different aspects of the transposition, mostly when it was necessary to modify the powers and roles of the labour inspectorate.
Content of transposition
Some countries have have adopted a minimalist approach. These include Hungary (mainly a formal transposition draft), Ireland, Poland and the UK. The UK declared it had ‘no intention’ at this stage of increasing monitoring and compliance arrangements, but that it would keep ‘under review’ Article 9 on the monitoring of posted workers and control measures.
Generally, the issues dealt with in Directive 2014/67/EU, such as checks and inspections, sanctions and cross-border cooperation, are considered in most of the transposition regulations. Some other issues are treated differently, depending on the national circumstances.
Interestingly, the ‘genuine activity’ criterion (Article 4), which aims to assess ‘genuine posting’ and to combat ‘letter-box companies’, has been dealt with in a number of different ways. For instance, in Luxembourg, the draft law provides measures to help assess the 'substantial nature of companies’ activities. Companies will be asked to give the country’s labour inspectorate four new documents, proving:
payment of a salary;
hours worked;
medical fitness;
the legality of the posting.
Trade unions in Slovenia have criticised the draft regulation for their country as being too easy to circumvent and have suggested amending the rule that reads ‘the undertaking must genuinely perform substantial activities in the country from which it posts the workers’. They propose instead: ‘the undertaking must make at least 25% of its revenue in the country from which it posts the workers’.
The liability principle (Article 12) has been adopted in a way that either limits it to the construction sector or to one subcontractor (most of the countries reproduce the directive’s provisions) or in a broader way. However, French legislation applies the principle to the overall subcontracting chain and Austrian law applies it to the customer also (not only the direct employer) in the construction sector. Meanwhile, the Danish social partners agreed on the creation of a new labour market foundation (funded by a contribution from every full-time employed worker), which will guarantee the payment of the wages.
Some transposition regulations (France, Luxembourg) adopt the right for trade unions to issue any necessary legal proceedings on behalf of the posted workers (Article 11). The Swedish government enquiry committee report, published in March, proposed to include in the regulation that the working condition of posted workers should be ‘in accordance with the collective agreements signed between the employers and the Swedish trade unions’.
Recent debates on regulation of posting of workers
On 8 March 2016, the European Commission proposed a ‘targeted revision’ of the rules on the posting of workers. It issued a press release stating: 'This revision translates a commitment of the Political Guidelines for this Commission to promote the principle that the same work at the same place should be remunerated in the same manner. … More specifically, the initiative aims at ensuring fair wage conditions and a level playing field between posting and local companies in the host country.'
The proposal suggested changes in three main areas:
remuneration of posted workers (including in situations of subcontracting);
rules on temporary agency workers;
long-term posting.
The absence of overlap or conflict between the proposal and the Enforcement Directive has been stressed on several occasions, with the European Commission in its targeted revision affirming that it 'focuses on issues that were not addressed by the Enforcement Directive’ and that they are therefore ‘complementary to each other and mutually reinforcing’.
This proposal triggered ‘reasoned opinions’ from the national parliaments of 11 Member States (Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia). These opinions stated that the proposal was in breach of the principle of subsidiarity. The 11 countries therefore rejected the targeted revision of the directive and this triggered the subsidiarity control mechanism (the ‘yellow card’ procedure). However, the national parliaments of five Member States (France, Italy, Portugal, Spain and the UK) submitted opinions that the European Commission’s proposal was compatible with the principle of subsidiarity. These opinions highlighted the divide visible between newly joined and older Member States since practically the first discussions.
Despite the Commission’s assurances on the independence of the transposition of the Enforcement Directive transposition vis-à-vis the discussion of a targeted revision of the Posting of Workers Directive, some Member States seem to have looked at one in the context of the other. In those countries that participated in triggering the ‘yellow card’ procedure, the discussions around the transposition of the 2014 Enforcement Directive have been combined or mixed up with a restatement of the various positions on the 2016 revision proposal. Concerns about, and opposition to, the implication of applying the principle of ‘equal pay for equal work’ were raised in the context of the transposition in Bulgaria, Czech Republic, Estonia, Croatia and Poland (all part of the ‘yellow card’ procedure) but also in Ireland.
On 20 July, the European Commission adopted a Communication that confirmed it maintained its proposal for a revision of the Posting of Workers Directive as presented on 8 March 2016.
Commentary
The transposition process is a dynamic issue. The picture is likely to change as, over the next few months, more countries should engage in and finalise the transposition process, leading to modifications in the data presented in this article. Nevertheless, the issues discussed – presented by country in the tables in the annex – will still be relevant and continue to contribute to the overall discussion during future months on the posting of workers and, more widely, on labour mobility in Europe.
References
Eurofound (2016a), Developments in working life in Europe 2015: EurWORK annual review, Dublin.
Eurofound, (2016b), EU-Level: Posted workers proposal gets 'yellow card' from Member States, EurWORK article May 2016.
Annex
21 November 2016
Exploring the fraudulent contracting of work in the European Union
The fraudulent contracting of work is an important issue in many European countries today. EU and national policymakers have turned their attention to violations of the basic protection provided by employment law and collective bargaining that are linked to the fraudulent use of certain employment or commercial contracts. This report looks at these practices across the EU and examines measures initiated by national authorities, including labour inspectorates and the social partners, to identify, prevent and combat such practices. While governments and public bodies focus largely on improving regulation – reducing loopholes in legislation and strengthening detection and inspection – the social partners endeavour to achieve compliance, particularly through organising information and awareness-raising initiatives. Based on 29 national reports, covering the EU28 and Norway, the research finds that the potential of collective bargaining to respond to the challenges of fraudulent use of contracting work is largely underexploited. It points to the contribution that EU actors could make, given the crucial role of cross-border cooperation in detecting and sanctioning fraudulent practices involving a transnational dimension.
6 October 2010
Posted workers in the European Union
This report examines the extent of the phenomenon of the posting of workers, the roles played both by European and national-level legislation in determining the employment and working conditions of posted workers and the roles played by legislation and collective bargaining – and how these two domains interplay. The report is in part an update of earlier work carried out in 2003 by Eurofound into the issue – not least, updating the findings with data from the new Member States, which had not joined the Union at that time. Importantly, the research looks at the possible implications of a number of high-profile decisions taken by the European Court of Justice in cases of posting of workers, which highlighted the at times tense relationship between the twin EU goals of economic freedom and social cohesion.
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