France: New legislation on cross-border posting of workers

New French legislation aims to combat unfair social competition arising from the abuse of posted workers sent by a company from one EU Member State to another. Among other provisions, the new law institutes a system of financial liability to encourage contractors to make sure that treatment of posted workers complies with the law.

New legislation on cross-border postings

The new law, ‘Law no. 2014-790 of 10 July 2014 to fight against unfair social competition’ (in French) is the result of several parliamentary reports which highlight many cases where cross-border posting rules are violated by companies posting workers on French territory. The objective was transpose immediately into French law part of Directive 2014/67/EU, which relates to the enforcement of Directive 96/71/EC concerning the posting of workers.

Background

Social dumping and fraud associated with cross-border posting of workers was a major topic of debate in France during 2013 and around the 2014 local elections. At EU level, the French government has pushed forward with the adoption of the Directive on the enforcement of Directive 96/71/EC concerning the posting of workers (in French, 240 KB PDF). At the same time the government has supported a proposal for legislation to combat posting fraud and abuse. The new bill, which incorporates some of the provisions of Directive 2014/67/EU (in French), also goes beyond it to a certain extent. It puts the emphasis on the sharing of information between all parties concerned (labour inspectorate, contractor, co-contractor, subcontractor, trade unions), and it establishes new penalties and sanctions when parties fail to apply the rules. The law also institutes a system of financial liability designed to encourage contractors to make sure that treatment of posted workers complies with the law.

Notification of posting

The bill stipulates that the service provider must tell the labour inspectorate where the posted worker is to work before they begin. The service provider must also appoint someone to liaise with the labour inspectorate during the period of posting. Before the posting starts, the contractor must verify that the service provider has complied with all necessary obligations relating to the posted worker. Non-compliance can incur an administrative fine of up to €2,000 per posted worker (or €4,000 for repeat cases), but the overall fine cannot exceed €10,000.

Decent living conditions

A contractor who is informed by the authorities that posted workers’ living conditions are not compatible with human dignity must see that the situation is improved and will be held responsible for making sure they have adequate housing. The law does not make it clear if this means that the contractor will have to pay housing costs or will have to find decent housing and pay for it.

Contractors’ duty of vigilance

The contractor must also be ‘vigilant’ about the application of work regulations. This implies that if the contractor is informed that a sub-contractor is infringing certain labour law rules, the contractor must demand compliance in writing. If the subcontractor does not give a written answer to the request, the contractor must inform the labour inspectorate.

Labour law rules covered by this requirement are: individual and collective freedoms relating to the work relationship; discrimination and equal opportunity between women and men; protection of maternity; maternity/paternity leave and family leave; temporary work rules and guarantees granted to temporary workers; the right to strike; working time; annual leave, public holidays and compensatory rest periods; leave funds; young workers’ night work; the minimum wage (including overtime); health and safety rules (including children’s work and minimum age for work).

Joint financial liability

The contractor can be held financially liable for the payment of posted workers’ legal or conventional minimum wage. According to the bill, if a contractor is informed by the labour inspectorate that the salary of a posted worked employed by a co-contractor or a subcontractor has not been paid or has only partly been paid, the contractor must demand that the situation be rectified. If the co-contractor or subcontractor does not confirm that the worker has been fully paid, the contractor must inform the labour inspectorate. A contractor who fails to do this will be held jointly liable for the payment of wages and other related costs.

The system of joint financial liability is also part of new rules designed to combat undeclared work which have been included in the Labour Code, and which extend joint liability to all contractors’ co-contractors where undeclared work is discovered. New sanctions are also enforced: a criminal court may register on a blacklist (a specific website created for this purpose) all companies and natural persons who have breached criminal rules relating to undeclared work. However, the registration may not be for more than two years. The companies or natural persons concerned may also be banned from all ‘public aid’ (including aid from private institutions in charge of a public service) for a maximum of five years.

Some rules already in place to fight undeclared work have been toughened. The authorities may require the temporary closure of the establishment concerned, or may decide to ban the company or natural person from carrying out public contracts.

Trade unions that are representative may issue any necessary legal proceedings on behalf of an employee.

Specific measures for road transport

The law also contains provisions on lorry drivers’ working conditions. It is forbidden for a driver to be obliged to spend their weekly leave aboard a vehicle. Employers must ensure that lorry drivers’ working conditions are compatible with their right to standard weekly leave. Any violation of these rules is subject to a €30,000 fine and one year’s imprisonment. The same sanctions apply to employers who link lorry drivers’ pay to distance travelled or the volume of cargo transported.

Reaction of social partners

Social partners strongly support the new legislation. In 2013, the French Building Federation (FFB) issued a press release listing 10 suggested measures to end posting fraud (in French) and abuse in the building sector. It launched a petition within the sector to put pressure on the EU institutions to adopt a new directive, and on the French authorities to increase field inspections. The Federation of Small and Medium-sized Enterprises (CGPME) also reacted positively to the new law.

Trade unions have contributed to the design of the new legislation. In particular, the National Union of Cabin Crew Personnel (SNPNC) describes the right of unions to take legal action on behalf of employees whose work is undeclared as a ‘real step forward’.

Commentary

The new law against unfair social competition increases the administrative burden of service providers, especially of contractors. The efficacy of the law will mainly depend on whether the labour inspectorate has access to reliable and up-to-date information. The relevance of some penalties (in particular, the blacklist system or barring companies from public assistance) and their compliance with internal market rules may be considered questionable.

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