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 2016 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