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What is the Posting of Workers Directive?

The Posting of Workers Directive mandatorily lays down when and which employment terms and conditions of the temporary country of employment must be guaranteed. It does not matter which employment law normally governs the employment contract pursuant to Article 8 Rome I Regulation.

The legal basis of the Posting of Workers Directive is the free movement of services. The purpose of the Posting of Workers Directive therefore seems to be primarily to promote the free movement of services, although the preamble to the Posting of Workers Directive also refers to guaranteeing fair competition and rights of workers.

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Translated into the content of the Posting of Workers Directive, the importance of the free movement of services is expressed in particular in the fact that a certain limit is imposed on the unbridled application of priority rules (via Art. 9 Rome I Regulation), while the interests of the fair competition and worker protection are mainly expressed in the guarantee of a mandatory (eliminating national scope rules) and minimal application of certain priority rules. Both aspects are coordinating in nature.

Which situations fall under the Posting of Workers Directive?

It is important to check whether the specific case falls under the Posting of Workers Directive; only in that case can an employee invoke the labor rules of the temporary country of employment laid down in the Posting of Workers Directive. The main scope provisions, or scope rules, of the Posting of Workers Directive can be found in Articles 1 and 2 of the Posting of Workers Directive. Directive 2014/67 and Directive 2018/957 offer viewpoints for the interpretation of these scope rules and supplement the scope rules.

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  • Article 1 paragraph 1 Posting of Workers Directive – general scope

Article 1(1) of the Posting of Workers Directive reads as follows:

‘This Directive applies to undertakings established in a Member State which, in the context of transnational services, post workers to the territory of a Member State in accordance with paragraph 3’.

Three criteria follow from this.

Firstly, the activity must fall under the free movement of services. It is also important that the posting takes place ‘on the territory of a Member State’. Finally, it follows from the text that it must concern labor mobility from one Member State to another.

Mobility to or from a third country therefore does not fall within the scope of the Posting of Workers Directive. Article 1(4) of the Posting of Workers Directive, in combination with number 18 in the preamble, does, however, provide that companies established in a third country may not be treated more favorably than companies established in a Member State. In fact, this seems to come down to a minimal application of the hard core from Article 3(1) of the Posting of Workers Directive, which can be freely supplemented with other priority rules.

Directive 2014/67 sets additional requirements with regard to the ‘undertaking’. The Directive now makes it unequivocally clear that PO box companies do not qualify as a ‘company’ within the meaning of the Posting of Workers Directive, as a result of which such a case falls outside the scope of the Posting of Workers Directive.

More specifically, the list of views introduced by Directive 2014/67 from Article 4 of Directive 2014/67 is relevant here. This list can be used for the interpretation of the term ‘posted employee’ from the Posting of Workers Directive (Articles 1 and 2 of the Posting of Workers Directive).

According to the logic of Directive 2014/67, the term ‘posted worker’ can be divided into two aspects: on the one hand, the company must actually carry out substantial activities in the country of residence (Article 4, paragraph 2, Directive 2014/67), on the other hand, the activities must actually ‘ temporary’ (art. 4 paragraph 3 Directive 2014/67).

Incidentally, the interpretation value of the list of viewpoints is still nuanced. Article 4(1) of Directive 2014/67 provides that the elements, as listed in the further paragraphs 2 and 3, are intended to assist the competent authorities in carrying out checks, and in the event that they have reasons to suspect that a employee does not qualify for the status of a posted worker under the Posting of Workers Directive. It is further clarified that the elements are indications for the overall assessment to be made and therefore cannot be viewed in isolation.

In Article 4(4) of Directive 2014/67, the indicative and non-exhaustive nature of the list of viewpoints is then underlined. After all, this stipulates that non-compliance with one or more factual elements from the list does not automatically mean that there is no secondment. The assessment of the elements should be adapted to each specific case, taking into account the concrete circumstances of the case.

In concrete terms, with regard to the term ‘enterprise’, Article 4 paragraph 2 of Directive 2014/67 requires the company to actually carry out substantial activities in the country of origin. In popular terms, this provision therefore (among other things) ensures that a PO box company cannot fall under the scope of the Posting of Workers Directive (with the assumption that the entire labor law of the temporary country of employment (host country) is applied).

  • Article 1 paragraph 2 Posting of Workers Directive – exclusion of the maritime transport sector

Article 1(2) of the Posting of Workers Directive excludes seafarers from merchant shipping companies from the scope of the Directive. This exception was introduced as a result of the Council’s common position in 1995. Legislative history is rather obscure on this point. Neither explanation nor motivation is given about the exception.

  • Article 1 paragraph 3 Posting of Workers Directive – three types of posting

Article 1(3) of the Posting of Workers Directive distinguishes three types of posting:

  • (sub)contracting
  • intra-group secondment
  • posting

The first type of secondment was central to the famous Rush Portuguesa case before the Court of Justice of the EU, in which a construction company from one Member State temporarily carries out construction work in the other Member State with the employees employed there. This type of posting triggered the development of the Posting of Workers Directive.

In short, the second type of secondment refers to secondments within a group. The background to this can be deduced from the proposal for the Posting of Workers Directive, in which the European Commission notes that not including this type of posting ‘could make the entire directive meaningless’.

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The third type of secondment primarily concerns secondment via employment agencies. In addition, it includes companies that do not necessarily focus on making labor available, but do so de facto. This type of secondment (via an employment agency or a general company) generally involves an agreement to provide work in itself. This differs in particular from the first type of secondment, which essentially involves an agreement to provide services.

Directive 2018/957 adds another paragraph to the third type of secondment, in which the so-called ‘on-lending’ secondment is tackled (art. 1 paragraph 1 Directive 2018/957). This refers, for example, to a situation where an employee is posted to an undertaking within a particular Member State by a temporary employment agency, where that user undertaking then makes the employee available across borders to another company or establishment. In practice, some uncertainty had arisen about the applicability of the Posting of Workers Directive in such a situation. Directive 2018/957 now provides that the temporary employment agency in a secondment is deemed to have posted the employee abroad, and by extension can be held liable for the correct application of the Posting of Workers Directive to posted workers.

  • Article 2 paragraph 1 Posting of Workers Directive – the posted worker

Article 2(1) of the Posting of Workers Directive provides the second scope rule for the priority rules laid down in Article 3(1) of the Posting of Workers Directive. It provides a definition of a ‘posted worker’:

“Any worker who works for a certain period of time in the territory of a Member State which is not the State in which that worker habitually works”.

Two additional criteria follow from this compared to Article 1 of the Posting of Workers Directive: 1. ‘a specific period’ and 2. another country of normal employment.

  • ‘During a certain period’ within the meaning of the Posting of Workers Directive’

The Posting of Workers Directive does not provide any clarifications with regard to ‘during a certain period’. Both Directive 2014/67 and Directive 2018/957 have now filled this gap. For example, Article 4(3) of Directive 2014/67 provides a general list of points of view with regard to the question of the extent to which there is a temporary nature, while Directive 2018/957 even provides for a ceiling of 12+6 months: for postings lasting more than 12+ months. For 6 months, employees are entitled to an extra package of labor rules from the host country, on top of the already applicable hard core from Article 3, paragraph 1 of the Posting of Workers Directive.

  • Another country of habitual employment within the meaning of the Posting of Workers Directive

It follows from the definition of Article 2(1) of the Posting of Workers Directive that it is important that a Member State be designated where the employee usually works. The Posting of Workers Directive lacks any further clue for the interpretation of the term. It is generally assumed that for the interpretation of this concept, inspiration can be drawn from the similar concept in Article 8 paragraph 2 Rome I Regulation.

  • Article 2 paragraph 2 Posting of Workers Directive – qualification ’employee’

Article 2 paragraph 2 The Posting of Workers Directive refers to the national law of the Member State to which the employee is posted for the interpretation of the term ’employee’. It is therefore based on a national concept of employees and therefore not on an autonomous concept as is generally assumed for the Rome I Regulation. This makes false self-employment more difficult: after all, only self-employed persons who are designated as such by the national criteria of the actual country of employment escape the effect of the Posting of Workers Directive.

Article 4(5) Directive 2014/67 clarifies that the criteria included in Directive 2014/67 can also be used to determine whether there is a question of an ’employee’ within the meaning of Article 2(2) of the Posting of Workers Directive. In doing so, Member States must, among other things, look at ‘elements relating to the performance of work, relationships of authority, the remuneration of the employee, irrespective of the way in which the relationship is characterized in any agreement concluded between the parties, of a contractual nature or otherwise’. So the “creature-goes-for-appearance” doctrine is used here.

Which employment rules are regulated by the Posting of Workers Directive?

If a case falls within the scope of the Posting of Workers Directive, the posted employee is entitled to a ‘hard core’ of labor rules of the temporary country of employment. This ‘hard core’ includes rules on:

  • work and resttimes;
  • a minimum vacation days arrangement;
  • minimum wages;
  • posting conditions;
  • health, safety and hygiene;
  • protection provisions for pregnant women, children and young people;

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Directive 2018/957 has expanded the minimum wage concept from the Posting of Workers Directive to the broader concept of ‘pay’. In addition, Directive 2018/957 provides that the employee is entitled to the full employment law of the temporary country of employment (minus arrangements for recruitment and termination of the employment contract and pensions) if the secondment lasts longer than 12+6 months.

An apparently important nuance to the imposition options with regard to such a ‘hard core plus’ is that these provisions must still be able to pass the rule of reason test separately. In this regard, number 10 in the preamble to Directive 2018/957 states that the hard core plus provisions must be compatible with the free movement of services and that ‘according to settled case law (…) the freedom to provide services may only be be limited if this is justified by imperative reasons of public interest and that limitation is proportionate and necessary.’

This appears to be different from the hard core of Article 3(1) of the Posting of Workers Directive. After all, for these provisions it is not necessary to each time be tested separately whether their imposition in the specific case is, for example, proportional: it can be said that the legislator, when determining the balance between the objectives of the directive, uses this test for the hard has, after all, implemented core provisions in advance and has therefore actually determined which obstacles to the free movement of services are justified (except that these must of course comply with, for example, the more formal requirements of the rule of reason such as transparency, etc.).

Favorability principle of Article 3(7) Posting of Workers Directive

In principle, when applying the Posting of Workers Directive, it does not matter which law applies to the employment contract via Article 8 Rome I Regulation; After all, the Posting of Workers Directive mandatorily regulates for situations that fall under the Posting of Workers Directive which labor rules of the temporary country of employment must be guaranteed.

However, this is based on the so-called ‘favorite principle’. This means that the labor rules of the temporary country of employment should only be applied to the employment contract if this is more favorable for the employee. In order to subsequently find out whether this is more favourable, it is necessary to find out the applicable labor law on the basis of Article 8 Rome I Regulation, and then compare this with the rules of the country of temporary employment.

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