More than simply recruiting and selecting personnel


On 3 June 2021 the European Court of Justice (ECJ) issued a ruling in the Team Power Europe case (C-784/19). The ECJ concluded that:

Article 14(2) of Regulation 987/2009 must be interpreted in the meaning that in order to be considered as 'normally carrying out activities' within the meaning of Article 12.1 of Regulation 883/2004, a temporary agency established in a member state, must carry out a significant part of its activities of making temporary agency workers available to user undertakings established and operating in the territory of that member state.

More than simply recruiting and selecting personnel

This means that a temporary-work agency must do more than simply recruit and select personnel in a member state before they meet the criteria of Article 14(2) of Regulation 987/2009 and can pay social security in that member state.

At first glance, the Team Power Europe case seems to be soley focused on social security. However, the ruling provides some insight into the Dutch criteria (and possibly of other member states) to qualify for the work permit exemption for third-country nationals within the framework of intra-EU service provisions in Article 56 of the Treaty on the Functioning of the European Union (TFEU). The Dutch legislature implemented new criteria in 2017 following the Essent ruling in 2014 (Cā€‘91/13). The implemented criteria for legal work, based on the exemption of intra-EU service provisions, are codified in Article 1(e) of the decree executing the Foreigners Employment Act:

The prohibition referred to in Article 2, first paragraph, of the Foreigners Employment Act does not apply to a foreign national who temporarily performs work in the Netherlands in the context of cross-border services for an employer established outside the Netherlands in another Member State of the European Union, another State party to the Agreement on the European Economic Area or Switzerland, provided that:

a. the foreign national complies with all regulations regarding residence, work permit and social security to perform work in the country as an employee of the employee where the employer is located;

b. the foreign national performs work that is similar to the work to which the foreign national is permitted in the country where the employer is located;

c. the foreign national is only the substitute for another foreign national who has performed similar work, if the total duration of the agreed service is not exceeded, and

d. the employer carries out actual and substantial activities as referred to in Article 6, Paragraph 3(a) of the Employment Conditions for Posted Employees in European Union Act.

According to the Dutch legislature, the criteria under points a and b were directly related to Essent, while the criteria under points c and d appear to be additional.

To understand why Team Power Europe is relevant in this case, attention should be paid to point d, commonly referred to as the "substance requirement". In contrast to tax law, until recently, the Netherlands did not consider PO boxes to be substance. However, what exactly falls under the scope of substance can be argued, as seen in Team Power Europe. In establishing this criterion, the Dutch legislature refers to Article 4.2 of EU Directive 2014/67, which states that the criterion of "genuinely performing substantial activities" must reach beyond that of "purely internal or administrative activities". This is why Team Power Europe is also relevant outside the Social Security Law, according to the opinion of Advocate General Campos Sánchez-Bordona (C-784/19). Article 12.1 of Regulation 883/2004 is indirectly based on the same wording, via Article 14(2) of Regulation 987/2009, as is Article 4.2 of EU Directive 2014/67. In Sánchez-Bordona's opinion, there are similarities between Article 4.2 of Directive 2014/67/EU and Article 14.2 of Regulation 987/2009 in terms of genuinely performing substantial activities and purely internal activities. The ECJ continues to apply these criteria and states in paragraph 50 of its ruling that:

[i]t follows that a temporary-work agency which, like Team Power Europe, performs its activities of selecting and recruiting temporary agency workers in the member state in which it is established can be regarded as performing 'substantial activities' in that member state, within the meaning of Article 14(2) of Regulation No 987/2009, read in conjunction with Article 12(1) of Regulation No 883/2004, only if it also carries out there, to a significant extent, the activities of assigning those workers for the benefit of user undertakings established and performing their activities in the same member state.

In other words, if the only activities of a temporary-work agency are to select and recruit workers, the agency does not meet the substance requirement stated in Article 14.2 of Regulation 987/2009/EU. Given the fact that Article 4.2 of EU Directive 2014/67 has exactly the same wording, it can be concluded that the implementation of that particular article in point d means that third-country nationals working for such a company are not working in conformity with the exemption for intra-EU service provisioning and are therefore working illegally in the Netherlands.

However, there is a discrepancy between paragraph 50 and paragraph 66 of the ruling – namely that:

[i]t follows that, although a temporary-work agency which carries out its activities of assigning temporary agency workers exclusively or mainly to user undertakings established in a Member State other than that in which it is established is entitled to rely on the freedom to provide services guaranteed by the Treaty on the Functioning of the European Union, such an undertaking cannot, by contrast, benefit from the advantage offered, in the matter of social security, by Article 12(1) of Regulation No 883/2004, which consists in keeping those workers affiliated to the legislation of the member state in which it is established, since that advantage is subject to the exercise by that undertaking of a significant part of its activities of assigning workers for the benefit of user undertakings established and carrying out its activities in the territory of the member state in which it is itself established.

In short, temporary-work agencies can still use the intra-EU service provision under Article 56 of the TFEU – and with that the work permit exemption – but they are not permitted to pay social security premiums in that member state, as that must be done in the member state where the employees are working. It appears that there is a difference in the definition of "substantial activities" in social security law and in migration law, despite the terms being the same.


With this sentence the ECJ has created more confusion than clarity by mixing social security with the freedom to provide services. Parties participating in intra-EU service provision with the use of third-country employees are nevertheless advised to conduct a substantial amount of the core activities in the member state of establishment, not merely the recruitment and selection of employees, to ensure the legality of the employment of their third-country employees. This guidance was, and is based on a mixture of the criteria under points b and d of Article 1(e) of the decree executing the Foreigners Employment Act – the Team Power Europe ruling – and thus only adds further confusion. Given the harsh fines for alleged illegal employment in the Netherlands, derived from intra-EU service provisions or otherwise, employers should remain cautious.

For further information on this topic please contact David Wernsing at Maes Law by telephone (+31 85 902 12 70ā€‹) or email ([email protected]). The Maes Law website can be accessed at