Patiently and rigorously, France oriented the interpretation of EU law to justify the national legal framework aiming at fighting fraudulent postings.
A recent Court of Cassation ruling summarises key features of applying ECJ case law to French law.
The case giving rise to the ruling is concerned with a French company in the construction sector established in France, present in Portugal in the capacity of foreign company nonregistered with the Commercial Register Services, and posting workers from Portugal to France.
Following inspections by the labour and social security authorities carried out on different work sites in France,
- the manager of the French company was prosecuted before a criminal court for i) concealed employment by dissimulation of activity in the capacity of de facto manager of the Portuguese company, and ii) concealed employment by dissimulation of paid employment in the capacity of manager of the French company
- the French company was prosecuted for concealed employment by dissimulation of paid employment
The sentence pronounced by the Court of Appeal of Bordeaux, Criminal Chamber:
- the French company -fine of EUR 40.000
- the manager of the French company: six months imprisonment suspended, and a fine of EUR 10.000
The Court of Appeal found inter alia that France is not deemed to be the Member State other than the one in which the posted workers normally work.
The main plea brought by the defendants is the existence of E101 certificates issued by the competent authority of Portugal, that bind both the social security competent authority of France, and the courts of the latter Member State.
To understand the Court of Cassation’s reasoning (that applies mutatis mutandis to “similar” cases of fraudulent posting), the following grounds must be addressed:
ECJ case law:
- judgment of 14 May 2020, Bouygues travaux publics, C-17/19
- judgment of 6 February 2018, Ömer Altun, C-359/16, and judgment of 2 April 2020, Vueling Airlines SA, C-370/17 and C-37/18
- Article L. 1221-10 of the Labour Code on the pre-employment statement (DPAE):
“An employee can only be hired after the employer has made a declaration to the social security bodies designated for that purpose.”
From the perspective of employment law, in the case at hand, fraudulent posting triggers employment within the French territory by the “recipient of the service”, employer de facto.
Employment within the French territory triggers the obligation to send the pre-employment statement.
Failure to send the pre-employment statement triggers concealed employment by dissimulation of paid employment (where relevant with retroactive effect).
In the same context, the French law precludes foreign companies from exercising a continuous, stable, and regular activity within the French territory under the “umbrella” of the Posting of Workers Directive (i.e., concealed employment by dissimulation of activity).
The borderline between the freedom to provide services and the (obligation) to establish is certainly challengeable, however, French courts consider certain facts rather than evidence.
In assessing the existence of a genuine posting, the actual performance is decisive, documentary evidence being only indicative of nature.
Social Security Coordination
E101 (A1) certificates create a presumption of lawful affiliation of the worker concerned to the social security system of the issuing Member State and bind both the social security competent authority of the receiving Member State, and the courts of the latter Member State.
Where the affiliation is challenged by the receiving Member State , first the procedure laid down in Article 84a(3) of Regulation 1408/71 (Article 76(6) of Regulation 883/2004) must be initiated, and the competent authority of the issuing Member State must be “put in a position to review the grounds for the issue of those certificates in the light of the concrete evidence submitted by the competent institution of the host Member State that indicates that those certificates were fraudulently obtained or relied on.”(see to that extent the judgment of 2 April 2020, Vueling Airlines SA, C-370/17 and C-37/18).
Provided that the competent authority of the issuing Member State “has failed to undertake such a review and has failed to make a decision, within a reasonable time, on that evidence, cancelling or withdrawing the certificates at issue, where appropriate”, a national court of the receiving Member State “may, in proceedings brought against persons suspected of having used workers posted under cover of such certificates, disregard those certificates if, on the basis of those elements and in compliance with the guarantees inherent in the right to a fair trial which must be granted to those persons, it finds the existence of such fraud.” (see to that extent the judgment of 6 February 2018, Ömer Altun, C-359/16).
In the case at hand, the criteria required to disregard the E101 certificates issued by the competent authority of Portugal were not met.
Interoperability between the employment law and the social security coordination regulations
In its judgment of 14 May 2020, Bouygues travaux publics (C-17/19), the ECJ held that an E101(A1) certificate is binding on the courts or tribunals of the receiving Member State solely in the area of social security.
It follows that in the case at hand, if the court is not in a position to disregard the E101 certificates issued by the competent authority of Portugal, it may merely disregard the question of their validity.
Moreover, although it must be made to the social security body, the pre-employment statement (DPAE) has a wide scope, and it cannot entail affiliation of workers covered by E101(A1) certificates to the French social security system.
The DPAE “is part of the system to combat the various forms of irregular work and employment”, and is (also) intended “to guarantee the effectiveness of the checks carried out by the competent national authorities in order to ensure compliance with the employment and working conditions imposed by labour law” etc.
It follows that where relevant, the existence of the E101(A1) certificate does not preclude the obligation to send the DPAE.
Practical consequences of the reasoning used by the court
The question is in which situations a DPAE and an A1 certificate can “coexist” in a lawful scenario.
Following the Court’s request, the oral submission delivered at the ECJ hearing in Bouygues travaux publics (C-17/19) has largely covered the scope of the DPAE. The interpretation was finally left to the discretion of the referring court (i.e., the French Court of Cassation).
Certainly, a DPAE and an A1 certificate can “coexist” when for any reason, the French competent authority decides not to challenge the A1 certificate (e.g., no concrete evidence that indicates that the certificate was fraudulently obtained or relied on). That would be only regulatory conformance.
Multi-state employment can give rise to situations in which a DPAE and an A1 certificate are due at a time, in a lawful scenario.
Situations in which although the criteria from Art 12 of Regulation 883/2004 are met, there is a doubt on whether (e.g.) France is deemed to be the Member State other than the one in which the posted worker normally works, can give rise to the obligation to send the DPAE while the social security subjection is not affected.
It must be however recalled that the existence of a DPAE entitles the employee (the “posted worker”) to rights and obligations provided for by the French Labour Code, beyond those arising from the Posting of Workers Directive, and that partially undermines the economic advantage of posting scenarios.
As regards the significant advantage might be triggered by a “chosen” social security subjection, the French competent authority will not hesitate to enforce the judgement in Altun, any time the recovery of due amounts will be genuinely foreseeable.
Fraudulent postings, and (even) borderline situations are likely to fail the French “reasoning test”.