The European Commission introduced a new Directive, which was approved by the European Parliament and the Council of Ministers in May and June 2018 respectively. The Member States (as well as the United Kingdom, to which the Directive still applies) are obligated to implement the new Directive before 30 July 2020, and therefore employers will need to review their culture and policies to ensure they comply with the new rules. The reason for this new Directive is that it is argued that the current Posting of Workers Directive encourages unfair competition and that posted workers are underpaid compared to local workers, resulting in ‘social dumping’ (see our article on Polish employment law for a similar point).

The following overview highlights the changes made to the current Posting of Workers Directive:

Equal pay

Under the current Directive, the hirer and/or the temporary employment agency must offer posted EU workers at least the minimum wage and minimum holiday allowance applicable in the host country. Under the revised Directive, the hirer will also have to offer additional remuneration to the workers alongside these minimum requirements. Each Member State will be free to decide for itself what this ‘remuneration’ will entail and will have to publish this on a government website.

Long-term posting and termination

If a worker has been posted to another EU country for more than 12 months (or 18 months in case of a delay), all the legal terms and conditions of employment of that host country will apply to the worker's employment under the new Directive. Each EU Member State is able to define the exact content of these terms and conditions of employment. However, they are likely to include working hours and rest periods, equal treatment, and health and safety. In defining the legal terms and conditions of employment, the Member State may also rely on non-universally applicable collective labour agreements. This means a considerable broadening of the terms and conditions of employment to which EU workers are currently entitled.

In addition, if the hirer uses different workers over a period of time, but these different workers all carry out the same work in the same place, then all the different postings will count towards the 12-month period. This will prevent any circumvention of the period of posting.

The legal terms and conditions of employment explicitly do not include procedures, formalities and conditions for concluding and terminating the employment contract.

Improvement of working conditions

In some sectors, travel and accommodation costs are deducted from the worker’s wages. That is no longer allowed under the new Directive. At the same time, the hirer – in accordance with the applicable collective labour agreement or immigration legislation – will have to ensure that proper accommodation is available for the workers.

The temporary employment agency will have to offer its posted EU workers the same working conditions that the hirer offers to its own staff. This ‘hirer’s remuneration’, as already laid down in the Netherlands by the Dutch WAADI (Wet Allocatie Professionals door Intermediairs or the Dutch Posting of Workers by Intermediaries Act), counteracts the aforementioned ‘social dumping’. In the case of a universally applicable collective labour agreement, all collective labour agreement provisions will have to be applied to EU workers.

The temporary employment agency will also remain responsible for compliance with the Directive (including ensuring correct payments are made to the workers), even if the hirer seconds the worker to a subcontractor.

Misuse and fraud

Member States must punish fraud under and misuse of the new Directive. Additionally, the Member State may require any subcontractor to comply with the same remuneration rules that apply to the hirer and/or the temporary employment agency. This will prevent circumvention of the remuneration rules (using a revolving door construction).

To do

Employers need to be aware of how different EU states implement the new directive: there will be differences between the approaches of different member states. Employers also need to factor in the immigration and other issues which we envisage as Brexit discussions continue.