In a short note, as expected, the actions in annulment brought by Poland (C-626/18), and Hungary (C-620/18) were rejected by the European Court of Justice.

The ratio decidendi is the main objective of the amended Posting of Workers Directive, notably a “genuine social convergence” (Preamble 4 Directive 2018/957/EU).

I am only quoting two relevant paragraphs:

However, as noted in paragraphs 56 and 90 of this judgment, the Union legislature sought, in adopting the contested directive, to ensure the freedom to provide services on an equitable basis, namely within a regulatory framework guaranteeing competition which is not based on application, in the same Member State, substantially different levels of terms and conditions of employment depending on whether or not the employer is established in that Member State, while offering greater protection to posted workers, such protection being, moreover, as stated in Recital 10 of this Directive, the means of "safeguarding the freedom to provide services on an equitable basis” (ruling of 8 December 2020, Poland v  EU Parliament and Council ,C-626/18, ECLI:EU:C:2020:1000 paragraph 104).

To that extent, in order to achieve such an objective, the contested directive rebalances the factors on the basis of which undertakings established in the various Member States may compete, without, however, removing any competitive advantage which service providers from certain Member States may have enjoyed, since, contrary to what Hungary maintains, the directive in no way has the effect of eliminating all competition based on costs. It provides, in fact, for the application to posted workers of a set of terms and conditions of employment in the host Member State, including the elements constituting remuneration which are made compulsory in that State. This Directive therefore has no effect on the other cost elements of undertakings posting such workers, such as the productivity or efficiency of such workers, which are mentioned in its recital 16. Contrary to what Hungary alleges, this Directive does not, therefore, create any distortion of competition” (ruling of 8 December 2020, Hungary v European Parliament and Council, C-620/18, ECLI:EU:C:2020:1001 paragraph 128).

That clarifies the ratio decidendi of further ECJ rulings in relation to the Posting of Workers Directive.

The alleged conflict between Art56TFEU (“freedom to provide services”), and the Posting of Workers Directive, cannot be enforced in view of depriving the said directive from its effectiveness.

That is not an unexpected approach:

The Belgian Government, on the other hand, is of the view that the applicability of Articles 59 and 60 of the Treaty in regard to the posting of workers in the framework of the provision of services must be examined in the light of the Directive. The Directive is to be regarded as a continuation of the relevant case-law in this area”. (reference is made to Directive 96/71/EC after its adoption- Opinion delivered by AG Alber on 29 September 1999, in André Mazzoleni, C-165/98, ECLI:EU:C:1999:461   paragraph 11). 

Lastly, the ECJ clarifies the interpretation must be given to Art 3.7 Directive 96/71/EC as amended, in relation to reimbursement of expenditure actually incurred on account of the posting:

Secondly, as regards Hungary's argument that Article 3(7) of Directive 96/71, as amended, is contrary to the principle of equality, in so far as it imposes an obligation to reimburse travel, accommodation and food expenses on undertakings which post workers to another Member State, that argument is based on a misinterpretation of that provision. Indeed, as the Council has argued, the second sentence of the second subparagraph of Article 3(7) is not intended to create such an obligation. As is apparent in particular from recital 19 in the preamble to the contested directive and from the reservation contained in that sentence by reference to Article 3(1), first subparagraph, point (i), of that directive, that sentence merely provides that such reimbursement, which does not relate to pay, is governed by the national legislation or practices applicable to the employment relationship” (emphasis added)-(ruling of 8 December 2020, Hungary v European Parliament and Council, C-620/18, ECLI:EU:C:2020:1001 paragraph 134).

Member States whose legislation transposing the PWD is in breach of EU law, are called upon to amend/clarify (personal remark).