In his Opinion delivered on 26 April 2018 (C-18/17), Advocate General Wahl. clarifies the relevance of the European Law in determining the rules applicable to atypical “posting arrangements”.

The case in the main proceedings

An undertaking established in Italy (D1) has concluded a contract of provision of services with an Austrian undertaking.

To provide the service, (D1) wished to deploy to Austria, Croatian nationals employed by an undertaking established in Croatia (D2), and third-country nationals employed by another undertaking established in Italy (D3). The undertakings D1, D2 and D3 belong to the same group and the workers were transferred by D2 and D3 to D1 (the workers are employed by D2 and respectively D3 and subjected to the social security system in Croatia and respectively in Italy).

D1 has registered the workers with the competent authority in Austria, in the capacity of posted workers. The Austrian authority has rejected the application for confirmation of the posting. Where there is no employment relationship between the workers and D1 (the undertaking has concluded the contract of provision of services), pursuant to the national legislation, a work permit Is required.

Questions referred for a preliminary ruling

The Supreme Administrative Court of Austria, has referred to the ECJ two questions can be summarised as follows:

Whether considering the atypical “posting arrangements”, Articles 56 and 57 TFEU (freedom to provide services) and the Posting of Workers Directive (96/71/EC), preclude Austria from requiring a work permit for:

  • Croatian nationals (inter alia bound by restrictions to the free movement of persons, pursuant to the 2012 Act of Accession).
  • Third-country nationals.

Opinion delivered by Advocate General Wahl

Interpreting the Directive 96/71/EC, AG Wahl clarifies the type of posting applicable to such atypical arrangements, and in turn, the compatibility with the EU law of the requirement of a work permit in the present case (notably with Articles 56 and 57TFEU and where applicable, the transitional provisions annexed to the 2012 Act of Accession).

AG Wahl observes that prima facie, the atypical arrangements “fit somewhat uneasily into the situations referred to in Article 1(3)(a) and (c)” (i.e. Directive 96/71/EC).

However, the scope of the said directive is to cover different situations in which workers are transferred from one Member State to another in the context of cross-border provision of services. In context, the directive covers provision of services under a contract concluded between an undertaking and the party for whom the services are intended and the hiring out of workers for use by an undertaking in the framework of a public or a private contract.

In the present case, workers employed by D2 and D3 have been transferred from Croatia and respectively Italy to a user undertaking D1 established in Italy and operating in the host Member State (Austria).

In regard to the qualification of such transfer, recalling settled case-law of the ECJ (Vicoplus and Others and Martin Meat), AG Wahl observes that the (cross-border) service provided constitutes hiring out of workers.

AG Wahl clarifies on the one hand the relevance of the Directive 96/71/EC in determining the type of posting, and on the other hand, in identifying the undertaking making the posting : the undertakings D2 and D3 established in Croatia and respectively Italy, are posting workers to Austria, by means of hiring out such workers to the undertaking D1, established in Italy and operating in Austria, for the purpose of the provision of services, in the frame of a contract concluded between the latter and an undertaking established in Austria.

Having regard to such determinations, pursuant to Articles 56 and 57 TFEU interpreted in the light of settled case-law of the ECJ, and considering the transitional provisions annexed to the 2012 Act of Accession, AG Wahl takes the view that:

  • The work permit requirement imposed to Croatian nationals (have not been active on the labour market in Italy) is justified.
  • As the case at issue, Articles 56 and 57 TFEU interpreted in the light of settled ECJ case law (Essent), preclude Austria from requiring a work permit for third-country nationals.

To clarify the doubt in regard to the fact that the undertakings D3 and D1 are both established in Italy, AG Wahl recalled that “it is only when all the relevant elements of the activity in question are confined within a single Member State that the provisions of the Treaty on freedom to provide services may not apply”.

 Insights on and beyond the Opinion delivered

  • The EU Commission and the applicants have argued for a broad interpretation of the concept of ‘employment relationship’ (in the context of employment by undertakings belong to the same group). AG Wahl takes a different view. It will be interesting to assess the same situation, considering a coordinating contract of employment (“global employment contract”) concluded between two or more undertakings belong to the same group and a worker. In the light of the broad scope of the Posting of Workers Directive (underlined by AG Wahl), and pursuant to Article 63 Brussels I Regulation-recast- (i.e. the association of legal persons referred to as Employer, is domiciled at its principal place of business), does the said directive preclude a “global employer” from posting a worker from its principal place of business to an undertaking established in another Member State?
  • AG Wahl emphasises that the ECJ has attached little importance to the fact that undertakings hiring out workers are not temporary work agencies. However, in general, under the law applicable in different Member States, only temporary work agencies may hire out workers (e.g. Legislative Decree No. 81/2015 in Italy). The question is whether an undertaking established in a Member State, posting workers to an undertaking established in another Member State, by means of hiring out such workers to an undertaking established in the first Member State, fails under the national legislation governs the hiring out of workers.
  • The Opinion has relevance to the questions referred by the Administrative Court of Austria to the ECJ In Michael Dobersberger (C-16/18).