The recent Supreme Court decision in case No 3-2-1-179-12 confirmed that workers posted to another member state are subject to working conditions of that particular state. If a worker is employed in several states simultaneously it is vital to agree on the law governing the worker’s contract and their habitual place of work. If a worker is sent outside their habitual place of work, this constitutes a posting and it is important to verify whether in a given situation the legislation of the state where the employee is posted should be applied.
The workers in this case were construction workers in Finland employed by an Estonian company registered in Finland as an undertaking involved in residential construction. The workers were posted to Finland by the Estonian construction company.
The Court ruled that Finnish law applies to the employment relationship of the workers as their contracts have the closest connection to Finland. At the same time a Finnish sectoral level collective agreement for the residential construction industry had to be applied. Under the collective agreement the hourly salary rate was supposed to be set at 10. 3 to 11 Euros. In reality the workers were paid 8 Euros an hour.
More importantly, the Court provided additional clarification on the following: even if the parties had agreed on applying Estonian law to their relationship, in the given context Directive 96/71/EC (the Directive on free movement of workers) should have been applied. Under the Directive the workers should be granted working conditions applicable at the destination state (minimum pay rates at least). However, the Directive should not be applied to all postings: for example, a two-day conference in another country does not entail an obligation to examine the intricate nuances of labour legislation of that country. The Directive should be applied to situations where a worker is on secondment to the employer’s cooperation partner, a company in a group or in cases of rental of employees.