In a recent judgment relating to posting of workers, the Criminal Court (Tribunal Judiciaire) of Bordeaux (France) clarified the interpretation must be given to the concept of “continuous, stable, and regular activity within the French territory”, in the light of EU law.
The French law expressly precludes foreign companies from enforcing the provision of the Posting of Workers Directive, in view of exercising a continuous, stable, and regular activity within the French territory.
Transgressing the borderline between the freedom to provide services and establishment, by means of exercising a continuous, stable, and regular activity within the French territory, represents a breach of Article L1262-3 of the French Labour Code (breach that trigger concealed employment by dissimulation of activity in the meaning of Article L8221-3).
In the case at hand, the manager of a temporary work agency established in Poland, was prosecuted for concealed employment by dissimulation of activity, on grounds of long-standing activity carried out by the Polish temporary work agency within the French territory, enforcing rights under the Posting of Workers Directive.
Consulting the SIPSI (Prior declaration of posting) database, and subsequently previous records, the labour inspectors have ascertained that the Polish temporary work agency hired out workers to French customers since 2011.
It must be noted that the prosecution is directly concerned with a limited period, during which three workers hired out to a French customer, worked 24 hours a month.
It was however not contested by the defendant that each month, 30 workers were hired out to French customers within the French territory. 249 posting declarations were made in 2018 and 291 in 2019, for 274 workers over the two years.
To determine whether the activity carried out by the Polish temporary work agency within the French territory is stable, continuous, and regular, the court analysed the concept of establishment in the light of ECJ case-law.
The first ECJ ruling cited is European Commission vs Hungary (23 February 2016, C-179/14, EU:C:2016:108):” To that end, freedom of establishment is intended to allow a national of a Member State to participate, on a stable and continuing basis, in the economic life of a Member State other than his State of origin and to profit therefrom by actually pursuing in the host Member State an economic activity through a fixed establishment for an indefinite period” (paragraph 148 and the case-law cited).
The ECJ ruling in C-179/14, was invoked in relation to the (nonexistence) of a fixed establishment (in the case at hand).
The second ECJ ruling cited is Commission of the European Communities vs Portuguese Republic (29 April 2004, C-171/02, EU:C:2004:270), in relation to the duration or frequency of the provision of services: “The Court has thus found that services within the meaning of Article 49 EC may likewise be constituted by services which a business established in a Member State supplies with a greater or lesser degree of frequency or regularity, even over an extended period, to persons established in one or more other Member States, for example the giving of advice or information for remuneration. It observed that no provision of the Treaty affords a means of determining, in an abstract manner, the duration or frequency beyond which the supply of a service or of a certain type of service in another Member State can no longer be regarded as the provision of services within the meaning of the Treaty” (paragraph 26 citing the landmark ECJ ruling in Schnitzer C-215/01, paragraphs 30 and 31).
In view of determining in a concrete manner whether the temporary work agency carried out a stable, continuous, and regular activity with the French territory, the court analysed the case at hand in the light of the criteria laid down by Art 4.2 Directive 2014/67 on the enforcement of Directive 96/71 concerning the posting of workers in the framework of the provision of services:
- the place where posted workers are recruited and from which they are posted (Poland)
- the law applicable to the contracts concluded by the undertaking with its workers, on the one hand, and with its clients, on the other (Polish law)
- the place where the undertaking performs its substantial business activity and where it employs administrative staff (Poland)
- the number of contracts performed, and the size of the turnover realised in the Member State of establishment (only 20% of the turnover realised in France, and maximum 10% of the staff was hired out to French customers)
The conclusion is unambiguous:
“If the activity of the company in France may seem important, it is secondary to the overall activity of the company and therefore cannot be considered as habitual, stable, and continuous. Moreover, no argument can be drawn solely from the fact that the company posts each month and since several years employees to the French territory. No text of European or French law requires a maximum duration for the provision of services carried out in France, by a company from another Member State”.
Lastly, the intention to breach the law provision invoked was not established.
Such a judgment confirmed by the French Court of Cassation, would make a huge difference.