The concept of “protection of workers” in the meaning of the Posting of Workers Directive

The protection of workers constitutes a means to safeguard the freedom to provide services on a fair basis, which is the main objective pursued by the Posting of Workers Directive (Recital 10 Directive 2018/957/EU and the ECJ ruling of 8 December 2020, C-620/18, Hungary v European Parliament and Council of the European Union, paragraphs 57 and 126).

The reasoning is simple: where “fair competition” per se, cannot counterbalance the freedom to provide services, “the overriding reasons relating to the public interest which have been acknowledged by the Court include the protection of workers” (ECJ ruling of 23 November 1999, Joined Cases C-369/96 and C-376/96, Arblade, paragraph 36 and the case-law cited).

Why genuine protection of workers grants a (more) fair competition?

Because “it ensures that the terms and conditions of employment of posted workers are as close as possible to those of workers employed by undertakings established in the host Member State” (ECJ ruling of 8 December 2020, C-620/18, Hungary v European Parliament and Council of the European Union, paragraph 57).

What are the constitutive elements of the right to protection of posted workers?

The terms and conditions of employment that must be granted to posted workers, in the meaning of Article 3 Directive 96/71/EC as amended by Directive 2018/957/EU (hereinafter referred to as the PWD).

Is the protection of posted workers a choice given to the “parties”?

Member States shall ensure that workers who are posted to their territory are granted certain terms and conditions of employment (see Article 3 PWD).

The fact that the employer and/or the posted worker consider that the latter is sufficiently protected by the law applicable to the employment relationship, is merely irrelevant (the objective pursued being fair competition).

Only a correct application of the principle of favourability (Article 3.7 PWD) may result in situations in which the law applicable to the employment relationship prevails over the host MS law.

To date, the principle of favourability from the PWD is not given an autonomous and uniform interpretation throughout the EU. In my view, the ECJ will clarify that issue.

Consequences of failure to comply with terms and conditions of employment

1 Posted workers must be granted certain terms and conditions (i.e., working conditions) laid down in the MS where the work is caried out, considering the limitations imposed by the PWD.

The EU law defines minimum requirements in the field of working conditions, by means of labour law directives.

Transposing into their national legislation the labour law directives, Member States have established a legal framework that applies to local employers and to employers posting workers, on the basis of equality of treatment (as regards posted workers considering the limitations laid down by the PWD).

Administrative and criminal penalties for failure to comply with specific working conditions are laid down by the Member States’ national legislations and apply to employers posting workers as well.

The remuneration although not protected by labour law directives, it is protected by the Member States’ national legislations.

2 Articles 5 and 6 PWD, read in conjunction with Article 11 Directive 2014/67/EU lay down the Member States’ obligation:

  • to provide for effective mechanisms for posted workers, trade unions and other third parties, such as associations, organisations, and other legal entities to lodge complaints against employers, as well as the right to institute judicial or administrative proceedings, also in the Member State in whose territory the workers are or were posted (as regards third parties under the conditions laid down by Article 11.3 Directive 2014/67/EU)
  • to protect posted workers bringing judicial or administrative proceedings against any unfavourable treatment by their employer
  • to ensure that the employer of the posted worker is liable for any due entitlements resulting from the contractual relationship between the employer and that posted worker

The employer of the posted worker is liable for any due entitlements resulting from the contractual relationship between the employer and that posted worker.

3 Although somewhat unclear, the second paragraph of Article 5 PWD as amended, lays down the Member States’ obligation to provide for “rules on penalties applicable to infringements of national provisions adopted pursuant” to the said Directive.

Such penalties should apply for failure to comply with the provisions transposing the PWD into the national legislation (e.g., obligation to guarantee terms and conditions of employment), and can be justified by the fact that posted workers are more likely than domestic workers to have their rights infringed upon. A back solution for situations in which the failure to comply with certain terms and conditions of employment does not trigger a penalty under the host Member State’ national legislation.

The failure to comply with terms and conditions of employment may trigger per se penalties.

Compliance with terms and conditions of employment- question of risk management?

It appears that compliance with terms and conditions of employment is often attached importance in relation to the concept of risk.

Risk exposure = (the probability of an unfortunate event occurring) x (the potential impact or damage incurred by the event).

The event might be occurring – audit by the competent authority 

The potential impact – penalties for failure to comply with terms and conditions of employment

To determine the risk exposure, the employer must be in the capacity to determine first the probability of an audit and be aware of the penalties for failure to comply with terms and conditions of employment.

It might appear to be a laborious task.

Examples:

The probability of an audit is not directly proportional to the duration of the assignment. Labour inspections might decide to audit notably short duration assignments.

Labour inspections might decide to audit certain business sectors particularly subject to unfair competition. Such sectors are not necessarily those “listed” as high-risk sectors and vary from one Member State to another.

It is hard to predict labour authorities’ behaviour in enforcing the amended PWD-a genuine opportunity to mitigate unfair competition (that concept being given different “interpretations” not only in different Member States, but sometimes in different regions of a Member State as well).

Penalties for failure to comply with terms and conditions of employment are not covered by the Member States’ obligation to guarantee “access to information” in the meaning of Article 5 Directive 2014/67/EU. Such penalties are effective, proportionate, however in certain Member States more than dissuasive.

The takeaway

Compliance with terms and conditions of employment represents the sole solution to eliminate risk.