Pending the ECJ ruling in Bouygues travaux publics and Others (C-17/19), the French Cour d Cassation had stayed proceedings in other cases as well.
On 12 January 2021, by copy pasting the same reasoning, the Cour de Cassation has rejected several appeals, inter alia in BLANCONORTE LDA (ECLI:FR: CCAS:2021:CR00026).
An inspection carried out by the Gironde labour inspectorate found that the company BLANCONORTE, active in the building sector, had been making numerous posting notifications for its employees to carry out building and public works projects within the French territory, acting as a subcontractor for several companies based in France.
To establish the offence of concealed employment by dissimulation of activity, the Court of Appeal has pointed out that 85% of the company’s activity was not carried out in Portugal (Member State of establishment), in addition to the fact that the activity concerned prospecting of clientele within the French territory.
It appeared that that the “head office” of the company in Portugal was a simple room with neither employees nor a computer and was used only as a place for recruitment.
Mr. X, BLANCONORTE ‘manager was found guilty of the offence of concealed employment and sentenced to a suspended prison sentence of eight months, and a fine of 10,000 euros.
Pursuant to the ECJ ruling in Bouygues travaux publics and Others, the A1 certificates issued by the competent authority in Portugal bind the French courts, exclusively as regards social security coordination.
That statement must be read textually: unless the conditions from the ECJ ruling in Altun and Others (C-359/16) are satisfied, the French courts may not disregard A1 certificates and impose social security subjection in France.
However, where it was established by the French courts that BLANCONORTE could not rely on posting rules, it follows that the defendant should have applied for registration in the register of professions or enterprises or in the trade and companies register, made the declarations required to the social protection bodies or the tax authorities and, lastly, made the nominative declaration prior to the hiring of employees (in France).
That follows from Article L. 8221-1.1° read in conjunction with Articles L. 8221-3 and L. 8221-5 French Labour Code, and consequently may be enforced by a court regardless the existence of A1 certificates : “The submission of E101 or A1 certificates for some or all of the employees concerned was not such as to prohibit the court from declaring the latter facts established, which in their own merits were sufficient to justify the conviction of concealed employment, an offence defined in a uniform manner by Article L. 8221-1, 1°, of the Labour Code” (ECLI:FR: CCAS:2021:CR00026, paragraph 28).
Pursuant to Article 4 Directive 2014/67/EU, Member States are bound “to make an overall assessment of all factual elements that are deemed to be necessary” in order to determine whether an undertaking genuinely performs substantial activities, other than purely internal management and/or administrative activities (Article 4.2), and in order to assess whether a posted worker temporarily carries out his or her work in a Member State other than the one in which he or she normally works (Article 4.3).
Most of the Member States have copy-pasted these provisions in their national legislation. A pragmatic transposition approach is the one chosen by Austria: “The true economic substance rather than the outer appearance of the facts shall be relevant for assessing whether an employment relationship, the cross-border posting or hiring out of workers as defined by this Federal Act exists” (Section 2.1 LSD-BG).
Article L.1262-3 French Labour Code covers at a time Article 4.2 Directive 2014/67/EU and its Preamble 11, the exclusion from the scope of the posting of any activity involves searching for and prospecting customers or recruiting employees within the French territory, and lastly the imperceptible borderline between the freedom to provide services and establishment.
Due regard must be given to ensuring proper understanding of the said article. Failure to comply may result in heavy criminal sanctions.