The Dutch Foreign Workers Employment Act (Wet Arbeid vreemdelingen, abbr. Wav) has a restrictive admission policy for migrant workers from countries outside the European Union who want to work in the Netherlands. A foreigner from outside the EU may only work in the Netherlands if there is no suitable labour supply in the Netherlands or in any other EU Member State. In addition, this Act aims to prevent disturbances in the labour market by combating competition on working conditions. In practice, the Wav is strictly enforced. Illegal employment and scheme arrangements are detected and addressed as much as possible through the instruments provided by the Wav. Dutch shipbuilders often hire Romanian ironworkers and welders which are hired out by Romanian and Cypriot undertakings. Such hiring of workers is subject to stringent conditions. The Minister of Social Affairs and Employment (the Minister) imposed fines on a Dutch shipyard and a Romanian undertaking of (initially) EUR 792,000, - for breach of the Act. However, on the 5th of July 2017, the Dutch Administrative Jurisdiction Division of the Council of State (Afdeling bestuursrechtspraak Raad van State, abbr. ABRvS) ruled that these fines – which had previously been reduced to EUR 512,000 per undertaking – did not have to be paid.[1] In the opinion of the ABRvS, it has not been proved that work permits were required for the foreigners in question. Against this decision, no appeal is possible.

At the core of the Wav lies the prohibition for employers to employ foreigners (i.e. non-Dutch national workers) without a work permit.[2] EU citizens are excluded from this obligation, as they are entitled to work freely in all Member States under the Treaty on the Functioning of the European Union (TFEU).[3] This right does not apply to citizens of countries subjected to a ‘transitional period’ as is the case with the country of origin of the workers in question: Romania.[4] If an employer hires workers from this country without arranging a work permit, he is at risk of getting a substantial fine. However, it should be noted that the free movement of services carried out by Romanian citizens is not limited in the same way. Because of this, so-called ‘cross-border services’ may be carried out without a work permit.[5] This makes the difference between ‘employers’ and ‘recipients of cross-border services’ very important.

Vicoplus ruling of the European Court of Justice

The scope of ‘cross-border services’ within the meaning of article 45 TFEU in conjunction with article 1(3)(c) of Directive 96/71/EC (hereinafter: the Posted Workers Directive) can be derived from the Vicoplus ruling.[6] As the European Court of Justice (ECJ) considered in its ruling of the 10th of February 2011, the hiring-out of workers within the meaning of article 1(3)(c) of Directive 91/71/EC should be considered to be a service provided for remuneration in respect of which the worker who has been hired out remains in the employ of the undertaking providing the service and no labour contract is concluded with the receiver of the service. This service is characterized by the main focus on the relocation of the employee by the service provider to the receiving Member State. This employee fulfils his duties under the supervision of the service provider. The ECJ has formulated three criteria to establish whether a case concerns the hiring-out of workers.[7] First of all, it must concern a service provided for remuneration void of a contract of employment between the employee and the user of the service.[8] Secondly, the main purpose of the service must be the relocation of workers to another member state (where the work is performed).[9] When determining this, all relevant factors in respect to whether the relocation is the focus of the service, should be considered.[10]  Finally, the employee has to work under the direction and control of the undertaking in the receiving Member State.[11] For this criterion, a distinction must be made between ‘control and management over the employee and checking whether the services have been properly executed’. The latter is considered to be an important indication for the provision of services.[12]

In the two decisions set out in the introduction of this article, the ABRvS confirms the criteria developed in European case law.[13] The first criterion, that the hired-out worker must be employed by the service providing undertaking and the absence of a contractual link between the worker and the hiring undertaking, is satisfied in these decisions, as both parties agree that the Romanian undertaking employed the Romanian employees.[14] Regarding the third criterion, the nature of supervision and management, the ABRvS held that there are several factors indicating an interference beyond a mere verification of the quality of the services that were rendered. For example, when a shipyard manager functions as a primary supervisor of the Romanian employees while directly giving them work instructions, this is indicative of an employer-employee relationship and not for a service as was held in the Martin Meat decision.[15] 

The second criterion, concerning the relocation of employees as the primary purpose of the services, has not been sufficiently demonstrated according to the ABRvS. After all, the minister has acknowledged that there were both indications and contra-indications concerning the relocation as primary goal of the service. The most important factor mentioned by the minister is the request by email from the Dutch Shipyard in which they request the Romanian undertaking for '+50 employees'. A compelling indication for the two undertakings was that an agreement was concluded in which the Romanian undertaking offers a guarantee for production failures.[16]

While the Minister was of the opinion that the indications weighed heavier than the contra-indications, the ABRvS considered that this assertion is surrounded with substantial doubt. Considering the recent case law, the burden of proof in case of administrative fines rests primarily with the governing body.[17] The minister did not meet the standard of proof because he had not been able to take away the doubts regarding the primacy of the email. Consequently, the two undertakings have to be given the benefit of the doubt in the light of the guarantees as provided by article 6(2) of the Convention for the Protection of Human Rights and Fundamental Freedoms.[18] This decision is no surprise and is in line with the criteria set out by the ECJ.

Directions for everyday practice

The enforcement of the Dutch Wav is conducted by the Inspectorate SZW (hereinafter: the Inspectorate). To this end, the Inspectorate carries out checks on eligible workplaces, during which employers and employees are questioned. The answers to these questions can have serious consequences, as everyone who is interviewed at a building site, workplace, etc. is being heard as a (potential) offender. It is important to be aware of this, especially because it is, often, initially not clear to what possible infringement the Inspectorate is geared. Case law indicates that the Inspectorate may base a violation solely on their reports based on these interviews, without additional evidence. These reports are written accounts of the statements made by the parties concerned, often freely formulated by the inspector. In most cases, this report is not read to those who have been interviewed and it is not possible to correct omissions or mistakes. For this reason, it is advisable to have a lawyer present at the hearing, as he/she is trained to ensure that the statements are correctly written up. In addition, a declaration can also be submitted on the basis of written questions of the Inspectorate. This option also creates a possibility to ensure that the contents of the report correspond to what the person concerned wanted to communicate.

When the Inspectorate requests files from the undertaking’s registration, the following should be taken into account. The Inspectorate may claim any document of which they are aware of, or suspect, its existence. Typically, undertakings will initially be requested to hand over these documents. However, when a undertaking does not hand over the documents voluntarily, the Inspectorate has the right to demand this documentation. In order to prevent fishing expeditions, it is advisable to wait for the demand instead of voluntarily providing the Inspectorate with all requested documents, as this forces the Inspectorate to indicate what they are looking for. This prevents the undertaking from handing out too many documents.

In conclusion, the two decisions confirm the European case law of Vicoplus and Martin Meat while also providing a further concretization with regards to the burden of proof. It remains important to request assistance from a lawyer to ensure correctness of the written reports of the hearing. Also, it is advisable not to hand over all undertaking records upon request as waiting for an official demand provides you with more clarity on what the Inspectorate is looking for.