The new rules serve to implement Directive (EU) 2018/957 of 28 June 2018 (“Amending Directive”) amending Directive 96/71/EC (“Posted Workers Directive”) concerning the posting of workers in the framework of the provision of services. The aim of Directive (EU) 2018/957 is to balance the relationship between the freedom to provide services as protected under EU law and the guarantee of equal competitive conditions, on the one hand, and the protection of the rights of employees posted by their employers across borders, on the other. Pursuant to the Amending Directive the catalog of terms and conditions of employment applicable to posted workers in the EU member state to which they are posted is extended. Furthermore, employees who are posted for more than 12 or 18 months, respectively, shall be subject to all mandatory terms and conditions of employment of the EU member state to which they are posted, but for a few exceptions. The conditions under which posting allowances can be credited against the remuneration prescribed in the EU member state to which the employees are posted are clarified. Also, the applicability of the Posted Workers Directive to certain employment leasing companies is clarified and certain information obligations are introduced.

The most important changes to the German Act on the Posting of Workers are as follows:

  • The catalog of working conditions regulated by legal and administrative provisions, which must also be observed by employers domiciled abroad, was expanded. Not only minimum wage rates will apply, but all wage conditions, i.e., base remuneration, including remuneration components linked to the nature of the work, qualifications and experience of the employee and the region, as well as allowances, supplements and gratuities, including overtime rates. It is furthermore clarified that the regulations on safety, health and hygiene at work also concern accommodation provided by the employer.
  • Posting allowances can generally be credited against the remuneration paid to posted workers – this does not apply though, if the posting allowance is paid to reimburse costs actually incurred as a result of the posting (in particular, costs for travel, accommodation and board).
  • The catalog of working conditions regulated by collective bargaining agreements, which must also be observed by employers domiciled abroad, is extended. Nationwide generally binding collective bargaining agreements will apply not only in the construction industry, but in all sectors under the Act on the Posting of Workers to employers based abroad if they employ workers in Germany. Such generally binding collective agreements apply with regard to all wage conditions.
  • If an employee is posted to Germany for more than twelve months, all working conditions regulated by German laws, regulations, administrative provisions and generally binding collective bargaining agreements apply to employers domiciled abroad, but for working conditions that affect the creation or termination of the employment relationship or the company pension scheme. Under certain conditions, the period from which the aforementioned legal consequences arise can be extended from 12 to 18 months.
  • In cases of employee leasing with cross-border implications, certain information obligations are imposed on the hirer towards the lender, so that the lender is able to comply with the applicable working conditions in the business of the lender in Germany.
  • There are certain exceptions for short terms visits, e.g. for employees carrying out initial assembly or installation work which are part of a supply contract, if it does not take more than 8 days within one year; furthermore for employees who – without providing work or services for their employer to third parties in Germany, conduct meetings or negotiations, participate as visitors in a trade fair event or conferences, or visit Germany for the purpose of training in the German part of the international group or company employing them – these exemptions only applying if the visit(s) does not take more than 14 days in a row and not more than 30 days within a year.