The ECJ delivered its ruling is AFMB Ltd and Others (C-610/18).
The case in the main proceedings
The Svb (competent authority for social security in the Netherlands), declared the Netherlands social security legislation to be applicable to drivers living in the Netherlands, recruited by a local transport company in the latter country, and have carried out their activity under the Dutch company effective control.
However, the drivers have carried out their activity in several Member States (no substantial activity was carried out in the Netherlands), and have concluded employment contracts with AFMB (company based out of Cyprus), or have had the employment contracts “transferred” to the latter company (i.e. from the Dutch company).
AFMB argues that pursuant to Article14(2) (a) Regulation 1408/71/EC and Article 13(1) (b) Regulation 883/2004, Cyprus social security legislation applies to the drivers.
The main question referred to the European Court of Justice
The main question referred to the ECJ by the Raad van bestuur van de Sociale verzekeringsbank can be summarised as follows: who is the employer (AFMB, the Dutch transport company, or both)?
Opinion delivered by AG M Priit Pikamae
The AG observes that the concept of employer is not defined by the EU law, however, the social security coordination regulations do not contain reference to national legislations. Pursuant to settled ECJ case law, the concept must be given an autonomous interpretation throughout the EU.
First, the AG recalls the general definition of employment relationship in the case law : “the essential feature of an employment relationship is that for a certain period of time one person performs services for and under the direction of another person in return for which he or she receives remuneration”.
Addressing ECJ case law on social security, employment relationship and private international law, the AG underlines the difference between formal and genuine employment relationship. Criteria such as “findings on the employed person’s actual situation”, “the party responsible for engaging the worker, paying the salary and sanctioning and dismissing the latter”, “the hierarchical relationship under which the worker is subject to supervision”, “in which State is situated the place from which the employee carries out his transport tasks, receives instructions concerning his tasks and organises his work, and the place where his work tools are situated”, are invoked in view of clarifying such a difference.
Although different areas of law are assessed, the judgment in Manpower (C-35/70) is particularly important: it concerns social security coordination and underlines the subordination as a decisive criterion in determining the applicable legislation.
Assessing the circumstances of the case at issue, the AG concludes that “the contractual relationship, under which AFMB is formally the drivers’ employer, is only indicative in nature”, and as a consequence, the employer is the company located in the Netherlands.
The ECJ ruling
The ECJ observes that in view of answering the question referred by the Raad van bestuur van de Sociale verzekeringsbank, the concept of a “person who is a member of the personnel … of an undertaking” within the meaning of Article 14(2)(a) Regulation 1408/71, and of the concept of “employer” within the meaning of Article 13(1)(b)(i) Regulation 883/2004, must be given an autonomous and uniform interpretation throughout the European Union.
To that extent, in absence of any definition laid down by the said regulations, “account must be taken, in accordance with the Court’s settled case-law, of their usual meaning in everyday language”.
The ECJ’s assesses the objective situation of the worker (“ it must, first, be recalled that the application of the system of conflict of law rules established by the regulations in which those concepts are used depends solely on the objective situation of the worker concerned”), in relation to “contractual documents” set forth the existence of an employment relationship.
The analysis is focused inter alia on the concept of hierarchical relationship (and the objective criteria that determine the latter),and on the interpretation must be given to the concept of ‘a person who normally pursues an activity as an employed person in the territory of two or more Member States’.
As regards both concepts, the ECJ case law clearly distinguishes between on the one hand, the information provided by the employment contracts and, on the other, the way in which the obligations under those contracts are performed in practice.
As expected, the ECJ concludes that the employer is the company located in the Netherlands.
How am I concerned by the present ruling?
Any worker (blue or white collar, including managerial positions), “posted” to an undertaking established in another Member State, and factually subordinated to the latter undertaking, is deemed to be employed by that undertaking. Intra-corporate “postings” are not given a more favourable treatment. An audit will give little importance to the employment contract concluded with the sending undertaking.
