European Law (2016/2017) Lecture 5

Lecture 5, European Law (2016/2017), Utrecht University

European Law, Lecture 5

19 december 2016, Posting of workers

Today we will discuss the posting of workers. This is when an employer sends an employee to another Member State to provide services or to start working there. The last weeks of the course we will discuss the social benefits of the European law, like for example European labour law.

Article 45 TFEU

The rights that were discussed in the earlier weeks of the course: The free movement of workers (art. 45 TFEU) to work in another Member State, to reside in another Member State under certain conditions (there must be an economic activity, in subordination and for remuneration, en not in the public service). Employees should be protected by this article of the Treaty; there may be no discrimination based on nationality (Article 7(2) Regulation).

Posting of workers

Posting of workers is the activity from an enterprise of sending employees to work in another Member State, to work for another enterprise (posting). For example, Hans is working in the Netherlands for a container-company, he gets send to Germany to work there for another container-company (providing services). The employee Hans is sent to another Member State, to provide services for another company.

The social protection is different from the rights of article 45 TFEU. This leads to the question: might this have negative consequences for the Member States (whether there would be a conflict between different social models in Member States) and lead to social dumping and unemployment for the nationals in that Member State?

Case law on the posting of workers

The Rush Portugesa case (C-113/89): The question arose about the protection that was given and if it was allowed to give the employees lower wages. A Portugese company brought Portugese workers to work in France before the free movement of workers was allowed. The French authorities imposed a big fine because the company did not have work permits, they did not comply with the Regulations. The Case was brought before the Court and the Court rules: These workers were brought on the basis of free movement of services. They are not workers in the sense of article 45 TFEU. Also the criteria and rules are based on article 56 TFEU.

So, Posting of workers is to be seen in the framework of the freedom of services. An enterprise which performs services in another Member State an move freely without bringing their manpower.

The Court also ruled: ‘’Their need not be fear of dumping, since Community law does not preclude Member States from extending their legislation, or collective labour agreements entered into by both sides of industry, to any person who is employed, even temporarily, within their territory, no matter in which country the employer is established; nor does Community law prohibit Member States from enforcing those rules by appropriate means’’.

In a later case it was stated that it could be problematic when Portugal sends employees to France, and the France nationals won’t get a job anymore in France. The costs for France will be high, because of the collective agreements. This could be an infringement of article 56 TFEU. An infringement of article 56 TFEU is allowed in the case of compelling reason of the general interest, including protection of workers (social objective).

Applying the full labour law on posted workers may infringe the freedom of services of the enterprise posting the worker. There is a tension between the freedom to provide services and social policy of the host state:

• Is there room for the Member State to impose their full labour law?
• Is there room for MS to impose full application of collective agreements?
• Is there tension between the old and the new Member States?

Directive 96/71

The solution to this problem is the Directive 96/71: The posting of workers Directive (PWD).

The objectives in the Directive are the protection of workers, to protect the freedom to provide services, to provide a legal certainty for employers and employees. The legal basis of the Directive is article 56 TFEU: The freedom to provide services. Especially the articles 3(1, 7 and 10) are important.

In article 3 of the Directive, the hard core elements of labour law are given that may be imposed. Which employment conditions can be imposed? For example, the maximum work periods and minimum rest periods, minimum paid holidays, minimum rates of pay, equal treatment and no discrimination, the conditions of hiring-out workers, protective measures of pregnant workers etc.

These conditions can be lead down by the law, regulation or administrative provision, or, by collective agreement or arbitration awards which have been declared legally binding.

We also have the Rome Convention, especially article 6 and 7,  and international private rules of private law. The Rome Convention is more general and gives the rule on what conditions the law is applicable. The Directive is more concrete, in order to determine the interpretation of the Rome Convention. In the absence of a system for declaring collective agreements generally binding, Member States may, if they so decide, base themselves on:

• Collective agreements or arbitration awards which are generally applicable to all similar undertakings in the geographical area and in the profession or industry concerned;
• Collective agreements which have been concluded by the  most representative employers’ and labour organizations at national level and which are applied throughout national territory.

Member States only have to apply the  minimum rules, but they are not obliged to have statutory minimum wage or to declare collective agreements legally binding.

The Rüffert case: In law of Land Niedersachensachsen public contracting authorities may award contracts for building works (not declared legally binding) and local public transport services only to undertakings which pay the waged laud down in collective labour agreements. Was it allowed to impose a penalty? The German law at stake do not fix minimum wages. The conditions of the PWD were not fulfilled and could not be applied. There was a system of collective labour agreement, but it was not legally binding. The labour conditions could not be uphold against the sending company, therefore the penalty could not be imposed.

The Court made an important ruling in the case: ‘’A Member State is not entitled to impose, pursuant to Directive, on undertakings established in other Member State, by a measure such as in the main proceedings…’’

Laval case: The OWD is important and relevant in the interpretation of Article 56 TFEU (Laval case). A restriction on Article 56 TFEU is only permitted if it pursues a legitimate aim, compatible with the Treaty and is justified by overriding reasons of the public interest. It must be suitable and necessary.

The Court rules that Article 3(7) of the Directive cannot be interpreted as allowing the Host Member State to make the provision of services in its territory conditional on the observance of terms and conditions of employment which go beyond the mandatory rules of minimum protection.

Article 3(10) Directive has a narrow meaning. Any exception should be interpreted strictly. (Commission v. Luxembourg).

Forms of posting

There are several forms of posting. At first, posting is always on the basis of an employment contract and mostly it’s about  providing services in another Member State, under supervision of their own employer. However, workers can also be posted within a group of undertakings (so, not individually, but in a group). Finally, workers can be posted to another Member State as a temporary agency worker.