Working towards an integrated European labor market

The posting of workers

By Marc André Gimmy and Katja Schiffelholz

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Introduction

The primary objective of the European Union is to establish a common economic area. Therefore, the freedom of movement for workers serves to provide a European labor market where workers can offer and employers can request labor irrespective of national borders. However, there are forms of transnational worker mobility which do not integrate workers to the extent described by the freedom of movement for workers. Workers tend to remain connected to their home country with less integration into the employment system of the host country. This is referred to as the posting of workers and is guaranteed by the (active) freedom to provide services, Article 56 of the Treaty on the Functioning of the European Union (TFEU). This also applies when the posted workers are not EU citizens but from third countries (Case 43/93 – [1994] ECR I-3803) because the freedom to provide services enjoyed by the posting company results in an ancillary freedom of movement for the posted worker (see also COM [206] 159, p.8: On the basis of existing case law, it must be concluded that the host Member State may not impose administrative formalities or additional conditions on posted workers from third countries when they are lawfully employed by a service provider established in another Member State, without prejudice to the right of the host Member State to check that these conditions are complied with in the Member State where the service provider is established).

By posting workers, questions arise in relation to the applicable legal system. The Rome I Regulation generally determines which law is applicable to situations involving several countries. If no choice of law is selected pursuant to Article 3, the applicable law is determined pursuant to Article 8 (2) Rome I Regulation. In principle, the law of the country where the work is habitually carried out, regardless of the temporary posting, has to be applied. Nevertheless, Directive 96/71/EC establishes certain overriding mandatory rules in the area of employment contracts, particularly when national rules are more favorable for the employee.

The posting of workers across Europe has in addition significant impact on social law and immigration with respect to residence title and/or work permit (see table below).

Different options

In general, workers moving within the European Union must be subject to single social security legislation. Generally speaking, the social security scheme established by the legislation for the Member State of the new employment is applicable under the regulations. However, in order to give as much encouragement as possible to the freedom of movement for workers and services and to avoid unnecessary and costly administrative complications, the Community provisions in force allow for certain exceptions. Posting workers gives rise to three situations: Posting from another Member State of the European Union (a), posting from Iceland, Liechtenstein, Norway or Switzerland (b) or posting from a state which does not belong to the EAA (EU + Iceland, Liechtenstein and Norway) and which is not Switzerland (c).

In scenarios a) and b), a worker may continue to be covered for a maximum period of 24 months by the social security system of the sending state. In order to stay in their home social security system, employees will need an A1 form which states that they are still covered by their home system while abroad. Article 16 of the Regulation even permits the relevant authorities of two or more Member States to reach agreements providing for exceptions. A request concerning these exceptions shall be submitted without delay when it can be foreseen that activity will take place for more than 24 months. Furthermore, extensions can be requested if the work could not be completed due to unforeseen circumstances (such as sickness). These requests must be submitted and substantiated before the end of the initial period. If work continues for more than two years without an exemption or extension, employees will have to switch to the local social security system and contributions paid in the hosting Member State. It is worth noting that a suspension of work during a posting period (due to holidays, illness, training, etc.) does not extend the posting period. A complete new posting can however be authorized after a two-month waiting period from the date of expiry of the previous posting period.

If situation (c) arises, the sending state has either concluded a social security bilateral agreement with the hosting state which will determine the respective rules and procedures, or there is no social security bilateral agreement. In the latter case, the social security system of the hosting state will apply. This might, depending on the sending state, result in the situation that the worker remains subject to the social security system of the sending state. <–

Editor’s note: The information regarding the different countries has been provided by several lawyers from Taylor Wessing: Wolfgang Kapek and Sandra Popp (Austria), Ales Linhart (Czech Republic), Marc André Gimmy and Katja Schiffelholz (Germany), Torsten Braner (Hungary), Bart Hunnekens (Netherlands), Claire Dieterling (France), Sean Nesbit (United Kingdom), Krystian Stanasiuk (Poland), Radovan Pala and Silvia Gatciova (Slovakia). (tw)

m.gimmy@taylorwessing.com

k.schiffelholz@taylorwessing.com