Simplification of the notification process delayed?

European Commission: report on the application and implementation of the Posting of Workers Enforcement Directive

By Audrey Morew and Sara Fekete

Beitrag als PDF (Download)

On September 25, 2019, the European Commission presented its report on the application and implementation of the Posting of Workers Enforcement Directive (2014/67/EU), assessing in particular the appropriateness and adequacy of the application of national control measures and administrative requirements introduced by the Members States on the basis of its Article 9(1).
The Enforcement Directive was implemented in all Member States starting from June 18, 2016. In its report, the European Commission summarizes the three years of experience of Member States and relevant stakeholders with the system for administrative cooperation and exchange of information.

The scope of the Enforcement Directive
According to the Enforcement Directive, all Member States are authorized to impose certain administrative requirements in order to ensure effective monitoring of compliance with the obligations set out in the Posting of Workers Directive (96/71/EC), namely guaranteeing to posted workers the “core labor rights’”applicable in the host country on the basis of law, regulation or administrative provision, and/or universally applicable collective agreements (provided these are more favourable than the rights enjoyed on the basis oftheir home country employment regulations):

(a) Maximum work periods and minimum rest periods,
(b) Minimum paid annual holidays,
(c) The minimum rates of pay, including overtime rates (but excluding supplementary occupational retirement pension programs),
(d) The conditions for hiring out workers, in particular the supply of workers by temporary employment undertakings,
(e) Health, safety and hygiene at work,
(f) Protective measures with regard to the employment of pregnant women or women who have recently given birth, of children and of young people,
(g) equality of treatment between men and women and other provisions on nondiscrimination.

To achieve its goal, the Enforcement Directive established a common framework of a set of appropriate provisions, measures and control mechanisms necessary for better and more uniform implementation, application and enforcement in practice of the Posting of Workers Directive, including measures to prevent and sanction any abuse and circumvention of the rules applicable to posted workers.

Administrative requirements during postings
The Enforcement Directive itself enlists a range of administrative requirements the Member States can pick and chose from to guarantee the respect of the above ‘core labor rights’ during postings:

a) to make a simple declaration to the responsible national competent authorities in order to allow factual controls at the workplace (Posted Worker Notification, PWN);
b) to keep or make available and/or retain copies of the employment contract or an equivalent document relevant to the assignment, including payslips, time sheets and proof of payment of wages during the posting, as well as after the period of posting at the request of the authorities;
c) to provide a translation of the retained assignment-related employment documents;
d) to designate a person to liaise with the competent authorities in the host Member State in which the services are provided and to send out and receive documents and/or notices;
e) an obligation to designate a contact person, if necessary, acting as a representative through whom the relevant social partners may seek to engage the service provider to enter into collective bargaining within the host Member State.

Although the list of requirements included in the Enforcement Directive is indicative and non-exhaustive, allowing the Member States to choose the preferred control measures – or even introduce new ones as long as they are justified and proportionate – the European Commission’s assessment indicates that most Member States impose most or all of the administrative requirements listed in Article 9(1).

Challenges with the administrative requirements
While the Enforcement Directive may suggest that very similar duties apply for service providers across the Member States, the actual requirements put in place in Member States are very diverse, creating a complex administrative labyrinth for businesses wishing to post their employees on temporary assignment.

The fields where the major variations can be perceived among Member States include:

The group of employees subject to PWN requirements (i.e., 14 out of 28 Member States apply the administrative requirements to third-country nationals retaining their employment relationship outside of the EU, while a limited number of Member States requires filing a PWN for business visitors as well),

  • The volume of essential information required to file the PWN for each posted worker (the level of information required varies between 10 and 50 pieces of information related to the posted worker, the overall assignment, the home or host company and the contact person or employer representative),
  • The timing of submitting the PWN (i.e., any time before the start of the service provision or by a certain deadline prior to the posting),
  • The conditions (e.g., role, host country presence) related to the contact person designated to liaise with the competent authorities and social partners,
  • The formal requirements of the assignment-related documentation as well as the duration of the document retention during and after the posting; and
  • The way inspections are conducted to monitor compliance and the amount and type of penalties imposed by each Member State’s government for non-compliance with PWN requirements.

The European Commission’s Practical Guide, published together with the report, confirmed that business visitors should be excluded from the scope of the Posting of Workers Directive, and hence from the related notification requirements. However, as there is no official definition of “business visitor” in EU law, and the Practical Guide is a non-binding document, the definition of this employee category is left to the discretion of the Member States, currently leading to discrepancies in the personal scope of PWN requirements across the region.

Review of the Enforcement Directive – time for a change?
PWN – related administrative requirements introduced by the Member States during the implementation of the Enforcement Directive are de jure in line with the scope of the regulation. In practice, however, the introduction of measures on the basis of the Article 9(1) of the Enforcement Directive has led to practical problems when posting workers, especially due to an increased administrative burden.
The existence of the practical challenges related to compliance with PWN requirements was also acknowledged by the Court of Justice of the European Union (CJEU), which has already scrutinized the Belgian notification system (Limosa) and related administrative obligations in previous case law (e.g., joined cases C-369/96 and C-376/96, Arblade et al.; C-219/08, Commission vs. Belgium),declaring that the national measures introduced should only be introduced to monitor compliance with the posted worker regulation if there is an overriding reason related to the public interest, and even in these case,s the measures must be proportionate to these interests to avoid any restriction on the freedom to provide services. In its most recent case law, namely cases Cˇepelnik (C-33/1) and Maksimovic (joined cases C 64/18, C 140/18, C-146/18 and C-148/18) the CJEU has analyzed the admissibility of certain national measures aiming at protecting posted workers and combating social security fraud.

  • In the Cˇepelnik case, the CJEU was tasked with the review of Austria’s national provisions requiring the recipients of services provided by foreign businesses to provide security and suspend payment to the foreign business in case of ongoing inspections and proceedings related to compliance with PWN document retention requirements.
  • In the Maksimovic case, the CJEU questioned the proportionality of the PWN–related penalty system as a whole–given that the Austrian system imposes a fine for each violation, without applying a maximum limit on the total amount of fines that can incur–also taking into account the rigorous compliance system with inspections frequently carried out by the Austrian financial police.

In both cases, the CJEU identified that the national measures implemented under the Enforcement Directive were indeed able to create a barrier to the freedom to provide services. Similar outcomes are expected in the other cases pending decision of the CJEU.

Conclusions
Despite the CJEU’s recent case law indicating a need to review and simplify the PWN processes and with the aim to reduce the obstacles they create to freely provide services within the single market, the European Commission maintains that the administrative requirements and control measures introduced by the Member States during the implementation of the Enforcement Directive are justified and proportionate. Consequently, at EU level, there doesn’t seem to be an appetite for the imminent amendment of the Enforcement Directive.
On the other hand, the European Commission seemed to acknowledge in its report that there is room for the simplification of the administrative control systems by, for example, introducing a single EU-wide declaration system of a common template for websites.
The current administrative burdens weigting on the service providers could be solved by the common work in the Expert Committee on Posting of Workers or in the framework of the European Labor Authority once it becomes fully operational by 2024.

amorew@fragomen.com

sfekete@fragomen.com