Employment and Industrial Relations Law

Posting of workers: the new proposal of EU Commission for revision of EU Directive 96/71/EC

30 Dec 2016

3 min read

As a specific form of temporary labour mobility, posting of workers has been a prominent topic of public and political debate during previous decades. Several factors have contributed to the debate.

Firstly, there has been an increase in the number of postings, as well as more evidence of unfair competition and the substitution of domestic workers in labour-intensive sectors. This has occurred mainly in North-Western European countries as a result of employers’ strategic use of posted workers from lower wage countries. Additionally, there has been a growth in ‘creative’, abusive and fraudulent practices, such as “letter-box” companies, bogus self-employment and numerous other forms of unacceptable practice, which involve the exploitation of posted workers. Furthermore, questions have been raised as to whether the EU Directive 96/71/EC (the “ED96”) concerning the posting of workers in the framework of the provision of services provides a sufficient legal instrument for ensuring a level playing field in the free cross-border provision of services within the EU, whilst also delivering a sufficient foundation for the social protection of posted workers.

In this context, European trade unions, employers organisations in the construction sector and the European Parliament have strongly advocated the need for significant improvements. While the Enforcement Directive 2014/67/EC (the “ED”) has focused mainly on improving processes and rules in order to better apply and enforce the provisions of the existing ED96, it has not focused on further matters relating to the framework of posting, namely with regards to a better definition of the “hard core” of working and employment conditions, as well as inconsistencies between the ED96 and regulations in the field of social security coordination.

In view of this, in March 2016 the EU Commission has published a proposal to revise the ED96. The revision introduces amendments in three main areas, ie remuneration of posted workers, rules on temporary agency workers, and long-term posting.

In particular, the proposal of EU Commission foresees that posted workers are subject to equal pay and working conditions as local workers. In fact, currently posted workers are subject to the same rules as host Member State employees in certain fields only, such as health and safety. However, the employer is not obliged to pay a posted worker more than the minimum rate of pay set by the “host” country. This can create wage differences between posted and local workers and potentially lead to unfair competition between companies. This means that posted workers are often remunerated less than other workers for the same job. According to the proposal of EU Commission, all rules on remuneration that are applied to local workers shall be also applied to posted workers, where “remuneration” means not only the minimum rates of pay, but also other elements such as bonuses or allowances, where applicable. Member States will be required to specify in a transparent way the different elements of how remuneration is composed in their own country. On the other hand, rules set by national law or any applicable collective agreements shall be mandatory for posted workers in all economic sectors.

Moreover, the above proposal provides that regulations on temporary agency shall apply when agencies established abroad post workers.

Finally, pursuant to the proposal of EU Commission, if the duration of posting will exceed twenty-four months, the host country terms and  conditions of employment shall be applied to the posted worker, if said terms and conditions of employment are more favourable than those applied by the posting country.

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