Posted Workers: Navigating the New Obligations for Employers

August 6, 2020


by Sophy King; Carlijn Langeveld, Senior Advisor, Newland Chase; and Holger Faust, Local Partner/Rechtsanwalt, Greenberg Traurig Germany LLP

Intra-EU travel is getting complicated.  With Brexit looming on the horizon and an ever-changing patchwork of different rules about COVID-19 related border closures and entry bans to deal with, the great European achievement of free movement across borders has never been in such grave peril.

The Posted Worker Directives are not really helping anyone’s headache.  In this short article, we will set out what the Posted Worker Directives are all about; what changed on July 30, 2020; give some illustrative examples, and set out what you need to know, and do, now.

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What is a Posted Worker?

A Posted Worker is defined as:

“A person who, for a limited period of time, carries out his or her work in the territory of an EU Member State other than the state in which he or she normally works”. 

This definition, taken from the first Posted Worker Directive from 1996, refers to EU Member States; however, due to other agreements, the Posted Worker Directives are actually also applicable to people employed in Iceland, Norway, Liechtenstein and Switzerland (we will refer to this expanded region as “EU+”). The definition may include someone who is posted under a contract of services (e.g., to a client site), posted within a corporate group (intra-company), or hired out by a temporary employment agency to a user undertaking.  The worker must be “posted” – i.e., on assignment, rather than on local contract in the host country, and his or her nationality is not relevant.

Generally speaking, Posted Worker Directives apply only to postings within the “EU+” area; however, note that some countries do require Posted Worker notifications to be submitted even for postings that originate outside the EU, as postings by non-EU employers must not be treated more favorably than those by EU employers, per the Directive.  For example, a Posted Worker notification would be required for someone posted from India to France or, even post-Brexit, for someone posted from UK to France.

History

The first Posted Worker Directive (Directive 96/71/EC) really established the concept of what a “Posted Worker” is, and how Posted Workers should be treated.  This Directive was necessary because of a significant increase in intra-EU assignments due to the establishment of the internal market and freedom to provide services.  The Directive was implemented to establish fair competition, and to protect the rights of workers.  It covered key items, such as the definition of a Posted Worker, and the definition of core working conditions, including minimum rates of pay; maximum work periods and minimum rest periods; minimum paid annual holidays; health and safety regulations, and protective measures for certain groups.

The second Posted Worker Directive (Directive 2014/67/EU) is all about enforcement of the first one – i.e., making sure that companies follow the rules and do not try and circumvent them, plus that the labor authorities in the EU Member States would have greater visibility over postings that were occurring.  One important abuse that this second directive was designed to address was the use of “letterbox companies” (where a “shell” entity is set up purely for the purpose of posting workers under home country conditions).  The Enforcement Directive included a definition of a “genuine” posting; directed Member States to create national websites stating applicable working conditions; called for greater cooperation between member states, and also, importantly, defined allowed tools, considered to be justified and proportionate, for the monitoring of postings, i.e., the Posted Worker notification itself, the need to keep records, and the need to appoint a liaison and a local representative.  It was this last point that really made an impact, because the requirement to make notifications and to keep records allowed the labor authorities to clearly identify companies who were not in compliance – and thus to impose significant financial penalties for non-compliance far more easily.

The third Posted Worker Directive (EU 2018/957) is the new one amending Directive 96/71/EC, requiring the EU Member States to transpose its provisions into national law by July 30, 2020, and it is all about “equal pay for equal work”.  This new Directive aims to address unfair practices more effectively, but looking at differential between remuneration and working conditions in Member States.  As the EU has grown, so have wage and employment condition differences, and so the new rules make it mandatory to apply certain host Member State’s rules on remuneration, worker’s accommodation, and allowances and reimbursement of expenses.  Additionally, certain host Member State’s mandatory terms and conditions of employment apply after 12 months (which can be extended to 18 months).

It should be noted that this last Directive has been transposed into UK national legislation, applying only until the end of the Brexit transition period. It has not been adopted yet by Switzerland – however, it is generally applicable to postings originating from Switzerland.

New Obligations

There are some very important points to consider when looking at both the remuneration aspect of the new Directive and the working conditions aspect.

With remuneration, it is key to note that a Posted Worker must receive remuneration equivalent to the pay set down in law by the host Member State for the relevant position, or the remuneration as laid out in a universally applicable collective bargaining agreement, should one exist and apply to the relevant position.  Any such remuneration components of the position in the host Member State must be considered, including overtime pay, special allowances (e.g., allowance for night-shift work), and performance premiums.  Travel, board and lodging expenses granted under the Posted Worker’s employment agreement cannot be included because any allowance given in consideration of a direct expense may not be included as part of remuneration.

If the position in the host Member State contains allowances as a specific and distinct part of the remuneration package, then the Posted Worker should also receive allowances to an equal or greater value.

When it comes to working conditions, the host Member State’s mandatory terms and conditions of employment, including things like sickness pay, time off regulations, benefits, will be applicable after 12 or 18 months.  Termination procedures and supplementary company pension schemes, however, are not included.  The calculation of when an assignment hits the 12-month mark can be complex – many of our clients have asked us what to do about commuter assignments, about assignees already in a host location and about rotational projects.  A few case studies follow:

         1. Commuter assignment

Employee A regularly works in the Netherlands but commutes to Germany for one week out of every month over a two-year period.  His total duration number of days in Germany amounts to less than 12 months but his overall travel back and forth is for longer than 12 months.  Do extended German employment conditions apply to him?

A: The Directive does not provide a clear answer to this and gives only little indication as to how it needs to be interpreted in such cases.

Article 3 para. 6 of the Directive establishes that the length of a posting shall be calculated on the basis of a reference period of one year from the beginning of the posting. Pursuant to this, in the given example, the employee would not reach a posting duration of 12 months within the required reference period due to the rather small scope of his/her posting of one week per month.

However, this para. 6 of Article 3 already was part of the Directive before the 12-months’-rule was included in its para. 1a., and apparently – from a historical perspective – refers to the provisions under para. 3 and 4 of Article 3 that allow for special rules in case of postings that do not exceed one month. And there is also an argument to make that if, as in the given example, the posting as such was intended to last more than 12 months its scope of days per week/month cannot be decisive as it only defines the amount of working time while being posted for a longer term, and that the 12-months’-rule will therefore be triggered once the time has passed.    

2. Assignee already in location

Employee B has been assigned to Belgium from Croatia and has been there since January 2019.  On July 30, 2020 she will have been in Belgium for longer than 12 months. Do the extended Belgian employment conditions apply to her?

A: It is subject to the Member States’ national law whether the time of a posting prior to July 30, 2020 will count against the 12-months’-period. The Directive does not explicitly call for this. The legislator in Belgium has decided that work performed by a Posted Worker before July 30, 2020 shall be considered for the purpose of determining whether the duration of the posting actually exceeds 12 months and, consequently, whether the extended set of employment conditions are applicable to work performed from that date of July 30, 2020. Hence, in the given example, the Croatian employer must apply these conditions from 30 July 2020, as the 12 months were already reached in January 2020, and the new rules became effective on July 30, 2020.

3. Rotational project

Company X sends employees from Poland to France to work in a factory.  They send Employee C for three months; when he comes back to Poland, Employee D goes to France for another three months; following which Employee E goes to France for three months (and so on). Do the additional employment conditions apply to these workers?

A: The replacement rule in Article 3 para. 1a. of the Directive requires the EU Member States to adopt a regulation into their national law that where a posted worker is replaced by another Posted Worker performing the same task at the same place, the duration of the posting shall be the cumulative duration of the posting periods of the individual posted workers concerned. For example, Employee G, who will be fifth in the line, will be subject to the additional employment conditions from his/her first day of the posting, assuming that everyone was essentially performing the same task at the same factory.

Actions to Take

Due to the combination of additional working condition requirements and an expected long-term increase in work place inspections due to COVID-19, it is more important than ever to be compliant with the Posted Worker regulations. Here are our top tips to become Posted Worker compliant:

  • Identify the various stakeholders within your company and make them aware of the requirements and the importance of Posted Worker Compliance.
  • Obtain visibility on your Posted Worker population – know where people are going to, for what period and what they are going to do, to be able to assess whether or not they are considered Posted Workers and whether action may need to be taken. We advise considering software to support you, especially if you have a large population and/or your employees are often traveling on short notice – you will need to get ahead of the postings if you want to become compliant.
  • Make a gap analysis with regards to working conditions in sending and host countries, so that you know for which country combinations you may need to make working condition adjustments. This will make it possible to make any necessary adjustments to a posted worker’s working conditions within a short time frame.
    • Since the new obligations went into effect on July 30, priority should be given to verify if people already on long term postings (longer than 12 months) are meeting the extended working condition requirements, and to check if any motivated notification for extension of the period to apply only core working conditions is required.
  • Update your travel policy to include steps allowing for timely filing of Posted Worker notifications, gathering of the relevant posting records and adjustment of working conditions.

Please consult your Newland Chase immigration specialist or contact us for case-by-case assessment of administrative requirements.

For more information on the new Directive, review the following resources:

This publication is not intended as a substitute for legal advice. Readers are reminded that immigration laws are subject to change. We are not responsible for any loss arising from reliance on this publication. Please contact Newland Chase should you require any additional clarification or case-specific advice.