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Webinar Q&A | Posted Worker Rules: Navigating the New Obligations for Employers
July 23, 2020
Posted Worker regulations have become a hot topic of discussion in the European mobility industry. Yet another new Directive comes into effect from 30 July 2020, which will see further revisions to posted worker employment conditions (“equal pay for equal work”), and reductions in the assignment duration, during which only limited host country conditions need to be applied. There are now more implications than ever before to consider in your Global Mobility and HR programmes.
Watch On-Demand Webinar Now – On-Demand Webinar | Posted Worker Rules: Navigating the New Obligations for Employers
The following FAQs address many concerns your business may have:
| Q: Are the Posted Worker Directives applicable to business trips, i.e., business meetings, seminars etc? |
NC: No, employees who do not provide services while sent abroad do not generally fall into scope of the Posted Worker (PW) Directives. Note, however, that some countries do apply a limit to the amount of days someone can attend meetings before they consider it a working activity and subject to the PW requirements. In addition, as an exception, Ireland currently considers any work-related visit to Ireland (including genuine business meetings) to fall into scope.
| Q: If we temporarily assign someone on a host basis, but they maintain home employment ties, do we need to make a Posted Worker Notification (PWN)? |
NC: Yes, if they are on home contract (and meet other conditions).
| Q: With Brexit, can we assume that the UK will not transpose EU PW Directives into national law? |
NC: The newest Directive has been implemented into national legislation, however, with a limited duration – the additional requirements will only be applicable from 30 July until 31 December 2020.
| Q: Is an employee on Van der Elst visa holding a work permit for one of the Schengen countries working on a Van der Elst visa in another Schengen country treated as a posted worker? |
NC: Usually, yes (if on home contract in the first Schengen country and then posted to the second one)
| Q: If someone goes to his home country and works from home for two weeks, for example, is there a PW Directive requirement? |
NC: If there is no service being delivered to any person or any company in the host country, then the person is not a PW under these Directives. However, we would advise to check on any social security requirements (in certain circumstances an A1 may be required)
| Q: Is an employee considered to be a PW where they are working remotely in a country which is not their home employment country but is not on assignment or working for the benefit of the local entity? |
NC: The employee’s regular place of working is a deciding factor. If the employee is assigned to work in a country other than the one where they normally work, and is providing a service for a person or entity in the host country, they will be considered a posted worker.
| Q: Are we responsible for notifications of non-permanent employees such as temporary contractors who are hired through an agency, or is the agency responsible? |
NC: A genuine self-employed contractor is not an employee and as such not subject to the Posted Worker Directives. It should be noted that some countries do apply some or all of the requirements also to self-employed workers based on their national legislation – in those cases the self-employed worker is responsible for filing the PWN. In some cases, authorities may consider a self-employed person who is carrying out services in their country not on their own behalf but on your behalf to be, in practical terms, your employee. In this case, you may be considered responsible for filing the PWN. This should be assessed on a case-by-case basis.
| Q: Who can act as a liaison in the host country if we do not have a presence (no offices) in that country? |
NC: This varies by host country, however, in many countries this can be someone at the client (usually not preferred), one of the posted workers, or often a third party can also act as liaison (Newland Chase provides this service where appropriate).
| Q: For the remuneration/equal pay requirement, is it correct that expenditures cannot be included, but can they be paid as an allowance via payroll and be counted? |
NC: Any expenditures for travel, board and lodging can be paid as an allowance via payroll, however, they cannot be counted to meet the remuneration threshold.
| Q: If a country allows accommodation to be included as remuneration for the work permit application, can that be included for PW calculation? |
NC: No. Any expenditures for travel, board and lodging cannot be counted as part of remuneration. It should be noted that the work permit requirements are based on immigration law, while the Posted Worker requirements are based on labor law. Requirements are not always the same under both types of laws.
| Q: Is there a special timeframe in which a posted worker needs to be in the host country to have equal pay? What if someone only works there for two days, and not, for example, three months? |
NC: Generally, there’s no special timeframe. However, Member States may establish rules (or allow those in a collective bargaining agreement) to exempt short-term postings (no more than on month) or postings where only “non-significant” work is performed from the equal pay requirement. In practice such exemptions are the exception, not the rule.
| Q: Is the benchmark salary in the host location a market rate (e.g., labor market testing level of equivalence), or a legal minimum wage (i.e., not relevant for most professional jobs)? |
NC: It is the minimum remuneration as determined by law or universally applicable bargaining agreement. This may vary by position and/or experience.
| Q: What exactly is meant by posting allowance? |
NC: Any allowance specifically paid to the employee during and due to their posting. Depending on the specifics of the case, some, all or none of the allowance can be counted towards the remuneration threshold: this must be looked at for each case.
| Q: Do we have to compare our posted employee with a specific group of workers in the host country with the same number of years of experience and job duties? |
NC: The remuneration level to be met for Posted Workers is defined by law/collective bargaining agreements. This may vary by position and/or experience.
| Q: For the remuneration/equal pay requirement, is it correct that expenditures cannot be included, but can they be paid as an allowance via payroll and be counted? |
NC: Any expenditures for travel, board and lodging can be paid as an allowance via payroll, however, they cannot be counted to meet the remuneration threshold.
| Q: Do the 12 months need to be consecutive? What about someone carrying out short projects over two years? |
NC: The Directive does not specify this. Based on its wording, an argument can be made that it only applies in terms of consecutive periods. However, this will not provide effective protection as intended by the Directive. Looking at the replacement rule, there will be cases where interruptions in between posting terms will have to be disregarded with respect to the 12-month period. Also, look out for national law clarifications in the host Member State.
| Q: For long-term postings do the mandatory regulations apply to expats who are already being paid from the host payroll, or does it only affect those that have remained on home payroll? |
NC: A posted worker in the meaning of the Directive is somebody who is sent to work for a limited period in another country while remaining in an employment relationship with its employer making the posting. Whether somebody is paid from a company’s payroll does not necessarily mean that an employment relationship exists with this company, so this should be examined for the specific situation.
| Q: If PW Directives don’t apply to business travelers, are there scenarios where there is a PWN requirement but not an immigration requirement? |
NC: Yes – often! The terminology may be confusing here – someone who is considered a business traveler within your organization may still be a Posted Worker based on the activities carried out. EU nationals being posted within the EU often don’t need work permits but do need PWN – there is extra risk when the posting is for up to 90 days (which typically removes the need to make a residence registration application but does not remove the need to submit a PWN).
| Q: Would a PWN be required for an employee who is not on a formal assignment but is working from home for a limited period of time for the benefit of the home entity? |
NC: Generally, a posting requires a willful and targeted decision to send somebody to provide services to a customer on behalf of their employer. If there is no recipient of a service, then PWN is generally not required. A notable exception is Belgium – the Limosa declaration is not only applicable to Posted Workers and is also in most cases applicable to people working from home for the sole benefit of an employer abroad, even if for short periods.
| Q: Is there a ‘cooling off’ period? For example, if we post someone for 12 months and this person works in their home country for another few months – can we post this person again? |
NC: The Directive does not specify this. Looking at the replacement rule, a new posting (and hence, a new 12-month period to start) can at least be assumed if the employee will not be doing the same tasks at the same place. If the same tasks will be performed at the same place, then the authorities may consider this a continuation of the posting. We would advise a case-specific assessment to be made.
| Q: How many countries have already transposed this new PW Directive into national law and are ready to start implementing the new rules from 1 August 2020? |
NC: We do not have the exact numbers as the report is not available on the EU Commission’s website yet. However, our spot checks imply that the vast majority will have this transposed into national law in time (by 30 July 2020).
| Q: For employees on home-based assignment packages, FX rate changes could impact whether the salary meets the host levels. Do firms have to assess this each year, each time the salary changes? What if the host level increases? |
NC: It is fair to assume that the FX rate will need to be checked/adjusted every time the salary is due for payment (mostly on a monthly basis).
| Q: We have been dealing with posted workers from non-EU countries with ICT work permits for up to three years and sending notifications for them. What happens now if they hold such permits exceeding 18 months? |
NC: The Directive is not directly applicable to postings from outside of the EU+. It will therefore depend on the national implementation of the Directive (whether or not this also makes it applicable to postings from outside of EU+) if any additional working conditions need to be applied and/or if a motivated notification will need to be filed. This should be checked on a country by country basis. Note as well that based on immigration law additional requirements may apply, e.g. with respect to remuneration.
| Q: If a non-EU national who travels on a work permit and starts working on an assignment in the same EU country where they hold a work permit, are they considered a posted worker? |
NC: The employee’s regular place of working is a deciding factor. If the employee is assigned to work in a country other than the one where he/she normally works, and is providing a service for a person or entity in the host country, he/she will be considered a posted worker. Therefore, if the person will stay on home country contract and only if the host country is also applying the requirements to postings from outside of the EU+ based on national legislation, then the person will be considered a posted worker (and the PWN will be needed as well as the work permit).
| Q: Is there a minimum period of time to be considered as being posted? Or are the activities to be performed leading (e.g. whether or not providing services)? |
NC: Generally, there is no minimum requirement (or relevant exemption, except for the initial installation/assembly of goods delivered) and the activities performed will be leading. However, Member States may establish rules (or allow those in a collective bargaining agreement) to exempt short-term postings (no more than on month) or postings where only “non-significant” work is performed from the equal pay requirement.
| Q: How do we manage commuter assignments where they regularly spend three days per week in host country and two in home country – can we apply a blanket PW notification? |
NC: This varies by country.
| Q: ome EU countries have state salary indexation as a matter of course. They also have a 13th month salary and holiday pay built into contracts which do not apply in other EU locations. If sending a posted worker to a country that has these contractual benefits as standard, do we have to provide these to the posted worker as we do to locals? |
NC: If these elements are mandated either by law or universally applicable bargaining agreements, then when checking what the total remuneration level is that needs to be met, these items need to be considered. This does not mean that the Posted Worker also needs to receive e.g. a 13th month. It only means that when taking all parts of remuneration the Posted Worker receives, this total remuneration must match the total of the equivalent local worker, which will include their 13th month.
| Q: Does the PWD rule apply to independent contractors hired by the company to work in the EU? |
NC: A genuine self-employed contractor is not an employee and as such not subject to DPW. This said:
- if the contractor is sent to another member state to fulfill a contract on another company’s behalf, under certain conditions the host country authorities may consider them as employees anyway and may therefore still apply the Posted Worker requirements to them.
- if the self-employed person provides services to a client of their own in the EU, in some countries the PWN does need to be filed, based on national legislation (e.g., the PWN, also called Limosa Declaration, in Belgium).
| Q: How are commuters affected? Their assignment duration might be two years; however, they may work three days/months in the host country. |
NC: The Directive does not specify this. Look out for the specific host Member State’s rules, especially exemptions that may be granted in terms of duration. Yet, in case of doubt a day-based consideration may be required.
| Q: What are the penalties for failing to observe PWN? |
NC: This varies by country – ranging from between a few hundred euros to the potential of tens of thousands of euros per infraction.
| Q: If an employee has a PWD registration in the respective country, but they don’t travel every month, do we need to apply equal pay even for those months, during which they weren’t in the host country? |
NC: If the employee is not performing services in the host country, there is no posting and hence no requirement to apply the equal pay principle.
| Q: Do you notice increased controls on A1 due to the sanitary crisis caused by COVID-19? |
NC: The A1 has been requested in order to be allowed to enter certain countries as an essential worker during the lockdown (e.g. France). In general, you can expect to have more on-site inspections due to the additional COVID-19-related health and safety regulations, also at white collar companies. During such inspections the A1 is one of the common documents requested to be shown.
| Q: Is it correct that postings to Germany do not require PWN for white collar workers? |
NC: Germany applies a sector specific approach – the PWN is only standard required for postings within certain specific industries, based on the Minimum Wage Act and the Posted Worker Act. The current industries in scope indeed are blue collar industries. However, the list of industries is subject to change. Also, based on the Temporary Employment Act, PWNs are also required for people employed by temporary employment agencies, regardless of the industry they will work in, as well as in certain cases of labor leasing by other types of companies. Therefore, under certain circumstances white collar workers are also subject to the requirement.
| Q: From 2021 will posted workers and business travelers from the UK to EU member states still require an A1 certificate or blanket A1? |
NC: The EU Social Security Regulation will no longer apply as of 1 January 2021. What the requirements and options will be, will depend on any agreements that may be in place between the UK and the EU at that time.
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With thirty years of experience, CIBT is the primary service provider to 75% of Fortune 500 companies. CIBT offers a comprehensive suite of services under two primary brands: Newland Chase, focused on global immigration strategy and advisory services for corporations worldwide and CIBTvisas, the market leader for business and other travel visa services for corporate and individual clients.
This information was prepared by webinar presenters Sophy King, SVP, Global Immigration, Newland Chase; Mehibe Hill, Client Services Director, EMEA, Newland Chase; Holger Faust, Local Partner, Greenberg Traurig LLP; and Carlijn Langeveld, Sr. Strategic Advisor, EMEA, Newland Chase.
