Fahri Karataş Bilkent Üniversitesi Hukuk Fakültesi 4.Sınıf
Introduction
Officially defined , a posted worker is an employee sent by their employer to carry out a service in another EU Member State on a temporary basis. Moreover, the main employer is registered on the same state where the employee normally doing his work. The main practical difference between the freedom of movement of labour and posting of workers institutions that in a posting situation, worker is hired and employed in the sending State, while carries out his work in another State. Which means, the situation of posted workers does not correspond with the terms at the Article 45 of the Treaty on the Functioning of the European Union (hereby TFEU). That is to say, they do not enjoy the all of the rights and freedoms that nationals do.
The framework of this distinction is determined by two directives. Main one is the Posted Workers Directive which came into force at 1996 and amended at 2018. The Directive covers the areas where the posted workers have the same rights as the nationals of the hosting State. The second one is the Enforcement Directive which determines, obviously, the enforcement of the former directive by for example making a distinction between genuine posting and deceptive one, liabilities of the employer and the Member States to the worker and resolving of the subcontracting chains.
However, existence of these legislations do not guarantee the legal well-being of the posted workers. Abusive practices caused by the exclusion of certain rights such as social security contributions in posting legislations, such as fake posting, fraudulent activities of letterbox companies and illegal employment are still common in the posting field.
While these legal and actual problems exists on this field of labour one could ask a simple question; why European legal system does not allow posted workers to enjoy all of the rights, perks and freedoms that nationals or any other worker who use her freedom of movement?
Posting of Workers Directive and It’s Suffice
In the beginning words of the report that is prepared by the European Commission about the posting field, it is clearly stated that the Posting of Workers Directive (hereby the directive) is meant to be implement the principles that are the free movement of workers, freedom of establishment and freedom to provide services. That is to say, in the areas that are regulated by the directive these principles are not just meant to be respected, but the other principles to regulate those freedoms about how they will be exercised could be counted as the main pillars of the Directive.
The Directive, does not set general rules to govern the relation between the employer and posted worker. It simply sets the issues that must be governed by the legislations or universally applicable collective agreements on the host Member State. This approach is on the scope of the free movement of workers. Which means, it is a direct product of the Article 45 of TFEU. Moreover, the same article sets up the basic grounds and characteristics for the freedom of movement. The second clause abolishes any discrimination regarding employment remuneration or any other conditions of work and employment on the basis of nationality. The directive ensures this abolishment by setting up the fields where a posted worker enjoy the same rights as the permanent one. Which covers handful of fields such as remuneration, maximum work periods and minimum rest periods, annual leave etc. However, it does not cover areas such as social security. Which means, in these uncovered areas, posted workers could have different, and if so lesser rights perks or freedoms in comparison with the permanent workers and only reason behind that is they are employed by an employer that is registered outside the host Member State even in the practice and reality they carry out their work within the borders in the host state. That means, even if they are not discriminated because of their nationality, they are discriminated because of the national characteristic of their employment contract, just because it is with an employer registered in another nation’s company register. Which not just cause a violation of the principles on the Article but also hinders the progress of cohesion that has been set as an aim by the Article 3 on Treaty on European Union. Moreover, The European Social Charter signed by the governments on European Council ensures just work conditions for all workers, uncovered areas. By the directive cause double standards between a posted and permanent worker, which severely injures the just work environment. With all these aspects, the very existence of this directive with the rights in numerus clausus fashion does have a contradictory characteristics against the main principles of the Union.
Enforcement Directive and Main Issues on Actual Enforcement
Second main legislation on the posting field is the Directive 2014/67 about the enforcement of Posting of Workers Directive. This directive sets some of the liabilities of Member States and service provider (employer) to ensure the implementation of the Posting of Workers directive. Such as making the distinction between a genuine and fraudulent one, operate inspections and upon the failure, initiate administrative and judiciary processes by the Member States. For the employer, such as responsibility to provide information both to the employee and to the State.
Identification of Genuine Posting
One of the most important aspects of this directive is the numerous situations that have been set up to identify a genuine posting. This criteria on Article 4 of course are not with the numerus clausus characteristics, which means they are just within an advisory nature to the Member States to detect a fraudulent posting. That is to say, apart from these situations, with the factual and practical elements, the organ of the Member State could detect the difference so well. Article advises some elements to look for to detect such as nature of the activities, starting date of the posting, the place where posted workers are recruited and from which they are posted and so on.
Even though those elements are mostly transposed among the Member States, European Labour Authority’s interviews with representatives of the enforcement authorities from Member States show us elements in second and third clause of the Article 4 is hard to identify. Which includes, detecting the place where undertaking registered office and administration and have a license, identifying the number of contracts performed in the sending Member State, and simply detecting if posting worker is really a temporary worker. ELA’s report clearly stresses that except the State Labour Inspection Office of Czechia, all officers report that they encounter issues to identify these elements.
To tackle this problems, especially Italian officers point out the importance of cooperation with the authorities of the sending Member States when it comes to the identification. Which is, at least at government level could be a positive approach in terms of the cohesion aim at the Article 3 on Treaty on European Union.
Subcontracting Chains
Posted workers are highly concentrated in construction sector. Thus, it is natural for authorities and institutions to focus on this sector while preparing reports about posting field. Moreover, subcontracting is a common practice in construction business. Which means, in many cases, the undertaking or person that have the employer-employee relation with the worker is not the owner of the actual undertaking, in this case the construction itself. Frequently the employer on the contract is just a temporary work agency who facilitate the employment process between the owner of the actual undertaking and the actual worker. This situation causes a main problem; with the subcontracting, detection of the actual employer becomes very challenging both for the State and the trade unions. For the trade unions of course, it becomes a challenge to place the employer to conclude a collective agreement with. For the Member State, it could cause problems to assign the liabilities among the contractors. Fortunately, the Article 12 of Enforcement Directive allows Member States to provide workers the right to hold liable the contractor of which the employer is a direct subcontractor, in addition to or instead of the employer in the failures of complying with wages or social security contributions. Thus, at least on the legislation level, process of claiming of rights for workers is facilitated.
10 Member States have introduced a full chain liability, which facilitates the legal process in a violation situation in favor of the worker. Belgium, Spain, France and Italy have also set up another measures, such as a maximum number of subcontracts within subcontracting chains.
However, in the enforcement field of this provisions, inconsistencies still exist and are common. European Labour Authority reports that under the Austrian scheme, workers have to enforce their rights themselves within very short timelines. In Belgium, it has been observed that although liability for past wages exists, in practice it is not often enforced. In the Netherlands, according to an official from the Labour Inspectorate, the regulation could be made more effective by extending the chain liability to remuneration and working hours (2023).
Ergo, to support the facilitation process for workers and trade unions in a wider perspective, the limitation on the number of subcontracts or any other measures to facilitate the right-claiming process for workers should be taken on EU Perspective. For the liability part, Germany could serve as a prototype for the EU Level Legislation. In German system, where the general minimum wage is applied to the construction sector, and to situations where there is a universally applicable collective agreement on a minimum wage in the sector; for the civil liability and the act of committing an administrative offence, it is irrelevant whether the employer is domiciled in Germany or abroad. The general contractor, at the top of the chain, is responsible for their subcontractors over the entire construction site. Furthermore, the general contractor can be held liable for an administrative offence if he/she knows, or does not know due to negligence, that the subcontractor does not pay the proper remuneration to workers or does not pay it on time.
Liability to Provide Information
Although it could seem mostly as a procedural liability, providing information has a key role to exercise of rights in modern continental law. In Roman law, ability to pursue a right by judicial means is mostly done by actio that was given by Praetor. This actio has the nature of a right, but it was mainly a practical mechanism which allows plaintiff to bring the alleged violation (if not mentioned on Ius Civile) to the court. While in the modern continental system, generally, ability to bring a violation of the right to the court follows the actual right itself, it is obvious that if there is no such plaintiff in a violation, there is no exercise of rights but its injury. Although ignorance does not cause a person to lose her right, the transition from a violated right holder to plaintiff is only by information and awareness.
Rules and conditions on the liability of providing information to the posted workers are legislated on EU Level. However, on Article 3 of Posted Workers Directive where the main liabilities are set, there are no such clause as providing information. This obligations are imposed with a simple nature by the Article 4 of the Directive. Which states basically, Each Member State shall take the appropriate measures to make the information on the terms and conditions of employment referred to in Article 3 generally available. Although methodology or technique to ensure that providing are not set up, moreover it is not detailed at all, we could see the extension on the Enforcement Directive. The Member States’ responsibility seems to be centered by ensuring the information process is clear, transparent and easy to access. Which mostly regulates the nature of the informative website.
The liabilities of the employers on providing information mostly regulated by another Directive, which is Directive 2019/1152 on transparent and predictable working conditions in the European Union, liabilities of the employer has been set on numerus clausus format, with making the additional information possible. This covers; the remuneration to which the worker is entitled in accordance with the applicable law of the host Member State, where applicable, any allowances specific to posting and any arrangements for reimbursing expenditure on travel, board and lodging and the link to the single official national website developed by the host Member State pursuant to Article 5(2) of Directive 2014/67/EU of the European Parliament and of the Council. Importantly, these are the basic liabilities obliged on EU Level, which could be extended by the Member States or collective agreements. Moreover, the extension would be more satisfactory in terms of the principle number seven of European Pillar of Social Rights, which provides the right to be informed in writing at the start of employment about their rights and obligations resulting from the employment relationship.
To sum up, by providing information, both employer and the Member States, give a modern actio to the posted worker, which allows her to pursue his right on judiciary bodies. Which causes the facilitation of the judicial and administrative processes and as a whole, enforcement itself.
Violations and Infringement Processes
While the infringement process has initiated for 24 Member States at 2021, at January 2023, European Commission clearly states that 17 Member States still fail to transpose and enforce some provisions of the Enforcement Directive. The construction sector is at the center of the analysis in the light of the European Labour Authority and European Commission Reports, since it is relevant to discuss a sector where an important part of the posted workers are.
European Labour Authority sets forth six main abusive practices on posting field. Which are, letterbox companies, permanent posting, bogus self-employment, non-respect of working conditions, fraudulent social security forms and illegal employment.
The report of the European Commission about letterbox companies states that there is no single common and agreed terminology or definition of the term. However, for the sake of this study, we could understand them as the letterbox companies are understood as companies that are incorporated in one Member State but do not perform any activity in that Member State or anywhere else. In the posting field, they could be companies whose only undertaking is nothing but posting itself. Which serves as a tool to create a fraudulent posting scenario in order to pay lower social security contributions since they are not included on the Article 3 of the Posting of Workers directive, therefore paid on the standards of the sending State which is mostly lower than the receiving one. This situation severely violates workers right to work in just conditions stated in European Social Charter and injures the aim of cohesion on Treaty of European Union by using several countries just as a legal platform and carrying their workforce to another to exploit their labour for the sake of profit, but still remain as a common abusive practice.
Conclusion
Posted workers are a small part of the European labour field. They only make approximately one percent of the all employees working on European Union. In that perspective, posting field could be seen as an exceptional practice which are mainly concentrated some areas and does not hold a significant role on the employment field of European Union. However, the very existence of the Labour Law is to protect the weaker side of the employment contract, who is the worker herself irrelevant from their so called economic significance. Thus, the numbers should not have a neglecting effect, and the importance of posted workers’ conditions must be considered in the scope of equality and social reliability.
In that perspective, the primal demand should be in this nature; every posted worker’s legal and actual status must be elevated to the national’s level. This demand is not just within a worker’s perspective, but it is necessary to satisfy the principles on TFEU and European Social Charter and cohesion aim on the Treaty on European Union.
Moreover, the existence of the posting institution causes a double standard for workers who work in same undertaking. Especially with paying lower social security becomes possible for the employers thanks to the posting institution, workers’ exploitation is facilitated. Needless to say, this is just because of the very existence of the Posted Workers Directive and its insufficient inclusiveness on worker’s rights. With all these infringements, violations, reports and any other remedy attempts on posted workers’ rights cost time, money, labour and seems to be ineffective at the matter of the time. Ergo, there is no need for such a distinction between the workers on the national and work period basis. Full-enjoyment of national rights, perks and freedoms for posted workers would facilitate the cohesion process, satisfy the social objectives of the Union and make it a lot harder to set up abusive practices for the vice. Therefore, finally, the ultimate solution would be the abolition or amendment of the Posting of Workers Directive (and naturally the Enforcement Directive) in the favor of total enjoyment of the rights by the posted workers.
FOOTNOTES
1 Thanks to Prof. Giulia Frosecchi (University of Florence) for inspiration and suggestions.
2 European Labour Authority, 2024.
3 European Commision, 2019
4 1. Freedom of movement for workers shall be secured within the Union. (The Treaty on the Functioning of European Union, 2012)
5 It shall promote economic, social and territorial cohesion, and solidarity among Member States. (Treaty on European Union, 2012)
6 European Labour Authority, 2023.
7 European Labour Authority, 2023
8 EurActiv , 2023. European Labour Authority, 2023.
9 European Labour Authority, 2023.
10 European Labour Authority, 2023.
11 Murray, 1875.
12 Directive on the enforcement of Directive 96/71/EC , 2014
13 Member States shall indicate clearly, in a detailed and user-friendly manner and in an accessible format on a single official national website and by other suitable means, which terms and conditions of employment and/or which parts of their national and/or regional law are to be applied to workers posted to their territory and take the necessary measures to make generally available on the single official national website and by other suitable means information on which collective agreements are applicable and to whom they are applicable, and which terms and conditions of employment are to be applied by service providers from other Member States in accordance with Directive 96/71/EC, including where possible, links to existing websites and other contact points, in particular the relevant social partners (Article 5, Clause 2 of the Directive on the enforcement of Directive 96/71/EC , 2014).
14 Directive of the European Parliament and of the Council on transparent and predictable working conditions in the European Union, 2019.
15 European Pillar of Social Rights, 2017
16 European Comission, 2023
17 European Labour Authority, 2023
18 European Comission, Directorate General for Justice and Consumers, 2021.
REFERENCES
Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union, 2019/1152 (European Comission and Council 6 20, 2019).
Directive on the enforcement of Directive 96/71/EC (European Parliament and Council May 15, 2014).
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European Comission. (2023, January 26). January Infringements package: key decisions. Official Website of European Commission: https://ec.europa.eu/commission/presscorner/detail/en/inf_23_142
European Comission, Directorate General for Justice and Consumers. (2021). Letterbox Companies: Overview of The Phenomenon and Existing Measures. Luxembourg: Publications Office of the European Union.
European Commision. (2019). REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE COM/2019/426 FINAL. Brussels: EUR-Lex.
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European Labour Authority. (2024, 07 10). Posting of Workers. European Labour Authority Official Website: https://www.ela.europa.eu/en/topics/posting-workers
European Pillar of Social Rights (The European Parliament, the Council and the Comission 11 2017).
European Social Charter (Strasbourg May 3, 1996).
Murray, J. (1875). A Dictionary of Greek and Roman Antiquities. London: William Smith, D.C.L., LL.D.
The Treaty on the Functioning of European Union (10 26, 2012).Treaty on European Union (10 26, 2012).
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