Information;Order — ECLI:EU:C:2019:1108
Date: 2019-12-19
Language of the case: German
Court formation: Sixth Chamber
Subject matter: Right of establishment;Freedom to provide services;Free movement of workers
Procedure: Reference for a preliminary ruling
Origin: Austria

Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
15 October 2018 
Referring court: 
Landesverwaltungsgericht Steiermark (Austria) 
Date of the decision to refer: 
9 October 2018 
Appellant: 
NE 
Respondent authority: 
Bezirkshauptmannschaft Hartberg-Fürstenfeld 
Interested party: 
Finanzamt Oststeiermark (Finanzpolizei)  
  
Subject matter of the case in the main proceedings 
Appeal against an administrative penalty order in respect of infringements of the 
Lohn- und Sozialdumping-Bekämpfungsgesetz (Law to combat wage and social 
dumping) 
Subject matter and legal basis of the reference 
Interpretation of EU law, Article 267 TFEU 
EN 
SUMMARY OF A REQUEST FOR A PRELIMINARY RULING — CASE C-645/18 
 
2  
Questions referred 
1. Must Article 56 TFEU, Directive 96/71/EC of the European Parliament 
and of the Council of 16 December 1996 concerning the posting of workers in the 
framework of the provision of services and Directive 2014/67/EU of the European 
Parliament and of the Council of 15 May 2014 on the enforcement of Directive 
96/71/EC be interpreted as precluding a national provision which, for 
infringements of formal obligations in connection with the cross-border 
deployment of labour, such as a failure to make available documents relating to 
pay and social security documentation or a failure to report to the Central 
Coordination Office [for the Control of Illegal Employment], provides for very 
high fines, in particular high minimum penalties, which are imposed cumulatively 
in respect of each worker concerned? 
2. If the answer to Question 1 is in the negative: 
Must Article 56 TFEU, Directive 96/71/EC of the European Parliament and of the 
Council of 16 December 1996 concerning the posting of workers in the 
framework of the provision of services and Directive 2014/67/EU of the European 
Parliament and of the Council of 15 May 2014 on the enforcement of Directive 
96/71/EC be interpreted as precluding the imposition of cumulative fines for 
infringements of formal obligations in connection with the cross-border 
deployment of labour which have no absolute upper limits? 
Provisions of EU law cited 
TFEU, in particular Article 56 
Directive 96/71/EC of the European Parliament and of the Council of 
16 December 1996 concerning the posting of workers in the framework of the 
provision of services 
Directive 2014/67/EU of the European Parliament and of the Council of 15 May 
2014 on the enforcement of Directive 96/71/EC concerning the posting of workers 
in the framework of the provision of services and amending Regulation (EU) 
No 1024/2012 on administrative cooperation through the Internal Market 
Information System (‘the IMI Regulation’) 
National legislation cited 
Lohn- und Sozialdumping-Bekämpfungsgesetz (Law to combat wage and social 
dumping; ‘the LSD-BG’), in particular Paragraphs 26, 27 and 28 
BEZIRKSHAUPTMANNSCHAFT HARTBERG-FÜRSTENFELD AND OTHERS 
 
3 
Arbeitsvertragsrechts-Anpassungsgesetz (Law amending the Law on employment 
contracts; ‘the AVRAG’) 
Brief summary of the facts and procedure 
1 In the contested administrative penalty order the appellant was found guilty of a 
total of 46 counts of infringements of the LSD-BG carried out in his role as a 
representative of the Slovak undertakings CONVOI s.r.o. Those infringements 
were established as a result of a check carried out on 24 January 2018 concerning 
employees who were posted to a building site in Fürstenfeld by CONVOI as a 
contractor of Niedec Global Appliance Austria GmbH, which has its registered 
office in Fürstenfeld. The individual infringements, which were each made up of a 
number of breaches of formal obligations associated with the cross-border 
deployment of workers — such as a failure to make available pay and social 
security documentation and a failure to report to the Central Coordination Office 
[for the Control of Illegal Employment] — were punished with fines ranging from 
EUR 500 to EUR 2 000 per count, resulting in a total of EUR 54 000. The present 
appeal relates exclusively to the amount of the penalties imposed. 
Brief summary of the basis for the reference 
2 The Landesverwaltungsgericht Steiermark (Regional Administrative Court, 
Styria; ‘LVwG’) has doubts as to whether the provisions of the LSD-BG relating 
to the obligations to report and make available documents relating to posted 
employees (Paragraph 26(1) thereof), the obstruction of the supervision of pay 
(Paragraph 27(1)) and the failure to maintain pay documentation (Paragraph 28) 
are EU-law compliant. Both of the questions referred to the Court were already 
referred by the LVwG in its previous request for a preliminary ruling of 
31 January 2018 (Case C-140/18, questions referred 1 and 2), which still refers to 
the AVRAG, the legislation that preceded the LSD-BG. 
3 Directive 2014/67/EU, which is an implementing directive for Directive 96/71/EC 
concerning the posting of workers in the framework of the provision of services, 
was transposed into Austrian law by, inter alia, the LSD-BG. Directive 96/71/EC 
requires the Member States, in the event of non-compliance with its provisions, to 
adopt appropriate measures, including effective, dissuasive and proportionate 
penalties. It does not, however, provide for any monitoring of its transposition or 
for penalties in the event of infringement of its provisions. 
4 The LVwG considers that the penalties imposed are disproportionate on the same 
grounds as those set out in its order for reference of 31 January 2018 (Case 
C-140/18), which covers a similar factual situation relating to the validity of the 
AVRAG, and considers that those penalties infringe the freedom to provide 
services under Article 56 TFEU. As a result, by using the same wording, it adopts 
the corresponding comments from the earlier order for reference (Case C-140/18, 
paragraphs 11 to 15), which are based on the case-law of the Court of Justice. 
SUMMARY OF A REQUEST FOR A PRELIMINARY RULING — CASE C-645/18 
 
4  
5 Since, in the present case, the respondent authority has already imposed the 
minimum statutory penalty in respect of each count and a further reduction of the 
penalty in accordance with other provisions is out of the question, all of the 
penalties are consequently subject to confirmation by the LVwG. 
6 The LVwG justifies its belief that the provisions of the LSD-BG, which entered 
into force on 1 January 2017, are disproportionate by reference to the same 
concerns as those set out in its earlier decision and adopts without amendment the 
argumentation relating to the corresponding provisions of the AVRAG (Case 
C-140/18, paragraphs 18 to 21). 
7 The LVwG is aware of even far more serious cases that the present one. For 
example, a Croatian service provider and its Austrian contracting partner, the 
parties to the main proceedings in Cases C-64/18 and C-140/18 which are 
currently pending before the Court of Justice, are each facing cumulative financial 
penalties amounting to millions of euros due to a failure to make available 
documents relating to pay (infringement of Paragraph 7d(2) of the AVRAG). 
8 Further, the LVwG repeats the concerns expressed in its previous order for 
reference relating to the deterrent effect that those penalties have on cross-border 
cooperation between foreign service providers and Austrian customers (Case 
C-140/18, paragraphs 22 and 23). 
The first question 
9 Although the definitions of the offences set out in Paragraphs 26(1), 27(1) and 28 
of the LSD-BG that are relevant in the present case include a range of penalties 
that gives the courts some discretion in determining the appropriate penalty, that 
discretion is nevertheless so restricted by the combined effect of the principle of 
the accumulation of penalties, high minimum penalties and one or a number of 
circumstances changing the applicable penalty range (Paragraph 28 of the LSD-
BG) that, even if the lowest penalty in the applicable penalty range is imposed, the 
total penalty that emerges may be such as to prompt doubts as to its compatibility 
with the EU-law requirement that penalties be proportionate. 
The second question 
10 By the second question, the referring court wishes to ascertain whether, in the 
event that the principle of the accumulation of penalties does not raise any doubts 
from the point of view of EU law, the European Court of Justice considers it 
necessary, for the sake of safeguarding the principle of proportionality and 
ensuring that those fines do not act as a deterrent such as to restrict unduly the 
freedom to provide services, to impose an absolute upper limit for penalties — if 
need be, staggered according to the number of infringements — so as to ensure 
that, even in cases involving a very large number of individual offences, an 
absolute maximum total fine is not exceeded.