Judgment — ECLI:EU:C:2018:896
Date: 2018-11-13
Language of the case: German;Slovenian
Court formation: Grand Chamber
Subject matter: Right of establishment;Freedom to provide services
Procedure: Reference for a preliminary ruling
Origin: Austria

Summary — Judgment of the Court (Grand Chamber), 13 November 2018 1. Freedom of establishment — Freedom to provide services — Services in the internal market — Directive 2006/123 — Scope — Definition of labour law — Scope — Measures intended to ensure compliance with the substantive rules of labour law — Measures intended to ensure the effectiveness of the penalties imposed in the event of non-compliance with those substantive rules — Included — Excluded from the scope of the directive (Art. 56 TFEU; European Parliament and Council Directive 2006/123, Art. 1(6)) 2. Freedom to provide services — Restrictions — Posting of workers — Legislation under which a commissioning party established in one Member State can be ordered to suspend payments to his contractor established in another Member State — Security for a possible fine that could be imposed on that contractor in the event of a proven infringement of the labour law of the first Member State — Not permissible — Justification — Protection of workers, combating social security fraud and preventing abuse — Absence — Breach of the principle of proportionality (Art. 56 TFEU) 1. See the text of the decision. (see paras 31-36) 2. Article 56 TFEU must be interpreted as precluding legislation of a Member State, such as that at issue in the main proceedings, under which the competent authorities can order a commissioning party established in that Member State to suspend payments to his contractor established in another Member State, or even to pay a security in an amount equivalent to the price still owed for the works in order to guarantee payment of the fine which might be imposed on that contractor in the event of a proven infringement of the labour law of the first Member State. On this point, it must be observed that the social protection of workers and combating fraud, particularly social security fraud, and preventing abuse are objectives that are among the overriding reasons in the public interest capable of justifying a restriction of the freedom to provide services (see, to that effect, judgments of 19 December 2012, Commission v Belgium, C‑577/10, EU:C:2012:814, paragraph 45, and of 3 December 2014, De Clercq and Others, C‑315/13, EU:C:2014:2408, paragraph 65 and the case-law cited). As regards the proportionality of such legislation with respect to those objectives, it must be observed, first, that it makes it possible for the competent authorities to require the commissioning party to suspend his payments to the service provider and to pay a security in the amount of the price still owed for the works, on the basis of ‘reasonable suspicion of an administrative offence’ against the national rules in the field of labour law. That legislation thus allows such measures to be adopted even before a finding is made by the competent authority of an administrative offence disclosing fraud, in particular social security fraud, or abuse or a practice capable of affecting the protection of workers. Next, that legislation does not provide that the service provider against whom there is such reasonable suspicion can, before the adoption of those measures, put forward his observations on the acts of which he is accused. Finally, the amount of the security that may be required from the recipient of the services corresponds, in accordance with the national legislation at issue in the main proceedings, to the price still owed for the works at the time of the adoption of that measure. Since the amount of the security may thus be fixed by the competent authorities without taking account of possible construction faults or other defective performance of the contract for works by the service provider, it could exceed, perhaps substantially, the amount that the commissioning party would in principle have to pay on completion of the works. (see paras 44, 46-48, 50, operative part)