EN Official Journal of the European Union C 185/75

Opinion of the European Committee of the Regions — The Revision of the Posting of Workers Directive

(2017/C 185/10)

Rapporteur: Yoomi RENSTRÖM (SE/PES), Member of Ovanåker Municipal Council Reference document: Proposal for a Directive of the European Parliament and of the Council amending 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 COM(2016) 128 final

I. RECOMMENDATIONS FOR AMENDMENTS

Amendment 1

Proposal for a directive

Recital 4

Text proposed by the Commission CoR amendment Almost 20 years after its adoption, it is necessary to assess whether the Posting of Workers Directive still strikes the right balance between the need to promote the freedom to provide services and the need to protect the rights of posted workers. Almost 20 years after its adoption, it is necessary to assess whether the Posting of Workers Directive still strikes the right balance between the need to promote the freedom to provide services and the need to protect the rights of posted workers. Posting may under no circumstances place posted workers in a less favourable situation.

Amendment 2

Proposal for a directive

Recital 8

Text proposed by the Commission CoR amendment In view of the long duration of certain posting assignments, it is necessary to provide that, in case of posting lasting for periods higher than 24 months, the host Member State is deemed to be the country in which the work is carried out . In accordance with the principle of Rome I Regulation, the law of the host Member States therefore applies to the employment contract of such posted workers if no other choice of law was made by the parties. In case a different choice was made, it cannot, however, have the result of depriving the employee of the protection afforded to him by provisions that cannot be derogated from by agreement under the law of the host Member State. This should apply from the start of the posting assignment whenever it is envisaged for more than 24 months and from the first day subsequent to the 24 months when it effectively exceeds this duration. This rule does not affect the right of undertakings posting workers to the territory of another Member State to invoke the freedom to provide services in circumstances also where the posting exceeds 24 months. The purpose is merely to create legal certainty in the application of the Rome I Regulation to a specific situation, without amending that Regulation in any way. The employee will in particular enjoy the protection and benefits pursuant to the Rome I Regulation. In view of the long duration of certain posting assignments, it is necessary to provide that, in case of posting lasting for periods higher than 12 months, the law of the host Member State applies to the employment relationship . In accordance with the principle of Rome I Regulation, this should be the case if no other choice of law was made by the parties. In case a different choice was made, it cannot, however, have the result of depriving the employee of the protection afforded to him by provisions that cannot be derogated from by agreement under the law of the host Member State. This should apply from the start of the posting assignment whenever it is envisaged for more than 12 months and from the first day subsequent to the 12 months when it effectively exceeds this duration. This rule does not affect the right of undertakings posting workers to the territory of another Member State to invoke the freedom to provide services in circumstances also where the posting exceeds 12 months.

Reason

The time limit set in the Commission’s proposal beyond which the law of the host country should apply in full to employment relationships in posting situations corresponds to that set out in Article 12 of Regulation (EC) No 883/2004 on the coordination of social security systems. That article states that the law of the host country shall apply if a single employee is expected to be posted for a period of 24 months.

The main aim of Regulation (EC) No 883/2004 is to share responsibility between the Member States with regard to the rights of EU citizens to benefits under each Member State’s social security system. The aim of the Posting of Workers Directive is to protect posted workers and to facilitate the free movement of services. The Committee sees no overriding reason to coordinate the time limits set by these two legal instruments simply on the basis that they both regulate situations in which EU citizens are temporarily residing and working in a given Member State.

In the Committee’s view, the time limit beyond which the law of the host country applies in full to employment relationships in posting situations should be reduced. It considers an anticipated or effective posting of 12 months for a single employee to be an appropriate time limit beyond which a posted worker should be considered to have a connection to the country of posting such that its legislation should apply in full to the employment relationship.

The Committee feels that the question of which country’s law is applicable to posted workers should be regulated in its entirety in the Posting of Workers Directive, and not by the application of the Rome I Regulation.

Recommendation for amendment 3

Proposal for a directive

Recital 12

Text proposed by the Commission CoR amendment It is within Member States’ competence to set rules on remuneration in accordance with their law and practice. However, national rules on remuneration applied to posted workers must be justified by the need to protect posted workers and must not disproportionately restrict the cross-border provision of services. This directive does not affect Member States’ competence to set rules on remuneration in accordance with their law and practice. However, the application of national rules on remuneration to posted workers must be justified by the need to protect posted workers and must not disproportionately restrict the cross-border provision of services.

Reason

The Posting of Workers Directive does not, in itself, affect Member States’ exclusive competence with regard to remuneration issues. It is for each Member State to determine — in line with their own labour market model — the remuneration applicable at national level. The Posting of Workers Directive merely states that a given level of remuneration — set in the country of posting — must also apply to workers posted to that country.

Recital 12 of the Commission’s proposal could be interpreted as meaning that rules on remuneration adopted at national level could themselves be subject to review under the Posting of Workers Directive and the rules in the Treaty on the freedom to provide services. It should be clarified that it is the application to posted workers of remuneration rules set at national level that must be justified by the need to protect posted workers and that must not disproportionately restrict the cross-border provision of services.

Recommendation for amendment 4

Proposal for a directive

Article 1(1)

Text proposed by the Commission CoR amendment The following Article 2a is added: The following Article 2a is added: Article 2a Article 2a Posting exceeding 24 months Posting exceeding 12 months 1. When the anticipated or the effective duration of posting exceeds 24 months, the Member State to whose territory a worker is posted shall be deemed to be the country in which his or her work is habitually carried out . 1. When the anticipated or the effective duration of posting exceeds 12 months , the employment contract for the period of posting shall be subject in its entirety to the law of the Member State to whose territory the worker is posted , unless the employer and employee have agreed on another applicable law . 2. For the purpose of paragraph 1, in case of replacement of posted workers performing the same task at the same place, the cumulative duration of the posting periods of the workers concerned shall be taken into account, with regard to workers that are posted for an effective duration of at least 6 months. 2. For the purpose of paragraph 1, in case of replacement of posted workers performing the same task at the same place, the cumulative duration of the posting periods of the workers concerned shall be taken into account, with regard to workers that are posted for an effective duration of at least 6 months. 3. An agreement designating another applicable law may not have the result of depriving the employee of the protection afforded to him or her by provisions that cannot be derogated from by agreement under the law applicable under paragraph 1. 4. The application of paragraph 1 shall not lead to the posted worker being placed in a less favourable situation as compared to the application of another country’s law to the contract of employment in accordance with Article 8 of Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I).

Reason

The time limit set in the Commission’s proposal beyond which the law of the host country should apply in full to employment relationships in posting situations corresponds to that set out in Article 12 of Regulation (EC) No 883/2004 on the coordination of social security systems. That article states that the law of the host country shall apply if a single employee is expected to be posted for a period of 24 months.

The main aim of Regulation (EC) No 883/2004 is to share responsibility between the Member States with regard to the rights of EU citizens to benefits under each Member State’s social security system. The aim of the Posting of Workers Directive is to protect posted workers and to facilitate the free movement of services. The Committee sees no overriding reason to coordinate the time limits set by these two legal instruments simply on the basis that they both regulate situations in which EU citizens are temporarily residing and working in a given Member State.

In the Committee’s view, the time limit beyond which the law of the host country applies in full to employment relationships in posting situations should be reduced. It considers an anticipated or effective posting of 12 months to be an appropriate time limit beyond which a posted worker should be considered to have a connection to the country of posting such that its legislation should apply in full to the employment relationship.

The format of the Commission’s proposal — with a provision that identifies the law of the host country as applicable to the employment relationship only indirectly and via application of the Rome I Regulation — raises a number of concerns. In line with recital 8 of the Commission’s proposal, the text of the directive should make it clear that it remains possible to agree to apply the law of a country other than the host country under the conditions provided by Article 8 of the Rome I Regulation. It should also be ensured that applying the law of the host country to the employment relationship does not put the employee in a less favourable position, for example because it provides less protection or less favourable terms for employees.

The circumstances in which the law of the host country is applicable should, in the Committee’s view, be set out directly in the Posting of Workers Directive. The amendment entails a corresponding amendment to recital 8.

Recommendation for amendment 5

Proposal for a directive

Article 1(2)(a)

Text proposed by the Commission CoR amendment ‘[…] For the purpose of this Directive, remuneration means all the elements of remuneration rendered mandatory by national law, regulation or administrative provision, collective agreements or arbitration awards which have been declared universally applicable and/or , in the absence of a system for declaring collective agreements or arbitration awards to be of universal application, other collective agreements or arbitration awards within the meaning of paragraph 8 second subparagraph, in the Member State to whose territory the worker is posted. ‘ In the context of this Directive, remuneration and social security contributions shall be defined in accordance with the national law and/or practice of the Member State on whose territory the worker is posted. Member States shall publish in the single official national website referred to in Article 5 of Directive 2014/67/EU the constituent elements of remuneration in accordance with point (c).’ Member States shall publish in the single official national website referred to in Article 5 of Directive 2014/67/EU the constituent elements of remuneration in accordance with point (c).’

Reason

It is important to establish that remuneration is a matter of national competence, so as to prevent the Directive from giving rise to a situation where the EU Court of Justice can examine national wage-related provisions.

II. POLICY RECOMMENDATIONS

THE EUROPEAN COMMITTEE OF THE REGIONS,

Assessment of the Committee of the Regions

1. notes that the freedom to provide services across borders within the EU is guaranteed by Articles 56 to 62 TFEU. The proper functioning of the single market for services not only brings direct advantages for service providers and consumers within the EU but is also an important condition for economic growth, which can be expected to benefit all EU citizens in the form of greater prosperity and a higher level of social protection;

2. considers a well-functioning single market for services to be particularly important for service providers in regions immediately bordering other Member States;

3. points out that one important starting point for the free movement of services is that service providers established in one Member State must be able to provide services in other Member States under the same conditions as in their country of establishment. At the same time, one of the prerequisites for a well-functioning single market for services is for competition — including cross-border competition — not to be primarily based on labour costs but on factors such as the quality of the service provided and the efficiency of the service provider’s work;

4. notes that the differences between Member States, particularly in terms of wage costs, mean that the posting of workers in the context of the free movement of services is liable to put downward pressure on remuneration in the country to which the workers are posted. Where competition with regard to terms and conditions of employment is unfair, there is a risk that this could lead to social dumping in the host country. This social dumping puts downward pressure on prices, endangering businesses which do not use posting;

5. considers it essential to strike a reasonable balance between the free movement of services, on the one hand, and protection for posted workers and against wage and social dumping, on the other, in order to achieve public acceptance for the functioning of the internal market in the EU, particularly among people working in service sectors where posting is and can be expected to be common practice. Underlines, however, that in order to effectively fight social dumping, there is a need for measures to also protect the self-employed as well as those carrying out work intermediated by digital platforms;

6. also considers a reasonable balance between the interests that the Posting of Workers Directive aims to serve to be a prerequisite for healthy and fair competition within the service sector in cross-border situations;

7. in this context, can, as a point of departure, endorse the principle on which the Commission’s proposal is based, i.e. that the same work at the same place should be remunerated in the same manner;

8. considers that not knowing the administrative requirements relating to the hiring of workers imposed by the host Member States and the difficulty that some businesses (especially SMEs) have in complying with them may hinder the free provision of cross-border services within the EU and jeopardise the protection of posted workers. These problems could be alleviated if the Commission and Member States were to draw up clear and easily accessible information and assessment mechanisms dealing with these aspects;

9. shares the Commission’s view that there should be a time limit beyond which the law of the host country must apply in full to a posted worker, but sees no overriding reason why the rules in Regulation (EC) No 883/2004 should be used as the basis for setting the time limit beyond which the law of the host country applies in full to employment relationships in posting situations. In the Committee’s view, the time limit in the Posting of Workers Directive should be 12 months;

10. also takes the view that the circumstances in which the law of the host country is fully applicable to the employment relationship must not result in the posted worker being put into a less favourable position in practice;

11. observes that the Commission’s proposal to replace the term ‘minimum rates of pay’ with ‘remuneration’ fits in well with the European Court of Justice’s judgment in, for example, Sähköalojen ammattiliitto ry (C-396/13) and its interpretation of the term ‘minimum rates of pay’ in that case;

12. points out that, if only the mandatory elements of remuneration and calculation bases in the host country can and should be used when calculating pay within the meaning of the directive in the relevant Member State, it will still not be possible for the host country to require employers to pay posted workers what would be regarded as a ‘normal’ or average wage for the work in question in the host country;

13. welcomes the proposal that the constituent elements of remuneration applicable to workers posted to the host country should be published on the official national website that each Member State has to set up pursuant to Article 5 of the Enforcement Directive in order to improve access to information prior to posting;

14. considers that, overall, the Commission’s proposal to use the term ‘remuneration’ instead of ‘minimum rates of pay’ and its other proposed changes to that part of the text mean that the Posting of Workers Directive will strike a reasonable balance between ensuring that service providers can provide cross-border services within the EU without undue barriers, on the one hand, and protecting posted workers and preventing unfair competition, on the other;

15. feels, however, that it needs to be made clear that the Posting of Workers Directive itself does not in any way affect the Member States’ exclusive competence when it comes to decisions on pay issues within the framework of their respective labour market models;

16. agrees with the Commission that the obligation to apply the host country’s conditions in the fields set out in Article 3(1) of the Posting of Workers Directive in the construction sector should be equally applicable whether the remuneration is set by law, in a collective agreement that has been declared universally applicable or in another collective agreement as referred to in the first or second indent of Article 3(8);

17. draws the Commission’s attention to posting situations arising with cascade subcontracting practices, which lead to the dilution of the responsibility of the employer and sometimes to posted workers being abandoned, with no access to assistance or support. A European support fund would allow swift intervention, ensuring that these employees can return to their countries of origin under the best possible conditions. Also suggests setting up a European register placing undertakings that post workers under an obligation in all Member States to declare the posted worker at the latest upon commencement of the provision of services;

18. notes that the skills of posted workers are very often deliberately underestimated by the employer so as to justify a lower level of remuneration. This practice is likely to persist as a way of circumventing the equal treatment obligation with regard to pay. The Commission should investigate the establishment of a European directory of occupations and vocational skills in order to remedy this situation and protect the interests of employees without recognised qualifications;

19. notes that the deadline for implementing Directive 2008/104/EC on temporary agency work was 5 December 2011. One of the objectives of that directive is to protect temporary agency workers, and it sets out, among other things, the principle of equal treatment with regard to conditions such as pay, leave and working hours (Article 5);

20. shares the Commission’s view that application of the Temporary Agency Work Directive’s principle of equal treatment should also be mandatory in cases where the temporary agency is established in another Member State and the work is a posting within the meaning of the Posting of Workers Directive;

Subsidiarity and proportionality

21. notes that 14 national parliaments/chambers in 11 Member States (Bulgaria, the Czech Republic, Croatia, Denmark, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia) have submitted reasoned opinions on the basis of a subsidiarity assessment, which means that the proposal has received a ‘yellow card’;

22. notes that the Posting of Workers Directive governs which of a host country’s terms and conditions of employment a service provider established in another Member State is required to apply to workers posted in that host country. Neither the current directive or the directive amending it aims to harmonise conditions between the Member States;

23. points out that the changes in the directive can only be made at EU level — it is not possible, under the Treaty rules on the freedom to provide services across borders within the EU and the Rome I Regulation, to regulate at Member State level which employment law conditions are applicable in a posting situation;

24. points out that the Enforcement Directive, which had to be transposed by the Member States into national law by 18 June 2016, contains tools to enable the Member States to limit abuse and social dumping as a result of posting (namely fraud, circumvention of rules and exchange of information between the Member States). The Committee takes note of the fact that the revised Posting of Workers Directive and the Enforcement Directive are to a great extent mutually reinforcing legal instruments and therefore keenly awaits a full assessment of the impact and consequences upon the posting of workers of the Member States’ implementation of the Enforcement Directive;

25. further stresses that there are still problems with ensuring consistency in the implementation of checks on posted workers in the various Member States, the Enforcement Directive merely providing for bilateral cooperation between Member States; agrees therefore that the objective of the proposed revised Directive, that is, a common definition of the rules applicable to the posting of workers, can be better achieved at EU level;

26. considers it necessary to promote the exchange of data between reporting bodies or social insurance institutions in the posting and host Member State, as well as to introduce reporting requirements for social insurance institutions in the host Member State as effective measures against bogus posting and the establishment of companies for the express purpose of bogus posting, and against unfair competition on the basis of lower social security contributions. If a tendency should arise for companies to be set up with the express purpose of bogus posting, the possibility of requiring a minimum period of employment of a worker in the posting Member State before he or she can be posted would have to be considered.