COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services
Date: 2016-03-08
Institutions: Directorate-General for Employment, Social Affairs and Inclusion, European Commission
Subjects: equal treatment, expatriate worker, free movement of workers, freedom to provide services, frontier worker, labour law, provision of services, remuneration of work, single market, working conditions

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   EUROPEAN COMMISSION  Strasbourg, 8.3.2016  SWD(2016) 53 final   COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services {COM(2016) 128 final} {SWD(2016) 52 final}  
 
 
Impact assessment on Proposal for a Directive amending Directive 96/71/EC concerning the posting of workers 
in the framework of the provision of services   

Executive Summary Sheet 

Why? What is the problem being addressed?  

A. Need for action 

Posting  of  workers  involved  1.9  million  European  workers  in  2014.  Although  it  represents  0.7%  of  total  EU 
employment,  posting  of  workers  supports  the  cross-border  provision  of  services  in  the  Internal  Market, 
particularly in construction and some personal  and business services sectors. Under the current rules, posting 
companies  need  to  comply  with  a  core  set  of  rights  of  the  host  country,  including  minimum  rates  of  pay.  This 
provision causes significant wage differentiation between posted and local workers in host countries, estimated 
to  range  from  10%  up  to  50%  depending  on  countries  and  sectors.  Differentiated  pay  rules  distort  the  level 
playing  field  among  companies,  by  conferring  a  labour  cost  advantage  to  sending  companies  over  local 
companies in host Member States. Mismatches between the Directive and other pieces of EU legislation create 
legal uncertainties with respect to equal treatment of posted workers in the EU regulatory framework in the case 
of long-term posting. On the other hand, the general rules on posting might not be adequate to deal with specific 
situations like posting in the context of sub-contracting chains, temporary agency work and intra-group posting.  

What is this initiative expected to achieve?  

The revision of the 1996 Directive aims at strengthening the original objectives of encouraging the exercise of 
the freedom to provide services across borders within a climate of fair competition and respect of the rights of 
workers  by  adapting  to  the  new  economic  and  labour  market  conditions.  In  particular,  the  initiative  aims  at 
ensuring fair wage conditions to posted workers and a level playing field between posting and local companies in 
the host country; and at improving the clarity of EU legislation. 

What is the value added of action at the EU level?  

A  regulative  framework  for  posting  of  workers  between  Member  States  can  only  be  established  at  EU  level. 
Member  States  and  the  social  partners  at  the  appropriate  level  remain  responsible  for  establishing  their 
legislation and setting wages, in accordance with national law and practices.  

B. Solutions 

What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why?  

The Commission  considers  the  introduction of  equal  rules  on  remuneration  and  the  extension  to  all  sectors  of 
the reference to universally binding collective agreements, a more effective option to attain the policy objectives 
of fair wage conditions for posted workers, a more level playing field for companies, and improved legal clarity 
than  non-action.  Also,  the  Commission  considers  efficient  in  terms  of  improved  legal  clarity  the  options  of 
applying  the  labour  law  of  the  host  Member  State  to  long-term  postings  over  24  months,  in  line  with  social 
security coordination rules; the establishment of equal remuneration between posted workers in subcontracting 
chains  and  workers  at  the  main  contractor  through  applying  the  latter's  working  conditions,  including  from 
company-level agreements, if any; the compulsory application of equal terms and conditions to posted temporary 
agency workers as agency workers recruited locally..  

Who supports which option?  

The  options  of  introducing  the  principle  of  "equal  rules  on  pay  for  equal  work"  and  applying  the  host  Member 
States's labour law for long-term posting go in the direction favoured by seven Member States (AT, BE, FR, DE, 
LU,  NL,  SE),  the  European  Trade  Union  Confederation,  and  the  European  Builders'  Confederation.  Eurociett 
supports the revision of the Directive on posted temporary agency workers to ensure equal treatment between 
cross-border and national temporary agency workers. Nine member States (BG, CZ, EE, HU, LT, LV, PL, SK, 
RO),  Business  Europe,  UEAPME  and  CEEMET  have  expressed  a  position  in  favour  of  waiting  for  a  sufficient 
period of implementation of the Enforcement Directive before acting. 

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What are the benefits of the preferred option (if any, otherwise main ones)?  

C. Impacts of the preferred option 

Equal  rules  on  remuneration  will  contribute  to  increase  the  wages  earned  by  posted  workers,  reduce  pay 
differentials with local workers, and establish a level playing field between companies in the host countries. By 
reducing  the  scope  of  labour  cost  competition,  posting  of  workers  will  foster  the  provision  of  cross-border 
services  based  on  specialisation,  innovation  and  skills.  The  fine-tuning  of  elements  of  mismatch  between  the 
Directive and other EU legislation will improve legal clarity for businesses, workers, and authorities, and reduce 
the  costs  of  potential  judicial  litigation.  In  the  case  of  sub-contracting  chains  and  long-term  postings,  the 
application of the principle of equal treatment is expected to raise the wage conditions of posted workers, thus 
enhancing their social protection. 

What are the costs of the preferred option (if any, otherwise main ones)?  

Equal rules on wage can increase wage costs for such sending undertakings which are in the low wage segment 
(1/3 of the situations), even  though total labour costs may still be  lower than local companies  in host Member 
States because of cross-country differentials in social security charges and corporate taxes. The diminished role 
of labour costs as the main competition factor can reduce the competitiveness of companies located in Member 
States with lower wage conditions, especially in labour-intensive sectors, such as construction. Equal treatment 
rules  on  long-term  postings  over  24  months  and  on  sub-contracting  chains  can  also  reduce  the  role  of  labour 
costs as a competition factor with similar effects as above, although long-term postings seem to be a low share 
of  total  postings.  The application of  equal  treatment  to  posted  temporary  agency workers  may  also  lead  to  an 
increase  in  wage  costs  for  companies,  even  though  the  option  does  not  provide  for  additional  conditions  than 
those currently in place for locally-recruited agency workers. 

How will businesses, SMEs and micro-enterprises be affected? Maximum 8 lines 

No  special  regime  for  SMEs  is  envisaged.  In  the  first  place,  SMEs  will  benefit  from  improved  legal  clarity  and 
decreasing administrative burden originating from risks of judicial litigation. Equal rules on pay, as well as equal 
treatment  on  long-term  postings  and  in  sub-contracting  chains  may  particularly  affect  SMEs  providing  cross-
border  services  through  posting  of  workers  in  low-wage  market  segments  as  a  consequence  of  possible 
increases  in  wage  costs.  However,  cross-country  differentials  in  social  security  charges  and  other  taxes, 
including special regimes for SMEs in some Member States, may mitigate the impact. In turn, SMEs operating in 
high-wage market segments through posting of workers will benefit from a climate of fair competition based on a 
level  playing  field  as  regards  to  wage  rules.  The  effect  of  the  proposed  options  may  increase  their  business 
opportunities and job creation potential.   

Will there be significant impacts on national budgets and administrations?  

No particular cost is expected for national budgets and administration. The costs of information and enforcement 
are already provided for by the 2014 Enforcement Directive, currently under transposition. 

Will there be other significant impacts?  

The improvement of the information contained in the Portable Documents A1, as well as the transposition of the 
Enforcement Directive will enhance the reliability of the information on the dynamics of posting of workers. 

When will the policy be reviewed?  

D. Follow up 

The  Commission  will  evaluate  the  impact  of  the  Directive  five  years  after  the  deadline  for  transposition.  The 
evaluation  report  will  be  developed  by  the  Commission  with  the  assistance  of  external  experts  and  in 
consultation with the social partners and other stakeholders. 

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