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Brussels, 30 September 2010

Posting of workers: the Commission welcomes Germany’s putting an end to the discriminatory treatment of non-German businesses and closes the infringement procedure

Following the judgment in case C-546/07, the German authorities have put an end to the discriminatory treatment of construction sector businesses established in Member States other than Germany. The European Commission has therefore decided to close its infringement case against Germany. The bilateral agreement concluded in 1990 between Germany and Poland on the carrying out of works contracts in Germany had formerly been applied in a discriminatory fashion towards businesses established in other Member States. Only German businesses could engage Polish subcontractors to carry out works. The Commission considered that such an interpretation did not comply with EU legislation on the freedom to provide services or with the Accession Treaty and thus started legal proceedings against Germany which resulted in a ruling against Germany from the Court.

What is the aim of the EU rule in question?

The freedom to provide services, guaranteed by Article 56 of the Treaty on the Functioning of the European Union, is one of the fundamental freedoms of the European internal market. It notably gives businesses the right to post their workers to another Member State to provide their services subject to compliance with certain rules. This means that the EU Member States must amend their legislation or national practices if they obstruct the freedom in question. The freedom to provide services offers wide scope for businesses that wish to develop their activities and provide their products or services throughout the EU and has thus contributed significantly to job creation, growth and the provision of a greater choice to consumers.

How will citizens and businesses benefit?

The bilateral agreement that Germany concluded with Poland in 1990 on the carrying out of works contracts in Germany had been applied in a discriminatory fashion to businesses established in other Member States. According to the German authorities' interpretation, only businesses established in Germany could make use of the possibility offered by the agreement to engage Polish subcontractors. The latter could thus post their workers to Germany under a quota scheme. By virtue of the temporary arrangements provided for in the Accession Treaty concluded between Poland and the Member States of the European Union, Germany does indeed retain the possibility to restrict the posting of workers in the construction sector from new Member States (up to 2011 for the States that joined the EU in 2004 and up to 2013 for Bulgaria and Romania).

Businesses established in other Member States that envisaged carrying out works in Germany could not benefit from the abovementioned agreement and therefore could not engage Polish subcontractors to provide services.

Following the Court judgment in case C-546/07, in which the Court ruled in support of the Commission on this point, Germany agreed to amend the interpretation it had made until now of the provisions of the abovementioned agreement. The Commission welcomes the fact that this amendment also extends to all similar bilateral agreements concluded between Germany and other Member States that have joined the European Union since 2004 or 2007.

For further information

Freedom of establishment and the freedom to provide services:

The latest information on the infringement procedures taken against the Member States:

For more information on the EU’s infringement procedures, see MEMO/10/457.

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