Q&A – Legislative initiatives on the posting of workers
European Commission - MEMO/12/199 21/03/2012
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Brussels, 21 March 2012
Q&A – Legislative initiatives on the posting of workers
What is a 'posted worker'?
A posted worker is a person who, for a limited period, carries out his or her work in the territory of an EU Member State other than the State in which he or she normally works. The number of posted workers in the EU is estimated to be 1 million (less than 1% of the EU working age population). The sector that most commonly uses posted workers is construction (25%) with a strong SME presence. Other sectors include services, financial and business activities, transport and communication and agriculture.
What is the 1996 Directive on the Posting of Workers about?
The Posting of Workers Directive was adopted in 1996 for the temporary provision of services and has been in force since December 1999 (Directive 96/71/EC). It requires that, where a Member State has certain minimum terms and conditions of employment in force, these must also apply to workers posted temporarily by their employer to work in that Member State. Its aim is to balance the economic freedoms enshrined in the EC Treaty and the rights of workers' rights during posting.
The Directive on the Posting of Workers applies to companies providing a cross-border service that:
At all times, employers and workers must maintain an employment relationship during the posting.
What terms and conditions of employment are covered by the Posting of Workers Directive?
The Directive aims to guarantee that posted workers enjoy during their work abroad minimum standards set by legislation or achieved through universally applicable collective agreements, in the Member State to which they are posted. These include:
Are all areas of employment covered by the Posting of Workers Directive?
The Posting of Workers Directive covers all areas of employment except seagoing personnel working for merchant navy companies. The rules must be laid down by the legislation of the host country and/or, for activities in the construction sector, by collective agreements or arbitration rulings that are declared to be generally applicable. For activities in sectors other than construction, Member States may choose to impose the rules laid down by collective agreement. Most have done so.
What is the objective of the Enforcement Directive?
The Enforcement Directive will improve the implementation of the 1996 Directive on Posting of Workers. It clarifies how EU rules on posting of workers should be better applied in practice. In particular the Enforcement Directive will:
All Member States are concerned by the existing enforcement problems. At the moment, an adequate protection of workers rights, fair competition and a level playing field between all service providers are not achieved.
How will the Enforcement Directive improve the application of the 1996 Directive?
The Enforcement Directive entails a balanced package of measures in order to improve different aspects of enforcement. It takes a comprehensive and proportionate approach, including:
All aspects are equally important for a balanced and comprehensive approach. Each of the aspects has been included in the proposal in a proportionate way. This package of measures is most effective in view of the protection of workers rights and most cost-effective from a companies and Member States point of view.
Why not revise the 1996 Directive on the posting of workers in order to provide for equal treatment between posted workers and nationals?
There is nothing wrong with the current posting rules. The 1996 Directive is fundamental to clarify the rules applying in posting situations and represents a valid compromise between the protection of workers' rights and the freedom to provide services. The Directive provides for the respect of the most important working conditions in the host Member State, in particular minimum rates of pay, working time and provisions regarding health and safety at work.
Introducing an obligation for 'equal pay for equal work or work of equal value' with respect to posted workers would ignore the fundamental difference between a posted worker and a migrant worker: the posted worker is not integrated into the labour market of the host country, whereas the migrant worker is.
Were the social partners consulted in drawing up today's two proposals?
The social partners were consulted on both the posting of workers and fundamental social rights as part of the public consultation launched on the Single Market Act. The Commission also held a major stakeholder conference in June 2011 on the Posting of Workers where it outlined its ideas for proposals and gave the opportunity to stakeholders to provide feddback.
Why does the proposal entail a provision on joint and several liability?
Better enforcement requires a comprehensive approach including a balanced package of measure of which joint and several liability is an essential element. The protection of posted workers rights in subcontracting processes is a matter of particular concern. There is evidence that, in a number of cases, posted workers are exploited and left without payment of wages or part of the wages they are entitled to under the Posting of Workers Directive. Posted workers may also not be able to enforce their wage claims against their employer because the company has disappeared or never really existed.
This evidence comes from studies carried out in preparation of the legislative initiative, reports from labour inspectors and social partners, cases reported in the media and parliamentary questions and hearings. According to this evidence, abuses, exploitation and unfair competition seem to be concentrated in the construction sector which also represents the highest number of the postings (about 25%).
In the Member States that already have a system of joint and several liability (AT, DE, ES, FI, FR, IT, NL, BE), it is considered an effective enforcement tool in combination with state enforcement.
In cases of exploitation, the contractor in the host Member State often indirectly derives an economic benefit in the form of cheap prices offered by the subcontractor. Sometimes, these prices are so cheap that it is clearly impossible to respect the applicable minimum wage in the host Member State. Joint and several liability mitigates such unjustified and anti-competitive economic benefits.
The internal market will only succeed if there is fair competition between all service providers. Service providers which do not respect the rules should be pushed out of the market. Joint and several liability plays an important role in this respect. It has a preventive and deterrent effect. The contractor will choose his subcontractors more carefully. This creates a more level playing field for SMEs.
Could joint and several liability discourage cross-border provision of services?
The Enforcement Directive provides for a clearer legal framework and a more level playing field. This will encourage cross-border provision of services.
The envisaged provision on joint and several liability focuses on domestic companies/service recipients, that can be held liable for the payment of minimum wages of posted workers. There are no burdens imposed on foreign service providers. The exemption from liability of contractors which have undertaken due diligence obligations will limit possible effects on foreign service providers further. Moreover, posting depends on a number of very different drivers, such as geographical proximity, labour and/or skill shortages which will remain.
The introduction of joint and several liability may restrict the freedom to provide services but it is justified by the protection of workers rights. Member States which receive a large number of posted workers already have systems of joint and several liability in place (AT, DE, ES, FI, FR, IT, NL, BE).
Does the Enforcement Directive entail unjustified additional administrative costs for companies?
No. The only additional costs for companies derive from the provision on joint and several liability and are very limited. The costs correspond to the preventive measures eventually to be undertaken by contractors in those Member States where a system of joint and several liability does not yet exist, in order to ensure that contractors are selecting subcontractors that respect their wage obligations. The costs are justified in the interest of the protection of posted workers.
At the same time the proposal will reduce administrative costs for companies: It will limit Member States possibilities to impose administrative requirements on companies. Better information and clarity will reduce costs for companies to investigate about the applicable working conditions.
Companies, in particular SME, will benefit from fairer competition and a more level playing field.
Why does the proposal limit Member States possibilities to impose national control measures on service providers?
The enforcement Directive recognises the importance of national control measures and inspections in order to guarantee the applicable working conditions to posted workers. However, the freedom to provide services must also be respected.
The Court of Justice of the EU decided that certain national control measures were proportionate in view of companies' freedom to provide services, while others were not. In order to provide for legal certainty, the Enforcement Directive indicates clearly which control measures are proportionate and justified.
Who is responsible to control posting companies and the correct application of the minimum working conditions?
The enforcement Directive recognises the role of the host Member State for ensuring the respect of the applicable working conditions to posted workers and in the fight against abuses as well as the importance of national control measures and inspections.
At the same time, certain information about the posting company is mainly available in the Member State of establishment. Therefore, cooperation between Member States is essential in order to ensure the applicable working conditions to posted workers. The Enforcement Directive provides for an effective electronic tool to improve this cooperation.
Does the proposal for an Enforcement Directive respect the different social models and industrial relation systems in the Member States?
In accordance with Article 152 TFEU, the Enforcement Directive respects the differences in national industrial relation systems. It provides for flexible solutions respecting the particular role of social partners in Member States.
Member States can for example require designating a contact person to negotiate on behalf of the posting company with the relevant social partners or delegate monitoring the applicable working conditions set by collective agreements to social partners.
What is the objective of the Monti II Regulation?
Monti II may be very short but it is crucial. It confirms that the fundamental right to collective bargaining and to take collective action, including the right to strike, and economic freedoms are of equal importance. It also sets out a new alert mechanism for industrial conflicts in cross-border situations (as in Monti I Regulation). It leaves national law on the right to strike entirely unaffected.
Does the Monti II Regulation legislate on the right to strike, which is explicitly excluded by the Treaty?
Monti II does not regulate on the right to strike. Member States are free to lay down the conditions for the existence and exercise of the social rights at issue. However, when exercising that power Member States must comply with Union law, in particular the provisions of the Treaty on the freedom of establishment and the freedom to provide services. The Court clearly stated that the right to strike does not fall outside the scope of the freedom of establishment and the freedom to provide services.
The Regulation lays down general principles with respect to the exercise of the right to strike within the context of the freedom of establishment and the freedom to provide services. It shall not affect in any way the exercise of the right to strike.
Does the Monti II Regulation limit the right to strike?
No. The Monti II Regulation clarifies that there is no primacy of the freedom to provide services or of establishment over the right to strike, nor the other way round. The proposal explicitly states that it may not be interpreted as affecting the right to strike.
The Monti II Regulation respects Member States limited possibilities to intervene in strikes as well as the lack of competence of the EU to legislate on the right to strike (Art. 153(5) TFEU).
Does the Monti II Regulation interfere with national industrial relations systems?
In accordance with Article 152 TFEU, the Monti II Regulation respects the differences in national industrial relation systems. The Regulation clearly indicates that it does not affect the right to negotiate, conclude and enforce collective agreements and to take collective action in accordance with national law and practices.
What is the decision making procedure for the posting of workers package?
The enforcement directive will be decided by codecision procedure. The Monti II Regulation will be decided on by unanimity in the Council of Ministers and through consent procedure by the EP.
Further information on the posting of workers: http://ec.europa.eu/social/posted-workers
See also IP/12/267