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Brussels, 18 March 2010

Internal Market: Commission asks the Netherlands to put an end to unjustified restrictions on the posting of workers

The European Commission has today acted to ensure the freedom to provide services by asking the Netherlands to review its rules on the posting of workers who do not (yet) enjoy free movement within the EU. Under Dutch rules, businesses must obtain work permits for certain staff members before they can be temporarily posted to the Netherlands to perform services. This applies to staff members from Bulgaria and Romania, as well as to staff members from non-EU countries who live and work legally in the Member State of their employer. The Commission considers that this work permit requirement constitutes a breach of the rules of the Treaty regarding the freedom to provide services. The Commission's request to the Netherlands takes the form of a "reasoned opinion" the second stage of the infringement procedure under Article 258 of the EU Treaty. If the Dutch authorities do not reply satisfactorily within two months, the Commission may refer the matter to the Court of Justice.

What is the aim of the EU rule in question?

The Court has ruled that Article 56 of the Treaty precludes a Member State from making the movement of staff subject to restrictions such as an obligation to obtain a work permit. To impose such a condition on the person providing services established in another Member State discriminates against that person in relation to his competitors established in the host country who are able to use their own staff without restrictions, and moreover affects his ability to provide the service (Rush Portuguesa Judgment, C-113/89 of 27 March 1990).

The Court has also ruled that the obligation to obtain a work permit in the host country for workers from non-member countries who already have a valid employment contract in the Member State in which their employer is established goes beyond what could be required as a necessary condition for the provision of services (judgment in the Vander Elst case, C-43/93 of 9 August 1994).

How is the Netherlands not respecting this rule?

Even after Accession, the posting to the Netherlands for the purposes of a service contract of workers from Bulgaria and Romania by businesses established in a Member State other than the Netherlands is still subject, in certain cases, to the obligation to obtain work permits. This is true for workers who are employed by an EU business and who are posted to an undertaking owned by the same group in the Netherlands (so-called "intragroup" postings). This is also true for workers who are employed by a temporary employment agency established in an EU Member State and who are temporarily posted to the Netherlands in performance of a service contract (so-called "cross-border hiring out of workers").

The granting of work permits depends on an assessment of the situation on the Dutch labour market. This means the Dutch authorities may refuse to grant a work permit and check whether the posts in question could be occupied by workers entitled to preferential treatment before issuing the permit. The Accession Treaties with Bulgaria and Romania contain no derogation for the Netherlands regarding the freedom to provide services involving the posting of workers. The possibilities for the Netherlands to depart from the Treaty concern only the free movement of workers (Article 45) and not the posting of workers in connection with the provision of services (Article 56). Work permits must also be obtained under the same conditions as explained above if workers from non-member countries legally employed by businesses in other Member States are to be temporarily posted to the Netherlands. Requiring a work permit in these cases is contrary to the rules of the Treaty regarding the freedom to provide services (Article 56 of the Treaty). The Commission has therefore decided to send a reasoned opinion.

The reasoned opinion concerns only workers from non-member countries who have the right to live and work in an EU Member State, who are legally employed by an EU employer, and who are being posted on a temporary basis to perform specific tasks (such as installing software or lifts, or providing after-sales service). Competency lies entirely with the Member States where access by non-EU workers or job-seekers to their labour markets is concerned.

How are EU citizens and/or businesses suffering as a result?

Any unjustified restriction on the posting of workers between Member States has a snowball effect. First, the work permit regime imposed on posting makes it difficult for certain businesses established in other Member States to provide services in the Netherlands. Several weeks may elapse before the Dutch authorities issue the requested permit, which may prevent businesses from other Member States from winning contracts in the Netherlands. Second, businesses established in the Netherlands are not free to choose between the various service providers on the European market and hence to obtain the best prices. Many European businesses – in, for example, the building and information technology sectors – employ workers from certain new Member States or non-member countries. Third, final consumers run the risk of paying higher prices for the goods or services they buy. Failure to comply with the rules on work permits is punishable with fines of up to EUR 8,000 per worker illegally employed within the meaning of Dutch law.

In order to avoid any risk of “social dumping”, the 1996 Directive on the posting of workers stipulates that all workers posted within the European Union must be employed on the terms applicable in the country in which the service is provided – particularly as regards the minimum rates of pay, paid leave, and health and safety at the place of work. The Member State in which the service is provided must also ensure compliance with these terms. It can make on-the-spot checks – at building sites, for example.

More information

IP/05/337, IP/05/1014

Freedom to provide services:

Latest information on infringement proceedings concerning all Member States:

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