ITEM comments on proposal Posted Workers Directive

The situation

Posting of workers has become a common phenomenon in the EU. Since the mid-1990’s it is regulated by the Directive on posting of workers (96/71/EC). The directive aims at striking a balance between the freedom to provide services on the one hand and the protection of workers, the persons who actually carry out the services for their employer, on the other hand. 

This double aim has led to some difficulties in the past, as both ideas seem to be mutually exclusive. After all, the free provision of services is best served without any interfering rules, while protection of workers generally means the implementation of protective – and thus interfering - rules.

The present directive tries to limit the amount and impact of protective rules for (foreign) service providers. Host states may impose their national employment laws and generally binding collective agreements with regard to the minimum standards laid down in article 3 (1) under a-g. As these are mere minima, service providers from member states where employment costs are low, are at a comparative advantage, due to lower labour costs. Even though in the host state they will have to pay the statutory or collectively fixed minimum wage of the host country, they do not have to adhere to the wage system of the host country as such. Therefore, substantial cost differences remain, which leaves the playing field between posting and local companies in the host states uneven. 

The proposal

The new proposal, amongst other things, tries to remedy this cost gap. As Commissioner Thyssen said, the proposal aims at realising equal pay and working conditions for posted workers as for local workers, including bonuses and allowances. The reference to the minimum wage is deleted. According to Thyssen, this amendment leads to a level playing field concerning labour costs. 

Furthermore, states must specify and publish in a transparent way the constituent elements of remuneration applicable to posted workers. 
Another change is the proposal to limit the maximum duration of posting to 24 months. After 24 months, the law of the host state is supposed to be the applicable law. This proposal aims at aligning the applicable labour law according to directive 96/71/EC with the applicable social security law according to regulation 883/2004 EC. 

Also, in a new paragraph, new rules on subcontracting are envisaged that would prevent cases like Rüffert. It seems that the idea is to allow for obligations in subcontracting chains which aim at standardizing a minimum level of payment, even if this level is not laid down by law or generally binding collective agreement, as long as it is imposed on all national sub-contractors.

Finally, some changes concerning temporary work agencies are added.

Appraisal

The proposal definitely tackles one of the main points of criticism concerning the posted workers directive. The minimum protection, which in the Court’s case law turned out to be a maximum protection as well, leads to differences in treatment on the workfloor and to (sometimes huge) comparative advantages for posting service providers. Therefore, the proposal to enhance the protection to include all remuneration, is a sensible one. Still, even in that case, labour costs will continue to differ. This is due to the fact that posted workers will remain affiliated to the social security and tax systems of their home country, as long as the period of posting does not exceed 24 months (social security) or 183 days (tax). Therefore, even though wage costs will be equal, total labour costs will not. The proposal might be a first step towards the creation of a level playing field, and the field will definitely be more equal than before, but not (yet) level. 
The idea of aligning labour law co-ordination rules of Directive 96/71 with social security co-ordination rules has been advocated before, and its realisation would mean a further limitation of possible sources of conflict, incomprehension and confusion. 

Unfortunately, the discussion on the EU level already shows that, however necessary, useful or desirable an amendment to the posting directive might seem to some countries and the workers involved, the member states’ interests are diametrically opposed. While the receiving states generally favour rules that allow for more national law to be imposed on the posted workers’ employer (the transnational service provider), the traditional sending countries oppose stricter rules, as they would lose some of their their comparative advantage as (relatively) low-cost sending states. It therefore remains to be seen whether any amendment to the existing directive is politically feasible.