EC: Implementing the posted workers Directive
The EC Directive on the posting of workers aims to prevent "social dumping" by ensuring that workers who are posted by their employer to another member state are guaranteed minimum local pay and conditions of employment. The deadline for compliance with the Directive is 16 December 1999. We review the provisions of the Directive and examine the state of play regarding implementation in member states.
In a single market which guarantees businesses and individuals the freedom to provide services anywhere in the European Union, workers of any grade can be sent by their employer to another host member state in order to provide a service or to work for a separate undertaking.
However, it is feared that the posting of workers, especially low-paid workers in sectors such as construction, might have a detrimental impact on local labour market terms and conditions. High-wage economies, such as Germany, are particularly anxious to ensure that large numbers of migrant workers are not be subject to lower levels of pay and less-advantageous employment conditions than national workers, thus placing a downward pressure on pay and conditions by offering their services at a lower pay rate. The posted workers Directive - Directive 96/71/EC on the posting of workers in the framework of the provision of services - is designed to allay such fears.
Context
The intention to legislate in the area of sub-contracted labour was formally expressed in the Commission's Action Programme which accompanied the 1989 Social Charter. The Commission was primarily concerned to establish a core of minimum terms and conditions that should be observed in host countries by employers sending their employees there on temporary assignments.
The profile of this issue was raised further by a European Court of Justice (ECJ) ruling in the Rush Portuguesada v Office National d'Immigration case (C-113/89), given on 27 March 1990. The case concerned a Portuguese contractor who employed Portuguese workers in France, working under Portuguese employment conditions that were lower than the prevailing local conditions. The ECJ ruled that if a company from one member state provided a service in another member state, the latter member state could insist that its statutory and collectively agreed working regulations should prevail.
In June 1991, the Commission issued its proposals for a Directive to protect the interests of posted workers. The draft was designed to ensure that workers are not disadvantaged and that competition is not distorted by a situation in which these "posted" workers are subject to different working conditions than those of the host country. The aim of the Directive is to ensure that basic regulations regarding pay and employment conditions applicable in a member state should apply both to the nationals of that member state and to workers who have been posted by their employer to work in that member state.
Following numerous debates and a plethora of revised texts over a period spanning more than five years, the Directive was finally adopted on 24 September 1996 by the Council. Final adoption by the European Parliament and the European Council under the co-decision procedure was achieved on 16 December 1996 and member states are required to transpose its provisions into national legislation by 16 December 1999.
Transposing the Directive
Although member states have until 16 December to transpose the measures contained in the Directive, many countries are still preparing their implementing legislation.
It appears that in some members states, the issue of posted workers is more pertinent than others. Northern European member states such as Belgium, Denmark, France and Germany have had in place for some years extensive provisions in the area of posted workers, whereas in southern European countries, such as Greece, Italy and Spain, the issue of posted workers has not been addressed.
The reason for this is arguably that the southern European member states have traditionally been so-called "labour exporting" countries, sending workers to the northern European "labour importing" countries to help reduce labour shortages in the latter's expanding economies. This practice was particularly prevalent in the 1950s and 1960s when, for example, the German government signed bilateral labour accords with governments in Italy, Spain, Portugal and Greece setting down a framework for the terms and conditions of employment for the imported labour. These agreements established trends in labour migration from southern to northern Europe which continued to develop. Therefore, the experience of the northern European member states in dealing with the impact of "imported" workers in their labour markets may explain why, in these countries, regulations are already in place.
Here, we review the state of play regarding the regulation of posted workers in member states.
Austria
Legislative amendments adopted in October 1999 are considered sufficient to meet the requirements of the Directive. The amendments stipulate that posted workers will be covered by: statutory and collectively agreed minimum pay norms; collectively agreed working time regulations; and the right to additional leave in proportion to the duration of their stay. However, the latter will apply only if leave provisions in Austria are more advantageous than in the worker's home country. Leave provisions will not apply to workers posted in the construction sector.
Belgium
Existing legislation in Belgium regulating the terms and conditions of employment of posted workers is considered to be stricter and more comprehensive than the provisions contained in the Directive. Legislation adopted on 24 July 1987 stipulates that posting employers remain responsible for the payment of wages and social security contributions. Article 32.4 specifically states that the level of pay received by posted workers should not be below the minimum pay level at the workplace to which they are posted. The law also states that postings are to be of a fixed duration and that the replacement of a posted worker by another employee is prohibited.
The Belgian government has drafted legislation to transpose the Directive and this is currently being considered by the social partners at the National Labour Council, which advises the government on social legislation. Once the social partners have issued their opinion on the proposed legislation, it will be debated in parliament prior to adoption.
Denmark
A national collective agreement concluded in 1993 between the DA employers' association and the LO trade union confederation states that posted workers in Denmark are covered by existing collectively agreed provisions as soon as they formally begin their posting. Nevertheless, the government issued new rules, in the form of draft legislation, at the end of July 1999 to transpose the Directive and complement collectively agreed provisions.
However, head of the construction workers' union John Larsen has criticised the government proposals. Although workers posted to the construction industry will be covered by the prevailing collective agreement in that sector, the draft legislation excludes work carried out for a private individual. Mr Larsen contends that this loophole in the legislation is unacceptable as it will undermine collectively agreed provisions.
Finland
Draft legislation to transpose the Directive was issued by the government on 29 October 1999 and is currently being considered by parliament. The draft legislation mirrors the provisions of the Directive and also provides for the amendment of existing legislation.
The draft law stipulates that Article 17, paragraph 6 of the Employment Contracts Act (1970) should be repealed. Article 17 of the Act refers to the universal validity system for collective bargaining, and states that all employers must guarantee their employees the minimum terms and conditions of employment contained in a collective agreement, even if they are not party to an employers' organisation that has signed a collective accord. Paragraph 6, which was introduced in 1996, lists exemptions from the guarantee of minimum collective conditions and includes: planning, supervision and training related to the acquisition of machinery, devices or systems; the installation, repair or maintenance of the machinery, devices or systems; and the transportation to or through Finland of related persons and goods. These exemptions will be revoked under the proposed legislation to transpose the Directive.
Article 29 of the Aliens Act (1991) will also be amended to take into account the case whereby non-Finnish workers resident in Finland are employed by non-Finnish employers on a contracted, subcontracted or temporary basis. The Act will be amended to stipulate that in such a case the provisions in the legislation to transpose the posted workers Directive will be applied.
France
Under Article L.314-5 of the Labour Code, which was introduced by Decree 94-573 of 11 July 1994, French legislation is comprehensive in the area of posted workers. It requires that any foreign undertaking providing a service in France through workers it has posted there must comply with legal, regulatory and collectively agreed measures that apply to workers employed by French undertakings in the same sector. This covers social security, pay, working time and working conditions and applies equally to workers who are temporarily posted.
Posted workers will also benefit from the protection of collective agreements that have been extended to cover all employees in the same sector as that in which the foreign undertaking operates. Collectively agreed rights offered to posted workers in this situation will relate to:
If any of the above benefits are subject to criteria based on seniority, posted workers will claim seniority on the basis of their length of service with their employer - that is, the foreign undertaking.
Under French law, undertakings that post workers to provide a service in France must inform local French labour inspectors of their business details, their place of business in France, the nature and duration of that business and the personal details - such as name, age, sex and nationality - of the posted workers.
If temporary employment or placement agencies post workers in France, they are obliged to provide the local employment authority with the following information: their business details; proof that posted workers will either receive a pre-established pay rate or be paid local minimum rates; the posted workers' personal details; the duration of the employment period; and details of the user company.
As a result, France need not introduce any major legislation to transpose the Directive and, as it applies to all posted workers in France, even if they are from non-member states, its remit is larger than that of the Directive. However, the stipulation in Article 3.2 of the Directive referring to the provisions relating to minimum pay and holiday entitlement if the posting does not exceed eight days (see above), has not been included in French law and will need to be addressed.
Germany
Legislation on posted workers (Arbeitnehmer-Entsendegesetz) was adopted on 26 February 1996, came into force on 1 March 1996 and was amended in December 1998. The legislation was originally limited to the construction sector but the Ministry of Labour told EIRR that the law transposes the Directive because the minimum terms and conditions of employment set down in the legislation are generally applicable.
When the law was introduced, it was set to expire at the end of August 1999, but the 1998 amendments extended its duration indefinitely. The scope of the legislation has also been extended in terms of minimum pay coverage. Previously, posted workers were covered only by the minimum agreed wage rate, whereas they are now covered by a range of collectively agreed minimum pay rates.
Article 7 of the legislation stipulates that companies employing posted workers must respect:
Under Article 2a of the legislation, user companies employing workers posted by employment or placement agencies are obliged to pay collectively agreed or regulated minimum pay rates.
Like the French legislation (see above), the scope of this law is wider than the Directive as it targets all foreign companies wishing to post employees to work in Germany, irrespective of whether they are from undertakings established in EU member states.
As under the French legislation, foreign undertakings posting workers to Germany are required to register in German with the local employment authorities (Article 3, para. 1). They are obliged to provide details of the nature of their business, the duration of any posting, the personal details of workers being posted and the location where the posted workers will be employed. If a foreign employment or placement agency is responsible for posting workers, they too are required to register in German with local employment authorities, providing details such as information about the user company, the personal details of the posted workers, the duration of the posting and the location of the construction site (Article 3, para. 2).
Greece
The preparation process for introducing legislation to transpose the Directive is underway, in the form of the establishment of a tripartite working group at the Ministry of Labour to examine the issue.
At present, trade unions and employers do not appear to have clear views on posted workers as it seems to be an issue that does not have much relevance for the Greek labour market.
Ireland
In Ireland, all posted workers are covered by existing legislation governing working time, minimum leave and equality issues. From 2000, posted workers will also be covered by minimum pay regulations. The transposition process is in its latter stages and the government is currently seeking legal advice regarding its transposition measures.
Italy
In Italy, there is no specific legislation covering posted workers, although most sectoral and company collective agreements contain provisions to cover any expenses incurred as the result of a posting.
As yet, no Decree legislation has been published to transpose the Directive. However, on 12 February 1999, law no.25 was published in the Italian Official Journal. This law regulates the provisions for the implementation of obligations resulting from Italy's membership of the European communities and is a general law setting out the means of transposing Directives. It states that: "The government is charged with the task of issuing, within a year of the date of enforcement of present legislation, law Decrees containing rules to implement Directives listed in annexes A and B." The posted workers Directive is contained in Annex A. However, it is not clear when Decree legislation will be issued.
Luxembourg
Legislation adopted in 1995 stipulates that all posted workers in the private sector are covered by statutory and collectively agreed provisions on minimum pay, working time, leave, equality and maternity. This is thought to be sufficient to transpose the Directive.
Netherlands
Legislation in the Netherlands governing minimum pay, working time and equal treatment covers all workers irrespective of nationality. However, amendments to legislation governing paid leave, health and safety, maternity protection and equality need to be introduced to transpose the Directive.
The Dutch government issued draft legislation to transpose the Directive on 18 May 1999. The Bill closely adheres to the provisions of the Directive and the social partners in the bipartite Economic and Social Council are currently considering the legislation before issuing their opinion.
Portugal
Existing legislation and prevailing collective agreements are thought to cover posted workers. Therefore, no statutory amendments appear to be required to transpose the Directive.
Spain
There is no existing legislation governing the provision of minimum local employment conditions to posted workers in Spain.
Nevertheless, the process of transposing the Directive is in its latter stages as the Economic and Social Council has approved draft legislation to ensure that certain statutory provisions can be applied to workers who are posted to Spain.
Sweden
Existing legislation on working time and the work environment applies to all workers in Sweden, therefore amendments were required only in other areas.
New legislation, which was adopted in May 1999 and takes effect on 16 December 1999, extends existing legislative provisions to posted workers in the following areas: paid leave; maternity protection; equality; parental leave; and collective bargaining rights. Pay will be covered by collective agreements.
United Kingdom
The position of the government in the UK is that the Directive has already been largely transposed through a variety of statutes already in force. A spokesperson at the Department of Trade and Industry (DTI) told EIRR that because all employment legislation in the UK governing areas such as paid holiday leave, minimum pay, working time and health and safety covers all workers legally employed in the UK, there is no need for any primary legislation to implement the main provisions of the Directive.
However, the DTI highlighted one area of outstanding action to be addressed - that of ensuring that legislation in the area of race, sex and disability discrimination covers all workers. Responsibility for discrimination comes under the aegis of the Department for Education and Employment, and so this government department is expected to publish regulations under Section 2(2) of the European Communities Act (1972) to extend current UK legislation in the areas of discrimination to all workers.
With regard to transposing the measures in the Directive to ensure cooperation on information between members states, the UK government intends to deal with this through a form of administrative process rather than through legislation.
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State of play on the transposition of the posted workers Directive |
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Country |
State of play |
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Austria |
Legislative amendments adopted in October 1999 are considered to meet the requirements of the Directive. |
|
Belgium |
Existing legislation adopted in 1987 is considered to be comprehensive in this area and to meet the needs of the Directive. |
|
Denmark |
Draft legislation to transpose the Directive was issued in July 1999. |
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Finland |
The government issued draft legislation to transpose the Directive on 29 October 1999. |
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France |
Existing legislation adopted in 1994 already provides comprehensive cover for posted workers. Minor amendments are required to transpose the Directive. |
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Germany |
Existing legislation, adopted in 1996 and amended in 1998, is considered to meet the requirements of the Directive. |
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Greece |
There are no legal or collectively agreed provisions in this area. Transposition will take the form of a presidential Decree, but a transposition date has not been set. |
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Ireland |
Posted workers in Ireland are covered by statutory regulations governing working time, minimum leave, equality and minimum pay from 2000. The transposition process is now in its latter stages. |
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Italy |
There is no legislation covering posted workers; a Decree-law is expected to be issued to transpose the Directive, but no date for this has been set. |
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Luxembourg |
Existing legislation, adopted in 1995, is thought to be adequate to transpose the Directive. |
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Netherlands |
Amendments are needed in certain areas of the law before transposition can be completed. |
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Portugal |
Posted workers are covered by legislation and collective agreements and no statutory amendments are thought to be needed to transpose the Directive. |
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Spain |
The transposition process is in its latter stages. |
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Sweden |
Legislation adopted in May 1999 transposes the Directive. |
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UK |
All workers are covered by existing legislation. Regulations to extend legislative provisions in the area of discrimination to posted workers are required to transpose the Directive - these are expected by December 1999. |
Main provisions of the Directive
Article 1 states that the Directive applies to all cases of postings of workers in this context, with the exception of sea-going personnel in merchant navy undertakings. The Directive defines a posted worker as someone who, for a limited amount of time, carries out their work in an EU member state other than the one in which they normally work (Article 2).
The Directive covers only companies that provide transnational services and post one or several workers to another member state provided that:
The posting arrangement implies that the employment relationship between posted workers and their employer should be maintained even if the rights involved in this relationship are modified during the term of the posting. It also implies that if the employment rights in a posted workers' country of origin are more favourable than those of the host member state to which they have been posted, the former will continue to be applied during the period of the posting.
The Directive is therefore seen as contributing to increasing the level of social protection across Europe. It ensures that posted workers enjoy the highest level of social rights during the posting, either through more favourable rights in a worker's country of origin or through the more favourable rights available in the host country.
Terms and conditions of employment
Under the Directive, member states must make sure that the following terms and conditions of employment apply to posted workers:
Member states may extend this list to cover additional items if they wish.
All of the above terms and conditions apply only if they are set out in a law, regulation or administrative provision. In the construction industry, however, terms and conditions regarding activities related to the construction, repair, upkeep, alteration or demolition of buildings are covered if they are provided for by a collective agreement or universally applicable arbitration award - a detailed breakdown of activities covered is provided in the Directive's annex. Member states can extend this provision to other sectors.
Exemptions
There are a number of exemptions to the Directive's provisions as follows:
Sharing information
Under the terms of the Directive, member states are required to nominate a competent national body or liaison office for the purposes of implementing the Directive. They will also be obliged to ensure cooperation between public authorities that are responsible in each member state for the monitoring of the implementation of the terms and conditions of employment contained in the Directive. This cooperation will focus on meeting requests for information on the transitional hiring out of workers, including abuses and possible unlawful activities.
Each member state will also be required to publicise the terms and conditions applicable to posted workers.
