Posting of Workers
by Abbo Junker
1. Subject matter and purpose of Dir 96/71/EC
The completion of the European internal market offers a dynamic environment for the transnational provision of services. The free movement of services between the Member States (Arts 49 ff EC Treaty; free movement of services) as well as the other three freedoms of the internal market of the European Union (fundamental freedoms (general principles)) are prompting a growing number of undertakings to post employees abroad temporarily to perform work in the territory of a Member State.
Because of substantial differences in the conditions of industrial and social law among the Member States, the transnationalization of the employment relationship is accompanied by the question of which law is applicable to the employment relationship.
Directive 96/71/EC of the European Parliament and of the Council concerning the posting of workers, which is based on Art 53 and 62 TFEU/47(2) and Art 55 EC, was adopted in 1996 in order to guarantee and encourage the transnational provision of services and to protect posted workers (subsequent references relate to this directive unless otherwise indicated). It has been in force since December 1999. It aims to abolish the obstacles and uncertainties that impede implementation of the freedom to supply services by improving legal certainty and facilitating identification of the employment conditions that apply to workers temporarily employed in a Member State other than the Member State whose legislation governs the underlying employment relationship. Therefore Art 3 of the directive requires that undertakings guarantee workers posted abroad the terms and conditions of employment which are laid down in the Member State where the work is carried out.
2. Scope of the directive
a) Scope of application as regards the person affected
Pursuant to Art 1, the directive applies to undertakings established in a Member State which, in the framework of the transnational provision of services, post workers temporarily to another Member State. Additionally, undertakings established in a non-Member State must not be given more favourable treatment than undertakings established in a Member State (Art 1(4)). The directive covers all areas of employment except seagoing personnel working for merchant navy companies (Art 1(2)) and contains special regulations for the construction sector. For the purposes of this directive, posted worker means a worker who, for a limited period, carries out his work in the territory of a Member State other than the State in which he normally works (Art 2(1)). According to Art 2(2) of the directive, the law of the Member State to whose territory the worker is posted is material to the definition of a worker.
b) Scope of application as regards the subject matter
Pursuant to Art 1(3), the directive covers three transnational posting situations. The main situation concerns the posting of workers under a contract for service or a contract for work and service concluded between the undertaking making the posting and the party for whom the services are intended (Art 1(3) lit a). The directive does not contain a regulation regarding the period of posting; pursuant to the wording of Art 2 the posting has to be for a limited period. A further posting situation is posting to an establishment or undertaking owned by the group (Art 1(3) lit b), the so-called intercompany posting; the circle of posted workers affected here mainly comprises specialized workers and employees at middle and top management levels. The third posting situation is the posting of workers by a temporary employment undertaking or placement agency to a user undertaking established or operating in a Member State other than that of the undertaking making the posting (Art 1(3) lit c).
The three posting situations are accompanied by the proviso that there exists an employment relationship between the undertaking making the posting and the posted worker during the period of posting.
3. Regulatory content of the directive
a) Terms and conditions of employment
Art 3(1) lit a–g of the directive lays down a ‘hard core’ of clearly defined and mandatory protective rules which must be observed by employers during the period of posting and which apply regardless of the national law which applies to the employment relationship of the posted worker. Therewith these mandatory rules become regulations of the ordre public in terms of Art 7 of the Rome Convention of 19 June 1980, which cannot be departed from to the disadvantage of workers.
The catalogue of Art 3(1) lit a–g of the directive lays down the mandatory terms and conditions of employment in regard to the following issues: maximum work periods and minimum rest periods (lit a); minimum paid annual holidays (lit b); minimum rates of pay, including overtime rates (lit c); conditions of hiring-out workers, in particular the supply of workers by temporary employment undertakings (lit d); health, safety and hygiene at work (lit e); protective measures with regard to the terms and conditions of employment of pregnant women or women who have recently given birth as well as of children and of young people (lit f); equality of treatment between men and women and other non-discrimination provisions (lit g).
Since terms and conditions of employment having a scope limited to the rights of an individual would infringe Art 56 TFEU/49 EC, these rules must be laid down by law, regulation or administrative provision, and then be applicable to all sectors. The rules can also be laid down by collective agreements or arbitration awards: if so, the terms and conditions of employment must be applied to posted workers in the construction sector, but only with regard to building work listed in the annex of the directive. In the absence of a system for declaring collective agreements or arbitration awards to be of universal application, Member States may, if they so decide, base rules on collective agreements or arbitration awards which comply with Art 3(8) of the directive.
The minimum terms and conditions of employment must be applied to workers posted to the territory of a Member State from the first date of posting. In the case of initial assembly and/or first installation of goods which is an integral part of a contract for the supply of goods and necessary for taking the goods supplied into use and which is carried out by the skilled and/or specialist workers of the supplying undertaking, the rules regarding minimum paid annual holidays and the minimum rates of pay shall not apply if the period of posting does not exceed eight days. This provision shall not apply to building work listed in the annex of the directive.
Regarding the posting of workers under a contract for service or a contract for work and service (service contracts, contract for work and labour) and also intercompany postings, when the length of the posting does not exceed one month Member States may decide not to apply the rule regarding minimum rates of pay (Art 3(3)) or may provide that exemptions be made from the rule regarding minimum rates of pay by means of collective agreements (Art 3(4)). In the case of such posting situations, Member States may also provide for exemptions to the rules regarding minimum paid annual holiday and the minimum rates of pay on the grounds that the amount of work to be done is not significant (Art 3(5)). Member States availing themselves of this option shall lay down the criteria which the work to be performed must meet in order to be considered as ‘non-significant’.
Art 1(3) stipulates that there must be an employment relationship between the undertaking making the posting and the posted worker during the period of posting. If the terms and conditions of employment in the posting Member State, which otherwise apply to this employment relationship, are more favourable than those of the Member State to whose territory the worker is posted, the directive shall not prevent application of those favourable terms and conditions of employment (Art 3(7)).
b) Social security
The rules concerning social security for posted workers are not governed by the directive. The provisions applicable with regard to benefits and social security contributions are those laid down by the Council Regulation (EEC) No 1408/71 of June 1971 on the application on social security schemes to employed persons and to members of their families moving within the Community.
c) Company retirement provision
Art 6 of the Council Directive 98/49/EC of 29 June 1998 on safeguarding the supplementary pension rights of employed and self-employed persons moving within the Community applies in respect of the company retirement provision.
d) Procedural rule
Art 6 of Dir 96/71/EC provides for an additional jurisdiction in order to enforce the right to the terms and conditions of employment guaranteed in Art 3 of the directive. Pursuant to this provision, judicial proceedings may be instituted in the Member State whose territory the worker is or was posted without prejudice to an applicable right under existing international conventions on jurisdiction to institute proceedings in another state. This rule supplements Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
4. Implementation of Dir 96/71/EC in domestic law
The German law on posting of workers, called the Arbeitnehmerentsendegesetz (AEntG), was first adopted in 1996 in anticipation of Dir 96/ 71/EC and was materially amended in January 1999 in line with the directive. The AEntG was adopted with a view to creating and achieving reasonable minimum conditions of labour for transnational posted workers and those regularly employed within the domestic territory as well as guaranteeing fair and efficient conditions of competition.
Clauses 1 to 6 AEntG contain special regulations for the construction sector. These special regulations were extended to the industrial cleaning sector by the amending law of 25 April 2007 and on to postal service by the amending law of 21 December 2007. Germany thereby made use of Art 3(10) of the directive to set terms and conditions of employment laid down in the collective agreements for other sectors than the construction sector. Clauses 7 and 8 AEntG contain regulations that are applicable to all sectors.
Pursuant to clause 1 AEntG, generally applicable legal norms in collective agreements for the construction sector, industrial cleaning industry and postal service apply to the employment relationship between an employer and worker posted from a foreign territory or posted within Germany. These legal norms must contain regulations on minimum rates of pay or the duration of a holiday, holiday pay or an additional holiday allowance. The application of legal norms in collective agreements assumes a three-step rule. As a first step the parties to a collective agreement lay down minimum conditions of labour (clause 3(1) and clause 4(2), s 1 of the law on collective labour agreements, called the Tarifvertragsgesetz (TVG)). After the federal minister of labour declares this collective agreement generally applicable in a second step (clause 5(1)–(3) TVG or clause 1(3)a AEntG), clause 1(1) AEntG regulates in a third step that the minimum conditions of labour must be mandatorily applied to employment relationships between employers established outside of Germany and their employees employed inside Germany.
Clause 7 AEntG regulates the application of the terms and conditions of employment laid down by law, regulation or administrative provision according to employment relationships between employers established abroad and their employees employed in Germany for all sectors.
Clauses 2–6 AEntG also contain provisions addressing matters such as supervision (clause 2 AEntG) and obligatory registration for employers established abroad (clauses 3 and 4 AEntG): these provisions enable the government to regulate employers’ compliance with their duties and impose sanctions if infringements occur (clauses 5 and 6 AEntG).
Andreas Feuerborn, ‘Grenzüberschreitender Einsatz von Fremdfirmenpersonal’ in Harmut Oetker and Ulrich Preis (eds) Europäisches Arbeits- und Sozialrecht, part B 2500 (2003); Martin Franzen, Arbeitsrecht-Blattei (2006) 158; Abbo Junker, ‘Arbeitnehmerentsendung aus deutscher und europäischer Sicht’ (2005) JZ 481; Gregor Thüsing, Europäisches Arbeitsrecht (2008).