University of Amsterdam Faculty of Law
L.L.M. European and International Labour Law
Jan Králíček Student number: 10973486
Posting of Workers in the Framework of the
Provision of Services – Establishing a Time
Frame for Genuine Application of the
Directive 96/71/EC
Master Thesis
“Labour is not a commodity.”
Declaration concerning the Aims and Purposes of the International Labour Organisat io n, adopted at the 26th session of the ILO, Philadelphia, 10 May 1944
Table of contents
Introduction ... 1
I. Limitations on the length of posting under the Posted Workers Directive, Enforcement Directive and norms of private international law ... 5
a. The Posted Workers Directive ... 5
b. The Posted Workers Enforcement Directive ... 8
c. Limitations on the length of posting in the Rome I Regulation ... 11
II. Potential sources for assessment of a proper maximum duration of posting... 16
a. Limits on successive assignments in temporary agency work ... 17
b. Case law on the freedom to provide services ... 23
c. Social security coverage ... 25
III. Beyond genuine posting – the regime of non-genuinely posted workers ... 27
Conclusions ... 33
1
Introduction
Posting of workers refers to a situation where a worker, for a limited period, carries out his work in the territory of a Member State other than the State in which he normally works.1 This
term is central to the Directive 96/71/EC (hereinafter referred to as the “Posted Workers Directive”) which strives to achieve balance between the free movement of services and fair competition with measures guaranteeing respect for the rights of posted workers2. Although
originally intended to remove obstacles to the freedom of provision of services and to combat one aspect of social dumping, its subsequent use in situations which were not deemed genuine raised concerns as to the fair use and abuse of the concept of a posted worker.3
While the European Court of Justice held, even before the Directive’s enactment, that sending of workers is an inherent economic right of the sending undertaking derived out of the existence of freedom of provision of services in single market4; the outcomes of potential social dumping
arising out of artificial arrangements, which seek to establish application of foreign (less protective) rules of labour law to workers performing work in a different country, were not successfully resolved with adoption of the Posted Workers Directive.
The weaknesses of the Posted Workers Directive identified in the discussions within the Employment and Social Affairs of the European Parliament include a lack of legal clarity on the posting situation, a lack of administrative monitoring due to insufficient cooperation among Member States to exchange information, too little information being made available to companies and posted workers, and difficulties in enforcing rights and handling cross-border complaints. These have led to distortions and abuses by posting companies, including creation of so called “letter box” companies as way to minimise social security contributions.5 In a paper
focused on the implementation, practical application and operation of the Posted Workers Directive in the building sector6, improper use of posting was also identified as a possible source
of social dumping as well as possible distortions of competition, due to the specific conditio ns
1 Art. 2(1) of the Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the pro vision of services, OJ L 18, 21.1.1997, p. 1–6 2 Recitals 2,5,13 Preamble Directive 96/71/EC
3 European Commission, COM(2012) 131 final, Proposal for a Directive on the enforcement of Directive 96/71/ EC concerning the posting of workers in the framework of the provision of services , p. 13-14
4 ECJ, C-113/89 (Rush Portuguesa), [1990] ECR I-1417, operative part
5 European Parliament. Q&A on Posting of Workers. Employment policy. What are the weaknesses of the 1996 Directive and how is it abused? [online]
6 Cremers and Donders, The free movement of workers in the European Union Directive 96/71/EC on the posting of workers within the framework of the provision of services: its implementation, practical application and operation, p. 139 [online]
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in which the workforce in this sector is posted. The existence of the abuse of provisions of the Directive was also acknowledged by the European Parliament in its Communication on the implementation and impact of the Directive in the common market7.
In terms of numbers, in 2012 and 2013, respectively 1.23 million and 1.34 million forms, which are related to postings of workers according to Article 12 of Regulation (EC) No. 883/2004, were issued.8,9 In 2013, the leading sending Member State was Poland, and on average 43.9%
of the forms were issued to posted workers employed in the construction sector. Compared to 2010 data, the overall number of postings increased by 16% in 2012 and by 27% in 2013.10 The
overall number is still less than 1% of EU working age population, but there is significant rising trend in the last years, together with acknowledgement that the posted workers in constructio n industry are in particularly precarious position.
To address the aforementioned problems, together with an effort to tackle issues connected to the misuse of posting in situations which were not deemed genuine, the Posted Workers Directive was augmented by another piece of EU legislation – an Enforcement Directive11 –
which aims to reduce the role of the Posted Workers Directive to situations of genuine posting, as well as to prevent, avoid and counteract the abuse and circumvention of applicable rules regarding the posting of workers.12 It also contains provisions advancing the cooperation
between Union labour inspectorate bodies tasked with investigating and remedying unfair labour practices. According to documents accompanying the legislative proposal, the drafters of the Enforcement Directive recognised a number of problems with regards to the use and abuse of the PWD, inter alia, that the posting is no longer of a temporary nature or has a rotational character.13 This study will focus primarily on this aspect of genuine posting
situation.
7 European Parliament resolution of 11 July 2007 on the Commission Communication on the posting of workers in the framework of the provision of services: maximising its benefits and potential while guaranteeing the protection of workers [online]
8 Pacolet and de Wispelaere, Posting of workers: Report on A1 portable documents issued in 2012 and 2013, Network Statistics FMSSFE, European Commission, December 2014, p. 13 [online]
9 It has to be noted that the numbers of issued certificates only partially reflect the actual volume of postings. 10 Pacolet and de Wispelaere, Report on A1 portable documents issued in 2012 and 2013, p. 8
11 Directive 2014/67/EU of the European Parliament and of the Council of 15 May 2014 on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services and amending Regulation (EU) No 1024/2012 on administrative cooperation through the internal market Information System (‘the IMI Regulation’) OJ L 159
12 Recital 5, Preamble of the Directive 2014/67/EU
13 European Commission, SWD(2012) 63 final, PARTIE I Impact Assessment, Revision of the legislative framework on the posting of workers in the context of provision of services, p. 34 [online]
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In order to justify the difference in treatment between posted workers (core protection) and migrant workers (equal treatment), posting has to be of temporary nature. If the duration of the posting is excessive, and becomes permanent, the presumption behind the difference in legal status between these two categories of workers is no longer valid. The same situation occurs if the same or different employees are repeatedly recruited by an undertaking with the purpose of being posted to another Member State for carrying out the same job (rotational postings).14
To better address the requirement of temporary nature of the posting for its proper use, the Enforcement Directive provides for a more comprehensive definition of posting, includ ing temporality criteria.15 The text aims to improve legal clarity by helping Member States to assess
whether a posting is genuine or an attempt to circumvent the law.16 This is done in order to
ascertain that the services provided are genuine and that they do not distort competition by providing an unfair advantage to the undertakings using artificial arrangements to achieve lowest social contributions possible.17 This would ultimately improve the position of workers
themselves as it aims to prevent social dumping by these arrangements where foreign service providers can undercut local service providers because their labour standards are lower. The existence of an ongoing debate on the issues related to the posting of workers is evidenced by a planned targeted review of the Posted Workers Directive indicated in the 2015 Commiss io n Work programme, which will be conducted to assess whether any adjustments are needed to further prevent the posting of workers leading to social dumping.18
This thesis aims to establish a time limitation for the implementation and interpretation of the term “limited period of time”, that is the temporary character of posting of workers; to see what is the maximum duration of posting still falling under the genuine character of posting, and provide aid, or a very basic tool for identification of non-genuine postings. The thesis asks what is the relevant time period that a continuous posting can take, to be still regarded as genuine, for the purpose of the Enforcement Directive. Is there a certain duration that could be used by inspectorate bodies to assess the temporary character of posting?
The first part of this work will be devoted to an overview of key aspects of the Posted Workers Directive and the newly enacted Enforcement Directive, specifically addressing the notions of
14 Ibid., p. 34
15 Art. 4(3)(a),(d) of the Directive 2014/67/EU
16 European Parliament. Q&A on Posting of Workers. Employment policy. How would the latest proposals improve enforcement? [online]
17 Ibid.
18 European Parliament, Parliamentary questions for written answer to the Commission, E-011088/2014 Answer given by Ms Thyssen on behalf of the Commission (28.4.2015) [online]
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temporality used in these legal materials. It will include a comparison with the terms used in the norms of private international law. This will be followed by a review of potential sources for assessment of the proper temporary limitation of posting. This part will draw from three different approaches, which includes analysis of case law, a closer look on limits set by particular Member States for continuous temporary agency worker assignments, and finally the Regulation on the coordination of social security systems19 and its special rules on posting will
be discussed. The last part will take a look at the regime applicable for non-genuine postings. The issue of temporary nature of posting will be approached from analytic perspective of the current scholarly texts. Comparative study of the legal norms in place in chosen Member States will be used to establish the boundaries on successive use of temporary agency workers.
19 Regulation (EC) No 883/2004 of the European Parliament and of t he Council of 29 April 2004 on the coordination of social security systems , OJ L 166 of 30.4.2004, pp. 1-123
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I. Limitations on the length of posting under the Posted Workers
Directive, Enforcement Directive and norms of private
international law
a. The Posted Workers Directive
Issues presented by posting of workers within the internal market represent an instance of a conflict between social protection of workers, an objective of EU policies20, and freedom to
provide services, a fundamental freedom under primary EU law21. This conflict is not confined
solely to the issue of posting of workers and does play a wider role in EU’s strategies, nevertheless, it could be argued that this conflict between perceived social dumping caused by free provision of services in the area of posting of workers produced a new kind of tension, not only exemplifying different Member States’ goals in this area (sending x receiving states), but turning groups of workers hostile against each other22.
The Posted Workers Directive was enacted on the legal basis of dealing with the provision of services while recognising the existing norms of private international law on the law applicable to contractual obligations.23 It was an attempt to accommodate the legal situation arising out of
the decision in Rush Portugesa which affirmed the right of undertakings to post workers in the area of EU, while leaving the regulation of the employment conditions of posting workers to host states24. Member States subsequently responded by the introduction of national legislat io n
for posted workers25. This situation was viewed by the European Commission as raising
substantial barriers to the posting of workers, requiring community-wide action. The Commission’s Explanatory Memorandum, which accompanied the first draft of the Directive, did identify the removal of obstacles to the free movement of services as one of the main objectives of the Directive (along with the control of unfair competition and worker protection).26
20 Art. 151 of the Treaty on the Functioning of the European Union (TFEU) 21 Art. 56 TFEU
22 Barnard, 'British Jobs for British Workers': The Lindsey Oil Refinery Dispute and the Future of Local Labour Clauses in an Integrated EU Market, Industrial Law Journal, 2009, p. 247
23 Recital 7-11 Preamble of the Directive 96/71/EC
24 ECJ, C-113/89 (Rush Portuguesa), [1990] ECR I-1417, para. 18
25 Davies, 'Posted Workers: Single Market or Protection of National Labour Law Systems?' (1997) 34 Common Market Law Review, Issue 3, p. 590
26 Ibid., p. 592, further referring to the Proposal for a Council Directive concerning the posting of workers in the framework of the provision of services. COM (91) 230 final, 1 August 1991
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The minimum length of posting was discussed but not included in the final Directive, only leaving an exemption available for the Member States when the length of the posting does not exceed one month27. Shorter postings were understood in the drafting phase as “having limited
relevance with respect to practices amounting to distortions of competition”.28 This observation
will be important for establishing the impact of the length of posting for the assessment of genuine use of the Directive in a latter part of this paper.
The definition of the term “worker” was left to the law of the Member State to whose territory the worker is posted.29 The Directive defines the “posted worker” as 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.30 There is thus a clear understanding of limited period of time for which the
employee is posted, with a requirement of an existent, genuine link towards the state in which employee normally works. Nevertheless, the exact meaning of the phrase “for a limited period” used in the definition of posted worker is not specified. The term “limited period” was not yet clarified in the case-law even though the length of posting is of crucial importance for assessment of genuine posting situation. Subsequent case law elaborated on the definition of the hiring-out method of posting and did not, as such, include a time limitation requirement for this type of posting31. Clarification of the definition of the temporary posting in the Posted
Workers Directive was recognised as a possible tool to combat abusive situations.32
Three types of posting are recognised33:
(a) (contracting/sub-contracting)
posting workers to the territory of a Member State on their account and under their direction, under a contract concluded between the undertaking making the posting and the party for whom the services are intended, operating in that Member State, provided there is an employment relationship between the undertaking making the posting and the worker during the period of posting; or
(b) (intra-corporate transfers)
27 Art 4 of the Directive 96/71/EC
28 European Commission, Proposal for a Council Directive concerning the posting of workers in the framework of the provision of services. COM (91) 230 final, 1 August 1991, para 26
29 Art 2(2) of the Directive 96/71/EC 30 Art 2(1) of the Directive 96/71/EC
31 ECJ, C-307/09-309/09 (Vicoplus), ECR 2011, I-00453
32 Van Hoek and Houwerzijl, Comparative study on the legal aspects of the posting of workers in the framework of the provision of services in the European Union, 2011, p. 189 [online]
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posting workers to an establishment or to an undertaking owned by the group in the territory of a Member State, provided there is an employment relationship between the undertaking making the posting and the worker during the period of posting; or
(c) (hiring-out)
being a temporary employment undertaking or placement agency, hiring out a worker to a user undertaking established or operating in the territory of a Member State, provided there is an employment relationship between the temporary employme nt undertaking or placement agency and the worker during the period of posting.
The criteria to determine hiring-out within the meaning of Art 1(3)(c) of the Posted Workers Directive are threefold. Hiring-out has to be a service provided for remuneration, in respect of which the worker who has been hired out remains in the employ of the undertaking providing the service, with no contract of employment being entered into with the user undertaking. It is characterised by the fact that the movement of the worker to the host Member State constitutes the very purpose of the provision of services effected by the undertaking providing the services , and that that worker carries out his tasks under the control and direction of the user undertaking.34 The afforded protection by host state law, regardless of the law applicable, which
has to be observed during posting of workers (so called “core protections”), is covering the following areas35:
- maximum work periods and minimum rest periods; - minimum paid annual holidays;
- minimum rates of pay;
- the conditions for hiring out workers, in particular by temporary work agencies; - health and safety;
- protection for pregnant women, women who have recently given birth, and minors; - equal treatment and non-discrimination.
Ultimately, through these requirements, the Directive should both protect businesses’ interna l market freedom to provide services and prevent social dumping.36
34 ECJ, C-307/09-309/09 (Vicoplus), ECR 2011, I-00453, para. 51 35 Article 3 of the Directive 96/71/EC
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b. The Posted Workers Enforcement Directive
The European Commission, based on the impact assessment and studies into the implementation and legal aspects of PWD throughout the EU37, proposed a new Directive
reinforcing the Posted Workers Directive in 2012. The Comparative study on the legal aspects of the posting of workers in the framework of the provision of services in the European Union suggested that a clear and enforceable definition of both the concept of posting and the concept of posted worker might help to avoid shortcomings of the Posted Workers Directive.38 The final
text of the Directive 2014/67/EU on the enforcement of directive 96/71/EC concerning the posting of workers in the framework of the provision of services (hereinafter referred to as the “Enforcement Directive”)39 provides justification for its enactment on the basis of concerns
about avoidance and abuse of the requirements of the Posted Workers Directive.40 The
Enforcement Directive specifically states that where there is no genuine posting situation and a conflict of law arises, due regard should be given to union law/international private law provisions41 that are aimed at ensuring that employees should not be deprived of the protection
afforded to them by provisions which cannot be derogated from by an agreement, or which can only be derogated from to their benefit.42
The Enforcement Directive aims to provide a clarification of the definition of the posted worker. The clarification should serve the aim to provide means to fight the abuse of non-genuine ly posted workers. Article 3 is intended to clarify situations which may be treated as a posting through a non-exhaustive lists of qualitative criteria which characterise the relationship between a posted worker and the sending company, and allow an assessment of the establishment of the sending undertaking.43 This list is intended to be used in cases of doubt and to target those who
abuse the Postings Directive through the use of letterbox companies or filling a permanent role with repeated postings. Those elements are intended to assist competent authorities when
37 A full list of preparatory materials is available on the website: http://www.ec.europa.eu/social/posted-workers 38 Van Hoek and Houwerzijl, Comparative study on the legal aspects of the posting of workers in the framework of the provision of services in the European Union, 2011, p. 14 [online]
39 Directive 2014/67/EU of the European Parliament and of the Council of 15 May 2014 on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services and amending Regulation (EU) No 1024/2012 on administrative cooperation through the internal market Information System (‘the IMI Regulation’) OJ L 159, 28.5.2014, p. 11–31
40 Recital 7, Preamble of the Directive 2014/67/EU
41 Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) OJ L 177, 4.7.2008, p. 6–16 or the Rome Convention
42 Recital 11, Preamble of the Directive 2014/67/EU 43 Art. 3 of the Directive 2014/67/EU
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carrying out checks and controls and where they have reason to believe that a worker may not qualify as a posted worker under the Posted Workers Directive.
The need for a clear definition of a posted worker was specifically addressed in the Article 4 of the Enforcement Directive. This Article (named Identification of a genuine posting and prevention of abuse and circumvention) states that in implementing, applying and enforcing the Posted Workers Directive, the competent authorities shall make an overall assessment of all factual elements that are deemed to be necessary (case-by-case basis), including, in particular, those set out in paragraphs 2 (criteria of sending undertaking) and 3 of this Article (criteria of the posting itself). Those elements are indicative factors in the overall assessment to be made and therefore shall not be considered in isolation.44 The substantive factors characterising the
work provided by the posted worker are45:
a) the work is carried out for a limited period of time in another Member State; b) the date on which the posting starts;
c) the posting takes place to a Member State other than the one in or from which the posted worker habitually carries out his or her work according to Regulation (EC) No 593/2008 (Rome I) and/or the Rome Convention;
d) the posted worker returns to or is expected to resume working in the Member State from which he or she is posted after completion of the work or the provision of services for which he or she was posted;
e) the nature of activities;
f) travel, board and lodging or accommodation is provided or reimbursed by the employer who posts the worker and, if so, how this is provided or the method of reimbursement; g) any previous periods during which the post was filled by the same or by another (posted)
worker.
The Enforcement Directive, however, does not contain a specific time limitation for the purpose of establishing “temporality”, nor does it create a presumption (rebuttable or not) of a non-genuine posting after certain time spent working in another Member State. This holds true to both of the time limitations used, these are the “limited period of time” and “expected return of the worker to the home state” requirements which are listed as elements which should be assessed in order to identify a genuine posting. The recital of the Enforcement Directive also
44 Art. 4 of the Directive 2014/67/EU 45 Art. 4(2) of the Directive 2014/67/EU
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mentions that Member States should ensure that provisions are in place to adequately protect workers who are not genuinely posted,46 but the Directive does not specify in what way this
goal should be achieved. The inclusion of this task and the requirement of giving “due regard” to the overriding mandatory provisions of Rome I Regulation in the recital, but not in the text itself, raises questions as to the nature of this task, making it a proclamation of reinforce me nt of Rome I Regulation rules of recommendatory nature. At the time of drafting, the European Trade Union Confederation was in favour of inclusion of a strict time limit for posting, while BUSINESSEUROPE, The Confederation of European Business, opposed such a time limit considering that the specific circumstances of each case may determine the need for longer posting periods.47
46 Recital 11 Preamble of the Directive 2014/67/EU
47 European Commission, SWD(2012) 63 final, PARTIE I Impact Assessment, Revision of the legislative framework on the posting of workers in the context of provision of services, p. 35 [online]
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c. Limitations on the length of posting in the Rome I
Regulation
The Regulation 593/2008on the law applicable to contractual obligations (hereinafter referred to as the “Rome I Regulation”)48 prescribes, with regards to the applicable law to the individ ua l
employment contracts, that to the extent that the law applicable to the individual employme nt contract has not been chosen by the parties, the contract shall be governed by the law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract. The country where the work is habitually carried out shall not be deemed to have changed if he is temporarily employed in another country.49
It follows that the Rome I Regulation also uses the notion of temporality for the assessment of an individual worker’s habitual place of work – in order to see whether the country in which the work is habitually carried out has changed by being “temporarily” employed in another country. I would now consider whether the interpretation of this term in the Rome I Regulat io n can help establish temporal limitation for the duration of posting under the Posted Workers Directive. To achieve this, it is necessary to compare the areas covered, relation between the norms, and case law interpretation.
The Posted Workers Directive represents a lex specialis norm in relation to the rules of private international law applicable between members of the EU. The Rome I Regulation recital states that its rules on individual employment contracts should not prejudice the application of the overriding mandatory provisions of the country to which a worker is posted in accordance with the Posted Workers Directive50. The Posted Workers Directive itself acknowledges this
relationship in the wording of Art 3(1) stating that whatever the law applicable to the employment relationship, the undertakings guarantee workers posted to their territory the terms and conditions of employment covering the following matters (nucleus of mandatory rules for minimum protection).51 Thus, regardless of applicable law, core employee protection norms of
the host state are to be observed.
The term “temporarily employed in another country” used in Rome I Regulation is further referenced in the recital which suggests the following criterion for the definition of temporalit y
48 Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I), OJ L 177, 4.7.2008, p. 6–16
49 Art. 8(2) of the Regulation 593/2008 (Rome I)
50 Recital 34 Preamble of the Regulation 593/2008 (Rome I) 51 Art. 3(1) of the Directive 96/71/EC
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of employment in another country within the meaning of the Regulation: “As regards individ ua l employment contracts, work carried out in another country should be regarded as temporary if the employee is expected to resume working in the country of origin after carrying out his tasks abroad.”52
Provisions for individual labour contracts in the Rome I Regulation are applicable to individ ua l employment contracts per its Article 8, but the Regulation itself does not define either “individual contract of employment” or “employee”. The autonomous definition of individ ua l employment contract contains the following elements which were specified in case law53:
- contracts of employment create a lasting bond which brings the worker to some extent within the organisational framework of the business of the undertaking or employer, and they are linked to the place where the activities are pursued, which determines the application of mandatory rules and collective agreements ;
- relationship of subordination;
- essential feature is that for a certain period of time one person performs services for , and under the direction of, another in return for which he receives remuneration. On the contrary to this approach, the Posted Workers Directive specifies its scope of applicatio n as covering undertakings established in a Member State which, in the framework of the transnational provision of services, post workers, to the territory of a Member State54. As
previously mentioned, the transnational posting is understood in three situatio ns : subcontracting, intra- group posting, and hiring out (temporary agency posting)55 and the term
“worker” is not given a community-wide definition, rather applying the law of the Member State to whose territory the worker is posted.56 The reasoning for this advanced by academic
literature is that the uniform definition has to be adjusted for various national law definitions of dependable work and shadowy areas between self-employed and employed persons, allowing for national inspectorate bodies to address illegal work.57
52 Recital 36 Preamble of the Regulation 593/2008 (Rome I)
53 ECJ, C‑47/14 (Holterman Ferho Exploitatie BV), ECLI:EU:C:2015:574, para. 39-41, 45 54 Art. 1(1) of the Directive 96/71/EC
55 Art. 1(3)(a),(b),(c) of the Directive 96/71/EC 56 Art. 2(2) of the Directive 96/71/EC
57 Karl Riesenhuber, European Employment Law: A Systematic Exposition, Cambridge: Intersentia, Ius Communitatis Series, Vol 4, 2012, p. 202
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Per reading of the ECJ’s ruling in Vicoplus, the return of personnel (as opposite to the Rome I Regulation) in posting situations seems to be a factor usually present, but not a necessary aspect of posting within the meaning of Art 1(3)(a):
“By contrast, the fact that the worker returns to his Member State of origin at the end of the posting cannot preclude that worker from having been made available in the host Member State. Although it is true that a worker posted for the purpose of carrying out work as part of a provision of services by his employer, within the meaning of Article 1(3)(a) of Directive 96/71, returns, in general, to his State of origin after the completion of that service (see, to that effect, Rush Portuguesa, paragraph 15, and Vander Elst, paragraph 21), there is nothing to prevent a worker who has been hired out, within the meaning of Article 1(3)(c) of Directive 96/71, from leaving the host Member State and also returning to his Member State of origin after having carried out his work within the user undertaking.”58
For the clarity of the description, we can now illustrate the following discrepancies between the understanding of basic definitions in the Posted Workers Directive and the Rome I Regulat io n:
Worker/employment relationship Temporality
Rome I
Regulation
Autonomous – Lasting bond which brings the worker to some extent within the organisational framework of the business of the undertaking or employer, subordination, performance of services for and under the direction of another in return for which he receives remuneration59
Employee temporarily employed in another country - if the employee is expected to resume working in the country of origin after carrying out his tasks abroad.60
PWD National law: As defined in the law of the host country.61
No contract of employment entered into with the user undertaking.62
Employee works for a “limited period of time” in the territory of a Member State other than the State in which he normally works.63
If we also look into the history of the drafting of the Rome I Regulation (in order to achieve conversion of the Rome Convention of 1980 on the law applicable to contractual obligat io ns into a Community instrument, while debating introduction of changes departing from the
58 ECJ, C-307/09-309/09 (Vicoplus), ECR 2011, I-00453, para. 49
59 ECJ, C‑47/14 (Holterman Ferho Exploitatie BV), ECLI:EU:C:2015:574, para. 39-41 60 Recital 36 Preamble of the Regulation 593/2008 (Rome I)
61 Art. 2(2) of the Directive 96/71/EC
62 ECJ, C-307/09-309/09 (Vicoplus), ECR 2011, I-00453, para. 51 63 Art. 2(1) of the Directive 96/71/EC
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wording of the Rome Convention64), the scholarly discussion seemed to support the draft (and
now current) wording of the Regulation absenting any hard upper limit, claiming it was right in rejecting calls for the introduction of upper limits or presumptions beyond which a posting shall be deemed to be permanent. According to a commentary by Max Planck Institute for Comparative and International Private Law65, any given period would be arbitrary and could
prove too rigid to cover the various situations of modern employment contracts, in turn referring to various German scholars on their estimates of upper limit of temporary posting.66
The Commission’s Green Paper on conversion of Rome Convention into communit y legislation67 mentioned that the absence of rigidity regarding the applicable law also enables
courts to take have fuller regard to the facts of the case, as “temporary employment” can refer to a great variety of situations. The same document recognised the link with the Directive on Posted Workers and more specifically the interaction between the general conflict rule of the Rome Convention and the rule affecting the applicable law in the sectoral Directive. The Green Paper included a note that the two instruments do not use the same terminology, but claimed that the difference in purpose of both instruments does not produce conflict:
“A superficial reading might suggest that the Directive does not follow the same logic as the Convention, Article 6 of which stipulates that the employee’s status does not have to be changed because of a temporary assignment. But it is clear from a more detailed analysis that the two instruments sit well together. In the event of a temporary assignment, the Directive by no means aims to amend the law applicable to the employment contract but determines a “focal point” of mandatory rules to be complied with throughout the period of assignment to the host Member State, “whatever the law applicable to the working relationship”. The Directive must therefore be regarded as an implementation of Article 7 of the Rome Convention, concerning overriding mandatory rules".68
64 Convention 80/934/ECC on the law applicable to contractual obligations opened for signature in Rome on 19 June 1980, OJ L 266 of 9.10.1980
65 Max Planck Institute for Comparative and International Private Law, Comments on the European Commission’s Proposal for a Regulation of the European Parliament and the Council on the law applicable to contractual obligations (Rome I), p. 288 [online]
66 Scholars named in the text include: Heilmann, Das Arbeitsvertragsstatut (1991) 144 (arguing that an employment may not be regarded as temporary after the employee worked two years abroad); Bamberger/H. Roth (-Spickhoff), Kommentar zum Bürgerlichen Gesetzbuch (2003) Art.30 EGBGB, no.20 (assuming the same after three years); v. Hoffmann/Thorn, Internationales Privatrecht (2004) 460 (assuming the same after one or two years) 67 European Commission, COM(2002) 654 final, GREEN PAPER on the conversion of the Rome Convention of 1980 on the law applicable to contractual obligations into a Community instrument and its modernisation , p. 35 “The Rome Convention and the Directive not having the same objectives, there is no inconsistency between these instruments.“
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However, the Green Paper concludes with the acknowledgement that “there is a risk of confusion in that the two instruments do not use the same terminology” and that “the present situation does not add to the transparency of Community legislation.”69 I infer that the broad
and non-exact scope afforded by both definitions leaves significant space for interpretat io n. Firstly, per my reading of the provisions, “expectations to resume working in the country of origin” can have especially broad meaning, leaving significant uncertainty as to when exactly this period ends (or should end), or if it is even possible to indicate that at all.
It could be concluded that the term “temporarily employed in another country” used in the Rome I Regulation and its interpretation within that context does not shed any additional light on the establishment of maximum length criteria for a continuous posting to be regarded as genuine under the Posted Workers Directive. The option to set maximum upper limit was debated during the legislative procedure leading to the Rome I Regulation, but was not adopted. However, the notion of return of the employee (that the employee is expected to resume working in the country of origin after carrying out his tasks abroad) was included as one of the relevant criteria in the Enforcement Directive. Both the “limited period of time” and “posted worker returns to/is expected to resume working in the Member State from which he or she is posted after completion of the work or the provision of services for which he or she was posted ” requirements are listed70 as elements which should be assessed in order to identify a genuine
posting. This can be interpreted as an attempt to bridge the terminology and requirements of both norms.
Nevertheless, within the framework of the Rome I Regulation, the maximum duration of being “temporarily” employed in another country, even when clarified with “expectations to resume working in the country of origin” explanation, can be interpreted very broadly. Ambiguity as regards the regime of applicable law runs against the general objective of the Rome I Regulat io n – to promote legal certainty in the European judicial area, where the conflict-of-law rules should be highly foreseeable.71 I conclude that the “(expected) return of the worker to the country of
origin” is now one of the relevant criteria for assessment of genuine posting situation, but does not provide for establishment of limit of maximum length of such posting.
69 Ibid., p. 37
70 Art. 4(3)(a),(d) of the Directive 2014/67/EU; alongside the element requiring that “the posting takes place to a Member State other than the one in or from which the posted worker habitually carries out his or her work according to Regulation (EC) No 593/2008 (Rome I) and/or the Rome Convention“
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II. Potential sources for assessment of a proper maximum duration
of posting
It can be inferred that with the length of posting, the effect on the labour market of host state directly increases. The possibility for Member States to use the exception on minimum wage application for posting of short duration72, and the eight-day initial assembly exemption73 are
only supportive of this notion (as exceptions permitted against the general rule of day-one protection). The importance of the temporal aspect can also be shown by the fact that the Commission’s initial proposal for the Posted Workers Directive of 1991 stated that the minimum pay and holidays provisions did not apply to postings of less than three months; the 1993 version reduced that period to one month but still retained its compulsory status.74
With the presumption that the length of posting is the defining variable for assessment of the impact on the labour market of the host country, the implication would be that it is also one of the defining values for establishing a genuine posting, and possibly for establishing whether the home state law can still be primarily applicable under the norms of private international law. It also makes the use of host state law provisions possibly legitimate due to fact that the notion of being only “temporarily” employed in another country can no longer be maintained. Studies suggested a framework of implementation based on a rebuttable presumption of non-genuine posting.75 To address the question of exact length that should be applied, it is necessary to look
into possible sources for assessment of this maximum duration.
72 Art 3(3),(4) of the Directive 96/71/EC 73 Art 3(2) of the Directive 96/71/EC
74 Paul Davies, 'Posted Workers: Single Market or Protection of National Labour Law Systems?' (1997) 34 Common Market Law Review, Issue 3, p. 602, further referring to the COM(93)225 final-SYN 346, O.J. 1993, C 187/5, Art. 3(2)
75 Van Hoek and Houwerzijl, Comparative study on the legal aspects of the posting of workers in the framework of the provision of services in the European Union, 2011, p. 188 [online]
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a. Limits on successive assignments in temporary agency work
The question of use and abuse of posted workers can be seen in a broader scope of activities of temporary agencies. The Directive 2008/104/EC76 (the “Temporary Agency Work Directive ”)establishes a protective framework for temporary agency workers in the EU77 and both
Directives (Posted Workers, Temporary Agency Work) are essentially addressing temporal situations. It can also be argued that posted workers face similar conditions in terms of potential precariousness of their work where same questions of equality with the rest of the workforce at the workplace arise. Also, as previously noted, the Posted Workers Directive recognises postings by agencies as one of the recognised variants of posting.78 The Posted Workers
Directive further lists “the conditions of hiring-out of workers, in particular the supply of workers by temporary employment undertakings” as one of the core standards covered under Article 3(1).79 Finally, the Posted Workers Directive attains an option for the Member States to
provide that the sending undertakings must guarantee temporary hired-out workers the terms and conditions which apply to temporary workers in the Member State where the work is carried out.80 This suggests that there might currently be limited situations where a hard cap on the
length of the posting applies. This is in the case of temporary agency hiring-out postings where certain countries made use of the Article (3)(9) of the Posted Workers Directive to apply the same conditions to national and foreign temporary workers. At the same moment, a number of these countries apply time limitations on the maximum continuous use of temporary agency workers (among other regulations limiting the use of temporary agency workers such as non-abuse criteria, preferred use of core workers, etc.). All these limitations are subject to review under the Temporary Agency Work Directive81, and as such can be susceptible to invalid it y
due to their conflict with the freedom to provide services (restrictions on the use of temporary agency work create an obstacle to the provision of services by temporary employme nt undertakings)82, but can nevertheless serve as a valid starting point for the discussion on the
76 Directive 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on temporary agency work, OJ L 327, 5.12.2008, p. 9–14
77 Recital 12 Preamble of the Directive 2008/104/EC 78 Art. 1(3)(c) of the Directive 96/71/EC
79 Art. 3(1)(d) of the Directive 96/71/EC
80 Art. 3(9) of the Directive 96/71/EC which states that “Member States may provide that the undertakings referred to in Article 1 (1) must guarantee workers referred to in Article 1 (3) (c) the terms and conditions which apply to temporary workers in the Member State where the work is carried ou t.”
81 Art. 12 Directive 2008/104/EC (“By 5 December 2013, the Commission shall, in consultation with the Member States and social partners at Community level, review the application of this Directive with a view to proposing, where appropriate, the necessary amendments.”)
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possible establishment of time frame for posting situations to distinguish them from abuse of the rules.
Moreover, the Temporary Agency Work Directive allows only for prohibitions and restrictio ns on the use of agency workers “on grounds of general interest relating in particular to the protection of temporary agency workers, the requirements of health and safety at work or the need to ensure that the labour market functions properly and abuses are prevented”.83 Academic
legal writers are almost unanimous in interpreting Article 4(1) of the Temporary Agency Work Directive as imposing on the Member States an obligation to remove unjustified restrictions on the use of temporary agency work84, such as the maximum temporal limitations.
As per the character of agency work, its temporality and use, Advocate General Szpunar in the case AKT v Öljytuote ry, Shell Aviation Finland Oy85 had to assess whether certain limitatio ns
of Member States on the length of agency work were in compliance with the functioning of internal market, or if they posed an unjustified burden to the freedom of provision of services.86
Regardless of the fact that the compliance of those limitations with the freedom of provision of services was not itself adjudicated by the Court, the Advocate General reiterated that the Temporary Agency Directive prohibits the continued application, or the introduction of prohibitions or restrictions, on the use of temporary agency work that is not justified on grounds of general interest, relating in particular, to the protection of temporary agency workers, the requirements of health and safety at work or the need to ensure that the labour market functio ns properly, and abuses are prevented.87 On the other hand, the goal to combat abuse in this area
was accepted as a possible justification for length limitations on successive posting.
As the Advocate General further noted, the continuance, for a long period of time, of temporary employment relationships, which should by nature remain temporary, might in fact be indicative of an abuse of this form of work.88 The provision in question in the case stemmed
out of a sectoral collective agreement which was limiting the use of temporary agency by stating that “the use of temporary workers is an unfair practice if the temporary agency workers employed by undertakings using external workers carry out the undertaking’s usual work
83 Art. 4 of the Directive 2008/104/EC, entitled ‘Review of restrictions or prohibitions’
84 Opinion of AG Szpunar, Case C-533/13 (Auto- ja Kuljetusalan Työntekijäliitto AKT ry), para. 40, in turn referring to Bell, M., ‘Between flexicurity and fundamental social rights: the EU directives on atypical work’, European law review, 2012, Vol. 37, no 1, p. 36, and various other sources
85 ECJ, C-533/13 (Auto- ja Kuljetusalan Työntekijäliitto AKT ry v Öljytuote ry and Shell Aviation Finland Oy), ECLI:EU:C:2015:173
86 Opinion of AG Szpunar, Case C-533/13 (Auto- ja Kuljetusalan Työntekijäliitto AKT ry), para. 2 87 Ibid., paragraph 93
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alongside the undertaking’s permanent workers under the same management and for a long period of time.89
The Advocate General observed that it is clear from the definitions set out in Article 3 of Temporary Agency Work Directive that temporary agency work implies relationships which are maintained “temporarily”. It may thus be inferred that this form of work is not appropriate in all circumstances, in particular where staffing needs are permanent. The Advocate General’s assessment followed with an argument that inasmuch as the limitation provision at issue prohibits the employment of temporary agency workers alongside an undertaking’s own employees for a “long period of time”, it does pursue the legitimate objective of limiting the abusive use of that form of work. Indeed, in accordance with the general thrust of EU legislation, the use of temporary agency work must not have a detrimental effect on direct employment but must, on the contrary, be able to lead to more secure forms of employment.90
Finally, the Advocate General concluded that national rules which limit the use of temporary work to the performance of tasks which, by reason of their nature or duration, objectively meet a temporary need for labour and which prohibit the employment of temporary agency workers alongside an undertaking’s own employees for a long period of time, seem justified on the ground of a general interest relating to the need to ensure that the labour market functio ns properly and abuses are prevented.91
The issue itself was not decided by the court since it held that the provision in question92 only
binds the competent authorities of the Member States, imposing on them an obligation to review in order to ensure that any potential prohibitions or restrictions on the use of temporary agency work are justified, while such obligations cannot be performed by the national courts.93
Nevertheless, it provides for an assessment where a national rule justified on the grounds of general interest gave rise to a conflict between the perceived proper use of “temporary” agency work and its abuse. I infer that given the temporary requirement of both the Temporary Agency Work and Posted Workers Directives, creating a reasonable time scope for posting of workers might be possible by drawing from the national practice of states in the case of limitations on the use of agency work.
89 Ibid., paragraph 9
90 Ibid., paragraph 120 91 Ibid., paragraph 124
92 Art. 4(1) of the Directive 2008/104/ EC
93 ECJ, C-533/13 (Auto- ja Kuljetusalan Työntekijäliitto AKT ry v Öljytuote ry and Shell Aviation Finland Oy), ECLI:EU:C:2015:173, para. 32
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The national limitations on the use of temporary agency work under the Temporary Agency Work Directive were subject to review by the Member States in cooperation with social partners94 and subsequently reviewed by the European Commission.95 The report reviewing the
limitations on the use of temporary agency workers96 identified several approaches taken by the
Member States in order to justify limitations on the use.
Firstly, a number of countries (Belgium, Bulgaria, Croatia, Czech Republic, France, Germany, Greece, Hungary, Italy, Poland, Portugal, and Slovenia) referred to “the protection of temporary agency workers” to explain and provide a justification for certain prohibitions or restrictions in place.97 On the other hand, other Member States (Ireland, Luxembourg, Malta and the United
Kingdom) reported that no restrictions or prohibitions were in place.98 Specifically, several
Member States (Belgium, Bulgaria, Czech Republic, Germany, Greece, Italy, Poland, and Sweden) justified certain prohibitions or restrictions on the use of agency work by “the need to ensure that abuses are prevented”. These countries are important for the assessment of the understanding of abuse of the “temporary” character of work under the Temporary Agency Work Directive. Several Member States (Belgium, France, Greece, and Poland) explained various restrictive measures by the need to protect permanent employment and to avoid a situation in which permanent positions might be filled by workers employed on a temporary basis. In particular, they have used this justification to limit the duration of assignments and to explain the existence of a list of permissible reasons for using temporary agency work, such as, for instance, the replacement of an absent worker, a temporary increase in the volume of work, or the performance of exceptional or seasonal tasks.99
A selected number of Member States make provision for a maximum duration of temporary agency assignments. In France, the law limits the length of assignments as between 18 and 24 months, inclusive of any contract renewals, according to the reasons for use.100 In Portugal, the
maximum permitted assignment was increased from one to two years in 2007.101 The total
94 Art. 4(2) of the Directive 2008/104/EC: "By 5 December 2011, Member States shall, after consulting the social partners in accordance with national legislation, collective agreements and practices, rev iew any restrictions or prohibitions on the use of temporary agency work in order to verify whether they are justified…”
95 Art. 4(5) of the Directive 2008/104/ EC: "The Member States shall inform the Commission of the results of the review referred to in paragraphs 2 and 3 by 5 December 2011."
96 European Commission, COM(2014) 176 final, Report from the Commission on the application of Directive 2008/104/EC on temporary agency work, p. 9
97 Ibid., p. 10 98 Ibid., p. 9 99 Ibid., p. 12
100 European Foundation for the Improvement of Living and Working Conditions, Temporary agency work and collective bargaining in the EU, p. 26 [online]
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length of any assignment in Luxembourg is limited to a maximum of 12 months, inclusive of any renewals. In Poland, agency workers may not be deployed to any one employer for more than 12 months over a period of 36 consecutive months. In Italy, the TAW collective agreement stipulates that the initial assignment can be extended for a maximum of five times and for an overall duration of no more than 36 months. The regulation of assignment length is made under the terms of the national collective agreement in Belgium. The maximum permitted length of the assignment depends on certain conditions, linked to reason for use, as defined in the national collective agreement. The maximum permitted lengths of assignment are: the whole period concerning the temporary replacement of a permanent worker (e.g. due to sick leave); a maximum of six months when replacing a dismissed worker, with a maximum of an additiona l six months subject to the agreement of the trade union delegation; any period agreed by the union delegation to meet any temporary peaks of demand (or a period of six months plus up to two further periods of six months if there is no trade union delegation, providing the social fund or mediation authority is informed); from seven days to 12 months in the case of unusual work, depending on the situation, to which a special National Collective Agreement (of November 1981) applies.102
The following list gives the overview of existing limitations on the hiring-out (under Art 1(3)(c) of the Posted Workers Directive) postings through equal application based on Art 3(9) currently in force in Member States which were deemed to have the highest number of “inco ming” posted workers (based on an overview of A1 norms handed out to workers coming from other Member States for the purposes of social security coverage)103 together with some other countries that
apply the system of limitations:104
102 Ibid., p. 27
103 PACOLET and DE WISPELAERE, Posting of workers: Report on A1 portable documents issued in 2012 and 2013, Network Statistics FMSSFE, European Commission, December 2014, p. 13 [online]
104 Compiled based on the documents of Temporary agency work and collective bargaining in the EU and the Report from the Commission on the application of Directive 2008/104/EC on temporary agency work
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MS: Max. time limitations for assignment with the same undertaking:
Extending TAW protection to foreign workers?
Austria No time limitations present, lengthy assignments accepted by Courts 105
Limited number of protective provisions
Belgium Up to 12 months depending on the type of assignment
Yes
Czech Republic 12 months Yes
Germany Currently there is no limitation on lengthy assignments106
--
France maximum of 18 months107 Yes
Luxembourg maximum of 12 months, inclusive of any renewals
Yes Italy Overall duration of no more than 36
months
Yes Poland Prohibition of deployment to one
employer for more than 12 months over a period of 36 consecutive
months
Yes
Portugal 24 months Yes
Spain National and sectoral collective agreements apply
-- United
Kingdom
No specific limit imposed --
It can be concluded that the use of restrictions on the maximum continuous assignments of temporary agency workers varies significantly. Member States do not have a consistent limit in force with regards to the limited duration of temporary agency assignments. There is currently no fixed limit for the length of an assignment with a certain user of agency workers within the largest “importer” states of posted workers. The only exceptions are Italy, France and Belgium with 36, 18 (with extensions), and 12 months respectively.
105 European Labour Law Network, Temporary Agency Work – Amendment of the Austrian Temporary Agency Work Act mentions that: „Article 3 of the Directive mentions that the work performed by temporary agency workers is performed “temporarily” – there is no mention of that in the Austrian Act. On the contrary, the Austrian Supreme Court deals with long-term assignments in its rulings and not with the legality of such lengthy assignments.“ [online]
106 Section 1 para. 1 sent. 2 of the German Temporary Employment Act (Arbeitnehmerüberlassungsgesetz) specifies that the hiring-out of workers has to be temporary. This provision does not provide a specific amount of time. The coalition agreement between the dominating German parties SPD and CDU includes a planned statutory time limit of 18 months (however, this is not implemented as of December 2015)
107 The maximu m duration is extended to 24 months in the case of replacement of a worker who left the company because of his/her position being suppressed, assig nments carried out in a foreign country and for exceptional export orders that require special efforts both in quantitative and qualitative terms. Furthermore, the duration of the contract can be 36 months for apprenticeships. In: European Foundation for the Improvement of Living and Working Conditions, Temporary agency work and collective bargaining in the EU, p. 26
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b. Case law on the freedom to provide services
As the situation of non-genuine posting of workers essentially falls under abusive use of the rights provided by the Posted Workers Directive in the framework of the provision of services, it is necessary to explore whether there are any time limits recognised in case law for continuo us service provision which, due to its duration, could no longer be regarded as being covered by the freedom to provide services under EU law. The ECJ has accepted that a general legal principle prohibiting abuse of rights exists in the EU and this principle has been applied also in case law of the Court of Justice.108
In the area of provision of services, the ECJ was repeatedly asked to make a distinction between situations which were (supposedly) covered by the freedom of provision of services but which were pursued on a stable and continuous basis for extended periods. This raised questions as to the temporary nature of the provision of services - and whether a person pursuing certain activities for lengthy time comes under the provisions relating to the right of establishment and not those of the chapter relating to services. Similar conflict as in the case of abusive continuo us postings arises. The concept of establishment is allowing a national to participate, on a stable and continuous basis, in the economic life of a Member State other than his State of origin, whereas, in contrast, where the provider of services moves to another Member State, the provisions of the freedom of establishment envisage that he is to pursue his activity there only on a temporary basis.109
The ECJ held that the temporary nature of the provision of services is to be determined in the light of its duration, regularity, periodicity and continuity.110 Provision of services within the
meaning of the Treaty may cover services varying widely in nature, including services which are provided over an extended period, even over several years, where, for example, the services in question are supplied in connection with the construction of a large building.111 The ECJ
concluded that no provision of the Treaty affords a means of determining, in an abstract manner, the duration or frequency beyond which the supply of a service or of a certain type of service in another Member State can no longer be regarded as the provision of services within the meaning of the Treaty.112
108 ECJ, C-321/05 (Kofoed), [2007] ECR I-5795, para. 38. 109 ECJ, C-55/94 (Gebhard), [1995] ECR I-04165, para. 26 110 ECJ, C-55/94 (Gebhard), para. 39
111 ECJ, C-215/01 (Schnitzer), [2003] ECR I-14847, para. 30 112 ECJ, C-215/01 (Schnitzer), para. 31
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However, an activity carried out on a permanent basis, or at least without a foreseeable limit to its duration, does not come under the EU provisions concerning the provision of services.113
It follows that the case law from the area of provision of services does not provide for the interpretation of the term “limited period of time” (or to further explain the temporary character of posting) within the meaning of the Posted Workers Directive. Assessment of the maximum duration of continuous posting still falling under the genuine character of posting may benefit only from the general guidelines specified in the services cases as to what should be taken into account for such assessment – the duration, regularity, periodicity and continuity – and could build on the example given in one of the cases which states that the freedom of provision of services may cover services which are provided over an extended period, even over several years, where, for example, the services in question are supplied in connection with the construction of a large building.
