Cross-border posting of workers in Europe

We have cross-border posting of workers when an employer from a State provides its services in another State, sending there its employees.

The phenomenon has been spreading out in Europe in the last 20 years, mostly since Eastern countries, with lower labour costs, joined the EU. Therefore various legislative measures have been discussed with regard to this subject at European and national level and it has been dealt with in some major decisions of the European Court of Justice too.

Indeed, the cross-border posting of workers involves many fundamental rights recognised by the EU and requires a careful balancing of the interests at stake.

Free movement of workers, capitals and goods and especially free provision of services (art. 56 TFEU) shall be granted, but also fair competition and workers’ protection are to be ensured.

In 1996 the European Parliament and the Council adopted a first directive on the matter (Directive 96/71/EC, implemented in Italy with D. Lgs. 72/2000); in 2014 another directive was adopted (Directive 2014/67/EU, implemented in Italy with D. Lgs. 136/2016) in order to better enforce the principles set out in the first one.

European and national rules pursue two main goals:

– to prevent and combat fictitious postings through letterbox companies, ensuring a level playing field for the service providers in Europe;

– to ensure uniform treatment and protection of posted workers, avoiding ‘social dumping’ phenomena.

To achieve these goals the 1996 Directive laid down a nucleus of mandatory rules to provide a minimum protection for posted workers all over Europe. To enforce this protection, the 2014 Directive strengthened the cooperation system among national authorities and set out a series of factual elements to be considered in order to determine whether a posting is ‘genuine’ or not.

Art. 4 of the 2014 Directive (transposed into art. 3 of Italian Law) details many of these elements concerning the companies involved and the posted workers.

As far as the companies are concerned the following elements are deemed relevant:

1. a) the place where the company has its registered office and its head office, where it uses premises, pays taxes and social security contributions and where it is registered with the Chamber of Commerce;
2. b) the place where posted workers are recruited and from which they are posted;
3. c) the law applicable to the contracts concluded both between the company and its workers and between the company and its customers;
4. d) the place where the company carries out its main business activity and where its administrative staff is employed;
5. e) the number of contracts performed and/or the turnover of the company in the Member State of establishment, taking into account the specific situation of newly established companies and of SMEs.

As far as the workers are concerned, the following elements should be taken into consideration:

1. a) whether the work is carried out for a limited period of time in another Member State;
2. b) the date on which the posting starts;
3. c) whether the work is usually carried out in the country of origin;
4. d) whether the posted worker will resume work in the Member State from where he has been posted;
5. e) the nature of activities performed;
6. f) whether travel, board and lodging costs are reimbursed by the employer;
7. g) any previous period during which the activities have been carried out by the same or by another posted worker.

None of these elements shall be deemed final; it’s up to the national authorities to make an overall assessment of all factual elements and decide whether a posting is genuine or not.

If it proves not to be genuine, financial administrative penalties and fines can be imposed both on the posting and on the host company; moreover both of them are held responsible for the workers’ credits.

Italian law has also strengthened that provision, confirming its hostility towards any kind of labour brokering. If the Italian authorities assess that the posting is not genuine, the “posted worker is considered in all respects a direct employee of the company taking advantage of his work (art. 3 of Italian Law).

To protect posted workers and ensure a level playing field, art. 3 of the 1996 Directive (art. 4 of Italian law) requires that each Member State grants posted workers employment conditions comparable to those granted to local workers, whatever the laws applicable to the working relationship are. In particular, posted workers shall be entitled to equality of treatment concerning the following matters:

– maximum work and minimum rest periods;

– minimum paid annual leave;

– minimum rates of pay;

– health, safety and hygiene at work;

– protective measures for mothers, children and young people;

– equal treatment of women and men and non-discrimination.

As a matter of fact, the most challenging aspect is the ‘minimum rates of pay’. Actually, in each Member State wages are made up of many different entries, not always easy to be compared, and are defined from different sources (law / administrative provisions / collective agreements). By the way economic issues are obviously crucial to companies and workers when they have to decide whether the posting is worthwhile.

For these reasons, the European Court of Justice set out that the rates of pay granted to posted workers shall be compared with those of the host country workers on an overall basis and not by comparing individual entries. Besides, the ECJ has specified that the only elements to be taken into consideration for such comparison shall be those strictly connected to the work performed, thus excluding bonuses or cost refund. European case-law has also   made clear that the pay items to be taken into account shall be transparent and available to posting employers.

Lastly, European Provisions impose to the Member States to allow access to the legal protection instruments provided for local workers to the workers posted within their territory.

For that purpose, art. 5 of Italian Law enables workers posted in Italy to call on the competent administrative authorities and to take judicial action to defend their rights.