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Global employment briefing: European Union, June 2018

  • Europe
  • Employment law


Changes agreed affecting the treatment of mobile EU workers

After 27 months of fraught negotiations, the EU Parliament has approved a revision of the 1996 Posted Workers Directive (PWD). This revision may affect some multinational employers who move their workers around Europe to perform temporary assignments and which have hitherto remained largely unaffected by the PWD’s employment protections.

Until now, the PWD concerned itself with guaranteeing only statutory minimum rates of pay and working conditions for posted workers. Under the revision, remuneration, including higher pay rates contained in certain collective agreements, are to be provided for posted workers on the basis of a new equal treatment rule. While this may impact only a minority of professional, ‘white collar’ mobile employees, employers need to be aware of the change.

The revised Directive is expected to be adopted by the EU this summer and Member States will then have two years for implementation. It does not change the recently introduced posted worker registration requirements which have added administrative burdens when posting workers to some European countries. We consider the background and key aspects of the revised Directive below. Note that the text of the revised Directive is currently provisional and therefore may be subject to change.

What are posted workers?

A posted worker is a worker who is sent by his employer in one EEA country (the EU plus Iceland, Liechtenstein and Norway) - the ‘home’ country - to carry out a service in another EEA country - the ‘host’ country on a temporary basis and remains employed by the sending company during the posting. It can include some intra-group transfers providing the employment relationship remains with the home country employer and the posting is for a limited period. An employee posted to the EEA from an employer outside the EEA, such as a US expatriate, is not a posted worker for the purposes of the PWD.

The treatment of posted workers under EEA law

The PWD aims to promote the provision of services across EEA-borders while also protecting posted workers and preventing ‘social dumping’ – i.e. cross-border undercutting of wages. Posted workers benefit currently from certain minimum employment rights under the laws of the host country, for example, they must be paid at least the minimum rates of pay applicable in the host country. Some exceptions apply, such as for short and/or specialist postings. As such, the PWD has historically been largely irrelevant to the movement of well-paid mobile employees across EEA borders.

This began to change in 2016 when new posted worker registration measures, applying to posted workers regardless of their pay and conditions, were introduced in some (not all) EEA countries. This forced more employers to pay attention to the PWD for the first time, reflecting the sometimes burdensome additional administration involved. These rules remain unchanged by the latest PWD revisions.

Changes under the revised PWD

The provisional text of the revised PWD sets out the following key changes for employers:

  • A new equal treatment principle for posted workers in the host country in relation to the following employment rights:

    - working time, rest periods, paid annual leave, remuneration* including overtime, the conditions for hiring out workers, health and safety, non-discrimination protections, protection for pregnant women, women who have recently given birth and for children and young people, accommodation rules applying to workers away from their regular place of work as well as travel, board and lodging allowances or reimbursement rules

    - the above core terms and conditions are derived not only from the host country’s laws, but also any universally applicable** collective agreements or arbitration awards

    - this means that even higher-paid posted workers may be entitled to different or higher remuneration and other conditions above - if they are provided for under a relevant collective agreement in the host country

    - in contrast, the existing 1996 PWD refers only to minimum rates of pay (e.g. a national minimum wage), provides for allowances and expenses to be more readily counted towards the worker’s pay and only the construction sector has to apply terms from universally applicable collective agreements

    *The definition of ‘remuneration’ will depend on the law of the host country (although specific reference is made in the text to the treatment of posting allowances).

    **To be universally applicable, the collective agreement must be observed by all undertakings in the geographical area and in the profession or industry concerned. Member States have the option also to widen this further to include generally applicable and other collective agreements.
  • In the case of postings lasting longer than 12 months (extendable to 18 months), the posted worker must have equal treatment in relation to all terms and conditions under the host country’s laws and above collective agreements, not just the core terms identified above. Conditions on termination, non-compete clauses and occupational pensions are excluded.
  • An anti-avoidance provision stipulates that if any posted worker replaces another and performs the same task at the same place, the period of posting for calculating whether the 12/18 month trigger has been met for benefiting from host country rules will be calculated by adding together the different workers’ periods of posting.
  • The rules for road transport will be subject to another agreement.

What are the risks to employers?

A practical first step is to check whether an employer is, in fact, dealing with a posting under EEA legislation. For example, a transfer may not be temporary in character: if it is for an unlimited period of time or the employee is not expected to return to the home country. If it does not have the characteristics of a posting, the changes resulting from the revised Directive may not apply.

Given the two year implementation period, employers should use the time to review whether there is a risk of host country laws, including appropriate collective bargaining agreements, setting more generous core terms than those offered to their workers posted to those countries and the risks associated with non-compliance (some of which will only become clear when Member States implement the revised Directive).

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