Posting of Workers within the European Union. The Enforcement Directive 2014/67/EU and shortfalls of existing legislation

Table of Contents

1. Summary

2. Table of Contents

3. Introduction
3.1. Background
3.2. Limitations
3.3. Aim

4. Definition of a posted worker

5. Jurisdiction in regard to posted workers

6. Applicable national law in regard to posted workers
6.1. Three-step system
6.2. Summing up

7. Overview of European Legislation applicable to posted workers

8. Directive 96/71/EC on the Posting of Workers
8.1. Legal Theory
8.2. Scope of application
8.3. A “hard core” of employment conditions – the host state´s overriding mandatory provisions
8.4. Effect of Article 3 of the Posting of Workers Directive in the opposite direction
8.5. Special treatment of temporary agency workers (“hired-out workers”)
8.5.1. Overview of different ways that Directive 96/71/EC influenced national laws
8.5.2. Procedure and Notifications in regard to the Posting of Workers

9. Judgment in Sähköalojen ammattiliitto ry and other CJEU judgments regarding minimum rates of pay
9.1. Minimum wage elements
9.2. Summing up

10. Regulation (EC) No 883/2004 on the coordination of social security systems
10.1. The Article 12 exemption for posted workers and its conditions
10.1.1. 24 months maximum
10.1.2. No replacement
10.1.3. Substantial activities
10.1.4. A direct relationship
10.1.5. Coverage under the sending state´s social system
10.2. Exceptions under Article 16 of Regulation (EC) 883/2004
10.3. Procedure and Notifications in regard to Regulation (EC) 883/2004

11. The Internal Market Information System (“IMI”)

12. Possible advantages of using posted workers instead of the local workforce

13. Abuse and circumvention of European legislation regarding the Posting of Workers
13.1. A brief overview
13.2. Case reports
13.2.1. Italy
13.2.2. Belgium I
13.2.3. Belgium II (Letterbox Company)
13.3. Details in regard to letterbox companies
13.4. Specific shortcomings of the Posting of Workers Directive 96/71/EC
13.4.1. Information available
13.4.2. Information available regarding national minimum wages
13.4.3. Cooperation between Member States as well as national control and monitoring measures
13.4.4. Unclear criteria in relation to the scope of application of the Posting of Workers Directive

14. Stepping up the enforcement of EU legislation on the posting of workers with Directive 2014/67/EU (The “Enforcement Directive”)
14.1. Indicators of a genuine posting
14.2. Monitoring and compliance
14.3. Subcontracting liability in the construction sector
14.4. Enhanced administrative cooperation
14.5. Improved access to information
14.6. A detailed look at the new subcontracting liability in the construction sector

15. The number of posted workers within the European Union

16. Conclusion

17. Bibliography/Sources
17.1. Books
17.2. Journal articles
17.3. Legislation
17.3.1. Legislation of various countries
17.3.2. Legislation of the European Union
17.4. Citation of cases and connected documents
17.5. Citation of official documents and papers
17.6. Websites

2. Summary

This thesis guides the reader through the most important aspects of current European labour law in relation to posted workers. It starts with basic definitions and provides answers to questions of jurisdiction and applicable law. The thesis then explains in detail the framework of the provisions guaranteeing a minimum level of safeguards and other rights to workers (Directive 96/71/EC) as well as the framework of the provisions applicable with regard to social security benefits and contributions (Regulation 883/2004). It explains the true impact of judgment Sähköalojen ammattiliitto ry on the applicable minimum wage and shows possible legal advantages of using posted workers over the domestic workforce. It furthermore explains how the practically important Internal Market Information System works and shows common ways of abuse and circumvention of current legislation. It divides these ways of abuse into the categories “Undesirable Legal Posting”, ”Questionable Practices”, “Fraud and Fake Postings”, “Letterbox companies” and “Bogus self-employment”, discussing three cases.

The most recent development in the area of posted workers is 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 (Enforcement Directive). The thesis explains the shortcomings of Directive 96/71/EC. It lists the novelties that the Enforcement Directive introduces and discusses their possible transposition into national law, their merits and insufficiencies. The thesis then takes a detailed look at one of these novelties, the new subcontracting liability in the construction sector. Finally, the thesis provides numbers of posted workers within the EU and specific countries, which enables the reader to put the economic impact of posted workers in perspective.

3. Introduction

3.1. Background

European Directives and Regulations governing the posting of workers are highly relevant in today´s globalized economy and have an impact on many people´s lives.^[1] The most recent development in this area is the introduction of 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 (Enforcement Directive). The deadline for the transposition of this Directive is 18 June 2016. Presently, academic and public debate focuses on the changes this new Directive brings and its implementation into national laws.

There seems to be no comprehensive academic work that illustrates the current state of the relationship between social and labour rights against a background of the shortcomings, abuses and circumvention of the existing European legislation and CJEU case law. This thesis seeks to address these issues as explained in detail below (see 3.3 “Aim”).

3.2. Limitations

Legislation in relation to individual contracts of employment is highly controversial and deeply complex. At the European level, the rules about posted workers are often in contact with or supplement other Directives and Regulations. There are for instance Directives 2008/104/EC on temporary agency work, 2003/88/EC concerning certain aspects of the organisation of working time, Council Regulations (EEC) No 3820/85 and (EEC) No 3821/85 concerning social legislation relating to road transport activities or Council Directive 2000/79/EC concerning the European Agreement on the Organisation of Working Time of Mobile Workers in Civil Aviation.

This complexity is not only the case at the European level, but also at the national level. At the national level, a myriad of diverse and complicated national laws govern individual contracts of employment. Take Austria, for instance, where contracts of employment are governed by the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch), the Employee Act (Angestelltengesetz), the Employee Protection Act (ArbeitnehmerInnenschutzgesetz), the Act on Working Hours (Arbeitszeitgesetz), the Leave Entitlement Law (Urlaubsgesetz), the Act on Rest Periods (Arbeitsruhegesetz), the Law Amending the Labour Contract Law (Arbeitsvertragsrechts-Anpassungsgesetz), the Personnel Leasing Act (Arbeitnehmerüberlassungsgesetz) and many more. Diverse collective agreements apply as well.

It is not within the scope of this thesis to explain in depth the European legislation that could apply to an individual contract of employment or to explain the exact content of diverse national laws, which employers have to observe when carrying out services in another Member State. This would exceed the limitations of a single thesis. The thesis is therefore limited mainly to the rights that employers have to observe in relation to posted workers.

3.3. Aim

This thesis analyses the topic of posted workers. It connects the following two pillars:

- Porovisions applicable with regard to social security benefits and contributions. This pillar consists mainly of Article 12 of Regulation (EC) No 883/2004 on the coordination of social security.
- Prvisions guaranteeing a minimum level of safeguards and other rights. This pillar consists mainly of 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 provision of services (Posting of Workers Directive).

The thesis provides the reader with a full picture of the topic of posting workers, including answers to basic questions of jurisdiction^[2] and applicable national laws^[3] as well as recent case law, specifically an interpretation of the judgment Sähköalojen ammattiliitto ry,^[4] and its anticipated results. It furthermore analyses the limitations to posting in general and illustrates the line between posted and migrating workers. It identifies the differences in conditions and requirements (procedure and notifications) between the provisions applicable with regard to social security benefits and contributions (social rights) and the provisions guaranteeing a minimum level of safeguards and other rights to workers (labour rights). It also tries to identify possible advantages of legally using posted workers instead of using the local workforce. The thesis then discusses the shortfalls of the existing legislation, which were the reason for the introduction of the Enforcement Directive. It explains why the European Union needed the introduction of the Enforcement Directive. What does it try to fix? What are the biggest changes it brings? How could Member States implement it? What is its impact and where does it fall short?

Because of its comprehensive approach, illustrated above, the thesis is useful as a general basis for guidelines in European employment law concerning the Posting of Workers. There seems to be no academic work offering a comprehensive overview of the current relationship between social and labour rights connected with an analysis of the new Enforcement Directive, simultaneously depicting the shortcomings of existing as well as abuses and ways of circumvention.

The last section of the thesis offers general information regarding the number of posted workers within the European Union as the basis for a better understanding of the relevance of the topic and scale of its economic impact.

4. Definition of a posted worker

An individual contract of employment is a contract whereby one party, the employee (or “worker”), undertakes for a defined or undefined period to work for the other party, the employer.^[5]

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 provision of services (the Posting of Workers Directive), gives us the definition of a “posted worker”. It defines a “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.”

Persons who are usually employed in one Member State thus become “posted workers” when their employer sends them to a different Member State to carry out work on a temporary basis there.

There is considerable ambiguity in relation to what “temporary” means in this context. Studies show that to this day, businesses and other groups, such as organizations representing workers, are very much uncertain as to what amount of time qualifies to be classified as a “limited period of time”.^[6] The Posting of Workers Directive itself does not offer an upper time limit. However, Regulation (EC) No 883/2004 on the coordination of social security systems, which covers the applicable law with regard to social security benefits and contributions, states that a posting of longer than 24 months no longer counts as temporary.^[7] Most Member States apply the same 24 months maximum timeframe to the posting of workers.^[8]

According to the Court of Justice of the European Union (CJEU) “the duration of the provision of the service but also of its regularity, periodical nature or continuity” all play a role in determining the temporary nature of a posting. An employer may even equip itself “with some form of infrastructure in the host Member State” to carry out temporary posting activities. A pre-defined maximum timeframe does not exist.^[9]

In contrast to the social security administrative rules applying to posting (see below 10), the Posting of Workers Directive does not set exact criteria that would help to determine whether posted workers temporarily carry out their work in a Member State other than the one in which they normally work.

The Enforcement Directive^[10], with its deadline for transposition on 18 June 2016, brings a little clarification. It lists a number of criteria in Article 4 (3) that the local authorities have to take into account when assessing whether a worker is a posted worker. The Enforcement Directive derived most of these criteria from the social security administrative rules (see below 10). Among these criteria are “the nature of the activities” and the fact that the posted worker “is expected to resume working in the Member State from which he or she is posted”. Notably still absent is a maximum timeframe for a posting activity.

The deadline for transposition of the Enforcement Directive is 18 June 2016. However, as it is an authentic interpretation of the Posting of Workers Directive, it is already applicable to the definition of a “posted worker” before this deadline expires.^[11] We will revisit the Enforcement Directive in more detail below (see 13.4).

Not included in the definition of a posted worker in accordance with Article 2 of the Posting of Workers Directive is a migrant worker who moves to a different Member State in order to enter into a working relationship there.^[12] Posted workers, in contrast to migrant workers, already have a job in the sending state before their employer sends them to work for it (on its payroll) in another Member State. Migrant workers simply exercise their right to move freely within the European Union to seek work or to work and settle down.

In other words, posted workers do not make use of their free movement right (“free movement of workers”). It is, on the contrary, the employers that make use of their right to provide services anywhere in the European Union.^[13] This right entitles employers to post their workers anywhere within the European Union in order to provide services there.

A posted worker will fall into one of the following three categories (see Article 1(3) of Directive 96/71/EC):

- “workers posted under a service contract” – Article 1(3)(a) of Directive 96/71/EC

The employer, on its own account and under its direction, posts its workers to another Member State under a contract that the employer itself concluded with one of its clients for whom the services are intended in that other Member State. The employer and the posted worker maintain their employment relationship during the period of posting.

- “intra-corporate transferees” – Article 1(3)(b) of Directive 96/71/EC

The employer posts its workers to an establishment or to an undertaking owned by the group (belonging to the same group of companies as the employer; e.g. a sister or mother or daughter company) in the territory of another Member State. The employer and the posted worker maintain their employment relationship during the period of posting.

- “temporary agency workers” – Article 1(3)(c) of Directive 96/71/EC

The employer is a temporary employment undertaking or placement agency and hires out workers to user undertakings established or operating in another Member State. The employer and the posted worker maintain their employment relationship during the period of posting.

The Posting of Workers Directive does not apply to workers that do not fall within one of the three categories outlined above. The Directive will therefore not apply if an employer sends a worker to another Member State, not to provide services for a third party, but to carry out work solely on behalf of the employer.

For example, if an employer sends a worker to another Member State to a business meeting, to participate in a seminar, client acquisition or to visit or participate in a trade fair, the worker does not fall under any of the three categories outlined above. The employer did not enter into a contractual relationship with a third party operating in the host state. The Posting of Workers Directive does therefore not apply.

Even if an employer posts a worker to participate in a trade fair in another Member State in order to sell goods to clients, that worker will not necessarily fall under the definition of Article 1 (3) (a) of Directive 96/71/EC. The Posting of Workers Directive will not apply if the employer in this case does the processing of the orders from the sending state and has no establishment in the host state (e.g. the employer did not set up a “customer service office” in the receiving state). The employer in this case will not have to guarantee its worker any of the terms and conditions of the receiving state, not even those that concern the very “hard core” of employment conditions.

If however the employer posts a worker to an establishment owned by the same group, then that worker will fall under the definition of Article 1 (3) (c) of Directive 96/71/EC (intra-corporate transferee). In this case, the Directive would apply to the intra-corporate transferee, even if the employer did not enter into a contractual relationship with a third party. It is not of relevance whether the intra-corporate transferee provided services for a third party or not.

5. Jurisdiction in regard to posted workers

Under Section 5 of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I-Regulation) and under Article 6 of the Posting of Workers Directive, the employee may choose whether to sue their employer in

- the Member State where the employer has its place of domicile;^[14] or
- the Member State where the employee “habitually carries out his work”;^[15] or,
- if the employee seeks “to enforce the right to the terms and conditions of employment guaranteed in Article 3”^[16] of the Posting of Workers Directive, the Member State where the employee is or was posted.

The employer, on the other hand, may sue its employee only in

- the Member State where the employee has his or her place of domicile.

Rome I^[17] as well as the Brussel I-Regulation both use the term “habitually carries out his work”, while the Posting of Workers Directive uses the term “normally works”. This difference did not lead to any substantial discrepancies in interpretation.

6. Applicable national law in regard to posted workers

The moment that an employer posts a worker to another Member State, the individual contract of employment of the posted worker has – by definition – a foreign or international element to it. A conflict of laws arises in this situation. Private International Law solves this conflict as follows (in a three-step system).

6.1. Three-step system

- Step: In the absence of a choice of law, the law of the home state applies.

Under Article 1 (2) – 1(4) of 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), it is principally the law of the home state that governs the employment contract of a posted worker. This means that if a contract remains silent on certain situations, the home state´s laws are applicable to these situations.

The home state (also “sending state”) is the country where the employee habitually carries out his or her work. If the employer temporarily employs the employee in another country, the home state does not change.^[18] The work carried out in another country “should be regarded” as temporary, as long as the employee “is expected” to come back.^[19]

The term “temporarily”, which Rome I uses, differs from the term “for a limited period”, which the Posting of Workers Directive uses. This difference did not lead to substantial discrepancies in interpretation.

- 2. Step: Instead of the home state´s law, the parties are free to choose any other law.

Under Article 8 (1) in connection with Article 3 (1) of Rome I, the parties can freely choose any other law instead of the law of the home state. In this case, the law of the chosen state governs the employment contract of a posted worker.

Under Article 2 of Rome I, the choice is not restricted to the law of a Member State. In other words, the parties can choose any law.

- 3. Step: No matter what law the parties have chosen (see above Step 2) or even if the parties did not choose another law (and therefore the law of the home state applies, see above Step 1), the following two types of provisions always apply to employment contracts of posted workers:

(1) The home state´s “provisions that cannot be derogated from by agreement” (ius cogens or lois the police^[20] ). These provisions will always override all conflicting contractual provisions, if the conflicting provisions offer the worker less protection.^[21] In other words, the parties cannot validly agree to contractual provisions that would deprive the worker of the protection afforded to him or her under his or her home state´s law.

(2) The host state´s overriding mandatory provisions, as defined in Article 3 of the Posting of Workers Directive. These provisions will also always override all conflicting contractual provisions, if the conflicting provisions offer the worker less protection. The term “host state” refers to that Member State where the employer posted a worker to in accordance with Article 2 (1) of the Posting of Workers Directive.

6.2. Summing up

On the one hand, if the parties did not choose a specific law,

- the home state´s law (including its lois de police or ius cogens) and
- the host state´s overriding mandatory provisions (defined in Article 3 of the Posting of Workers Directive) apply to the contract.

On the other hand, if the parties chose a specific law (different from the home state´s law),

- the chosen state´s law and
- the host state´s overriding mandatory provisions (defined in Article 3 of the Posting of Workers Directive) and

- the home state´s “provisions that cannot be derogated from by agreement” (lois de police or ius cogens)

apply to the contract. All these provisions override any conflicting provisions, if these conflicting provisions offer the worker less protection.

7. Overview of European Legislation applicable to posted workers

At this point, an overview of the laws that generally apply to posted workers at the European level is appropriate.

Labour law entitlements of posted workers are, at the European level, primarily governed by

- 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 provision of services (Posting of Workers Directive),
- Regulation (EU) No 1024/2012 of the European Parliament and of the Council of 25 October 2012 on administrative cooperation through the Internal Market Information System and repealing Commission Decision 2008/49/EC (IMI Regulation) and
- 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 (Enforcement Directive).

Provisions applicable with regard to social security benefits and contributions were, at the European level, previously covered by Council Regulation (EEC) No 1408/71 of 14 June 1971. This Regulation has since been replaced by

- Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems. Related to this is
- Regulation (EC) No 987/2009 of the European Parliament and of the Council of 16 September 2009 laying down the procedure for implementing Regulation (EC) No 883/2004.

Regulation (EC) No 883/2004 on the coordination of social security systems has since been amended by

- Regulation (EC) No 988/2009,
- Regulation (EU) No 1231/2010,
- Regulation (EU) No 465/2012 and
- Regulation (EU) No 1224/2012.

Lastly, Directive 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on temporary agency work applies to contracts concluded between temporary agency workers and temporary agencies both on a national and on an international level.

8. Directive 96/71/EC on the Posting of Workers

The Posting of Workers Directive puts safeguards in place that prevent social dumping by protecting the social rights of posted workers.^[22] In doing so, it tries to reconcile the promotion of the transnational provision of services with “fair competition”.

8.1. Legal Theory

Already in the 1990s, the CJEU established in its case law that posted workers could not rely on the free movement of workers.^[23] It is on the contrary employers that express their freedom to provide services when posting workers. Restrictions on the movement of posted workers are therefore restrictions on the employer´s freedom to provide services. This is why the CJEU suspends a worker´s right to equal treatment (equal to the treatment of local workers in the receiving state; Article 45 of Treaty on the Functioning of the European Union – TFEU) during the time of his or her posting.^[24]

The European Union has developed the Directive on the Posting of Workers (Directive 96/71) within the framework of Article 56 of the TFEU. The CJEU has interpreted it as the applied result of the CJEU´s proportionality test, which resulted from the CJEU´s interpretation of internal market law.^[25]

In other words, the measures laid out within the Directive are justified restrictions of the employer´s freedom to provide services.

The Posting of Workers Directive represents^[26]

“a compromise between the competing interests of the Member States sending out foreign workers and those receiving them. While the Treaty provisions on the basis of which the directive was enacted (namely Articles 57 (2) and 66 EC) place a clear emphasis on the promotion of cross-border provision of services, the end-result is a directive which — at least on the face of it — tips the balance in favour of the protection of domestic labour systems.”

Article 3 of the Posting of Workers Directive entails a conflict-of-law rule, listing certain matters in which, whatever the law applicable, the law of the host state would overrule less favourable provisions of the employment contract.

Article 23 of Rome I states that the Rome I Regulation does “not prejudice the application of” other community law provisions which lie down conflict-of-law rules. This is why the Rome I Regulation does not prejudice in particular the application of Article 3 of the Posting of Workers Directive, which gives effect to the overriding mandatory provisions of the host state.

The Posting of Workers Directive, like any other Directive, principally has no legal effect on its own. The Member States have to transpose the Directive into national laws. The transposing national laws then give effect to the obligations set out in the Directive.

Article 8 of the Rome I Regulation declares that the national laws of a specific Member State are applicable to an employment contract. It therefore gives effect to the national laws transposing Directive 96/71/EC in a specific Member State. The transposing national laws (in accordance with Directive 96/71/EC) in turn give effect to the host state´s overriding mandatory provisions. Summing up, Article 8 of the Rome I Regulation indirectly gives effect to the provisions of the Posting of Workers Directive.

8.2. Scope of application

Article 1 of the Posting of Workers Directive states (emphasis added):

“This Directive shall apply to undertakings established in a Member State which, in the framework of the transnational provision of services, post workers … to the territory of a Member State.”

The applicability of the Directive is further subject to the existence of a posted worker in accordance with Article 1 (3) of the Posting of Workers Directive. We have already discussed this term in detail above (see 4).

The Directive uses the term “established”. It therefore requires the employer (= the undertaking) to have a genuine link to the sending state. In contrast to the social security administrative rules applying to posted workers (see below 10), the rules in the Posting of Workers Directive do not set exact criteria which would help to determine the existence of the required genuine link.

The recent Enforcement Directive provides for such criteria in Article 4 by laying down part of the same framework as is already established in regard to the social security administrative rules. The Enforcement Directive, as an authentic interpretation of the Posting of Workers Directive, is immediately applicable regardless of its deadline for transposition, insofar as it lays out criteria to interpret the existing rules.^[27]

8.3. A “hard core” of employment conditions – the host state´s overriding mandatory provisions

Within the freedoms of Articles 56 TFEU and 57 TFEU, the directive defines a “hard core” of employment conditions that the employer has to respect in the receiving state (host state).^[28]

This means that, whatever the law applicable to the worker´s employment relationship, the posted worker will always be subject to those laws, regulations or administrative provisions of the receiving state that entail the receiving state´s basic rights for workers concerning the matters that the Posting of Workers Directive defines in its Article 3. In other words, no matter what country´s laws are applicable to the individual employment contract in accordance with Rome I, the “hard core” of the receiving state´s employment conditions will always apply to the posted worker.

Within the scope of these basic rights, employers that post workers^[29] must therefore in effect apply the legislation of the receiving state (host state), unless the law of the sending state (home state) is more favourable for the worker.^[30] This “hard core” of employment conditions falls under the definition of “overriding mandatory provisions” provided in Rome I.^[31]

Article 3 of the Posting of Workers Directive states that this “hard core” of employment conditions comprises all laws^[32] of the receiving state (host state) that cover one of the following matters:

- Maximum work periods and minimum rest periods
- Minimum paid annual holidays
- Minimum rates of pay, including overtime rates
- Conditions of hiring-out workers, in particular the supply of workers by temporary employment undertakings
- Health, safety and hygiene at work
- Protective measures in the terms and conditions of employment of pregnant women or those who have recently given birth, of children and young people
- Equal treatment between men and women and other provisions on non-discrimination

According to Article 3 (10), first indent, Member States may also apply other terms and conditions of employment “in the case of public policy provisions”.

In theory, this provision allows receiving states to apply their laws on other matters than those listed above. However, the case law of the Court interprets this provision very restrictively as it is an “exception to an exception”.^[33] Only mandatory rules which cannot be derogated from and which “meet overriding requirements relating to the public interest” fall under the term “public policy provisions”.^[34] In addition, only national authorities, after having had recourse to Article 3(10) of Directive 96/71, could theoretically introduce such further reaching obligations. Therefore, collective agreements that management and labour establish in their negotiations cannot entail such provisions. Public law does not govern these bodies and thus they cannot avail themselves of that provision by citing grounds of public policy.^[35]

Article 3 (10), second indent, authorizes Member States to apply collective agreements to sectors other than the construction sector, in regard and to the extent of the matters listed above.

Minimum paid holidays and minimum rates of pay do not apply to workers posted for just up to eight days who carry out the initial assembly and first installation of goods where an employer needs to offer these services in order to sell the goods.^[36]

Article 3 (3) – (5) authorizes Member States to provide additional exemptions from the “hard core” of employment conditions. It authorizes Member States not to apply provisions on minimum paid holidays or minimum rates of pay in specific situations. This authorization generally depends on the following requirements:

- The length of the posting must be very short (only up to 1 month) or the amount of work is not significant.
- Any such exemption cannot apply to temporary agency workers (“hired-out workers”).

One example of a country that has made use of this authorization is Austria. § 7b (1a) of the Austrian Law Amending the Labour Contract Law (Arbeitsvertragsrechts-Anpassungsgesetz – AVRAG) states that in certain cases where the amount of work is not significant and if the employer does not enter into a contractual relationship with another party, the worker will be exempt from Austria´s provisions on minimum paid holidays and minimum rates of pay.

If an employer from Latvia posts a worker to Austria in order to operate a trade-show booth at a trade fair, the Austrian provisions on minimum paid holidays and minimum rates of pay therefore do not apply to the worker. The same is true, even in the case of intra-corporate transferees. If the Latvian employer posts a worker to an establishment owned by the group for four weeks in order to help operate a trade-show booth, the Austrian provisions on minimum paid holidays and minimum rates of pay do not apply to the worker.

In a recent judgment, the CJEU has clarified how provisions on minimum rates of pay apply to posted workers.^[37] In light of this recent case law, we will take a more detailed look at minimum rates of pay and how they apply in practice (see below under 9).

8.4. Effect of Article 3 of the Posting of Workers Directive in the opposite direction

The scope of these basic rights as defined in Article 3 also has an effect in the opposite direction.^[38] In principle, Article 3(1), first subparagraph, (a) to (g) of Directive 96/71 limits the “level of protection” which receiving states can award to posted workers. Pursuant to the case law of the CJEU, Article 3(7) of Directive 96/71 does not allow receiving states to apply “terms and conditions of employment which go beyond the mandatory rules for minimum protection” to posted workers. Any other interpretation would deprive the Directive of its effectiveness.

It follows that only the “hard core” of protection in the receiving state (defined by Article 3 of the Posting of Workers Directive) is applicable to posted workers. The receiving state cannot declare applicable other rules regarding protection of workers, for instance rules about protection against dismissal. This means that usually the rules of the sending state apply to protection against dismissal.^[39] If a Polish employer posts a worker to Germany, the Polish minimum notice periods (terms between notice of dismissal and termination of the employment relationship) apply.

In conclusion, a posted worker does not have the right to equal payment or treatment as a worker in the receiving state.

8.5. Special treatment of temporary agency workers (“hired-out workers”)

In many ways, hired-out workers (Article 1 (3) (c) of the Posting of Workers Directive) are treated differently from workers posted under a service contract (Article 1 (3) (a) of the Posting of Workers Directive) or intra-corporate transferees (Article 1 (3) (b) of the Posting of Workers Directive).

As pointed out above in 8.2, the authorization to provide additional exemptions (Article 3 (3) – (5) of the Posting of Workers Directive) does not apply in the case of temporary agency workers.

Recital 19 of the Posting of Workers Directive points out that the Directive does not “prejudice the application by Member States of their laws concerning the hiring-out of workers and temporary employment undertakings to undertakings not established in their territory but operating therein in the framework of the provision of services”.

The Directive followed through on this recital at two instances:

Under Article 3 (1) (d) of the Posting of Workers Directive, in the case of hired-out workers, the applicable “hard core” of employment conditions comprises all provisions of the receiving state that cover “the conditions of hiring-out, in particular the supply of workers by temporary employment undertakings” on a national level.

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^[1] For the total number of posted workers within the EU see section 15 of this thesis.

^[2] In particular Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I-Regulation), Official Journal L 012 , 16/01/2001 P. 0001 - 0023. Available on: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32001 R0044. Last visited on 31 October 2015

^[3] 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. Available on: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32008R0593. Last visited on 31 October 2015.

^[4] Judgment in Sähköalojen ammattiliitto ry, C‑396/13, ECLI:EU:C:2015:86.

^[5] See for instance or Article 610 (1) of Book 7 of the Netherlands Burgerlijk Wetboek (Civil Code) (1 October 1838) or § 1151 of the Austrian Allgemeines Bürgerliches Gesetzbuch (Civil Code) – ABGB (1 January 1812). Available on: https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=Bundesnormen&Gesetzesnummer= 10001622. Last visited on 31 October 2015.

^[6] See UK Department for Business Innovation & Skills. EU Proposal for a Posting of Workers Enforcement Directive – Summary of responses to BIS call for evidence, October 2012, page 7. Available on: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/257046/bis-12-1183-eu-posting-of-workers-summary-responses-to-call.pdf. Last visited on 19 October 2015.

^[7] See section 10 of this thesis.

^[8] CLR European Institute for Construction Labour Research. Posting of workers: Improving collaboration between social partners and public authorities in Europe, 15 October 2013, page 166. Available on: http://www.eurodetachement-travail.eu/datas/files/EUR/synthesegenerale_2013EN.pdf. Last visited on 19 October 2015.

^[9] Judgment in Bruno Schnitzer, C-215/01, ECLI:EU:C:2003:662.

^[10] 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, OJ L 159, 28.5.2014, p. 11–31. Available on: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32014L0067. Last visited on 31 October 2015.

^[11] ENFOSTER project Grant Agreement VS/2014/0009 (January 2015). Enfoster Brief no.2 (Policy Brief) – Transnational Posting of Workers within the EU: emerging challenges and opportunities in the light of Directive 2014/67/EU, January 2015, page 15. Available on: http://enfoster.tagliacarne.it/. Last visited on 21 October 2015.

^[12] European Commission's DG for Employment, Social Affairs & Inclusion. Posted workers, publishing date not reported. Available on: http://ec.europa.eu/social/main.jsp?catId=471&langId=en. Last visited on 1 October 2015.

^[13] Recital 2 of the Enforcement Directive (Supra 10).

^[14] If the employer does not have its place of domicile in a Member State, but has a branch, agency or other establishment in one of the Member States, Article 18 (2) of the Brussels I-Regulation (Supra 2) applies.

^[15] If the employee does not or did not habitually carry out his or her work in any one country, Article 19 (2) (b) of the Brussels I-Regulation (Supra 2) applies.

^[16] In order to enforce the host state´s overriding mandatory provisions guaranteed to employees by Article 3 of the Posting of Workers Directive – 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 provision of services, OJ L 18, 21.1.1997, p. 1–6. Available on: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:31996L0071. Last visited on 31 October 2015.

^[17] Article 8 (2) of Rome I (Supra 3).

^[18] Article 8 (2) of Rome I (Supra 3).

^[19] Recital 36 of Rome I (Supra 3).

^[20] Menz, Georg Konrad. National Response Strategies to Transnational Challenges: The Austrian, French and German Re-Regulation of the Liberalization of Service Provision in the European Union Wage (University of Pittsburgh, Order No. 3054313, 2002), page 7.

^[21] Pursuant to Article 8 (1) in connection with (2) - (4) of Rome I (Supra 3).

^[22] Recital 5 of the Posting of Workers Directive (Supra 16) and Opinion of Advocate General in Sähköalojen ammattiliitto ry, C‑396/13, ECLI:EU:C:2014:2236, paragraph 27.

^[23] Judgment in Vander Elst, C-43/93, ECLI:EU:C:1994:310, paragraph 21-22.

^[24] European Parliament, Directorate General for Internal Policies, Policy Department A: Economic and Scientific Policy. EU Social and Labour Rights and EU Internal Market Law – Study for the EMPL Committee, 24 September 2015, page 39. Available on: http://www.europarl.europa.eu/thinktank/en/document.html? reference=IPOL_STU(2015)563457. Last visited on 31 October 2015.

^[25] Adams Z. and Deakin S. Online Publication Date: February 2015. “Freedom of Establishment and Regulatory Competition”, The Oxford Handbook of EU Law: Forthcoming, page 10/18.

^[26] Recital 5 of the Posting of Workers Directive (Supra 16) and Opinion of Advocate General in Sähköalojen ammattiliitto ry (Supra 22), paragraph 30.

^[27] Supra 11, page 15.

^[28] Article 3 of the Posting of Workers Directive (Supra 16).

^[29] See the definition of a “posted worker” in section 4 of this thesis.

^[30] Opinion of Advocate General in Sähköalojen ammattiliitto ry (Supra 22), paragraph 31.

^[31] See Recital 34 of Rome I (Supra 3).

^[32] Included are not only “laws”, but also regulations, administrative provisions and collective agreements or arbitration awards which have been declared universally applicable according to Article 3 (8) insofar as they concern certain activities laid out in the Annex of the Posting of Workers Directive (Supra 16).

^[33] See judgment in Commission v Luxembourg, C‑319/06, EU:C:2008:350, paragraph 31.

^[34] Opinion of Advocate General in Sähköalojen ammattiliitto ry (Supra 22), paragraph 118.

^[35] Judgment in Laval un Partneri, C-341/05, ECLI:EU:C:2007:809, paragraph 84.

^[36] This provision shall not apply to activities in the field of building work listed in the Annex. See Article 3 (2) of the Posting of Workers Directive (Supra 16).

^[37] Judgment in Sähköalojen ammattiliitto ry (Supra 4).

^[38] See judgment in Laval un Partneri (Supra 35), paragraph 81.

^[39] See section 6 of this thesis.