The deadline for its implementation by Member States was June 18, 2016.
Pitfalls of the Posting of Workers Directive
The Posting of Workers Directive 96/71/EC (PWD) is aimed at promoting the free movement of services by creating legal certainty regarding the applicable labour laws, and preventing ‘social dumping’ and unfair competition between EU Member States.
Its purpose is to determine the applicable law in situations where workers are posted to work in EU Member States by making a compromise between the competing interests of the Member State that posts the worker (Home MS) and the receiving Member State (Host MS).
However, in practice, the implementation of the PWD has suffered pitfalls. Some companies [posting workers] were only “letterbox companies” (companies without any activities in the Home MS). In the case of chains of subcontractors, false declarations of posting have been made; there have been failures to pay minimum wages or social security in the Home MS; and failures to comply with statutory rest and work periods, amongst others.
As a consequence, a new EU Directive 2014/67/EU of 15 May 2014 was introduced which aims to enforce directive 96/71/EC. This new directive -the Posted Workers Enforcement Directive (PWED) – was required to be implemented by Member States on or before 18 June 2016.
Challenges of the PWED
1. The main goal of the PWED is to prevent any abuse and misuse of the PWD by identifying what a genuine posting is. A genuine posting is a posting that is made by a sending company, which genuinely performs substantial activities (other than administrative activities or purely internal management), in the Home MS and where the posted worker temporarily carries out work in the Host MS.
To serve the PWED’s main purpose, the authorities of the Host MS must make an overall assessment of all factual elements characterising those activities, on a case-by-case basis, and take into account a wider timeframe.
Under this assessment, having registered offices or paying tax and social security contributions in the Home MS; the place where the posted workers are recruited and from which they are posted; and the law which is applicable to the employment contract; constitute some of the factors pointing towards the existence of substantial activities in the Home MS.
The factors to assess the temporary character of the posting are: whether or not the worker is working in the Host MS for a limited period of time; whether or not the posted worker is expected to return to the Home MS or resume working in it after completion of the work; and the nature of the activities. It is also necessary to consider if the worker’s travel and accommodation are provided for or reimbursed by the employer.
A failure to satisfy one or more of the factual elements set out by PWED shall not automatically preclude a situation from being characterised as one of posting. However, a weakness of the PWED is that it does not indicate what law should apply if the factor analysis concludes there is no genuine posting and the PWD does not apply as a consequence.
2. The PWED also aims to improve access to information regarding the terms and conditions of employment which are applicable to posted workers in both the Home MS and Host MS. To achieve this, information should be made free of charge, clear, transparent, accessible from a distance and by electronic means, and through a single official national website and in the most relevant languages.
Under the PWED, all Member States are required to work in close collaboration and give each other mutual assistance to prevent any abuses under the PWD by replying promptly to any request for information, ensuring that service providers supply all necessary information and comply with strict deadlines for the electronic exchange of information.
3. In terms of control measures by Member States, the PWED foresees a set of measures including: a declaration by the service provider, at the latest, at the commencement of the service provision; an obligation to keep a list of documents; the translation of the required documents in the appropriate language; the designation of a contact person to liaise with the competent authorities in the host MS; and a person who acts as a representative for the contacts with the social partners within the host MS.
4. Finally, the PWED requires Member States to ensure that they put in place an effective mechanism allowing posted workers to launch complaints against their employer in the case of abuse and that posted workers are protected from suffering any adverse treatment by their employer for taking any such administrative or judicial action.
Subcontracting liability in the construction industry
Recent statistics demonstrate that in Belgium, over 25% of workers in the construction industry are posted workers and over 20,000 jobs have been lost due to social dumping.
One of the tools of the PWED for tackling fraud and abuse is a new mechanism of subcontracting liability [in the construction industry], where there are more typically chains of subcontractors. The direct subcontractor of an employer will be liable to the posted worker, in addition to or in place of their employer, with respect to any outstanding net remuneration corresponding to the minimum rates of pay and/or contributions due to common funds or institutions of social partners. However, this subcontracting liability is limited to the rights that the posted worker acquires under the contractual relationship between the contractor and subcontractor.
Cross-border enforcement of financial administrative penalties and fines
Last but not least, the PWED requires Member States to designate a competent authority for the purpose of cross-border enforcement of financial administrative penalties and fines, and to put in place a system of enforcement for any penalties and fines imposed by a Member States under the PWED.
What is the state of play in Belgium?
Modest, one must admit.
The PWED has not yet been implemented. However, a draft bill on the posting of workers was approved by the Belgian government on June 17, 2016.
Its key highlights are:
- the protection of a worker posted from Belgium to another EEA country or Switzerland, with the draft bill replicating the detailed list of factors to assess if the posting is genuine and temporary.
- the concept of posting and control of the work conditions in its broadest sense;
Inspection services will be authorized to require an employer posting any workers to Belgium to provide a copy of the posted worker’s employment contract, detailed information on the terms and conditions of the posting, time sheets, if any, and evidence related to the payment of salary.
A contact person should be appointed to deliver the necessary labour documents to the inspection services. The inspection services may require the documents to be translated into one of Belgian’s national languages or English.
- the setting up of a joint liability regime in the construction industry in direct line with the PWED which aims at covering future debts of more than one year, identified from the assessment of the inspection or by other channels;
- the setting up of an enforcement system for the administrative penalties and fines to be inserted in the Labour criminal code.
The draft bill is now under the scrutiny of the Council of State (Conseil d’État/ Raad van State) before its submission to the House of
Representatives (La Chambre/ De Kamer) for discussion and voting of the bill.
Work in progress
The implementation of the PWED is a work in progress and may well remain so for another year, or two yet.
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 Regulations (EU) 1024/2012 on administrative cooperation through the Internal Market Information System (IMI Regulation).