Introduction

Cross-border posting of workers is a phenomenon that appears to be happening more and more often. Cross-border posting of workers is governed by the following regulations in terms of labour law and its enforcement: Directive 96/71/EC (‘Posting of workers directive’)[1], Directive 2014/67/EU (‘Enforcement Directive’)[2], and Regulation (EC) 593/2008 (‘Rome I’)[3].

The research discusses the proposed revision of the Posting of workers directive and its potential legal consequences on Dutch labour law. This legal examination does not allow any conclusions about the possible (ex ante) impact on a border region. Moreover, the extent to which there may be specific consequences for a border region is also difficult to determine, in part because of the lack of empirical data. According to European Commission figures, in 2014 there were 87,817 posted workers in the Netherlands. However, this figure does not provide an accurate picture, because it is based on A1 declarations. This is problematic for three reasons: (1) not all Member States are in a position to provide the requested information, (2) there are differences between posting within the definition of the Posting of workers directive and Regulation (EU) No. 883/2004, and (3) the country of work does not always give notice of all changes.[4] Additionally, the Netherlands still has no notification obligation for cross-border service providers. The Dutch government does plan to introduce one, but only with effect from 1 January 2018.[5]

Looking at the potential consequences of the directive on Dutch labour law is speculative, because it is not as yet certain whether, and if so, when or in what form the proposed revision will ultimately be adopted by the EU legislator.

The proposal for revision of the Posting of workers directive[6]

On 8 March 2016, the Commission announced the intention to adjust the Posting of workers directive 96/71/EC on three specific but important details.

(a) Duration of posting 24 months

If the expected or actual duration of the posting exceeds 24 months, then the Member State in which the employee is posted is considered to be the country in which the employee normally performs the work (article 2bis). A further stipulation is that if the posted employee is replaced at the same place and for the same work, the total duration of the posting of the multiple employees must be taken into account, this conditional on these employees being posted for a minimum of six months.[7]

For the Netherlands, this clause will be new. In some cases, it will not be immediately clear how long the performance of services will last, or along the way it may become clear that performance will take longer than expected. In such cases, the period of posting of 24 months could be exceeded and as a result the employee’s normal country of work would change. This means an employee who had normally been working in Germany could, at a certain point, suddenly be classified as working in the Netherlands. In that event, the employee’s ‘protective regime’ changes: first, the employee fell under German labour law, and after the change under Dutch labour law. Naturally, this would entail a number of consequences. In some cases, these may be to the employee’s benefit, but in others not. Normally, during the placement the ‘hard core’ of article 3(1)(a)-(g) of the Posting of workers directive, the provisions of the temporary country of placement would of course apply (this, however, conditional on the rules of the country of placement being more advantageous to the posted employee – if they are not, the law of the employee’s ordinary country of work applies).

For enterprises and posted employees, this change can offer more legal certainty on when which law applies to their employment relationship. In order to assess the compliance of enterprises with posted employees, the I-SZW (Inspection Service of the Ministry of Social Affairs and Employment) must conduct reviews and, where violations are encountered, impose administrative penalties. A great deal will depend on the enforcement of this clause. For the applicability of this proposed 24-month scheme, the threshold of six months may attract workaround constructions (i.e. by which companies may find ways to limit the postings, and potentially the duration of the services, to six months). It must be noted that the duration of the services need not be linked to the duration of the posting.[8]

(b) Term ‘remuneration’ replaces ‘minimum wages’

The proposal tackles one of the most disputed terms: ‘minimum wages’ is replaced by the term ‘remuneration’. This expands the definition of wages: the provisions on remuneration that apply to local employees and those that are derived from the law or collective labour agreements declared generally binding are applied to posted employees. A requirement for Member States is to list all remuneration components on a single website. This notification obligation was already dictated under article 5 of the Enforcements Directive, which the Netherlands should have already implemented by 18 June 2016, but this has not yet happened.

Along the same lines, with regard to subcontracting Member States may oblige companies to only work with subcontractors that extend certain remuneration conditions to employees that they also extend to the contracting party. It is interesting to note that these conditions, at least according to the explanatory memorandum, can also be incorporated into collective labour agreements that are not declared generally binding.

For the Netherlands, this change will primarily be significant for the collective labour agreements that are declared generally binding. Experience has shown that posted employees are in most cases scaled lower than their counterparts with a regular position in Netherlands. In a situation in which posted employees were to actually benefit in terms of remuneration, this could have the consequence of making them less attractive for the recipient of the services in the Netherlands, because these employees would then become more expensive. One could argue that this takes away something that could be considered a comparative advantage on which the free movement of services (and thereby the cross-border posting) is based.

(c) Equal conditions for posted employee and ordinary staffing employee

Another stipulation is that in line with article 5, Directive 2008/104/EC, posted employees must be subjected to the same conditions that apply to domestic staffing services companies. This makes article 3(9) of the Posting of workers directive a legal requirement. This provision is already applicable in the Netherlands, so the change will have no effect except perhaps in increasing the awareness of the obligation on the part of cross-border service providers and their employees.

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[1]      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 [1997] OJ L 18/1.

[2]      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 and amending Regulation (EU) No 1024/2012 on administrative cooperation through the Internal Market Information System (‘the IMI Regulation’) [2014] OJ L 159/11.

[3]      Regulation (EC) No. 593/2008 on the law applicable to contractual obligations (Rome I) [2008] OJ L 177/6.

[4]      Jozef Pacolet & Frederic De Wispelaere, ‘Posting of workers: Report on A1 portable documents issued in 2014’ (report for the European Commission, December 2015), p. 9.

[5]      See WAGWEU and the planned introduction of the notification obligation as from 2018. Parliamentary Documents II, 2015/16, 34 408, no. 6, p. 4.

[6]      From M. Kullmann, ‘Detachering van werknemers: naar meer transparantie en een betere handhaving?’, TRA 2016, afl. 6/7.

[7]      On the duration of the posting and the relationship between the Posting of workers directive and Rome I, see: M. Kullmann, ‘Tijdelijke grensoverschrijdende detachering en gewoonlijk werkland: over de verhouding tussen de Rome I-Verordening en de Detacheringsrichtlijn en de rol van de Handhavingsrichtlijn’, NIPR 2015, afl. 2, p. 205-216.

[8]      Kullmann 2015, p. 211.