Prosperity in the Netherlands, as well as in other Western European countries, has led to a high demand for labour. There is a considerable shortage of qualified personnel, particularly in the construction sector but also in the industry, transport and health care sectors. Under the current European Posting of Workers Directive, large-scale recruitment of workers from Eastern Europe is a well-established method of overcoming this shortage. Eastern Europeans are also often employed at lower wages than the local workforce, which gives the hirer (the company to which the worker is posted) a competitive and profit advantage.
This practice has been widely criticised by local businesses. It is argued that the Posting of Workers Directive encourages unfair competition, which cannot have been the intention of the European legislator. Additionally, posted workers are underpaid compared to local workers, resulting in ‘social dumping’. Western European countries in particular have recognised this problem and have called for a review of the Posting of Workers Directive in Europe. Despite strong protests from Eastern European countries, the European Commission has introduced a new Directive, which was approved by the European Parliament and the Council of Ministers in May and June 2018. The Member States are currently in the process of implementing this revised Directive in their national legislation. The Dutch legislator recently published the implementation law.
This article gives an overview of the most important changes compared to the current Posting of Workers Directive. This enables companies, including HRM and P&O, to prepare for the upcoming changes.
Changes to the Directive
Under the current Directive, the hirer and/or the temporary employment agency must offer posted EU workers at least the minimum wage and minimum holiday allowance applicable in the host country. Under the revised Directive, the hirer will also have to offer additional remunerations to the workers alongside these minimum requirements. Each Member State will be free to decide for itself what this ‘remuneration’ will entail and will have to publish this on a government website.
In the Netherlands, ‘remuneration’ includes bonus payments, year-end bonus, overtime allowances, regular pay rises, etc. In this context, the hirer will also have to take into account remuneration aspects laid down in universally applicable collective labour agreements. These will also have to be applied to the EU workers. It is good to know, however, that supplementary pension schemes under universally applicable collective labour agreements do not need to be applied to EU workers.
Duration and termination of posting
If workers have been posted to another EU country for more than 12 months (or 18 months in case of a delay), all the legal terms and conditions of employment of that host country will apply. Each EU Member State is able to define the exact content of these terms and conditions of employment. This is partly because the majority of these terms and conditions are already governed by EU legislation. These include working hours and rest periods, equal treatment and health and safety. In defining the legal terms and conditions of employment, the Member State may also rely on non-universally applicable collective labour agreements. This means a considerable broadening of the terms and conditions of employment to which EU workers are entitled.
If the hirer changes workers but these workers carry out the same work in the same place, then all the different postings will count towards the 12-month period. This will prevent any circumvention of the period of posting.
The legal terms and conditions of employment explicitly do not include procedures, formalities and conditions for concluding and terminating the employment contract. Determining which rules of which country apply will be governed by the Rome-I Regulation.
Improvement of working conditions
In some sectors, travel and accommodation costs are deducted from the worker’s wages. That is no longer allowed. At the same time, the hirer – in accordance with the applicable collective labour agreement or immigration legislation – will have to ensure proper accommodation.
The temporary employment agency will have to offer its posted EU workers the same working conditions that the hirer offers to its own staff. This ‘hirer’s remuneration’, as laid down in the Dutch WAADI (Wet Allocatie Professionals door Intermediairs) [the Dutch Posting of Workers by Intermediaries Act], counteracts the aforementioned ‘social dumping’. In the case of a universally applicable collective labour agreement, all collective labour agreement provisions will have to be applied to EU workers.
The temporary employment agency will also remain responsible for compliance with the Directive (including correct payments made to the workers), even if the hirer seconds the worker to a subcontractor.
Misuse and fraud
Member States must punish fraud and misuse of the new Directive. Additionally, the Member State may also require any subcontractor to comply with the same remuneration rules that apply to the hirer and/or the temporary employment agency. This will prevent circumvention of the remuneration rules (revolving door construction).
Even though the transport sector frequently makes use of Eastern European workers, the revised Directive will not apply to this sector. Separate European regulations are being drawn up for this sector. These regulations will be in line with the revised Directive. The revised Directive will apply to the other sectors.
The revised Directive must be implemented by the Member States by 30 July 2020. Companies that hire EU workers are therefore advised to take stock next year of what kind of contracts have been concluded with temporary employment agencies and in what other way EU workers are hired. Areas of reassessment include the remuneration agreements and the period of posting. Please also be aware that a collective labour agreement may be fully applicable to the workers.
Joost Kokje, Lawyer Employment, Employee Participation & Pensions