On 12 September, the European Court of Justice will deliver its judgement in Joined Cases C-64/18, C-146/18, C-140/18 and C-148/18.
The questions referred to the ECJ are related to the “very high fines” imposed by the Austrian legislation, for failure to comply with obligations in connection with the posting of workers, notably it compatibility with Article 56 TFEU (freedom to provide services), Directive 96/71/EC, Directive 2014/67/EU, and/or with the Charter of Fundamental Rights of the European Union.
For a better understanding of the context, hereinafter only two examples:
- Payment of less than the minimum wage: up to EUR 10,000 per employee (up to EUR 20,000 in cases of repeated offence). Where more than three employees are affected, up to EUR 20,000 per employee (up to EUR 50,000 in cases of repeated offence).
- Failure to keep pay documents on hand: up to EUR 10,000 per employee (up to EUR20,000 in cases of repeated offence). Where more than three employees are affected, fine of up to EUR 20,000 per employee (up to EUR 50,000 in cases of repeated offence).
It must be first observed that Austria is not the only country imposing high fines. Pursuant to the Belgian Social Criminal Code, failure to send the declaration of posting, may result in a criminal fine of up to EUR 48,000, eventually multiplied by two, and then multiplied by the number of workers.
Except for the EU consumer protection rules, there is no intention to harmonise the criteria to be used in determining the level of penalties imposed further transposition of EU regulations and directives.
Preamble 47 and Article 20 Directive 2014/67/EU on the enforcement of Directive 96/71/EC, contain the usual sentence “The penalties provided for must be effective, proportionate and dissuasive."
According to the EU case law, a penalty is effective if breaches of EU law are penalised under conditions (both procedural and substantive) which are comparable to those applicable to breaches of national law, of a similar nature and importance (see in context, Silvio Berlusconi and Other, Joined Cases C-387/02, C-391/02 and C-403/02 ECLI:EU:C:2005:270,paragraph 65).
A genuinely dissuasive penalty should grant that the severity of the sanction is compatible with the seriousness of the breach (see to that effect, Case C‑383/92, Commission v United Kingdom, ECR 5I‑2479, paragraph 42). In Commission v France, AG Geelhoed has emphasised that “the threat of repressive action must generate sufficient pressure to make non‑compliance economically unattractive” (C-304/02, ECLI:EU:C:2004:274, paragraph 39).
A penalty is proportionate when it is appropriate to attain the objectives set by the legislation in question, and does not go beyond what is necessary in order to attain these objectives (see to that effect Nutrivet, C‑69/15, EU:C:2016:425, paragraph 51).
In general, the ECJ leaves to the referring court the task to determine in the case at hand, whether the penalties are effective, proportionate and dissuasive. However, the questions related to high minimum penalties, fines with no upper limit or several years’ imprisonment for non-collectible fines, and mandatory contribution to the procedural costs of appeal proceedings of 20% of the fine imposed, merit attention.
Will the ECJ provide criteria to determine the level of penalties?