Corporate Intra-EU Mobility to pay the bill for presumed third parties’ fraud

The European Economic and Social Committee released its opinion on the ‘Proposal for a Directive of the European Parliament and of the Council amending Directive 96/71/EC of the European Parliament and of the Council concerning the posting of workers in the framework of the provision of services’.

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Mar 14, 2017
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The European Economic and Social Committee released its opinion on the ‘Proposal for a Directive of the European Parliament and of the Council amending Directive 96/71/EC of the European Parliament and of the Council concerning the posting of workers in the framework of the provision of services’.

The EESC welcomes the fact that the Commission has laid down the maximum duration of postings, but considers the limit of 24 months as a “step in the right direction” where a limit of 6 months would be “closer to the real business conditions”.

However, the EESC believes that the 24-month period is “unrealistic in practice” and should be significantly reduced.

No further clarification in regards to the enounced principle of “real business conditions”.

A brief reference is made to the average period of posting: “For comparison, the average period of postings in 2014 was less than four months (103 days)”.

It must be first observed that in 2015, on average 41.5% of the PDs A1 were issued to posted workers employed in the construction sector. [European Commission -Posting of workers-Report on A1 portable documents issued in 2015]. In context, in Belgium, Austria, Finland, Sweden and Norway more than 50% posted workers are employed in the construction sector. According to the same report;”4 out of 10 employed persons in the Slovenian construction sector are posted abroad. Furthermore, also the Croatian, Slovakian and the Polish construction sectors post a high percentage of persons

It must be then noted that the period referred to by the EESC (i.e. 103 days) is from a sending perspective, the average posting period for receiving Member States is in general not known. In regards to the year 2015 “14 sending Member States reported figures on the average duration of the posting period. The average posting period for receiving Member States is not known since only a few sending Member States have provided a breakdown of the posting period by receiving Member State” [European Commission -Posting of workers-Report on A1 portable documents issued in 2015].

The same report underlines: “However, taking also the data about the number of individual posted workers involved into consideration makes that an individual person is posted on average 182 days” (the number of PDs A1 issued is not necessarily equal to the number of persons involved).

Having regard to the above considerations, where the real average period of posting was 182 days, a period of maximum 183 days cannot be closer to the(said) “real business conditions”.

In context, where corporations in the service sector and industrial activities (excluding the construction sector) post workers for periods up to 24 months, that period is certainly realistic in practice.

In the same context, the Commission proposal to apply an “accumulation rule” (replacement of worker regarding the same task) only to workers posted for at least 6 months, is considered by the ESSC as being ineffective. The EESC “therefore calls for a rule stipulating that periods of posting be aggregated from the first day”.

It must be noted that as laid down by the Commission proposal, when the maximum posting period is exceeded, the law of the host Member State will in principle apply.

Reading in conjunction the EESC suggestions, where the cumulative duration of the posting exceeds 6 months, the host Member State is deemed to be the country in which the work is habitually carried out and as a consequence the “‘The employee will in particular enjoy the protection and benefits pursuant to the Rome I Regulation.”

Following the Commission proposal, the EESC has a superficial reading of Article 8 Rome I Regulation and ignores the related settled ECJ case law.

Undoubtedly, the employee will enjoy the protection and that is a legitimate target, however if finally adopted, such provisions would impose a disproportionate burden on corporations posting high skilled workers. (considering in particular eventual later dismissal cost).

Another unrealistic in practice EESC’s suggestion is related to the Commission’s proposal gives Member States the option of applying to workers in a subcontracting chain the same conditions as are applied by the main contractor.

Firstly, “in order for this part of the proposal to be effective in practice, it might be useful to make a reference to a rule on joint and several liability throughout any subcontracting chains introduced by article 12 of the Enforcement Directive

Lastly, the EESC considers that “it will be necessary to introduce adequate provisions to check the genuine self-employed status of subcontractors, in accordance with Member States’ standards”

It must be observed that Art 12 of the Directive 2014/67/EU (the Enforcement Directive) provides for joint and several liability in principle only as regards the activities mentioned in the Annex to Directive 96/71/EC (construction sector).

In regards to the second suggestion, with simple words, the main contractor will be required to assess and would be(?) held responsible for the genuine self-employed status of subcontractors. The question is whether assessing will be sufficient or a different outcome from that will be later ascertained by the competent authority, will result in a breach. Shall the main contractor refer the question for preliminary ruling to a national court?

In my view, the provision will operate to frustrate the reasonably held expectations of parties acting in reliance on the law.

Tanel Feldman

Immigration Law Associates

info@euimmigrationlaw.com

Go to the profile of Tanel Feldman

Tanel Feldman

Managing Partner, Immigration Law Associates

Corporate Immigration Law/Employment Law/Social Security Law/European Law

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