Tackling social dumping or tackling posting of workers

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In the context of posting of workers, the European Commission defined social dumping as a situation “where foreign service providers can undercut local service providers, because their labour standards are lower”.

To tackle social dumping, it must be first distinguished between fraud/abuse of right, and lawful provision of services in the sense of EU law and ECJ case-law. Blurring the borderline, can only result in amplifying the exploitation of the difference between national systems and rules set out by EU law.

The concept of “national systems” is complex, because it covers national legislations and national practices (as usual the devil is in the details).

Certainly, there is no clear borderline between (fair) provision of services and social dumping. However, it is essential to determine a clear borderline between fraud and lawful provision of services. The former (borderline) is rather virtual (or at least subjective) and will always give rise to academic and political debate. The latter, can give rise to administrative fines, criminal convictions, company permanent shutdown etc.

To that extent, it is probably important to recall that in view of granting market integration, EU law take priority over conflicting national law. The concept of supremacy of EC law was first addressed by the ECJ in Van Gen den Loos (C-26/62) and in Costa v ENEL (C-6/64). Latter, the ECJ brought clarity as regards the application of the principle by national courts (see to that extent Simmenthal Cases- C35/76 and C-106/77, and the landmark case Kobler v Austria C-244/01).Art 4(3) TEU requires MS to “take any appropriate measure, general or particular, to ensure fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions of the Union”.

Declaration 17 concerning primacy (12008E/AFI/DCL/17) states: “It results from the case-law of the Court of Justice that primacy of EC law is a cornerstone principle of Community law. According to the Court, this principle is inherent to the specific nature of the European Community”.

Lastly, the indirect effect from Von Colson (C-14/83), determines an obligation to interpret national legislations with a view of achieving the purpose of EU law.

As regards breaches of EU law, we would cite first, Article L-1261-3 French Labour Code, notably the definition of posted worker. Pursuant to the said article, as amended by the Law 2018-771 of 5 September 2018, a posted worker must (inter alia), habitually carries out activities, on behalf of his employer, outside of the French territory. To assess the reach of that amendment, the interpretation always  given by the French labour authority(the DIRECCTE) to the concept of posting, must be highlighted : employees posted, must have been employed (habitually working for) the undertaking making the posting, in the home country, before the initiation of the posting, and/or will be employed (habitually working for) the undertaking making the posting, in the home country, after completion of the posting period. The amendment is meant to enforce the legal arsenal in view of clearly excluding from the scope of the definition, employees which are hired in view of being posted, unless they will resume working for the same employer , in the home country, after completion of the posting period.

The prize for the most original breach of EU law, must be certainly awarded to Article L 1262-3 French Labour Code. The said article sets forth a French-specific borderline between freedom to provide services and freedom of establishment. As regards criteria, discretion is left to labour inspections (and national courts). Practically, Art L-1262-3, replaces/supplements (?), Article 4 Directive 2014/67/EU (Identification of a genuine posting and prevention of abuse and circumvention), in view of imposing the exercise of freedom of establishment as a compensation for the right to post (some) employees. Failure to comply, may result in “unlawful employment by dissimulation of activity”, breach triggers criminal liability with retroactive effect (i.e. as of the day on which the posting was initiated).The difference is of “nuance”, you should have sent declarations of employment instead of declarations of posting, and inter alia fully comply with the French labour law.

Beyond fraudulent practices having a negative impact on the single market, the concept of social dumping is used for political ends. A motion for a resolution to tackle fraudulent practices, proposed by Vlaams Belang (Belgian Chamber of Representatives-DOC 55 0997/001-6 February 2020), merely disregards Directive 2018/957/EU amending the Posting of Workers Directive, the “Mobility Package” , the existence  and the tasks of the recently established European Labour Authority etc.(a motion about nothing).

In a recent article, PWC Belgium brings useful side notes on the margin of an article published in De Standaard, ” focuses on how non-EU nationals are posted to Belgium from another EU Member State (where they first obtained a residence and work permit), in the process “avoiding” the Belgian rules on economic migration”. The article (i.e. the one released by PWC) merits attention (Posting of workers - a public debate in need of nuance? -26 February 2020-PwC Legal).

Conclusion:

It is important (mandatory) to tackle fraud and abuse of right, however, making Europe great again by depriving the concept of posting of its effectiveness ,might not be an appropriate solution.

 

 

Tanel Feldman

Senior Partner , Immigration Law Associates

Immigration Law Associates provides in-depth advice on rights and obligations triggered by the cross-border element of a given legal situation. Our know-how is built on an extensive experience in EU law and is supported by a network of partners across the EU. Social security coordination : • Autonomous application of the social security coordination regulations and ECJ case-law, to any situation involves a cross-border element EU Company law : • Establishment -permanent activities • Establishment -self-employment activities International Private Law : • Law applicable to the employment relationship Labour and employment law : • Freedom of movement of workers-equal treatment, access to social benefits • Employment contracts and termination of employment • Working conditions • Employee benefits • Transfer of undertakings • Authorisations of work for third-country nationals Special regimes : • Posted workers • Frontier workers • Highly mobile workers • Employment of record • Intra-EU mobility of third-country nationals

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