ECJ-Bouygues and Others- no new point of law

Like Comment

On 14 May, the ECJ will deliver its ruling in Bouygues travaux publics and Others (C-17/19).

Pursuant to Article 20 of the ECJ Statute, “Where it considers that the case raises no new point of law, the Court may decide, after hearing the Advocate General, that the case shall be determined without a submission from the Advocate General”.

Bouygues and Others will be determined without a submission from the Advocate General.

Indeed, the case does not raise new point of EU law, it raises however the opportunity to determine whether certain provisions of the French labour law, are in compliance with EU law.

The French Cour de Cassation seeks to know whether a E101 certificate (currently Portable Document A1), binds the courts of the host Member State, not only as regards the social security subjection, but also as regards labour law. The question is prima facie raised in the context of certificates fraudulently obtained or relied on, which cannot be disregarded by a national court, unless the conditions from the ECJ ruling in Altun and Others (C-359/16,6 February 2018, ECLI:EU:C:2018:63), confirmed by the ruling in Vueling Airlines SA (joined cases C-370/17 and C-37/18, 2 April 2020, ECLI:EU:C:2020:260) are met.

1 In its ruling of 6 November 2015 (ECLI:FR: CCASS:2015: AP00626), the French Cour de Cassation has held that a E101 certificate, represents the sole document certifying the regularity of the individual’s social security affiliation, and consequently, the only material evidence of a posting. With simple words, its (non) existence overrides the constitutive elements of the posting, and a genuine posting not covered by a E101certificate, is deemed to be concealed employment.

Practically, provided that (e.g.), the PDA1 is not provided, regardless if : a) the constitutive elements of the posting under Regulation 883/2004 are met ,b) the transnational measure taken represents a genuine posting in the sense of Article 4 Directive 2014/67/EU and in the meaning of the French labour law, c) a declaration of posting was made, the breach of concealed employment is established under criminal law (Articles L8221-1, L8221-3, L8224-1 and L-8224-2 Labour Code).

As the case at issue, the certificates issued to ATLANCO LIMITED were withdrawn by the issuing authority (refreshing our memory, ATLANCO LIMITED is the multi-state activity “specialist” from the bogus case Bogdan Chain v Atlanco Ltd C-189/14).

The withdrawal procedure concerns ELCO Construct Bucharest was suspended. Such a decision was probably made following the insolvency by reorganisation procedure, initiated by ELCO in March 2015.

2 Provided that the PDA1: a) is provided and not challenged or b) is challenged, however not withdrawn by the competent authority in the sending Member State, and cannot be disregarded by a national court (the conditions from Altun and Others not being met), the French labour law came into discussion.

First, pursuant to Article L1262-1 Labour Code -definition of posting- (into force since 21 January 2008, however referred as “applicable at the time of the facts” -see to that extent the ruling of the Court of Appeal of Caen, 20 March 2017, 15/01327, SA Bouygues and Others p.31),read in conjunction with Article L1261-3 -definition of posted worker-, a posted worker (inter alia), habitually carries out activities, on behalf of his employer, outside of the French territory. Assessing the latter article, 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) by the undertaking making the posting, in the home country, before the initiation of the posting, and/or will be employed (habitually) by the undertaking making the posting, in the home country, after completion of the posting period. With simple words, the existence of an employment relationship, from the start to the end of the posting assignment (as laid down in Article L1262-1), represents a necessary but not sufficient condition.

Failure to comply with Article L1261-3, triggers the breach of concealed employment by dissimulation of paid employment. Practically, the employer should have made a declaration of employment in the sense of Article L1221-10 (and not a declaration of posting). The sanctions laid down in Articles L8224-1 and L-8224-2 are relevant (criminal law).

As the case at issue, most of the workers posted by ELCO Construct, were hired only several days before their deployment to France.

Before the hearing of the case, the ECJ had addressed France, in view of clarifying the concept of “habitually working for their employer”, in the sense of Article L 1261-3.

Then, Article L1262-3 Labour Code sets forth a French-specific borderline between the freedom to provide services and the freedom of establishment. The said article, provides for the concept of habitual, stable and continuous activity carried out within the French territory. 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 the freedom of establishment.

Failure to comply, results in concealed employment by dissimulation of activity, breach triggers criminal liability with retroactive effect, on the same conditions and with the same consequences as the breach of concealed employment by dissimulation of paid employment.

As the case at issue, ELCO’s operations in Romania “had become ancillary to its operations in France”. Reference is made to the ratio between the turnover in France and Romania, during the years 2009 and 2010, and to the administrative management provided by a French branch, and not by the Romanian company (the employer). An overall assessment in the sense of Article 4 Directive 2014/67, could have nuanced the conclusion about a regular activity carried out in France. The insolvency by reorganisation procedure report of March 2015, contains the necessary information to assess why at the time of the facts, ELCO Construct (company founded in 1953), had oriented its activity mainly toward other countries.

Conclusion

Fraud must be sanctioned, however, when about transnational posting of workers, the grounds must be in compliance with EU law.

Article 2.1 Directive 96/71/EC (definition of posted worker), does not contain reference to the Member States’ national legislation.

Article 4.2 Directive 2014/67/EU provides for criteria in view of determining whether the undertaking making the posting “genuinely performs substantial activities, other than purely internal management and/or administrative activities” (i.e. in the Member State of establishment).

The ECJ might strictly rule on the question referred by the French Cour de Cassation and “send back” to the referring court for further assessment, or ,rule on the question referred, and find that the labour law provisions invoked are in breach of the principle of effectiveness (“National law must not render practically impossible or excessively difficult the exercise of the rights conferred by EU law”).

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

No comments yet.