ECJ ruling- non-payment of the posted workers remuneration

Like Comment

On the basis of a check carried out in 2016, a representative of a Slovakian company was fined for failure to comply with obligations relating to remuneration due to workers posted to Austria.

The fine was notified in 2020.

In accordance with the Austrian law in the version applicable to the case at hand, the limitation period for bringing proceedings against employers for failure to comply with obligations relating to the remuneration of posted workers, is five years.

The question referred to the ECJ for preliminary ruling was rephrased by the court as follows : “whether Article 5 of Directive 96/71, read in conjunction with Article 47 of the Charter and in the light of the general principle of EU law relating to the right to good administration, must be interpreted as precluding national legislation providing for a five-year limitation period for failure to comply with obligations relating to the remuneration of posted workers.

The ECJ observes that:

  • Member States are left discretion in determining penalties in order to grant compliance with the obligations relating to minimum rates of pay (Article 5 Directive 2014/67/EU read in conjunction with Article 3.1 (c) Directive 96/71/EC)
  • Directive 2014/67/EU does not lay down limitation rules for the imposition of such penalties

It follows that the principle of national procedural autonomy applies.

Applying the principle of procedural autonomy, Member States may not disregard:

  • the principle of equivalence (similar actions of national law and EU law are treated alike)
  • the principle of effectiveness (national remedies and procedural rules do not render claims based on EU law impossible in practice, or excessively difficult to enforce)
  • the right to an effective remedy from the first paragraph of Article 47 of the Charter, “a provision which constitutes a reaffirmation of the principle of effective judicial protection

As regards the principle of equivalence, prima facie, the limitation period laid down by the Austrian law is not in breach of the said principle (it is however on the referring court to assess an eventual breach).  

As regards the principle of effectiveness, the ECJ underlines that Member States are responsible for ensuring:

  • a fair balance between the opportunities afforded the parties involved (the principle of equality of arms), in the case at hand, “the principle that the addressees of decisions that significantly affect their interests must be placed in a position in which they can effectively make known their views as regards the information on which the authorities intend to base their decision
  • the right “to a fair and public hearing within a reasonable time by an independent and impartial tribunal previously established by law” (Article 47 EU Charter of Fundamental Rights)

Applying the principle of effectiveness to the case at hand, the ECJ observes that:

  • the five-year limitation period laid down by the Austrian law is intended to grant compliance with the obligation relating to minimum rates of pay in a cross-border context, and thus “the proceedings to be brought against such an administrative offence are liable to render the work of the competent national authorities relatively complex
  • Article 9.1 (c) Directive 2014/67/EU lays down the Member States’ right to impose an obligation to deliver certain documents (such as proof of payment of wages), after the period of posting, at the request of the authorities of the host Member State, within a reasonable period
  • “[..]in view of the importance attributed, by Directive 96/71, to the obligation relating to the minimum rate of pay, service providers posting workers to the territory of a Member State can reasonably be expected to retain evidence of the payment of wages to those workers for several years

The ECJ concludes that:

Article 5 of Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services, read in conjunction with Article 47 of the Charter of Fundamental Rights of the European Union and in the light of the general principle of EU law relating to the right to good administration, must be interpreted as not precluding national legislation providing for a five-year limitation period for failure to comply with obligations relating to the remuneration of posted workers.” (Judgment of 10 February 2022, C-219/20, EU:C:2022:89).

Beyond the case at hand:

Transposing Art 9.1 (c) Directive 2014/67/EU, national laws lay down a specific period during which certain documents (such as proof of payment of wages), must be delivered at the request of the authorities of the host Member State.

However, service providers posting workers to the territory of a Member State can reasonably be expected to retain evidence of the payment of wages to those workers for several years.”  

It must be distinguished between on the one hand, the period laid down by national laws provisions transposing Art 9.1 (c) Directive 2014/67/EU, and, on the other hand, the limitation period for bringing proceedings for failure to comply with (e.g.,) obligations relating to the remuneration of posted workers.   

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