Intra-Corporate Transfer Directive from the perspective of social security coordination and labour law

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Beyond a simplified procedure for admission of intra-corporate transferees, due to the interoperability between different EU legal instruments, Directive 2014/66/EU must be addressed from the perspective of social security coordination and labour law.

Social security-applicable legislation

A Work in the territory of a Member State

Where the intra-corporate transferee carries out the activity exclusively in the territory of a Member State, without enforcing the intra-EU mobility option, the following situations are foreseeable:

A1 Social security legislation of the country of origin applies by virtue of:

  • bilateral social security agreement concluded by the Member State and the country of origin or
  • law of the Member State (i.e. the non-existence of a bilateral agreement, triggers non applicability of the host Member State’ law)

or

A2 Social security legislation of the Member State applies

B Intra-EU mobility (work in a second Member State)

Pursuant to Article 3(n) Directive 2014/66/EU, “‘second Member State’ means any Member State in which the intra-corporate transferee intends to exercise or exercises the right of mobility within the meaning of this Directive, other than the first Member State”. 

First, the applicable legislation under Art 11 to 16 Regulation 883/2004 (the latter applicable by virtue of Regulation 1231/2010/EU) must be determined-practically it must be determined whether the intra-corporate transferee is subject to the social security legislation of the first or the second Member State.

B1 Provided that following the determination of the applicable legislation, the first Member State is competent, the rules addressed under point A apply.

B2 Provided that following the determination of the applicable legislation, the second Member State is competent:

  • the second Member State and the country of origin have concluded a bilateral agreement, and that agreement is more favourable to the person concerned, the social security legislation of the country of origin applies (by virtue of Article 4 Directive 2014/66/EU)
  • the second Member State and the country of origin have not concluded a bilateral agreement, or the agreement concluded is not more favourable to the person concerned, the social security legislation of the second Member State applies

Labour law

Pursuant to Article 2 Directive 2014/66/EU, that Directive shall not apply to third-country nationals who are posted in the framework of Directive 96/71/EC.

However, pursuant to Article 18.1 the said directive, regardless the law applicable to the employment relationship, and without prejudice to Article 5.4(b) ,“intra-corporate transferees admitted under this Directive shall enjoy at least equal treatment with persons covered by Directive 96/71/EC with regard to the terms and conditions of employment in accordance with Article 3 of Directive 96/71/EC in the Member State where the work is carried out”.

Article 5.4 (a) Directive 2014/66/EU provides for equal treatment with posted workers as regards all conditions in the law, regulations, or administrative provisions and/or universally applicable collective agreements (except for remuneration), and in the absence of a system for declaring collective agreements of universal application (in the meaning of Article 3.8 Directive 96/71/EC  before its amendment by Directive 2018/957/EU).

Article 3.8 Directive 96/71/EC as amended by Directive 2018/957/EU, is applicable in the absence, or in addition to a system for declaring collective agreements of universal application.

Under Art 3 Directive 96/71/EC as amended, additional terms and conditions of employment apply after an initial period of 12 months. The concept of long-term posting is irrelevant for intra-corporate transfers.

By virtue of Art 18.1 Directive 2014/66/EU, Article 3 Directive 96/71/EC applies as a minimum standard (as regards terms and conditions of employment), and consequently, the former article should not preclude Member States from enforcing extensive terms and conditions applicable after the initial period of 12 months (from Directive 96/71/EC as amended), to intra-corporate transferees, regardless the duration of the posting.

The concept of remuneration laid down by Article 5.4(b) Directive 2014/66/EU, is closer to the principle of equal pay for equal work than the definition of remuneration provided for by Article 3.1 Directive 96/71/EC as amended.

Article 9 Directive 2014/67/EU (Administrative requirements and control measures), does not apply to intra-corporate transfers. However,

  • in certain Member State the posting notification covers situations beyond the scope of the Posting of Workers Directive
  • certain Member States impose administrative requirements in the meaning of Article 9 Directive 2014/67, to intra-corporate transfers as well

The takeaway

The procedure for admission of intra-corporate transferees must be regarded as only the tip of the iceberg.

For the rest, reference must be made to Recitals 11 and 12 Directive 2014/66/EU:

(11) Member States should ensure that appropriate checks and effective inspections are carried out in order to guarantee the proper enforcement of this Directive. The fact that an intra-corporate transferee permit has been issued should not affect or prevent the Member States from applying, during the intra-corporate transfer, their labour law provisions having — in accordance with Union law — as their objective checking compliance with the working conditions as set out in Article 18(1).

(12) The possibility for a Member State to impose, on the basis of national law, sanctions against an intra-corporate transferee's employer established in a third country should remain unaffected.

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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