Bursting the Bubble

Posted Workers: the Enforcement Directive Set to Be Adopted Soon

6 March 2014 | by

No great fuss was made, but the end of February saw some very promising news: nearly two years after the Commission proposed the posted workers enforcement Directive (COM (2012) 131), the negotiators of the Parliament and the Council have finally managed to reach a temporary agreement on that sensitive issue. Although the definitive text has not been adopted yet, this temporary agreement shows that the procedure is accelerating. It is now very likely that the final enforcement Directive will be officially adopted by the end of April, which means before the European elections. I believe that this is great news, both for posted workers and the single market. Indeed, 17 years after the adoption of the Directive 96/71/EC (which sets the rules for posting workers abroad), it is high time the European Union produces another Directive in order to put an end to the exploitation of posted workers and to the unfair competition that derives from it.

What is the Directive 96/71/EC about?

Before delving into details of why this Directive is a step towards both a better protection of workers and a stronger freedom of services, let me clarify what the original posted workers Directive sets out. In the original legislation, posted workers are defined as workers sent temporarily by their employers to execute a contract in another Member State. Since Member States have very different social laws, the Directive 96/71/EC was adopted with the aim of clarifying which of the host, or home, legislation applies when a worker is sent abroad. The idea was to strike a good balance between the protection of workers and the freedom of services. For that, it has been decided that workers should be protected by a minimum set of standards from the host country, such as minimum salaries and maximum working hours when they exist. Crucially, it was deemed that their employers should have to pay the social contributions to the country of origin.

Implementation Issues and Abuses: an enforcement Directive is needed

Despite the Directive 96/71/EC and the publication of additional guidelines in 2006, the last 17 years have clearly shown the need for an enforcement Directive to effectively protect the workers. Indeed, many cases of abuse have been brought to light. Three main kinds can be identified. Firstly, there is the creation of very complex combinations of subcontractors set to minimise the amount of social contributions. A great example is that of the construction of a nuclear plant in Flamanville (France) in 2011, where Polish workers were hired through a Cypriote office of an Irish-based temporary work agency. In that case, the workers were not covered by any social insurance and the combination of subcontractors made the task of finding out who should be held responsible for the abuse very difficult. Secondly, several companies have taken advantage of the lack of existing controls by paying their workers below the minimum required salary and sending them abroad for longer than the authorised period. A very good example took place in Clermont-Ferrand (France) where posted workers were paid 2,85€ per hour, well below the 9,53€ prescribed by French law. Thirdly, a recent case, denounced by the European Federation of Buildings and Woodworkers last October showed that, often, the cost of the workers’ substandard housing is deduced from their salary. The workers, posted in the Netherlands, had to pay 968€ a month to the work agency while living in a highly dilapidated house set for demolition. All this adds up to a situation that French MP Gilles Savary, author of a report on the Directive 96/71/EC, rightly calls “modern slavery”. For this reason, the enforcement Directive is expected to give new tools to the Member States to conduct their controls more effectively.

A poisonous issue that weakens freedom of services

All these abuses are currently poisoning the political debate in some Member States. With the unemployment rate record highs of the last few years, posted workers are perceived more negatively. They are often seen as a form of unfair competition, invading the national labour market, which is already saturated, with the EU’s blessing. This is the case in France especially: a BVA poll shows that 72% of the population is opposed to the presence of posted workers in the country. In addition, the issue has now reached a new critical dimension because of the impending European elections. French far-right party, the Front national, is using the issue as part of its anti-EU campaign, pointing fingers at the original directive and calling it a legalisation of social dumping. A Directive that allows “unfair competition”, “kills employment of the French workers” and that “should be abolished”, is how Marine Le Pen, the leader of the party, describes it in a video published on her website. In this context of anti-migration atmosphere spreading across Europe, the acceleration of the negotiation process on the enforcement Directive is a good way to start defusing the bomb. By adopting the legislation before the elections, EU institutions will send a signal to the European citizens: freedom of services is not equated with unfair competition and legalised social dumping. This is why the future enforcement Directive can be seen as a great step towards stronger freedom of services.

A satisfying compromise

All this shows that the temporary agreement is good news both for workers and the internal market. Yet, the battle has been intense in the Council and it is only thanks to Poland’s last minute change of position that an agreement on a general approach was reached. Member States were split into two opposing camps. Belgium and France, backed by Germany, were pushing strongly to allow tighter controls whereas the other group of countries, led by the UK, Slovakia and Hungary, was afraid that tougher rules would threaten the ability of their companies to send workers abroad. The challenge was then to find a balance between the need to avoid unfair competition and the need to protect the freedom of services.

From the beginning, there were two main issues at the fore of the debate, which remain key issues today: the liability of the contractor, and the list of control measures as well as administrative requirements that a Member State can impose. After hours of discussion, it was finally decided that, in case of abuse, the principal company (which subcontracts the direct employer) should be held responsible in addition to, or in place of, the direct employer. Due to pressure from the UK, this will only be mandatory in the construction sector. As for the control measures, the list provided in the Directive will be open. However, the additional measures will need to be sent to the Commission to decide whether they are proportional.

The battle is not over yet

Aside from European Trade Union Confederation, which argued for more protection for workers in the Directive, the European institutions and stakeholders have warmly welcomed the agreement. The President of the European Parliament, Martin Schultz optimistically declared after the deal was struck in Council: “The new rules reduce the room for cheating and abuse that the current laws on posted workers have been subject to. They will make the single European market fairer by limiting the scope for social dumping and the exploitation of workers.” However, the posted workers enforcement Directive is not a done deal yet: the Council and the Parliament have only reached a temporary agreement. The compromise still needs be accepted by the Employment and Social Affairs Committee of the Parliament and by the COREPER before being voted upon in the Plenary. The most optimistic forecasts promise a plenary vote in April, paving the way for a final adoption before the elections. Let’s hope, like Danuta Jazłowiecka, the rapporteur of the Directive, that “this will finally stop conflicts and put an end to the negative atmosphere which emerged with regards to the posting of workers”.

What do you think?