EU: Examining the Posted Workers Directive

What is a Posted Worker?  

A posted worker is an employee who carries out work services or activities, on a temporary basis, in a European Union (EU) member state. A posted worker may be a short-term business traveler or project worker visiting the destination country for a limited duration of time. At its core, this definition includes workers temporarily traveling to a company or client site in the host member state or workers hired by a temporary agency in the host member state. Posted workers do not integrate into the host country’s local labor market because of their temporary position in the member state and employment in their home member state.  

The timeframe in which a posted worker can remain in the host member state depends on the length of time needed to complete the specific task in which the employee was posted to complete. In some cases, the employee may apply for an extension for an additional six months depending on the conditions established in the host member state. Once the task is complete, the worker is expected to return to their home country immediately. 

While posted worker is an EU-wide directive, each member state has implemented these rules differently. For each member state, there may be variations in which activities are considered work activities and require the foreign employer to notify the host member state of the employee's work assignment.  

History of the Posted Worker Directive  

The EU adopted the original Posted Workers Directive (96/71/EC) in 1996. The Directive addressed the free movement of workers throughout the EU and their rights as protected by law in the individual member states in which they completed their temporary assignment. However, the Directive has undergone many changes due to concerns over the employment rights of citizens in the host country competing with the rights of posted workers.  

Several of these concerns centered around the hotly debated concept of so-called social dumping. In connection with posted workers, the practice of social dumping is described as a situation where foreign companies maintain lower labor standards than those of the host member state, resulting in unfair and unequal labor conditions. These unequal conditions also had the ability to damage the labor conditions of citizens in the host country.  

As a result of these concerns, a second Posted Worker Directive (2014/67/EU) was created. This Directive further clarified how the rules of the Directive would be applied and enforced. The second Directive also laid out the framework for appointing a liaison or local representative to the host company's office and the requirement to keep a record of posted workers.  

A third Posted Worker Directive (EU/2018/957) was implemented into law in 2020. This Directive also aimed to mitigate some of the concerns that arose from the original Posted Worker Directive of 1996, especially those related to social dumping. As such, equal pay for equal work was the principal focus of this Directive. Aiming to address unfair labor conditions and practices, the Directive ensured that a posted worker would receive remuneration equal to the total compensation received by a citizen of the host member state if the employees held similar relevant positions.  

Twenty-six years since the original Directive was implemented, the Posted Worker Directive (PWD) has undergone many changes and clarifications that work to ensure that employers and employees can enjoy movement between and into the member states while safeguarding the rights of the employee and the citizens of each nation. One of the key elements to ensuring employees and employers can operate safely under the Directive is the duty to notify. 

What is the Duty to Notify? 

The PWD sets the requirements for companies sending individuals from around the globe to work in EU member states. Although requirements vary depending on the conditions set by the individual member states, at its foundation, the Directive requires that the home country employer notify the host member state of the posting of an employee prior to the employee’s arrival in the host member state.  

Through this notice, member states are informed on the details of the travel, including the duration of time in which the employee will remain within the member state’s borders to complete their assignment as well as the details of the foreign company, the contact information of the employee posted in the host member state and the expected duration of the work assignment.   

For example, in the Netherlands, the duty to notify applies to self-employed professionals working in certain sectors, employers who bring their own personnel to the Netherlands, and multinational companies that post workers to their Dutch branch. On the other hand, Ireland applies posted worker requirements to EU nationals carrying out business meetings within its borders.  

One constant is that nearly every member state requires that the appropriate authorities be notified before the employee's first day of work. The exact timeframe in which a member state's government must be informed varies depending on the conditions established by that member state.  

Each member state has established its own terms and conditions that sending companies should ensure they adhere to prior to sending a posted worker. Before beginning posted work in France, for example, an outside employer must send a declaration of posting to the labor inspectorate via the SIPSI teleservice as well as appoint a representative in France prior to the start of service. Whereas in Italy, a posting notification must be sent via a dedicated official national website no later than midnight on the day before the start of the posting and a contact in Italy must be appointed.  

Additional Requirements  

Aside from the duty to notify, the rules for posted workers can vary between each member state. In some member states, such as the Netherlands, sending companies may need to ensure that their posted worker does not require a residence permit or short-term stay visa to reside in the country during the work period.  

Professional requirements may need to be met. Sending companies will also need to ensure that the conditions of work meet the terms established under the PWD and the labor conditions of the host country. This can include things like finding suitable accommodations for employees, filing for health insurance, registering with the member state’s Tax and Customs administrations, notifying the authorities of the posting, declaring the salary of the employee and more.  

The Rights of Employees  

The PWD also ensures that each member state protects the employment rights of posted workers. This can include conditions such as minimum salary, allowable working hours, gender equality rights, discrimination protection, minimum paid leave and more. 

Employers and employees should keep in mind that the working conditions applicable to the posted worker do not apply if the rules of the sending member state are more favorable than the conditions established under the PWD.  

Non-Compliance with the PWD 

Companies that do not comply with the conditions of the PWD can be penalized by the host country’s government. This can include penalizations and fines against both the receiving and sending companies. 

The PWD has changed since its first introduction and will continue to evolve as new and old concerns arise and EU labor practices and conditions change.