ETUC position on the implementation of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services

Brussels, 14-15 March 2006


In the autumn of 2003, the ETUC was consulted about a prior document of the Commission, COM (2003) 458, regarding the implementation of the so-called Posting Directive.

In November 2003, the ETUC replied, calling on the Commission to - in short -:
- increase its efforts to monitor and enforce compliance with the Directive,
- initiate a more in depth assessment of the implementation and application of the Directive in practice, especially taking into account experiences of social partners
- look into good practice examples in Member States to tackle unfair competition in subcontracting chains, especially with regard to establishing liability of main contractors
- and to present, as soon as possible on the basis of this additional research, and in consultation with social partners, adequate proposals to simplify and improve the existing Directive as appropriate. These should aim at better and more effectively achieving the objectives of the Directive, i.e. to provide for a climate of fair competition (a level playing field) and respect for the rights of workers within EU-25, in which the free movement of persons and services can thrive.

In March 2004 the European Parliament adopted a resolution P5_TA (2004)0030 along the same lines.

Mid-December 2005, the ETUC received the second draft report of the Commission's services, with a letter asking the Social Partners at European level to respond within a deadline of 6 weeks.

The ETUC has tried to consult its affiliates as soon as possible, but because of the Christmas period and the time needed for affiliates to bring together the on-the-ground experience of their unions this consultation was not finalized in time.

Furthermore, the Steering Committee of the ETUC, in its meeting of 9 February 2006, decided that because of the major importance of the issue, and its close connection with other important dossiers such as the free movement of workers and the draft Directive on Services, a final position needed to be discussed in the ETUC Executive Committee on 14 and 15 March 2006.

As it was understood, that the Commission was urgently expecting to receive the positions of the Social Partners, because of the fact that the European Parliament had recently put pressure on this issue and wanted to hear the Commission's views on the occasion of the plenary debate in the EP about the Services Directive on 14 February 2006, the ETUC has sent therefore to Commissioner Spidla on 10 February a letter with some first remarks as a preliminary response.

The objective of the Posting Directive is more important than ever!}}

ETUC wants to draw attention to the purpose of the Directive, as laid down in the preamble:

(1) whereas (...) the abolition of obstacles to the free movement of persons and services constitutes one of the objectives of the Community;

(5) whereas (...) promotion of the transnational provision of services requires a climate of fair competition and measures guaranteeing respect for the rights of workers;

(13) whereas the laws of the Member States must be coordinated in order to lay down a nucleus of mandatory rules for minimum protection to be observed in the host country by employers who post workers to perform temporary work in the territory of a Member State where the services are provided (...).

As the ETUC clearly stated in its position adopted in 2003, the objective of the Posting of Workers Directive - to provide for a climate of fair competition and measures guaranteeing respect for the rights of workers - is more important than ever.

In an economic era in which transnational provision of services is increasingly taking place, and where because of the recent enlargement of the European Union there is increasingly free movement of workers within the EU-25, the Posting Directive plays a key-role in protecting the workers concerned, while respecting the framework of labour law and industrial relations of Member States.

It is of major importance to ensure that the main goals of this Directive are achieved and its provisions are properly implemented and enforced, to create and maintain the confidence of the EU-citizens that ‘Europe' is not about organizing social dumping and competition to the bottom of the welfare state, but still aiming at the constant improvement of the living and working conditions of its inhabitants.

It is against this background that the ETUC wants to make the following comments.

The ETUC expects from the Commission a more proactive approach

On the basis of the various replies in the meantime received from national affiliates as well as from European sectoral organisations, especially the European Federation of Building and Woodworkers, the ETUC comes to the following views:

- Currently, the question if the Posting Directive in reality does achieve its objective or not is very much dependent on the strength or weakness of the legislative and/or collectively agreed regulatory framework at national level, and the degree to which the national system can cope with the challenges that cross border provision of services put to the national system when it comes to fair competition between service providers and the protection of workers.

Therefore, it is a matter of the highest priority that the European Commission puts more pressure on Member States to take up their responsibilities in this regard. They should be urged to adapt their regulatory framework where necessary and appropriate, for instance by implementing the Posting Directive in its maximum scope (extending it to all sectors of the economy, etc.), and review their regulations with regard to definitions and instruments to tackle letter box companies, bogus self-employment, etc.

- Secondly, the question if the Posting Directive ‘works' or not is very much dependent on administrative cooperation and coordination between Member States, which according to many of our affiliates in practice is almost non-existing (non-functioning national liaison offices, inadequate internal and cross border administrative cooperation and coordination)!

This is a joint responsibility of the European Commission and the Member States, and therefore the European Commission should more actively take the lead and come up with proposals how to bring this cooperation and coordination about.

Especially the issue of providing companies and workers with accessible and transparent information with regard to the terms and conditions of employment that apply is of key importance; on the one hand to allow and stimulate companies - main contractors and user enterprises as well as service providers - to comply with the rules; and the other hand to allow and stimulate workers and their representatives to be aware of their rights and take action to claim observance.

ETUC invites the Commission to consider instruments like the development of a toolkit together with representatives of Member States and relevant social partners to support cooperation, coordination and information.

In addition, the ETUC wants to remind the Commission of the recent judgement of the ECJ (case 244/04) in which the Court explicitly accepted the instrument of prior declarations by the service provider in situations of posting as an appropriate means for the host country to monitor and enforce its regulations. The ETUC is of the opinion that without such prior declarations, and without obligations to have an address and/or representative on the territory, the relevant actors (public as well as private, in the case of collectively agreed standards) cannot play an effective role in the monitoring and enforcement of the minimum standards as laid down in article 3 of the Directive.

- Thirdly, for many different reasons the cross border provision of services increasingly takes the form of subcontracting (especially in construction) and agency work (in many other sectors of the economy). By creating extremely complex networks of sub-contractors, main contractors can create easy ways to circumvent legal or collectively agreed labour standards and working conditions. By hiring workers through agencies instead of directly, user-enterprises and agencies - especially in countries that do not have a strong regulatory framework in place for equal treatment of agency workers - can easily enjoy major profits (that in some countries surpass the estimated gains in drug trafficking!) in employing agency workers on wages and working conditions that are far below standards in the sector concerned.

Therefore, the European Commission should much more actively promote that Member States that have not yet done so take initiatives to introduce so called systems of ‘client liability', ‘chain responsibility' or ‘joint and several liability', bring together the various practices in Member States - if necessary in a separate report - , and consider the proposal of a Community initiative on this matter.

Furthermore, the ETUC agrees with the statement in the draft report, that, given the transnational nature of the activities covered by the Directive, the enforcement of fines (in particular) in the country of establishment of the company posting the workers, and other cross border measures in the event of non-compliance with the Directive, are crucial. However, we are not convinced that the recent Council Framework Decision 2005/214/JHA on the mutual recognition of financial penalties will be enough to improve the current very unsatisfactory situation. ETUC therefore invites the Commission to explore further measures to strengthen transnational enforcement.

- ETUC welcomes that in its draft report the European Commission recognizes the importance of the bringing about at EU level of a legal instrument with regard to temporary agency work that establishes the general principle of equal treatment with regard to essential employment and working conditions. As the report rightfully states: the draft Directive on Temporary Agency Work (TAW) and the Posting Directive would in this way complement each other, while continuing to perform separate functions, “on the one hand the coordination of rules in trans-national cases, and, on the other, the alignment of substantive provisions - irrespective of whether or not cross-border activities take place.” However, the ETUC would like to see the Commission more actively pursuing political agreement on the draft TAW Directive, which is already blocked for quite some time in the Council.

In its position of November 2003, the ETUC asked the Commission to present, as soon as possible, in consultation with the social partners, adequate proposals to simplify and improve the existing Posting Directive.
In its recent position on the transitional measures for free movement of workers, the ETUC referred to the importance of strengthening the Posting Directive in the broader framework of providing at EU level for a set of firm and fair ‘rules of the game', in which transparency and security for workers are put centre stage, to support cross border mobility of workers, both in the framework of free movement of services and free movement of workers.

According to the ETUC, such supportive framework should consist of:

- a set of minimum standards established at EU level;
- the establishment of clear principles of equal treatment in wages and working conditions applying to the place where the work is done;
- the obligation to respect the host country's industrial relations systems, i.e. the rules and regulations with regard to collective bargaining and industrial action;
- mechanisms and instruments, including liability of principal contractors, for cross border monitoring and enforcement of working conditions and labour standards.

In this stage, the ETUC wants to propose the following additional measures to be taken, either within the framework of the Posting Directive, or as separate initiatives:

- the exclusion for merchant navy vessels should be deleted, and the need for a EU framework Directive on manning conditions for regular passenger and ferry services operating between Member States should be revisited;

- the Commission should promote exchange of information and cooperation between national social and labour inspectorates, and develop a European social inspectorate or other appropriate structure to support Member States and national social and labour inspectorates in the application and enforcement of national and European minimum rules and worker protection;

- the Commission should consider to review Articles 4 and 5 of the Directive, with a view to strengthen their practical meaning. At the moment, Article 4 only provides for the obligation of public authorities to communicate with each other with regard to information on the transnational hiring-out of workers, while Article 5 only demands them to take ‘appropriate measures' with regard to failure to comply with the Directive. Member States should explicitly be obliged to provide via the liaison offices all private interested parties (the posted worker and his representative, the service provider and the user enterprise, as well as trade unions and employers organisations) with clear information about all the relevant legal and collectively agreed rules that are applicable in the host country;

- the Commission should evaluate existing systems in Member States to address abuses in cross border subcontracting and temporary agency work by responsibilizing main contractors and user-enterprises with regard to the payment of taxes, social premiums and wages, for instance in the form of ‘chain responsibility', ‘client liability' or ‘joint and several liability', and consider the proposal of a Community initiative on this matter;

- whereas the ETUC agrees that the definition of a worker (and measures to address bogus-self employment within the framework of the provision of cross border services) has to be left primarily to the national level, the Commission should put pressure on Member States to address this issue with urgency, and support their actions by developing at EU level - in the context of the upcoming Green Paper on the Future of Labour Law - a framework for protection of economically dependent and self employed workers;

- the Commission should support campaigns of Member States and social partners to provide workers and enterprises with information about labour and social rights of migrant and posted workers on their territory, and should consider - in the context of the Year of Mobility - a EU-wide campaign to sensitize all stakeholders throughout the EU about the necessary observation of minimum rights and protection of workers to support positive mobility.

The link with the draft Services Directive: a potentially explosive issue to be treated with great care

As indicated above, the Posting Directive currently plays a key role in providing for fair competition in trans-national provision of services by guaranteeing the respect for workers' rights and national industrial relations systems.
This key role was challenged by the Draft Directive on Services in the Internal Market, as proposed by Commission in 2004. The initial proposals raised major questions around the lack of respect for international private law and labour law in general and the Posting Directive in particular, while especially Articles 24 and 25 of the Directive raised huge concerns in Member States that the very instruments that were necessary for the monitoring and enforcement of the Directive (and in some Member States for the coming about of minimum standards itself, such as the need to have a representative on the territory for the Swedish and Danish system to be able to negotiate collective agreements with a cross border service provider) were under attack.
In the meantime a convincing majority of the European Parliament recently voted in favour of fundamental changes to the Services Directive, clarifying and safeguarding a full respect for all matters covered by the Posting Directive, as well as deleting the articles 24 and 25 with regard to ‘prohibited administrative requirements' to be used by Member States in the area of posting of workers.
However, there is considerable pressure from various political groups in the European Parliament to see active steps taken in the direction of administrative simplification.

In this stage, the ETUC strongly wants to warn the European Commission and other European Institutions not to confuse legitimate claims to administrative transparency and simplification (from companies and workers alike!) with the forced abolition of requirements that - in the framework of complex regulatory systems that exist at national level, which in the absence of harmonisation are the sole and autonomous responsibility of Member States - are necessary to properly monitor and enforce the Posting Directive.

The ETUC has understood that the Commission will soon come up with some sort of Communication, in which Member States will be given guidance especially on relevant ECJ jurisprudence. The ETUC strongly recommends that the Social Partners will be consulted about such a document.

In the recent discussion about the draft Services Directive, after the vote in first reading of the European Parliament, another question has been put on the table: if - now that matters covered by the Posting Directive were clearly excluded from the Services Directive - it would still be necessary to exclude temporary agency services from the scope of the Services Directive (as the EP has voted for with a convincing majority). For the ETUC this is an important matter to clarify. In our view, the answer clearly needs to be: yes.

The ETUC has sent on 16 March 2006 a separate letter to Commissioner McCreevy to explain its position on this issue.


ETUC welcomes the draft Commission's services report as a step in the right direction, providing for more insight in the implementation in practice of the Posting Directive. However, it regrets that the Commission has not yet come up with any concrete proposals on how to tackle the various problems and questions raised in the report. It therefore urges the Commission to come up in its final report with a more proactive approach.

ETUC and its affiliates at national and sectoral level are ready and available to play a constructive role in discussing and developing measures and instruments to further simplify and strengthen the Posting Directive as well as its implementation, monitoring and enforcement.