Posting of workers in the EU: Does it really safeguard fair competition and the respect for workers’ rights?


The Posting of Workers in the Framework of the Provisions of Services Law of 2017 (L.63(I)/2017) and 2020 (L.158(I)/2020) and Regulations of 2017 (R.A.A.196/2017), which is fully harmonized with the Directives 96/71/EC, 2014/67/EU and 2018/957/EU, is the enactment of appropriate measures, provisions and monitoring mechanisms for the posting of workers. These mechanisms are necessary in order to secure an appropriate level of protection of the rights of posted workers for the cross-border provision of services. In 1996, the EU adopted regulations to prevent foreign workers from undercutting local workers, a phenomenon the EU calls “social dumping”, and to ensure that European companies and countries compete on a level playing field.

The aim of the legislation is to ensure the free movement of workers, freedom of establishment and freedom to provide services which are fundamental principles of the internal market in the Union enshrined in the Treaty on the Functioning of the European Union (TFEU). The implementation of those principles is further developed by the Union aimed at guaranteeing equal opportunity for businesses and respect for the rights of workers. The freedom to provide services includes the right of undertakings to provide services in another Member State, to which they may post their own workers temporarily in order to provide those services there. It is necessary for the purpose of the posting of workers to distinguish this freedom from the free movement of workers, which gives citizens the right to move freely to another Member State to work and reside there for that purpose and protects them against discrimination as regards employment, remuneration and other conditions of work and employment in comparison to nationals of that Member State. To come under the umbrella of the EU law, there needs to be a cross-border element, meaning that the performance of the work must be adequately linked to that territory and an element of temporality.

The Directive now applies to the transportation sector

On 1st December 2020, the European Court of Justice (ECJ), in response to a series of questions referred by the Supreme Court of the Netherlands (Hoge Raad der Nederlanden), ruled that the Posting of Workers’ Directive also applies to transactional services in the field of road transport. The request was made in a case concerning three different transport companies which have the same shareholder, namely Van den Bosch Transporten BV (registered in the Netherlands), Van den Bosch GmbH (Germany), and Silo-Tank Kft (Hungary).

The Dutch company concluded a number of charter contracts with both the German and the Hungarian companies for international road transport of goods. The German and Hungarian companies employed drivers to carry out those contracts. Most of the shift of the drivers started and ended in the town of Erp (in the Netherlands), the seat of the Dutch company, but most of those transport operations also took place outside the territory of the Netherlands. The Netherlands Federation of Trade brought an action against all three companies, claiming that they had acted contrary to Directive 96/71 because their drivers were posted workers to whom the basic conditions of employment under the Dutch ‘Goods Transport’ collective labour agreement should have been applied.

The Netherlands Federation of Trade Unions sued Van den Bosch Transporten, arguing that the German and Hungarian drivers should be covered by the collective labour agreement and also be considered posted workers, as stipulated by the 1996 EU directive.

In its judgement, the Court of Justice has made clear that Directive 96/71 is applicable to the transactional provision of services in the road transport sector. According to the Court of Justice, the fact that the legal basis of that Directive does not include provisions relating to transport cannot therefore exclude from its scope the transnational provision of services in the sector of road transport activities, in particular goods transport.

Previously, it was not clear if truck drivers could be classified as posted workers. It is a fact that, with its open borders and single economic market, the EU is increasingly interconnected, and it is common for people to work across borders. Nevertheless, European law covering such workers in the transportation sector was open to different interpretations.

The cross-border service provision and posting have sparkled extensive discussions on workers’ rights and this suggests that the posting remains controversial, which calls for a more systematic examination and greater legal clarity.

Under the regulations known as the Posting of Workers Directive, companies that send workers to another EU country are required to follow that country’s rules on such matters as minimum wages, maximum working hours, the equal treatment of men and women, and health standards. As an example, this would prevent a Polish company from sending its workers to Denmark, a country with some of Europe’s highest wages, while continuing to pay them the same wages they would get in Poland.

Conversely, the rules do not apply when workers are sent to countries where the minimum wage, for example, is lower. For example, a German company that sends its engineers to Romania, one of Europe’s poorest nations, must still pay its workers what they make in Germany.

In conclusion, there is a need to clarify basic terms and legal constructs related to posting and there should be no uncertainties concerning the interpretation and application of EU rules on cross-border mobility or the national legislation transposing it into EU Member States’ legal systems. If posting scenarios are correctly identified, compliance with the applicable legislation and effective protection of the rights of the workers and companies involved will eventually be achieved.

The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Polina Polycarpou, Associate at Limassol office, email polina.polycarpou@kyprianou.com