What is the issue?
EU member states were required to adopt a revision to the posted workers directive (PWD) into their national law by 30 July 2020 (please refer to the summary of the directive below).
As this deadline has now passed, employers should be aware of the updated rules and comply with the regulations. Failure to do this could result in penalties of up to EUR 500,000 per impacted employee and reputational risk. A reminder of the PWD rules and a summary of the revisions to them are provided at the end of this memo.
It is important to realise that the way the PWD is adopted will vary from country to country and is not uniform throughout the EU.
Impact for employers
The directive places onerous compliance obligations upon employers that could impact upon its ability to quickly and compliantly post employees between EU member states in order to meet business needs and deliver projects.
In order to be able to comply with the rules, we recommend that employers implement tracking software to ensure that it complies with the above requirements (and stores relevant documentation, information and data), and monitors employees posting periods.
Employers should appoint someone to manage compliance with the rules, liaise with the host state authorities, and manage and maintain documents.
Particular attention needs to be paid to business travellers who could be hard to track given the short periods of time they spend abroad, and employees whose postings are for 12 months and require approval from the host country authorities to not apply the host country’s labour laws if the posting is subsequently extended to 18 months.
Finally, care should be taken when replacing posted workers with another posted worker on a project. The first posted worker’s time in the host country will count towards the 12-month limit after which time the host country’s labour law applies to the posted worker replacing the first posted worker.
How Mazars can help employers
Mazars’ experts across the UK, EU and EEA help employers manage the compliance obligations imposed by the directive by:-
- Advising on how the directive has been implemented in each country and identifying impacted groups of employees;
- Advising on how the rules apply in practice and the policies and processes employers can implement to ensure compliance;
- Providing software tracking tools to comply with and monitor compliance with the directive, and guidance on implementing this software; and
- Providing internal reviews of employer compliance against the rules.
Summary of the PWD rules
Under the PWD, since 1996 workers posted from one EU member state to carry out work in another member state for a limited period for their employer, an associated employer, or a client, are entitled the following rights in the country they are posted to (“the host country”):-
- Minimum rates of pay and annual leave
- Maximum work and rest periods
- Health, safety and hygiene at work
- Equal treatment regardless of gender
Additionally, there are conditions attached to hiring out workers through agencies
The aim of these rules is to:-
- guarantee the rights and working conditions of posted workers;
- ensure a level playing field between EU members states; and
- avoid “social dumping”, i.e. where foreign service providers undercut local providers because their labour standards are lower
Revisions effective 30 July 2020 (summary of the main changes)
The revision to the PWD updates the rules on the posting of workers as follows:-
- Posted workers are entitled to the same level of remuneration as the local employees in the host country (e.g. allowances and bonuses), and not just minimum rates of pay (“equal pay for equal work”);
- For longer term postings (longer than 12 months, or 18 months with “motivated notification”), posted workers will also be subject to the host country’s labour laws (excluding termination rules and occupational pension schemes);
- Posted workers will be subject to any Collective agreements that apply in the host country; and
- Agency workers will be afforded equal treatment as employees
However, if the rights afforded to posted workers in their home countries regarding hours, rates of pay and leave etc are more generous than the host country, then there is no need to amend these to match the minimum requirements in the host country they are posted to.
Requirements for employers
The changes also impose the following requirements on employers:-
- Prior notification of new postings to the “host state” authorities before the posting;
- Obtain A1 certificates for all posted workers;
- The obligation to make a declaration to the host member state authorities regarding the identity of the service provider, the number of posted workers, the contact person at the organisation hosting employees, the posting period, the host workplace address and the nature of the services to be provided under the posting;
- Designation of a person to liaise with the host state authorities in order to comply with the compliance and on-going monitoring associated with the above declaration (including tracking and retention of documents);
- Designate a person to ensure compliance with collective agreements and liaison with the organisations overseeing/policing these agreements.
The revisions to the Directive were implemented into UK law with effect from 30 July 2020 by SI 2020/384 for the transition period to 31 December 2020. The rules therefore currently apply to intra EU-UK postings that commence up 31 December 2020. However, the position post 31 December 2020 may be influenced by the Brexit negotiations between the UK and the EU.
Additionally, the rules apply to short term business travellers (STBV), unless they do not provide a service, (i.e. they visit the host country for conferences, meeting and training). For STBV that do not provide a service, it is still necessary to obtain an A1 certificate for them, even if the rules above do not apply to them.
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