The legislative framework of the Posted Workers Directive

John Weekes

— 3 min read
The legislative framework of the Posted Workers Directive

One of the main (unintended) bi-products caused by the ‘Free Movement of Labour’ pillar of the treaty of Rome was the rise of ‘social dumping’. This is the practice of using the disparities in labour regulations and wage levels across EU countries to reduce business costs and maximize profits.

A simple example is the temporary assignment of workers from low-wage countries to work in higher-wage countries while being paid at the lower rate, which undermines local labour markets and leads to wage suppression for both local and migrant workers.

With lower cost labour arriving from other parts of the EU, why would an employer hire an expensive local national? In addition, some employers engaged in practices such as subcontracting, outsourcing, or using bogus self-employment to circumvent labour regulations, with an obvious negative impact on working conditions, job security, and social protection for workers.

The Original Posted Workers Directive

The EU introduced the 1996 Posted Workers Directive in response to concerns about these practices. It provided that in situations where an employee worked temporarily in another EU state, they were entitled to the protections offered by the host country, rather than the country of employment, if those protections were better than at home. In this way, it was intended to remove the initiative to shift cheaper labour around the EU, thus eliminating social dumping. The core areas covered in this legislation were:,:

  • remuneration, including overtime rates (ie minimum wage legislation)
  • maximum work periods and minimum rest periods;
  • minimum paid annual leave;
  • the conditions of hiring-out workers by agencies;
  • health, safety and hygiene at work;
  • protective measures relating to maternity and childcare;
  • equal treatment between men and women and other provisions on non-discrimination;
  • the provision of employer-provided accommodation for those working away from home;
  • travel and living expenses for those working away from home.

By focussing on these protections, the 1996 Posted Workers Directive aimed to strike a balance between facilitating the free movement of services within the EU and safeguarding the rights of workers.

The Posted Workers Enforcement Directive

Throughout the 2000’s and early 2010’s there was a growing concern within the EU that in spite of the rules introduced by the 1996 Directive, EU member states were not doing enough to ensure that posted workers were receiving adequate protection. There were comparatively few businesses being challenged in respect of their cross border workers, largely as a result of the focus of most labour authorities on businesses that tended to operate within their own national boundaries.

In 2014 therefore, the EU introduced the Posted Workers Enforcement Directive to address shortcomings in the enforcement of the original Posted Workers Directive and to strengthen the protection of posted workers' rights.. This directive, which came into force in stages across the EU from 2016, introduced three additional concepts which radically altered the legislative landscape around posted workers, and the administrative responsibilities of employers:

  • The requirement to submit a ‘posting notification’ to the authorities in the host country in advance of the posting taking place.
  • The obligation to retain and provide on request ‘social documents’ - that is, key information relating to the terms and conditions applicable to an employment (contracts, payslips, company policies, assignment letters etc)
  • a requirement for the employer of the posted worker to nominate a liaison person in the host country – broadly, someone who the host authorities could liaise with in respect of individuals present in their country

More detail about these additional requirements can be found on page 6 in the ‘what do employers have to do’ section

Equal Pay for Equal Work

In 2018, an additional layer was added to the legislative framework. Widely known as ‘Equal Pay for Equal Work’, this legislation (which came into force in July 2020) focused more on the harmonisation of labour laws for those working temporarily abroad.

There were two main elements. Firstly, instead of just requiring employers to ensure that posted workers receive at least the statutory minimum wage in the host country and the other ‘core’ employment protections listed above, the new rules required that their pay be equivalent to that of their local peers, including all the same salary elements (such as bonuses or allowances) embedded in local labour legislation and any payments due under the terms of any ‘generally applicable collective agreements’. So, for example, if in the Danish oil and gas sector there was a standard, national provision for individuals to receive an offshore working allowance, any worker posted to Denmark in that sector would also be entitled to the equivalent, even if they had not such entitlement in their usual place of work.

Secondly, the 2018 rules mandated that after 12 months, a posted worker would be subject to all labour laws in the host country, with the exception of pension provisions and termination rights. As such, for most purposes, they would be treated as local employees.

Clearly this legislation goes far beyond the simple notification of an employees presence in a location, and potentially involves assessing the employment law landscape in the host country to see the extent to which it applies, and amending pay and benefits for cross border workers.

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