Who falls under the Posted Workers Directive?

The Posted Worker Directives define “posted worker” as:

“A person who, for a limited time, carries out his or her work in the territory of an EU member State other than the state in which he or she normally works.”

This seemingly simple definition has created one of the key challenges surrounding the Posted Worker Directives and has significantly impacted what businesses need to do to be compliant. The simplicity of the definition leaves unanswered some critical questions relating to this part of the Directive, such as:

• Is a ‘person’ any person?
• How long is a ‘limited time’?
• What sort of ‘work’ is covered?

The lack of precision in the definition of the various elements of this statement has meant that, in principle, not just those who were in most need of social protection (primarily temporary workers in the agricultural, service and construction sectors) are covered by the legislation, but also expatriates on short assignments, project workers, the self-employed and, most problematic of all, business travellers. All meet the broad criteria set out above, and so all, in principle, are subject to all of the Directives in this area.

This problem is compounded by the fact that the rules regarding posted workers were introduced by the EU as a Directive, rather than as a Regulation. A regulation (such as the EU social Security regulations), would have imposed rules at an EU-wide level which each member state would have had to follow. A Directive, however, is not directly applicable in Member States, but creates a requirement for each member state to bring the stated principles into its own legislation. Of course, transposing this broad statement into the national laws of the 31 countries of the EEA and Switzerland, each with its own interpretations and legislative objectives, has led to very different outcomes.

Who is covered by the rules?

‘A person’ is variously regarded as being any EU person, any person employed by an EU entity, any EU employee of any EU entity, or any person at all.

A number of countries only apply the rules of the Enforcement Directive to EU employers who post employees to work in their jurisdiction. Other countries require all employers to comply – so for example someone posted from a Chinese entity to work on a project in Belgium would be potentially be caught by the three core requirements set out above, but not if the same person was sent to a project in Ireland.

The EU have made it clear (April 2024) that the Posted Worker Directives should apply to all Third Country Nationals moving within the EU (eg a US employee of a French company posted to Spain), but the picture for employees coming into the EU on a temporary basis is mixed. An individual’s citizenship, where they are employed and which EU country they are being posted to all have a significant bearing on whether they are within the scope of the legislation.

The EU are currently looking at how best to legislate in a uniform way for Posted Workers coming into the European Union, but it is likely to be several years before there is any degree of uniformity.

Do the rules cover even very short cross border trips?

‘For a limited time’ clearly takes permanent transferees out of scope of the legislation. They would not, in any event, be regarded as ‘posted workers’ as they don’t maintain an employment relationship with their original employer, and immediately on moving permanently to an EU country they would become fully subject to local labour law. However the key question which arises is whether there is a minimum threshold for someone to be regarded as a posted worker.

Again, it has been left to each host member to set, if they wish, deminimis thresholds above which the PWD requirements apply. Many have taken the view that there is no minimum, therefore exposing may one day business trips to a PWD requirement and thus pulling business travellers into the compliance regime. A few countries have decided that the shortest trips do not give rise to compliance obligations (trips of less than 8 days in the case of Spain), which is a welcome administrative relief, but this is comparatively rare. So, while there was undoubtedly no intention of including this sort of ‘posted worker’ in the Directive, the way the rules have been drafted and implemented at a national level has led to a significant compliance burden for the employers of individuals who previously could cross borders and carry out their business with no administrative formalities at all.

Most other ‘temporary’ workers (project workers, short term expatriates etc) are clearly in their host locations for a defined, limited time and so meet this criteria, the exception being expatriates with assignments of a year or more, who are in any event subject (since 2020) to local labour law in full (excluding any pension and termination provisions).

What sort of work activities do the rules cover?

‘Carries out his or her work’ – or more specifically, ‘work’, needs further exploration. Is every type of work covered in the Directive’s definition of a Posted Worker? At a national level, the picture is mixed, but the general approach has been to exclude from the requirement workers who are not engaged in commercial activity. So, in many countries, visitors who are attending training courses, seminars and conferences etc are excluded from the local PWD requirements, particularly those relating to the pre-travel notification, but those going to do their day to day work, particularly if it is market facing, are typically caught.

Germany’s approach has been somewhat different since the early days of the Enforcement Directive in that their requirement to file is primarily driven by the sector in which the individual is working, with their efforts (and therefore the compliance requirements) primarily focussed on the logistics, building, service and agriculture sectors. Thus a short project undertaken by an employee of, say, an investment bank, might well be exempt from the requirement to file a PWD registration, but a similar project done by an employee of a construction company would not be exempt.

This is a very complex area though, and the one most prone to change. The sheer volume of PWD applications has prompted many authorities to include more work-type exemptions in an effort to keep the focus on what the Directives are intended to achieve, and also to keep workloads under control. Most EU countries publish their exemption criteria and keep this up to date, but it would be unwise to assume that a particular countries’ rules aren’t subject to change.

In summary, therefore, while it is reasonably clear that the original intention of the Directives was to address the issue of social dumping through the targeting of seasonal or project workers in industries which were particularly prone to abuse (eg construction, agriculture, services), the actual implementation of the Directive in many countries has led to the unintended consequence of business travellers (and others) spending short amounts of time in many countries being burdened with large amounts of additional administration when, realistically, there is little or no chance that they are breaking any local labour laws