The year of 2020 has been unlike any other. The COVID–19 pandemic has not only greatly impacted health care systems and economies across the world but it also has deeply affected the global mobility and immigration landscape. As countries around the world went into lock-down, businesses focused on repatriation of their employees abroad and ‘smart’ working (i.e. working remotely) has increased at unparalleled rates. Mobilization across borders while travel bans are in place or are being introduced has created additional challenges to cross-border mobility. In addition, by 30 July 2020 EU Member states were to implement Directive 2018/957/EU amending the Posting of Workers Directive 96/71/EC, which introduces higher labor protection standards for employees and some stricter posted worker requirements for employers. Many Member States such as France, Poland, Sweden and Belgium have amended the notification systems as well as in some cases (e.g. in Sweden) they have removed exemptions to the requirement to submit a notification. Other countries such as Denmark have communicated to the European Commission that they will transpose the Revised Directive by January 2021.
On the other hand, while the EU Coordination Regulations on social security (EU Regulations 883/04 and 987/09) still are under revision, the compliance with social security obligations has gained in importance because of the rules introduced by the Posted Workers Enforcement Directive (2014/67/EU) that has offered Member States the necessary tools to monitor the compliance with the core labor law rights for posted workers, such as a posted worker notification system, but also and more importantly, a document retention requirement. The obtainment of an A1 form, to give evidence of social security compliance from Day One of the posting, is in the majority of EU Member States one of the important documents to be kept on record for such purpose.
- Impact of the Revision of the Posting of Workers Directive
The Revised Directive (2018/957/EU) has its origins in the obligations set out in the Posting of Workers Directive (96/71/EC), namely guaranteeing to posted workers the ‘core labor rights’ applicable in the host country based on law, regulation or administrative provision, and/or universally applicable collective bargaining agreements (CBA). However, key changes in the Revised Directive that have come into effect on July 30th 2020 stipulate that employees are entitled to:
– “Equal pay for equal work”: Posted workers are entitled to the level of remuneration as local employees for the same work in the same (work)place.
– In case of assignments exceeding 12 months (extendable to 18 months upon a duly motivated notification), all mandatorily applicable working conditions of the host state, with the exception of the rules on conclusion and termination of employment contracts and the supplementary occupational pension schemes.
“Equal pay for equal work”
The Posting of Workers Directive has received increasing attention with the entry into force of the Posted Workers Enforcement Directive, that has introduced the tools for Member States to monitor effective compliance with the core labor standards for posted workers (such as the posted worker notification, the document retention requirement, the obligation to appoint an administrative and social representative). The principle of “equal pay for equal work” will likely aide in creating additional challenges to companies.
Clients now have to ensure that the remuneration for their employees meets the local host country standards. However, the process of determining the ‘remuneration’ can be complex and information is not always publicly available. For example, in Sweden wage levels are determined by the relevant trade unions who in turn hold collective bargaining agreements with local Swedish entities and these are not always publicly available. Under the obligations the Revised Directive imposes, the host country will have to publish all relevant remuneration information on one single official website, however, how soon Member States will implement this remains to be seen. In addition, some countries have a high number of different unions and several hundreds of collective bargaining agreements, so determining which one to use can be cumbersome. Another layer of complexity is added if the sending entity is going to post an employee directly to a customer in the host country, and has no local entity and therefore has no CBA to refer to when determining the applicable wage.
Further away from simplification?
With Member States transposing the new rules into their national legislations, other requirements have also come into force or have been amended, such as the full applicability of mandatory labor law rules of the host country to long-term postings exceeding 12 months of effective duration. The home country employer may submit a motivated notification to the competent authorities in the host country to extend the posting period from 12 to 18 months.
In Poland, the new rules extend the action radius of labor inspections. Therefore, an increase in auditing activity of the Polish labor inspection can be expected after September 3, 2020, when the new rules based on the Revised Directive will enter into force.
Now that borders are re-opening and cross-border mobility is changing shape (more short-term travel, pan-European roles, rotational roles, more intra-EU travel etc.), businesses need to focus on all legal requirements to ensure their employees can legally enter and start working in the host EU country of travel destination (i.e. Day One Compliance requirements) and this need is further enhanced by the new rules imposed by the Revised Posted Workers Directive.
In order to mitigate costs and continue to operate efficiently and profitably, businesses need to look for an integrated solution ensuring Day One Compliance.