EU: Employment Ministers Agree on Stricter Regulation of Foreign Employee Postings

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By Andrea Barbara Schuessler

Posting of employees from one European Union country to another will follow stricter regulations aimed at preventing social dumping—the hiring by employers in higher-wage countries of workers from low-wage countries to keep employment costs artificially low. The new rules are included in the revised EU workers directive agreed to by member state ministers of employment and social affairs at a council meeting in Luxembourg Oct. 23.

In addition to the principle of equal pay for equal work at the same place, the reform of the 20-year old directive will provide legal clarity on the treatment of extra pay and bonuses and improve protections for long-term postings, Germany's Labor Ministry said Oct. 24. In principle, nonnationals posted to a member state will become subject to host country labor law, with a few exceptions, after 12 months' residence, 18 months' at the employer's request.

The European Parliament still needs to approve the new regulations, an official with the European Commission's Berlin office told Bloomberg BNA on the phone Oct. 27, and negotiations and consultations will now begin. It's not clear yet when the new regulations will become effective, the official said.

The workers directive outlines the conditions that companies need to comply with when sending employees to other EU countries. While host country minimum wage requirements must be adhered to, employers need only meet the home country social security contribution requirement. This means that companies based in Eastern Europe, where social security obligations are generally lower than in the west, are able to offer cheaper services than their Western European competitors. Germany, France, and Belgium, which take in about half of all employees posted across the EU, have criticized this situation.

‘Unanimous Endorsement'

“The unanimous endorsement of the European Pillar of Social Rights shows that all member states are committed to striving for better working and living conditions throughout our union, in light of challenges such as an aging society, globalization, and digitalization,” Marianne Thyssen, EU commissioner in charge of employment, social affairs, skills, and labor mobility, said Oct. 24. “As for the agreement on posting of workers, our position from the beginning has been that workers should earn the same pay for the same work in the same place.”

“I am glad member states broadly support this,” Thyssen added. “This is fair for the posted workers, who deserve equal working conditions. And this is fair for local workers and employers, who don't want to be undercut on wages.”

“The principle of equal pay for equal work in the same place applies,” Germany's managing labor minister Katarina Barley said Oct. 24. “The protection of posted workers under labor law will thus be significantly improved in the future. For this purpose, Germany's government has been working, especially together with France, in 18 months' negotiations.”

‘Unacceptable' Proposal?

The proposed changes to the workers directive are not universally supported, however.

“The rules on posting should not be tightened,” Ingo Kramer, president of the Berlin-based Confederation of German Employers' Associations, said Oct. 20. “They are good for businesses and workers as they are. The EU Commission proposal is not acceptable in its present form. Under the cover of social justice, the commission is running the danger of reverting to small-state mentality and protectionism.”

“The proposal provides for highly bureaucratic regulations that create new inner-European borders as well as hurdles for growth and employment,” Kramer said. “This is the opposite of social justice.”

To contact the reporter on this story: Andrea Barbara Schuessler in Berlin at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

More information on the reform of the EU Workers Directive is available in English here.

For more information on European Union HR law and regulation, see the European Union primer.

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