article by
Tanel Feldman
Senior Partner at Immigration Law Associates
EU Labour and Employment Law-Immigration Partner
CORPORATE MIGRATION CENTER
Expert in Intra-EU Labour Mobility, with a special focus on the Posting/Secondment of Workers
The transnational hiring-out of workers is governed by several layers of EU and national law. At EU level, Directive 96/71/EC, as amended by Directive 2018/957/EU, regulates the posting of workers, while Directive 2008/104/EC establishes the equal-treatment framework applicable to temporary agency work. Both frameworks are implemented through national legislation.
National law remains relevant for matters such as authorisation, registration, collective agreements, liability and enforcement. Undertakings supplying workers across borders must therefore consider these rules together.
Hiring-out under the Posting of Workers Directive
Article 1(3)(c) of Directive 96/71 applies where a temporary-employment undertaking or placement agency hires out a worker to a user undertaking established or operating in another Member State, provided that the employment relationship between the supplying undertaking and the worker continues during the posting.
The Directive also regulates onward assignments. A worker may be supplied to a user undertaking in one Member State and then sent by that user to work temporarily in another Member State. The worker is considered to be posted to the latter Member State by the temporary-employment undertaking or placement agency with which the employment relationship exists.
The user undertaking must inform the supplying undertaking of the onward assignment before the work begins. The supplying undertaking remains responsible for compliance with the Posting of Workers Directive and Directive 2014/67/EU.
Temporary-work agencies, temporary-employment undertakings and placement agencies
Directive 96/71 uses the expressions “temporary employment undertaking” and “placement agency”. Directive 2008/104 uses “temporary-work agency” and defines it as an undertaking which concludes employment contracts or employment relationships with workers in order to assign them temporarily to user undertakings where they work under the users’ supervision and direction.
Despite the different terminology, these concepts may cover the same activity: an undertaking employs workers and assigns them temporarily to a user undertaking which supervises and directs their work.
A conventional recruitment or placement agency may merely introduce candidates to an employer. If it does not employ the workers and assign them to a user undertaking, it is not a temporary-work agency within the meaning of Directive 2008/104 and cannot post those workers under Article 1(3)(c) of Directive 96/71.
Host-State authorisation and registration requirements
EU law does not establish a single European licence allowing an undertaking to supply workers throughout the European Union.
The host Member State may impose rules governing the hiring-out of workers, including registration or authorisation requirements, provided that those requirements comply with EU law. Article 3(1)(d) of Directive 96/71 includes conditions governing the hiring-out of workers, particularly by temporary-employment undertakings, among the matters regulated by the host State.
For example, a temporary-work agency licensed in Portugal wishing to hire out workers in another Member State may face very different requirements. In Austria, it will need to complete the procedure allowing its Portuguese authorisation to be recognised for the cross-border supply of workers. In Belgium, an additional authorisation is required, with the applicable procedure depending on the Region concerned. In Sweden, no additional licence or related registration is required in order for the foreign agency to be authorised to hire out workers, although other registration and compliance obligations may apply.
Which terms and conditions apply to workers hired out across borders?
The position of workers hired out across borders is specifically regulated by Article 3(1b) of Directive 96/71. The host Member State must require the foreign temporary-work agency to guarantee the terms and conditions of employment that apply, pursuant to Article 5 of Directive 2008/104, to workers hired out by temporary-work agencies established in that Member State.
Article 5 of Directive 2008/104 must be read together with Article 3 of that Directive. For the duration of the assignment, the basic working and employment conditions of the temporary agency worker must, in principle, be at least those that would apply if the worker had been recruited directly by the user undertaking to occupy the same job.
The basic working and employment conditions covered by the comparison concern:
- the duration of working time;
- overtime;
- breaks;
- rest periods;
- night work;
- holidays and public holidays; and
- pay
These conditions must be identified on the basis of the legislation, regulations, administrative provisions, collective agreements and other binding provisions of general application in force at the user undertaking. A company-level collective agreement applicable within the user undertaking may therefore be relevant when determining the conditions that would have applied to a directly recruited worker.
The Court of Justice has interpreted the equal-treatment principle as requiring, first, the identification of the conditions that would apply if the worker were recruited directly by the user undertaking for the same job and, second, a comparison with the conditions granted to the temporary agency worker.
Article 3(9) of Directive 96/71 allows the host Member State to require foreign temporary-work agencies to guarantee, in addition to the conditions resulting from Article 3(1b), other terms and conditions that apply to temporary agency workers in that Member State.
Are performance-related bonuses covered?
A performance-related bonus may fall within the equal-treatment requirement where it forms part of pay and would have been available to a worker recruited directly by the user for the same job.
For example, if warehouse employees directly recruited by the user receive a monthly productivity bonus based on individual output, an agency worker performing the same work should not be excluded merely because the formal employer is the agency. The same objective eligibility conditions may nevertheless be applied, and the amount may be calculated proportionately where this is justified by the duration of the assignment.
The position may be different where a payment genuinely depends on conditions that the agency worker does not satisfy, such as participation in a long-term incentive plan subject to a minimum service period. The nature and purpose of the payment must be examined rather than relying on the designation it is given.
The user undertaking’s information obligation
Article 3(1b) of Directive 96/71 requires the user undertaking to inform the foreign temporary-work agency of the working conditions and remuneration it applies to the extent necessary for compliance with the equal-treatment requirement.
The user must therefore provide the temporary-work agency with the information necessary to identify and apply the working and employment conditions that would apply to a worker recruited directly by the user undertaking to occupy the same job.
The information duty is imposed on the user undertaking through the host Member State’s legislation transposing the Directive. However, the temporary-work agency is the undertaking required to guarantee the relevant conditions to the posted workers.
If the user provides no information, provides it late or supplies incorrect or incomplete information, the agency may still face claims for wage differences and other consequences of non-compliance. The agency cannot therefore rely only on any sanctions or liability imposed on the user under national law.
The commercial agreement should require the user to provide complete and accurate information before the assignment, update it whenever the applicable conditions change and bear the consequences caused by missing, late or incorrect information. Subject to the applicable national law, this should cover wage adjustments, tax consequences, administrative penalties and related defence costs incurred by the agency.
Collective-agreement derogations from equal pay
Directive 2008/104 permits certain derogations from equal treatment, but these are subject to conditions.
Under Article 5(2), Member States may allow a derogation concerning pay where agency workers have a permanent employment contract with the agency and continue to be paid between assignments.
Article 5(3) also allows Member States to permit collective agreements establishing different working and employment conditions, provided that the overall protection of temporary agency workers is respected. The Court of Justice has confirmed that a collective agreement reducing agency workers’ pay must provide countervailing advantages capable of neutralising the effects of that unequal treatment.
It is the legal framework of the host Member State, rather than the temporary-work agency’s choice in an individual assignment, that determines whether a derogation is available and under which conditions. Where the host Member State relies specifically on Article 5(2), continued payment between assignments is an essential condition.
The Netherlands provides an example. Under the new Article 8 Waadi, the starting point is equal or equivalent treatment with workers employed directly by the user undertaking. Dutch law nevertheless permits derogation through the collective agreement applicable to the supplying undertaking, subject to the conditions and safeguards laid down by law. The applicable collective agreement determines in practice how that derogation is implemented.
A shared compliance exercise
Effective compliance requires cooperation between the temporary-work agency and the user undertaking. Before the assignment begins, the user must communicate the basic working and employment conditions that would apply to a worker recruited directly to occupy the same job, including relevant company-level collective agreements and remuneration arrangements.
The temporary-work agency must use that information to determine and grant the conditions due to the workers. The parties must also identify any additional protection imposed by the host Member State under Article 3(9) of Directive 96/71.
The commercial agreement should establish a detailed information and updating procedure and allocate to the user the financial consequences of missing, late or incorrect information. This contractual protection is important because any sanction or liability imposed on the user under national law does not necessarily protect the temporary-work agency against claims brought by workers or competent authorities.