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
Temporary work agencies entering new markets sometimes use intermediaries to identify and introduce potential clients.
That arrangement may appear straightforward. It becomes more complex where the intermediary does not merely introduce the genuine user undertaking but enters the contractual chain as a “user” itself.
The terminology used in the contracts is not decisive. What matters is the contractual structure and, ultimately, what happens in practice.
When the intermediary becomes part of the hiring-out chain
Consider a temporary work agency established in Portugal.
An intermediary introduces a client established in the Netherlands that requires temporary agency workers.
Instead of acting simply as a commercial agent, the intermediary insists, for its own reasons, on concluding the contract with the Portuguese temporary work agency as the “user”. The intermediary then concludes another contract under which the same workers are made available to the genuine Dutch user.
The first questions are therefore practical ones: What is the intermediary actually doing? Does it genuinely use the workers? Who exercises direction and control over them? Is the intermediary itself hiring the workers out to the end user? And, if so, is it legally entitled to do so under the applicable national law?
The description of a company as an “agent”, “contractor” or “user” cannot replace this analysis.
Double hiring-out is permitted under EU law
A similar situation may arise without an intermediary.
A temporary work agency established in Portugal hires a worker out to a user undertaking established in Belgium. The Belgian user subsequently sends that worker to Sweden, where the worker carries out work for another undertaking and under that undertaking’s direction and control.
Such a chain is expressly contemplated by EU posting law.
Article 1(3)(c) of Directive 96/71/EC, as amended by Directive 2018/957, expressly addresses the situation in which a worker hired out by a temporary employment undertaking to a user undertaking subsequently carries out work, in the framework of a transnational provision of services (including hiring out) by that user undertaking, in another Member State.
For the purposes of the Posted Workers Directive, the worker is considered to have been posted to that Member State by the temporary work agency with which the employment relationship exists. The temporary work agency remains responsible for compliance with the relevant provisions of Directive 96/71/EC and Directive 2014/67/EU. The user undertaking must inform the temporary work agency in due time before the work begins.
Whether the particular hiring-out arrangement itself is permitted must nevertheless be checked against the national law applicable in the Member State in whose territory the work is carried out. In general, Member States regulate or restrict the hiring-out of workers, including who may act as a supplier of temporary labour.
Double hiring-out and the applicable social security legislation
The fact that a chain may be permissible from a labour-law perspective does not mean that the original social security position automatically continues.
Article 12(1) of Regulation 883/2004 permits, subject to its conditions, a worker temporarily posted to another Member State to remain subject to the social security legislation of the Member State in which the posting employer normally carries out its activities.
However, the EU Practical Guide on applicable legislation specifically identifies situations in which the Article 12 posting provisions cannot apply. This includes where the undertaking to which the worker has been posted places that worker at the disposal of another undertaking in the same Member State, as well as where it places the worker at the disposal of an undertaking situated in another Member State.
The Guide explains this position by reference, among other things, to the complexity of such relationships and the absence of a sufficient guarantee that the direct relationship required for the posting exception continues to exist.
This distinction is particularly important.
In the Portuguese-Dutch example, the contractual insertion of the intermediary as the first “user” raises the question whether there is in fact a further making available of the workers and, consequently, whether Portuguese social security may continue to apply under Article 12(1).
The same issue arises even more clearly where the Portuguese temporary work agency hires the worker out to the Belgian user and the Belgian undertaking subsequently places the worker at the disposal of another undertaking in Sweden.
The starting point under Regulation 883/2004 is that an employed person is generally subject to the legislation of the Member State in which the activity is actually carried out. Article 12 constitutes an exception allowing the legislation of the posting State to continue where its conditions are satisfied.
Consequently, once the factual structure changes through a further making available of the worker, it cannot simply be assumed that an A1 certificate originally obtained on the basis of Article 12 continues to reflect the worker’s situation.
The A1 must correspond to the actual situation
Contracts are important, but the social security analysis cannot stop with their wording.
Where the factual working situation differs from that described in the contractual documentation, the competent institution must consider the worker’s actual situation. Where an A1 certificate has already been issued and the real working situation proves different from that on which the certificate was based, the institution may have to reconsider the grounds on which it was issued and, where necessary, withdraw it.
This does not mean that every situation of double hiring-out automatically produces the same social security result.
The applicable legislation must be determined under Regulation 883/2004 on the basis of the concrete circumstances.
What should not happen is for the social security question to be ignored simply because the underlying hiring-out arrangement is lawful from the perspective of labour law.
Before signing the contract
Where an intermediary is inserted between the temporary work agency and the genuine user, the TWA should clarify the intermediary’s actual role and refuse a contractual structure that does not correspond to the factual relationship, or at least be fully aware of the risks it entails.
A subsequent hiring-out by a genuine user is different: it may not be known or foreseeable when the initial contract is concluded.
The contract between the TWA and the user should therefore require the user to inform the TWA before making the worker available to another undertaking and provide for contractual liability, including the related damages, where this obligation is breached.
The two legal analyses must then be carried out separately. From the perspective of Directive 96/71/EC, the question concerns the labour-law framework applicable to the posting, including the specific rules governing temporary agency workers and subsequent hiring-out.
From the perspective of Regulation 883/2004, the separate question is which social security legislation applies. A chain of hiring-out may therefore be permissible under the applicable labour-law rules, while the same structure may prevent reliance on Article 12(1) of Regulation 883/2004 for maintaining the social security legislation of the sending State.