Posted Workers Amendment Directive – What do you need to know ahead of its implementation?

In the last year, the upcoming revisions of the Posted Workers Directive (PWD) have become a real talking point in global mobility, and not just to the posting of workers between EU Member States, but also to workers coming from non-EU countries. We thought we'd have a look at what the changes will mean for you and your organisation ahead of the new revisions that come into effect at the end of this month.

What is the Posted Workers Directive?

The Posted Workers Directive was originally introduced in 1996 by the European Union to protect employment rights of individuals working in other European countries. Effective from 30 July 2020, the Posted Workers Amendment Directive 2018 will further strengthen the protection of posted workers and ensure compliance. 

The revision of the directive has triggered the introduction of a new set of compliance requirements for employers across the EEA, though it can also affect third-country nationals, depending on the specific rules adopted in each member state. The changes to the directive will impose strict practical requirements on employers such as the need to track and provide pre-travel notifications of posted workers to the relevant authorities and retain employment documents, with strict penalties imposed for non-compliance.

Effective from 30 July 2020, the Posted Workers Amendment Directive 2018 will affect three main areas: the remuneration of posted workers, long-term overseas postings and temporary agency workers. 

Specifically, as per the revised Article 3 of the PWD:

• posted workers will be subject to all host country rules on remuneration, working conditions, accommodation conditions and allowances/expenses that apply to local workers
• posted workers on assignments exceeding 12 months (or 18 months with reasoned notification) will be fully subject to the host country's labour laws (excluding termination rules and occupational pension schemes)
• posted workers will be subject to any universally applicable collective agreements, across all sectors
• posted temporary agency workers will be subject to the principle of equal treatment as provided for in the Temporary Agency Work Directive

What is a posted worker and who does the PWD affect? 

A posted worker is a worker who, for a limited period, carries out his or her work in an EU member state other than the state in which he or she normally works.

Posted workers may be sent to another EU member state to carry out work for their employer’s customers or clients, or to work for a subsidiary or associated employer (an intra-group posting) established in that other state. Workers who are hired by a temporary employment or placement agency to carry out work for a client in another EU member state also fall within the definition of a posted worker.

As the directive applies to those temporarily working abroad, both business travellers and assignees may fall under the Posted Workers legislation depending on the interpretation of the regulations under national laws. 
One of the key changes under the new directive is the duration of the period before which a posted worker becomes entitled to all the employment rights in force in the host country. Under the amended PWD, the full application of the host country’s mandatory labour law applies for assignments exceeding 12 months, extendable to 18 months. After that, the posted worker will be entitled to all host-country employment rights and protections, except for termination provisions.

Companies intending to send employees on assignments over 12 months with a possible six-month extension will need to carefully consider how the new directive will affect their businesses in case a posted worker has acquired the enhanced level of protection.

Business travellers have a shorter lead time than assignments and the volumes are much higher, meaning that achieving PWD compliance for this population is more challenging and puts greater demands on resources for data gathering and tracking.

The European Commission’s Practical Guide on Posting states that workers who are sent temporarily to work in another member state, but do not provide services there, are not posted workers. This is the case, for example, when workers attend conferences, meetings, fairs or training events. Such workers are not covered by the posted workers directives and the administrative requirements and control measures set out in Article 9 of Directive 2014/67/EU are therefore not applicable to them.

However, for every cross-border work-related activity (including business trips), the employer, or any self-employed person concerned, is under the obligation to notify the home member state, whenever possible in advance, and obtain a portable document A1 (PD A1). That obligation covers all business travellers irrespective of length of trip and purpose of travel. Some countries require that an A1 certificate be submitted as part of the PWD notification process, and almost all require that an A1 application be provided in the event of an audit of the social documents.

This creates new challenges for GM professionals in terms of tracking business travellers who up to now had travelled under the radar. However, due to inconsistencies generated by transposition into national laws, the topic of PWD compliance in a business traveller context is here to stay and challenges for employers will likely continue for the foreseeable future.

It is also important to note that the changes to the PWD are not limited to EU nationals only. Some countries, such as Belgium, Spain, Italy and Poland, have decided to implement the provisions not only to the posting of workers between member states, but also to workers coming from non-EU countries. 

Remuneration – Equal pay for equal work

Under the original 1996 PWD, employers are only obligated to comply with the statutory minimum wage rules of the country where an overseas worker is posted. The revisions to the PWD mean workers will be entitled to the same remuneration as colleagues who hold the same job in the posted country. While this does not mean that posted workers will be entitled to the exact same salary, it does mean that posted workers will now be subjected to the same wage scale, and entitled to the same bonuses, allowances, and reimbursement of expenses as their local colleagues.

This change will require employers to keep close track of local core mandatory elements of remuneration in each host member state, including any applicable collective agreements, beyond just having to know the minimum rate of pay, as was previously the case.

Another new provision afforded to posted workers is ‘allowances or reimbursement of expenditure to cover travel, board and lodging expenses for workers away from home for professional reasons’ (Article 3(1)(i)), which has rightly sparked client queries with regard to statutory per diems in host countries. These may or may not be set by law – but also frequently by collective agreement – and will add another element to stay on top of, to ensure due compliance in the host member state.

EU directives – by their very definition – only ever set the minimum terms that member states must transpose into their national law. The specific ways in which directives are implemented is in many ways left to the member states, inevitably leading to variations across the EU. For instance, in the context of the amended PWD, the notion of 'same level of remuneration' is to be defined by the host member states in accordance with their national laws and/or practices. The directive itself does not define ‘remuneration’. It is therefore up to the member states to specify, in a transparent way, the different elements of how remuneration is composed on their territory. France, for instance, refers to the narrower notion of 'salary' in its implementing law.

To this end, in 2019, the European Commission published a Practical Guide on Posting, in which it outlined its interpretation of the new provisions. This guide will likely become a source of interpretation, as well as a useful tool if faced with some potentially unfounded requirements introduced by the different EU member states.

Brexit 

One additional variable for employers to consider is the impact that Brexit will have on the implementation of these revisions. If the UK leaves the EU without a deal at the end of 2020, the UK will no longer be required to comply with the PWD, amended or otherwise, which would constitute one more complication for global mobility professionals to navigate. In this situation it is not clear what the UK would do, but it could choose to adopt similar laws in this scenario. 

What practical considerations do GM professionals need to be aware of under the revised version?

The Posted Workers Enforcement Directive (PWED) imposes strict practical requirements on employers, including prior notification of new postings and the tracking of international postings, as well as the allocation of a liaison person for labour inspections and the storage, translation and management of social documents, such as payslips, employment contracts and time-sheets. This can feel like a challenging and resource-intensive requirement if the right processes and governance are not in place.

Claudia Kerschbaum, Senior Group Expert People Reward & Mobility at Borealis, said about the requirements under the new directive: “This is potentially an administrative nightmare. Under the new arrangements, A1 certificates will be needed for all our business travellers. The business needs employees who are agile and respond quickly to business opportunities and this can be slowed down and delayed in order to fulfil the legal requirements. In addition, the Posted Workers’ Directive is regulated differently in each member state. We want to be compliant, but how do we ensure compliance?” 

Claudia is not alone in voicing her concerns about the practicalities of enforcing the changes to the directive. Probably one of the main challenges for many employers is identifying posted workers. Tracking time spent in a location and activities performed, to determine whether a traveller is considered a posted worker is very challenging. It will be key for global mobility teams to have the right technology and processes in place to complete the pre-travel notification requirements, especially as the fines administered for non-compliance can be very severe. ”

How can we help?

This latest revision of the PWD straddles fields of immigration, social security, and labour law. It has never been more important to be up to date on a host country’s remuneration policies, whether they are set by law or relevant collective agreements. 

Liam Brennan, CEO & Co-Founder, Tracker Software Technologies can help GM teams manage the administrative and compliance requirements of the Posted Workers Directive. He said “By implementing a pre-trip approval process for business travellers, posted worker & A1 obligations can be identified before travel. The Tracker tool gives advice on the individual country requirements and can generate automatically the necessary A1 applications or posted worker forms. Hence, the administrative burden of searching for and trying to decipher the individual country requirements is made easier. Proactively managing employee travel compliance can also translate into efficiency and cost savings. Ultimately we see posted worker filing/declarations being rolled on to the traveller – as the traveller is usually the one with the knowledge of the trip being taken – rather than a remote HR resource.”

Useful external links

The directive requires all member states to “publish the information on the terms and conditions of employment, in accordance with national law and/or practice, on a single official national website, including the constituent elements of remuneration and all the terms and conditions of employment.” The European Commission maintains a list of all national liaison offices and websites here.

The European Labour Authority was also created in 2019 to ensure EU rules on labour mobility are enforced in a fair, simple and effective way.

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