What is the Posted Worker Directive and its purpose?

Do you plan to send your workers to another EEA country or Switzerland for a limited period, with the intention of them returning to your company afterward? If so, it's crucial to understand the European rules for posted workers. In this article, we aim to highlight the main goals, rules, and reporting requirements of the Posted Worker Directive (PWD). We'll explore how this Directive impacts Europe’s labor landscape, ensuring fair treatment and protection for workers while fostering cross-border cooperation. Join us as we delve into the significance and influence of the PWD on businesses and workers across Europe.

The Posted Worker Directive (PWD) sets requirements and conditions for employers when sending their employees to a Member State of the European Union (EU) or the European Free Trade Association (EFTA) for a limited time to perform a service. Originally introduced in 1996, the PWD aims to ensure equal employment conditions and fair play on the European market, preventing “social dumping.” Recent revisions have strengthened guidelines for local countries to interpret and adopt.

The Directive ensures that posted workers are entitled to minimum employment rights and protections in their host countries. It also guards against unfair competition. By establishing rules on wages, working hours, and health and safety, the PWD strikes a balance between cross-border service provision and worker rights.

When it comes to navigating the complex landscape of posting workers within the European Union (EU), understanding the ins and outs of registration requirements is paramount. Each EU country has its own set of rules and regulations governing the registration of posted workers, making compliance a complex effort for businesses operating across borders.^[2]

As a rule of thumb, the registration of a posted workers shall be done before they commence their work duties. However, the specifics can vary widely from one nation to another. Each country has its own registration system, and each EU country decides if the registration is not required for certain activities.

Additionally, it is important to note that Business travelers are subject to the rules for posted workers if they are sent to another country to provide services that benefit entities in the host country. The key to assess whether business traveler is subject to the rules of posted worker, is to determine the nature of work activities performed in the destination country.^[2]

In addition to previously mentioned, let us not forget to mention about the A1 certificate, which is required, if the posted worker, business traveler, or a remote worker remains under the home country’s social security system. The A1 certificate determines the applicable social security laws and the country to which social insurance contributions should be paid while working abroad within EU/EEA countries and Switzerland.^[4]

Thus, if you plan to work remotely from another EU country for your company which is in your home country, please do not forget to apply for an A1 certificate.^[2]

• All EU/EEA countries require posted worker registration.

Certain states require registration only if the posted worker is transferring from another EU/EEA country.^[2] It is good to note that Posted Worker Directive requirements are in the process of always changing with each EU country trying to unify the general legislation regarding Posted Worker Directive within the EU. As an example, we would like to bring the focus to Finland who has introduced some recent changes with its Posted Worker Directive legislation. 

On May 1, 2024, amendments were made to Finland's Posted Workers Directive (PWD) legislation. These changes are indeed significant and to align Finland's national legislation more closely with the EU Directives.^[3]

By aligning more closely with EU Directives, these updates not only safeguard workers' rights but also streamline administrative processes for companies. Staying informed and compliant with these regulations is crucial for businesses operating across borders, ensuring fair treatment of workers, and contributing to a balanced and competitive European labor market.

Staying informed and compliant is crucial for businesses operating across borders. We will be more than happy to discuss and share more information on the topics mentioned above. KPMG, as your trusted advisor, remains at your disposal in case of any questions.

^Sources:

^{[1] Posted workers - Employment, Social Affairs & Inclusion - European Commission. (n.d.). https://ec.europa.eu/social/main.jsp?catId=471}

^{[2] Racovițan, M. (n.d.). KPMG Guide to the Posting of Workers 2023. KPMG. https://kpmg.com/ro/en/home/insights/2024/01/kpmg-guide-to-the-posting-of-workers-2023.html}

^{[3] Posted workers - Ministry of Economic Affairs and Employment. (n.d.). Työ- Ja Elinkeinoministeriö. https://tem.fi/en/posted-workers}

^{[4] What is an A1 Certificate - Finnish Centre for Pensions. (n.d.). Finnish Centre for Pensions. https://www.etk.fi/en/work-and-pensions-abroad/insurance-while-working-abroad/what-is-an-a1-certificate/}