Posting of workers in the light of new provisions

From the perspective of posting, 2020 brought unprecedented changes, both because of the challenges induced by the COVID-19 pandemic and the final deadline for implementation of the provision of the Directive (EU) 2018/957 concerning the posting of workers into the national laws. In Poland, the Directive provisions were incorporated by way of the Act of 24 July 2020 amending the Act on the posting of workers in the framework of the provision of services. It should be noted, however, that the Polish Act relates to entities posting their employees to Poland. In turn, Poland-based employers posting workers abroad must act in line with regulations applicable in the host country. Although all Member States were required to implement the same Directive, local regulations governing the posting of workers differ substantially. For example, regulations applicable in France are far more restrictive than the minimum conditions provided for by the Directive.

The goal behind the amendments was to harmonize the rules of posting workers within the European Union, with special regard to the fundamental principles of EU law, i.e., the principle of equality and non-discrimination.
 

Harmonization of the regulations on employees' remuneration was a necessary step, especially given that the growing discrepancies in pays and labour costs increased the attractiveness of posting to companies. As a result, in the years 2010-2014 the number of posted workers surged by 44.4%. The amendments are to ensure equality of treatment in terms of remuneration. In other words, a posted worker shall be remunerated on the same terms as the comparable permanent workers in the host State ("equal pay for equal work").

The duty of the host States is to ensure that a posted worker receives from the posting company a remuneration calculated in line with the applicable law, collective agreements and common practices in force in the host State. Furthermore, the obligation goes beyond the equal pay, extending to all benefits received by local employees under the applicable law. The previous practice of calculating posted workers' remuneration based on minimum rates applicable in host Member States is now unacceptable. This means that the employer must now possess an extensive knowledge and understanding of the rules of remuneration in force in the host country.

Every Member State is obliged to publish the information on the terms of remuneration (and other conditions of employment) applicable to postings on a single official national website. In the case of an audit, inaccurate or outdated information may constitute an attenuating circumstance. Nevertheless, many implementations of this obligation bring disappointment. Some of the national websites (e.g. the German one) contain many detailed and useful information, also available in English. Unfortunately, some countries (including Poland) provide fragmented data, only to a certain extent available in a language other than the national one.
 

Prior to the amendments, the posting period was not subject to major restrictions. Now, under the amended provisions, the period of posting is limited to 12 months, with a possibility of extension by 6 months (to the total of 18 months), where the posting company submits a motivated notification.

Importantly, the duration of the posting shall also cover the period for which the posted worker is replaced by another posted worker performing the same task at the same place. This means that the 12-month posting period is linked to the duties performed during the posting and not to a single posted employee. In other words, if the same duties are performed by a number of employees posted in the same country, they will be covered by a single posting period. Yet, the provisions do not clarify if ‘workers replacing each other’ mean only the employees posted to a given country directly one after another. Therefore, there exists a doubt whether in case of a worker posted to a Member State a few months after the first worker - who has performed the same job - returns from the host country we are dealing with the same single posting and thus the same time limit, or whether it means that a new posting period began. In the first case, the question remains whether the deadline is suspended for the period in which the posting does not take place or whether it runs continuously from the first day of posting. Sooner or later these and similar issues will become the subject of requests for preliminary rulings submitted by national courts to the EU Court of Justice.

After 12 (18) months of continuous posting of employees by the same employer to perform the same duties, all provisions of the labour law resulting from the regulations, collective agreements and common practice in force will apply. They will cover the employee posted to the given country when the set deadline falls, along with every subsequent employee who will replace them. For application of the local labour law, the posting employer, the task assigned, and the place of its performance must remain the same.

It should be noted, however, that the requirement to comply with the host State law does not apply to situations where the terms and conditions of employment in the posting country are more favourable to the posted worker.

Under the Act implementing the Posting of Workers Directive, the National Labour Inspectorate gained a number of new powers. Under the new regulations, the authority shall assume the function of a liaison responsible for cooperation with competent authorities from other States in terms of providing information on the conditions of employment of workers posted to Poland, reporting irregularities and offenses related to the posting, requesting inspections and carrying out audits at the request of authorities of other Member States.

Undoubtedly, the new provisions will importantly increase the administrative burden on posting employers and, consequently, the associated posting costs. This means that each posting must be carefully planned by the employer and then meticulously supervised. The points of particular interest to posting companies seem the rules of remuneration and other non-wage aspects of employment applicable in the host country.

Author: Natalia Jarzebowska, Assistant Manager, Tax Advisor, TAX, Global Mobility Services, KPMG in Poland