Directive amending Directive 96/71/EC: Explanatory memorandum


amending Directive 96/71/EC of The European Parliament and of the Council of 16

December 1996 concerning the posting of workers in the framework of the provision of services


(Text with EEA relevance)


1.1. Reasons for and objectives of the proposal 
The Commission announced in its Political Guidelines and confirmed in its Work Programme 2016 a targeted revision of the Posting of Workers Directive to address unfair practices and promote the principle that the same work at the same place should be remunerated in the same manner. 
Posting of workers plays an essential role in the Internal Market, particularly in the cross-border provision of services. Directive 96/71/EC (hereafter: ‚the Directive’) regulates three variants of posting: the direct provision of services by a company under a service contract, posting in the context of an establishment or company belonging to the same group (‚intra-group posting’), and posting through hiring out a worker through a temporary work agency established in another Member State. 

1 Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services, OJ L 18, 21.1.97, p.1. 

2 Directive 2014/67/EU of the European Parliament and of the Council of 15 May 2014 on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services and amending Regulation (EU) No 1024/2012 on administrative cooperation through the Internal Market Information System (‘the IMI Regulation’), OJ L 159, 28.5.2014, p. 11. 

The EU established an Internal Market which is based on a highly competitive social market economy, aiming at full employment and social progress (Article 3(3) TEU). 
The Treaty establishes the right for companies to provide their services in other Member States. It provides that ‚restrictions on the freedom to provide services in the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person to whom the services are intended’ (Article 56 TFEU). The freedom to provide services may be limited only by rules which are justified by overriding reasons of general interest, provided that these are justified, proportionate and applied in a non-discriminatory way. 
Altogether, in 2014 (latest data available), there were over 1.9 million postings in the EU (representing 0.7% of a total EU labour force), up by 10.3% as compared to 2013 and by 44.4% with respect to 2010. The upward trend followed some stagnation during the years 2009 and 2010. 

The 1996 Directive sets the EU regulatory framework to establish a balance between the objectives of promoting and facilitating the cross-border provision of services, providing protection to posted workers and ensuring a level-playing field between foreign and local competitors. It stipulates a ‚core set’ of terms and conditions of employment of the host Member State which are mandatory to be applied by foreign service providers, which include (article 3(1) of the Directive): maximum work periods and minimum rest periods; the minimum rates of pay, including overtime rates; minimum paid annual holidays; the conditions of hiring-out of workers; health, safety and hygiene at work; protective measures in favour of pregnant women, mothers who have recently given birth, children, and young people; equality of treatment between genders; and other provisions of non-discrimination. 

The 2014 Enforcement Directive has provided for new and strengthened instruments to fight and sanction circumventions, fraud and abuses. It addresses problems caused by so-called „letter-box companies” and increases the Member States’ ability to monitor working conditions and enforce the rules applicable. Inter alia, the Directive lists qualitative criteria characterising the existence of a genuine link between the employer and the Member State of establishment, which can also be used to determine whether a person falls within the applicable definition of a posted worker. The Enforcement Directive also lays down provisions to improve administrative cooperation between national authorities in charge of posting. For instance, it provides for an obligation to respond to requests for assistance from the competent authorities in other Member States within two working days in the case of urgent requests for information and within 25 working days in non-urgent cases. Moreover, the Directive lists national control measures that the Member States may apply when monitoring compliance with the working conditions applicable to posted workers and requires that appropriate and effective checks and monitoring mechanisms are in place and that national authorities carry out effective and adequate inspections on their territory in order to control and monitor compliance with the provisions and rules laid down in Directive 96/71/EC. The full effects of the Directive should become tangible as of mid-2016, as Member States have until 18 June 2016 to transpose the Directive. 
The current initiative does not address any issue touched upon by the Enforcement Directive. Rather, it focuses on issues which were not addressed by it and pertain to the EU regulatory framework set by the original 1996 Directive. Therefore, the revised posting of Workers Directive and the Enforcement Directive are complementary to each other and mutually reinforcing. 

1.2. Consistency with existing policy provisions in the policy area 
The Commission has set itself to work towards a deeper and fairer Single Market as one of the chief priorities for its mandate. The proposal of targeted amendments to the Posting of Workers Directive integrates and complements the provisions set in the Enforcement Directive, which is to be transposed by 18 June 2016. 
In the preparatory consultations led by the Commission with about 300 stakeholders, mostly SMEs, 30% of companies providing services across borders reported problems with existing rules on posting of workers, such as burdensome administrative requirements, paperwork, fees and registration obligations. The lack of clarity of labour market rules in the country of destination is also considered a relevant hindrance to cross-border service provision, especially among SMEs.

At the same time, the Posting of Workers Directive underpins the initiatives for the road transport sector announced by the Commission in its Work Programme 2016. These measures will aim in particular to further enhance social and working conditions of road transport workers fostering at the same time the efficient and fair provision of road transport services. The two million workers engaged in international road transport operations regularly carry out work on the territory of different Member States, over brief periods of time. In this context, the forthcoming initiatives for the road transport sector should contribute to more clarity and better enforcement of the rules applicable to employment contracts in the transport sector and may address the specific challenges the application of the provisions of the Posting of Workers Directive raises in this specific sector. 

A modernised legislative framework for posting of workers will contribute to creating transparent and fair conditions for the implementation of the Investment Plan for Europe. The Investment Plan will provide an additional boost to cross-border service provision and thereby lead to increased demand for skilled labour to be fulfilled. As strategic infrastructural projects are realised across the Member States, companies will require appropriate skills for the job, and adequate conditions need to be set for that demand to be satisfied with adequate supply across borders. A modernised Posting of Workers Directive will contribute to investments taking place within conditions of undistorted competition and protection of workers’ rights. 

The EU Platform against Undeclared Work may positively interact with a view to tackling fraudulent aspects of the phenomenon of posting of workers. Posting is exposed to the risk of being subject of undeclared work practices, such as „envelope wages” or „cash-in-hand”, whereby only part of the salary is paid officially, while the rest is given to the employee unofficially, bogus self-employment, and circumvention of relevant EU and national legislation. The EU has stepped action to fight undeclared work and continues to act against letter box companies. The Commission proposed in April 2014 the establishment of a Platform for the prevention and deterrence of undeclared work. The Platform will bring together the enforcement authorities of all Member States. It will facilitate the exchange of best practices, develop expertise and analysis and support cross-border cooperation of Member States in order to fight undeclared work more efficiently and effectively.