Newsitem
2021-04-28
Academic Board Review 2020: Posting of workers and applicable law
Andrej Poruban[1]
The Court of Justice of the European Union (CJEU) continues in a remarkable trend in which decisions directly affect employers and employees. In late 2019 and in 2020, the CJEU issued a trinity of stimulating posting of workers-related judgments. These include case C-16/18 Dobersberger (EELC 2020/1) in which Advocate General Szpunar made a remark about Agatha Christie’s novel Murder on the Orient Express in his opinion. The plot took place on a train which crosses several countries on its journey from Istanbul to Calais. Moving on to the present day, the Administrative Court of Austria sought clarity on the interpretation of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services (PWD) in regard to highly mobile cross-border workers.
The Austrian Federal Railways (ÖBB) awarded a service contract for on-board services (such as cleaning and food and drink services for passengers) for some trains to an Austrian company D. GmbH. Trains departed from Budapest (Hungary) to Salzburg (Austria) or Munich (Germany) and stopped in Vienna (Austria) and after reaching the terminus station returned to Budapest. However, those services were provided by a Hungarian company Henry am Zug via a series of subcontracts involving H. GmbH, which also had its head office in Austria. Henry am Zug used its own workers and workers employed by another Hungarian undertaking, which were hired out to the former in the posting country. All of them had their domicile, social insurance and centre of interests in Hungary and began and ended their shifts in Hungary. They loaded goods in Budapest, where they also had to check the stock and calculate turnover. In fact, everything except the work carried out on the trains took place in Hungary. After an inspection in Vienna, Mr Dobersberger, managing director of Henry am Zug, was found guilty of breaching various administrative requirements of the Austrian implementation legislation of the PWD.
The questions referred to the CJEU can be summarised as follows: Must Article 1(3)(a) PWD be interpreted as meaning that it covers the provision, under a contract concluded between an undertaking established in a Member State and an undertaking established in another Member State, which is contractually linked to a railway undertaking established in that same Member State, of on-board services carried out by salaried employees of the first undertaking, or by workers hired out to it by an undertaking also established in the first Member State, on international trains crossing the second Member State, where those workers carry out a significant part of the work inherent in those services in the territory of the first Member State and where they begin or end their shifts there?
The CJEU concluded that on-board services on international trains do not fall within the scope of Article 1(3)(a) PWD concerning the posting of workers if most of the work is performed in one Member State. Firstly, although the freedom to provide services in the field of transport shall be governed by Article 58(1) of the Treaty on the Functioning of the European Union (TFEU), and not by Article 56 TFEU, on-board services are only incidental, but not inherently linked to, the service of rail passenger transport. Such services fall within the scope of Articles 56 to 62 TFEU, with the exception of Article 58(1) TFEU and, as a consequence, may by covered by the PWD. Secondly, the CJEU introduced an entirely novel concept, never mentioned either in the PWD or in previous case law. It added to the definition of a posted worker the test of ‘sufficient connection’ with the territory of the Member State. That interpretation derives from the scheme of the PWD and, in particular, Article 3(2) thereof, read in the light of recital 15 (very limited provisions or services). Moreover, the same logic underpins the optional exemptions referred to in Article 3(3) and (4) PWD.
The CJEU insisted on ‘sufficient connection’ and developed its reasoning around this concept in the recent ruling C-815/18 Netherlands Federation of Trade Unions (FNV) – v – Van den Bosch (EELC 2021/1). Van den Bosch and two other sister companies that are established in the Netherlands, Germany and Hungary, belong to the same group of companies. All three have the same shareholder. These companies concludeded charter contracts for international transport, for which they used drivers coming from Germany and Hungary. These drivers have employment agreements with the German and Hungarian companies. The charter operations started in the Netherlands and the journeys ended there. However, most of the transport took place outside of the Netherlands. It was in this context that the Supreme Court of the Netherlands posed a number of questions to the CJEU, inquiring as to how, and also, if at all, the PWD is applicable to drivers in international road transport. The CJEU confirmed that the PWD applies to the road transport sector and a worker is posted if his/her work has a sufficient connection with the host country. The existence of such a connection is determined in the context of an overall assessment of factors such as the nature of the activities carried out by the worker concerned in that territory, the degree of connection between the worker’s activities and the territory of each Member State in which the worker operates, and the proportion represented by those activities in the entire transport service. Leading on from this, in 2020 the EU adopted Directive 2020/1057 which explicitly states that the PWD applies to the road transport sector.
Additionally, for more details and focus on the posting of workers in the aviation sector which is characterised by a very mobile workforce reference can be made to the article ‘The (Non) Application of the Posting of Workers Directive to Aircrew: How a lack of legal certainty leads to a failure to apply the posting rules in the aviation industry’ (EELC 2020/44). This piece is based on a research report which the authors Gautier Busschaert and Pieter Pecinovsky drafted in 2019 with funding from the European Commission.
Last but not least, in December 2020 the CJEU also dismissed the actions brought by Hungary (C-620/18) and Poland (C-626/18) seeking the annulment of Directive (EU) 2018/957 amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services. The CJEU stated that those Member States relied on, inter alia, pleas in law claiming the choice of an incorrect legal basis for the adoption of that Directive, an infringement of Article 56 TFEU, guaranteeing the freedom to provide services, and an infringement of the Rome I Regulation.
On a national level the Dutch Supreme Court dealt with an interesting question in the context of the applicable law (EELC 2020/37). In ruling ECLI:NL:HR:2020:958 at stake was whether an employment contract was more closely connected with a country other than that in which the work was habitually carried out. In this case the contract concluded between a Turkish airline and a Dutch co-pilot stipulated that Turkish law governed the agreement, and that Turkish courts had jurisdiction over possible disputes. However, that same contract nominated Amsterdam as the co-pilot’s base residence. The airline terminated the employment contract for business reasons. Termination in case the airline ‘ceases to carry on business or meet its financial obligations’ on a 15-day notice was provided for in the employment contract, but this was not in accordance with Dutch law. In the Netherlands, there is extensive employee protection when it comes to termination of the employment agreement on the employer’s initiative. The employee took the view that mandatory provisions of Dutch law applied to his employment agreement and asked the Dutch court to annul his termination accordingly and summoned the employer to pay various heads of compensation with respect to Dutch law. The airline asserted that Turkish law was applicable and the habitual place of work – the Netherlands – should have been put aside as from the circumstances as a whole the contract was more closely connected to Turkey, so that Turkish law should apply. It put forward several circumstances supporting this claim. Amongst these arguments were the claim that the co-pilot paid his wage taxes and social security contributions in Turkey and that the salary was set in accordance with Turkish law. The Supreme Court applied the CJEU’s Schlecker judgment (C-64/12) and observed that the Court of Appeal had taken into account the same circumstances to deny that the contract was more closely connected to Turkey than to the Netherlands (Article 8(4) Rome I) as it did to decide that the Netherlands was the habitual place of work (Article 8(2) Rome I). It had mentioned some of the arguments that were put forward to support the employer’s claim that the contract was more closely connected to Turkey. However, it had not explicitly taken into account these arguments (where the co-pilot paid his wage taxes, the social security of which country he was covered by and the parameters relating to the salary determination) in its ruling on the matter of whether or not Article 8(4) Rome I would be triggered. Hence, the Court of Appeal had failed to take into account some of the elements suggestive of a close connection to Turkey. The case was referred back to a different Court of Appeal.
[1] Andrej Poruban is an associate professor at Alexander Dubček University of Trenčín, Slovakia.