1 The posting of workers
| (33787)
8040/12
+ ADDs 1-3
COM(12) 131
| Draft Directive on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services
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| Legal base | Articles 53(1) and 62 TFEU; co-decision; QMV
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| Department | Business, Innovation and Skills
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| Basis of consideration | Minster's letter of 24 March 2014
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| Previous Committee Reports | HC 83-xxxvi (2013-14), chapter 1 (12 March 2014):
HC 83-xxxiii (2013-14), chapter 1 (12 February 2014);
HC 83-xxvii (2013-14), chapter 1 (15 January 2014);
HC 83-xxiii (2013-14), chapter 5 (4 December 2013);
HC 83-xvi (2013-14), chapter 3 (9 October 2013);
HC 83-iii (2013-14), chapter 2 (21 May 2013);
HC 86-xix (2012-13), chapter 7 (7 November 2012);
HC 86-v (2012-13), chapter 4 (20 June 2012);
HC 86-i (2012-13), chapter 1 (9 May 2012)
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| Discussion in Council | General approach agreed on 9 December 2013
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| Committee's assessment | Legally and politically important
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| Committee's decision | Recommended for debate in European Committee C (decision reported on 12 March 2014)
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Background and previous scrutiny
1.1 Our earlier Reports describe the content and
purpose of the draft Directive which seeks to improve the implementation
and enforcement by Member States of existing rules (agreed in
1996) on the temporary posting of workers to another Member State.
These rules are intended to strengthen the competitiveness of
the internal market by facilitating the provision of cross-border
services whilst also ensuring that posted workers are entitled
to a minimum set of terms and conditions of employment in their
host State (the one to which they have been posted), covering
such matters as working time, annual leave, health and safety
at work and, where applicable, a minimum wage. Despite these
safeguards, inadequate application or enforcement of the rules
on posting has given rise, in some Member States, to accusations
of 'social dumping' and claims that posted workers have exacerbated
wage differentials or undermined local terms and conditions of
employment.[1]
1.2 During the course of negotiations, two issues
have proved to be particularly contentious. The first concerns
so-called control measures — the administrative requirements
that a host Member State may impose on businesses posting workers
to its territory to monitor their compliance with the rules on
posting — which are contained in Article 9 of the draft
Directive. The second concerns the proposed introduction of joint
and several liability as a means of recovering unpaid wages in
the construction sector in cases where there is a sub-contracting
chain (Article 12 of the draft Directive).
1.3 The Government's negotiating objectives were
to resist the possibility for Member States to introduce open-ended
national control measures, under Article 9, as well as the mandatory
imposition of joint and several liability in the construction
sector, under Article 12. It was not satisfied that the general
approach proposed by the Council Presidency as the basis for a
compromise amongst Member States at the Employment, Social Policy,
Health and Consumer Affairs (EPSCO) in December 2013 achieved
these objectives. Whilst the Government accepted that the Presidency
compromise contained some useful safeguards in relation to Article
9, it described the outcome on Article 12 as "not ideal"
and voted against the general approach which was nevertheless
adopted by a qualified majority of Member States.
1.4 Trilogue negotiations involving the European
Parliament, Commission and Council concluded on 27 February 2014
with a provisional agreement on a compromise text which was subsequently
approved by the Committee of Permanent Representatives (Coreper)
on 5 March. The Government told us that, during the trilogue
process, it had sought to persuade the European Parliament to
accept the Council general approach and that it was broadly satisfied
with the compromise agreed, including on Article 12 of the draft
Directive which was the same as the general approach. Our Thirty-ninth
Report, agreed on 12 March, provides further information on the
Government's position.
1.5 We asked the Government to explain why it had
advocated the adoption of a text — the Council general approach
— as the basis for a compromise with the European Parliament
when it had previously rejected the same text, last December,
on the grounds that it was "not in line with UK priorities".
We also asked how the Government envisaged that it would implement
the obligations contained in Article 12 of the draft Directive
on the liability of sub-contractors, and sought further information
on UK stakeholders' views on the outcome agreed in light of their
differing positions on Articles 9 and 12. We recommended that
these issues should be explored in a debate in European Committee
C which should take place before the draft Directive returns
to the Council for its formal approval after the European Parliament's
April Plenary session.
The Minister's letter of 24 March 2014
1.6 The Minister for Employment Relations and Consumer
Affairs (Jenny Willott) writes in advance of the debate —
scheduled to take place on 3 April — to provide the Government's
initial response to questions raised in our earlier Report. She
begins with an explanation of the Government's position on the
trilogue text agreed with the European Parliament:
"As you know, we voted against the draft
measures last December on the understanding that we had a Blocking
Minority and felt we could deliver the UK's ideal position of
a closed list of control measures and resisting joint and several
liability. Of these, joint and several liability has been the
most contentious point in negotiations. This was always likely
to be a difficult issue and although we would prefer the Directive
to have left it to Member States to decide on the most appropriate
enforcement mechanism, the agreement that was reached in December
did at least limit the impact of joint and several liability to
one stage removed in the construction sector and recognised that
Member States may take other appropriate enforcement measures
which enable the worker to enforce their right. Whilst not ideal,
this represents a genuine compromise and we have worked hard to
ensure this does not reach further up the supply chain or beyond
the construction sector. Our stakeholders, both employer and employee
representatives, have recognised this challenge and been supportive
of our overall position.
"Therefore, we think the final draft text
does strike a reasonable balance between the protection of workers
and the desire to limit the administrative burdens on business
and encouraging the single market. We believe that there is enough
flexibility within the text as drafted to implement the Directive
in a manner that is compatible with UK employment law reforms
and growth measures."
1.7 We had previously expressed disappointment that
the Government had failed to provide a summary of the main changes
being sought by the European Parliament during trilogue negotiations
and the Government's position on them, despite being asked to
do so in January. The Minister explains that there was disagreement
within the European Parliament on the approach to be taken to
the draft Directive, and adds that the Government "did not
have sight of the Parliament's proposals until late in the day".
She notes that the European Parliament was keen to expand the
scope of Article 3 of the draft Directive, which sets out a non-exhaustive
list of factors for determining whether a posting is genuine:
"The European Parliament also sought to
set out in Article 3 how Member States should define self-employment
in an attempt to address illegal working and tax evasion. Some
Member States thought that this did not belong in the text at
all, but we supported a concession which removed this to the recitals.
Member States would, of course, have recourse to the appropriate
legislation. We recognise that there have been cases where the
status of 'posted worker' has been used by rogue employers to
undermine statutory rights for those workers and can lead to unfair
competition for genuine businesses. These are legitimate concerns
and formed the basis of the European Parliament's proposed amendments.
We supported a list of indicative elements in Article 3, which
set out measures to establish whether there is a genuine posting
situation.
"The European Parliament also sought more
specific information to be made available, suggesting individual
contracts of employment should be published, but the agreed text
requires only that Governments set out statutory rights. The
original Posting of Workers Directive requires posted workers
from other Member States to enjoy the same basic rights as workers
in the domestic labour market. They do, therefore, benefit from
for example, the National Minimum Wage, working time restrictions
and leave entitlements. As with other workers in the UK they
can contact the pay and work rights helpline and ACAS for guidance
and advice on resolving any issues."
1.8 Turning to Article 9 of the draft Directive,
the Minister continues:
"Whilst the European Parliament sought a
fully open list of control measures in Article 9 (the administrative
requirements employers must adhere to), we have achieved a more
reasonable approach that has limits on the additional information
that can be asked for. It is important that there is clarity
about the appropriateness of control measures in order to ensure
that there is no barrier to businesses being able to make full
use of the freedom to provide services across the single market.
It is also important that, as our employment law reforms come
into force and we continue to review domestic measures, we are
able to apply those equally to posted workers who will benefit
from those protections.
1.9 Finally, the Minister explains that the Government
has not yet had an opportunity to hold substantive discussions
with stakeholders on the outcome of trilogue negotiations, but
has discussed the most contentious provisions — Articles
3, 9 and 12 — which concern whether a posting is genuine,
control measures applicable to businesses posting workers to another
Member State, and joint and several liability. She provides the
following information:
"On 14 March the TUC published a briefing
note for MEPs expressing their disappointment that there are insufficient
detailed measures in the text on bogus self-employment, illegal
working and the use of intermediaries. These concerns stem from
a wider position that posted workers can be used by employers
to suppress wages by undercutting the domestic labour force or
to mask illegal working practices. They are also concerned about
the efficacy of the European Commission's proportionality test
in relation to control measures — i.e. the test of any new
administrative burdens placed on businesses in order to monitor
the flow of posted workers.
"The TUC believes that the ability for Member
States to implement their own measures weakens protection for
workers and are also disappointed that joint and several liability
does not extend to all levels in the supply chain and to all sectors.
Having said that, they are content with the risk-based assessment
of whether a posting is genuine (Article 3) and the record-keeping
measures required of businesses (Article 9). They have indicated
they are keen to work with us to consider the detailed implementation
of the enforcement Directive.
"We know that, in contrast to the TUC, the
CBI are concerned that introducing a novel system of joint and
several liability as an enforcement mechanism for posted workers
could impose significant costs on firms that look to contract
across borders. The EEF [the Manufacturers' Organisation] are
similarly concerned about the cost impact of joint and several
liability, particularly on small business, and have said that
the text is too focused on employer sanctions — there are
no measures covering poor behaviour on the part of posted workers,
for example, in breaching their own health and safety responsibilities,
nor is there any appetite from the European Parliament to address
this."
Conclusion
1.10 We are grateful to the Minister for providing
further information in advance of the debate. We look forward
to hearing how the Government proposes to implement the draft
Directive, particularly Articles 9 and 12; what assessment the
Government has made of its overall impact on employment conditions
for UK workers posted to other Member States, as well as for incoming
posted workers; and whether better monitoring and enforcement
of the rules on posted workers will have significant resource
implications for Government and business.
1 See our First Report of Session 2012-13, agreed on
9 May 2012, which explains why the Commission considers that further
regulatory action is needed. Back
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