Documents considered by the Committee on 22 November 2017 Contents

5Posting of Workers Directive

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Energy and Industrial Strategy Committee

Document details

Proposal for a Directive amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services

Legal base

Articles 53(1), 62 TFEU; ordinary legislative procedure; QMV

Department

Business, Energy and Industrial Strategy

Document Number

(37591), 6987/16 + ADDs 1–2, COM(16) 128

Summary and Committee’s conclusions

5.1In March 2016, the Commission proposed to amend current legislation on “posted workers”—those who are temporarily posted to work in one country by a company based in another Member State—in order to apply the principle of “equal pay for equal work in the same place”, so that businesses posting workers are unable to offer less remuneration to their workers than to local workers. This now includes additional payments such as allowances or reimbursements of expenditure to cover travel, board and lodging, where these are already guaranteed for local workers by law or universally applicable collective agreement. A summary of the proposal and compromise agreement is set out below.

5.2The proposal engendered a great deal of controversy among national parliamentary chambers across the EU and 14 sent “Reasoned Opinions” to the Commission objecting to the proposal on the grounds of subsidiarity (i.e. believing that the EU is not best placed to tackle the identified issue). The number of Reasoned Opinions was sufficient to trigger a “Yellow Card”,20 in response to which the Commission chose to retain its proposal.

5.3The predecessor Committee did not consider the proposal to have breached the subsidiarity principle but considered the Commission’s subsidiarity justification to be weak. It set out its concerns in a contribution sent to the Commission as part of the political dialogue between national parliaments and the European Commission.21

5.4The predecessor Committee last considered the proposal at its meeting of 25 April 2017, rejecting a request for a scrutiny waiver in advance of possible Council agreement on 15 June and reiterating its request for clarity on the Government’s position.

5.5Writing on 20 July, the Minister for Small Business, Consumers and Corporate Responsibility (Margot James) indicated that Council agreement was not reached in June and set out the skeleton of a Government position for the first time: the Government would work constructively to improve clarity and transparency and to get the right balance between the needs of business and the protection of workers’ rights.

5.6A further letter was received from Lord Prior of Brampton on 6 October. In advance of possible agreement at the 23 October Council meeting, scrutiny clearance was requested. At that point, the Government considered that the text struck a reasonable balance between the interests of businesses and workers and, as such, UK policy objectives had been met.

5.7Agreement was indeed reached at the 23 October Council, with four Member States voting against (Hungary, Lithuania, Latvia and Poland) and three abstaining (UK, Ireland and Croatia). Margot James has since written, explaining the UK’s position. While the UK’s policy objectives were largely fulfilled, the UK did not consider that the right balance was struck, particularly in relation to transport provisions. Those provisions require application of this Directive to the road transport sector once related measures22 under the EU’s “Mobility Package”23 have been agreed.

5.8We note that agreement was reached at the 23 October Council meeting but that the UK abstained. As such, the scrutiny reserve resolution was not overridden.

5.9We note too that the Government was largely content with the balance of the compromise but abstained due to the transport provisions. Two issues arise from this. First, we would welcome a clearer articulation of those concerns and their potential impact on the UK. Second, it would be helpful if the Minister could spell out why the UK chose to abstain rather than oppose the agreement.

5.10The outcome remains uncertain as it is subject to negotiations with the European Parliament. We would welcome an update on those negotiations, which are not mentioned in the Minister’s recent letter but are referenced in the Council Conclusions as the next step in the process.

5.11Finally, it is noteworthy that the Council proposes to extend the implementation period until four years after adoption of the Directive. This, in reality, is likely to require implementation by 2022. We would welcome the Government’s view on the likelihood of the UK implementing this legislation post-Brexit should the UK and EU agree the right to continue to post workers to and from their respective territories.

5.12The document remains under scrutiny and is drawn to the attention of the Business, Energy and Industrial Strategy Committee.

Full details of the documents

Proposal for a Directive amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services: (37591), 6987/16 + ADDs 1–2, COM(16) 128.

Background

5.13The current legislation (1996 Directive) regulates three variants of postings: the direct provision of services between two companies under a service contract; posting in the context of a single business; and posting through hiring out a worker via a temporary work agency established in another Member State. The Directive sets the minimum standards for the rights and working conditions of posted workers. These must reflect at least the minimum standards applicable to local workers for a number of specific terms and conditions, such as minimum rates of pay, holiday pay, health and safety at work; and non-discrimination.

5.14While posted workers represent less than 1% of the total EU labour force, the concentration is high in some sectors such as construction. EU-15 Member States represent the destination of the majority (86%) of postings. In 2014, Germany, France and Belgium together received over 50% of total postings.

5.15According to the Commission, the United Kingdom received 50,893 posted workers in 2014 (fifth highest in the EU) and it posted 33,092 in the same year (15th out of the EU-28). The recent trends show a reduction in workers posted from the UK and an increase in those posted to the UK. France, Germany and Spain together represent over 60% of the workers posted to the UK. Over 70% of workers posted to the UK are employed in the construction sector.

5.16In order to tackle what the Commission described as “a structural differentiation of wage rules applying to posted and local workers”, the Commission proposed an amendment to the existing legislation to create a level playing-field for the cross-border provision of services through equal rules on wages applicable to posted and to local workers.

5.17In particular, the Commission proposed that:

5.18In the course of its scrutiny of the proposal, our predecessor Committee was somewhat hamstrung by the Government’s reluctance to set out a clear view. Both the Committee and the then Business, Innovation and Skills Committee called for a clearer analysis from the Government regarding the proposal’s impact on the UK.

The Minister’s letter of 20 July 2017

5.19The Minister (Margot James) indicated that Council agreement was not reached in June, and she set out the skeleton of a Government position for the first time: the Government would work constructively to improve clarity and transparency and to get the right balance between the needs of business and the protection of workers’ rights.

The Minister’s letter of 6 October 2017

5.20The Minister (Lord Prior of Brampton) noted that good progress had been made in respect of clarity and transparency, for example through the proposed addition of text to clarify how to assess whether workers have received the correct level of remuneration and how allowances should be considered. In addition, the Council approach of setting out that additional rights will apply to ‘long-term’ postings is clearer for workers and employers than the approach taken in the original Commission proposal.

5.21The Government had sought to strike a balance between the rights of workers and the needs of business. By way of example, the UK had supported the insertion of text which would clarify that the amount and accuracy of information on national laws and practices provided by the Member State in question could be taken into account when assessing the sanctions on an employer deemed not to have fully complied. This measure underlined the importance of clarity about employer responsibilities in supporting compliance. The UK had been clear that there must be no suggestion that the inserted text would prevent workers getting their full rights.

5.22The Minister anticipated that the Presidency would seek a General Approach at the 23 October Council and confirmed that the Government position was to seek to improve the clarity and transparency of the revision and limit the impact of the proposal on UK businesses posting workers abroad. The Minister sought Parliamentary scrutiny clearance for the UK approach in advance of Council.

The Minister’s letter of 30 October 2017

5.23The Minister (Margot James) explains that agreement was reached at the Employment and Social Policy Council (EPSCO) on 23 October 2017, but notes that the UK abstained. She emphasises that the Directive does not create the same difficult issues for the UK as for some other Member States:

“In the UK, posted workers are covered by the same labour laws, such as the National Minimum Wage, as all other workers. While revisions to the Directive could lead to increased costs and administrative burdens for UK firms posting workers to other Member States, the available evidence shows that the impact on them will be relatively low. Therefore, this Directive has less of an impact on us than others.”

5.24On the UK’s engagement, the Minister says:

“In the lead-up to EPSCO, and in the Council itself, the UK engaged constructively and sought a clear and proportionate text, to strike the right balance in preventing abuses and protecting workers, but whilst providing clarity for business.

“We secured agreement on a number of provisions to limit the burdens on business, including the option to extend a posting, additional transparency requirements, and sanctions provisions that put the onus on Member States to provide accurate information about local rules businesses must follow.”

5.25On the other hand, she says, the proposal failed to strike the right balance between the rights of workers and businesses, particularly in relation to transport provisions. For this reason, the UK chose to abstain. This decision had to be taken on the day of the Council once the Government had sight of the final text.

5.26The Minister summarises the key provisions:

Previous Committee Reports

Sixth Report HC 71–ix (2016–17), chapter 4 (15 June 2016); Thirty-second Report HC 342–xxxi (2015–16), chapter 3 (4 May 2016); Twenty-eighth Report HC 342–xxvii (2015–16), chapter 6 (13 April 2016).


20 Under a system whereby each national parliament has two votes, the European Commission must reconsider draft legislation if at least one third of votes object on the grounds of subsidiarity.

21 Letter from Sir William Cash to Commissioner Timmermans dated 15 June 2016.




28 November 2017