How will the revision of the Posted Workers Directive
impact your assignments?
.
Introduction
With this brochure, Deloitte intends to keep you updated on the recent
revision of the Posted Workers Directive.
The topic of posted workers (i.e. “assignees”, “seconded workers”) and
the Posted Workers Directive has always been under the attention, but
has recently become an extremely hot topic covered by all media. The
information published in the press is however not always fully accurate
or complete and may lead to confusion on the impact for employers and
employees. Through this brochure, Deloitte will clarify the state of affairs
and share all relevant updates on the subject.
You will find an overview of the current EU Posted Workers Directive as
well as an assessment of its revision.
Stay tuned for future updates.
Current EU legislation on Posted Workers
Posted Workers Directive: host state’s “core set of labour law” applies
When assigning employees within the EU, the Posted Workers Directive
(“PWD”) obliges employers to comply with a “core set” of labour law
provisions in the host country during the assignment period.
This hard core consists of national laws and collective agreements regarding:
• Minimum wage,
• Working time,
• Vacation,
• Health and safety,
• Conditions of hiring out workers,
• Protective measures for pregnant women or women with young children,
• Equal treatment between men and women,
• Other local public policy provisions.
Employees (regardless whether the employees are assigned from an EU or
non-EU country) assigned to Belgium are subject to the Belgian terms and
conditions of employment that are sanctioned by criminal law. In practice,
this means that almost the entire Belgian labour legislation (termination rules
excluded), including all generally binding collective agreements, is applicable to
assigned employees as of day one of their assignment to Belgium.
Posted Workers Enforcement Directive: better monitoring of employers’ compliance
Since many EU countries continued to struggle in enforcing those minimum employment standards and non-
compliance led to unfair competition, action was taken at European level in 2014 with the adoption of the Posted
Workers Enforcement Directive. The latter aims to improve local compliance with the core set of labour law,
through general enforcement measures and specific new employer’s obligations. The latter mainly concern
prior notifications of posting, the appointment of a liaison person for the authorities and the keeping of social
documents.
In Belgium, this was implemented through:
• Introduction of criteria to better define genuine postings;
• The obligation for foreign employers to keep specific social documents available (e.g. employment agreement, payslips,
and time-sheets);
• There are however some exemptions to this obligation (based on the length and/or the nature of the activity) for a
12-month period. The employees of the international transport sector (cabotage operations on the Belgian territory
excluded), the employees seconded to Belgium for the initial assembly and / or first installation of a property as well as
specialized technicians are nevertheless not covered by these exemptions.
• The obligation for foreign employers to appoint a contact person with whom Belgian authorities can liaise (since October
1, 2017, the name of the liaison person has to be mentioned in the Limosa declaration);
• A specific joint liability regarding payment of remuneration in construction sector;
• Specific sanctions against violations of the above rules.
Revision of the Posted Workers Directive:
“equal pay for equal work”
EU Commissioner Thyssen proposed to revise the PWD in order to ensure a level playing field between
foreign and local employers in the host country. On 21 June 2018, the EU adopted a new directive revising the
Posted Workers Directive of 1996.
The aim of the revision is to facilitate the free movement of services whilst ensuring fair competition and respect for
the rights of posted workers. More specifically, the revision aims at ensuring fair wages and a level playing field in the
host country between posting and local companies whilst also maintaining the free movement of services.
The essence of this revision is:
• the principle of “equal pay for equal work” between posted and local
employees;
• the full application of the host country’s mandatory labour law for
assignments exceeding 12 months (extendable to 18 months on the
basis of a motivated notification) with the exception of termination rules
and supplementary occupational pension schemes;
• the application of universally applicable collective agreements to
posted workers across all sectors;
• the equal treatment of temporary agency workers and local workers.
What is the impact for employers? Equal pay for equal work
The principle “equal pay for equal work” implies that
The revision of the PWD will have an impact for the remuneration of assigned workers should be at the
employers assigning employees to the European same level of the salary of his local peers, including the
Economic Area, i.a. depending on the host country same additional salary elements such as bonuses or
concerned. allowances. At the moment, an employer is only obliged
to comply with the minimum wage.
No impact for social security
We draw your attention to the fact that the revision At the moment it is still unclear what “equal pay” exactly
of the PWD does not have any impact on the EU will mean. Based on our analysis of the changes, “equal
social security coordination rules provided for by EU pay” does not imply that a posted worker is entitled
Regulation 883/2004. Based on its provisions, an to an identical salary and benefits package as his
employee remains covered by the home social security local colleagues (cf. group insurance, hospitalization,
scheme during a period of maximum 5 years company car, lunch allowances, etc.). Equal pay rather
(with A1 form as proof). This remains unchanged. refers to the wage scales and specific allowances
applicable due to local legislation or generally binding
collective agreements. For some countries, this is
nevertheless a substantial change compared to the
current obligation to comply with the minimum wage
level. In the documents that are published today the
following elements are mentioned: seniority, 13th
month, Christmas bonus, allowance for bad weather,
mobility allowance, pay supplement for special works,
allowance for wear of tools, allowance for difficult work,
meal vouchers or other type of vouchers, etc.
It will be up to the member states to specify in a
transparent way the different elements of how
remuneration is composed on their territory. Generally
speaking, the core set-requirement to comply with the
“minimum wage” has been changed to the core set-
requirement to comply with the “remuneration” rules of
the host country.
For employees assigned to Belgium, there will be no
substantial changes. Considering that Belgium has
already implemented the Posted Workers Directive in
a very broad sense by determining almost the entire
Belgian labour law as applicable to posted workers, the
revision will have a minimal impact.
Full application of the host country’s mandatory Example – Assignment to the Netherlands
labour law after 12 months Currently, as of the first day of assignment to the
After 12 (or 18) months of assignment not only the core Netherlands, the mandatory core terms of Dutch
set, but the full mandatory labour law provisions of the employment law will be applicable. These (Dutch)
host country will be applicable with the exception of employment terms include, amongst others, maximum
the termination rules and supplementary occupational working hours (general ground rule: max 12 hours per
retirement pension schemes. shift; max 60 hours per week), minimum wage (EUR
1,578 gross as of 1 January 2018), minimum holiday
Also here, the impact for assignees to Belgium will allowance (a gross payment of a minimum of 8% of the
be considerably low, as in principle almost the entire annual salary) minimum number of holidays (20, based
Belgian labour law applies. For assignments to other on fulltime employment). These employment terms or
countries, the impact can be substantial as we can see conditions can also be included in (universally binding)
in the next example collective labour agreements.
Under the future rules, in the first 12 (or 18) month-
period, the remuneration to be paid to a posted
worker in the Netherlands might be higher than the
current entitlement to merely the minimum wage and
minimum holiday allowance (cf. paragraph above). If
the specific minimum wage scale and certain specific
allowances (such as an overtime allowance, seniority
allowance, etc.) are included in a (universally binding)
collective labour agreement, the minimum wage scale,
overtime allowance and seniority allowance will already
have to be paid to the employee.
An example: A Spanish engineer (of 55 years old) is
assigned to the Netherlands for a period of one year.
A (universally binding) collective labour agreement is
applicable with the following relevant rules included:
• the relevant wage scale minimum for his job is EUR
1,800 (including holiday allowance);
• an overtime allowance that in a given month
amounts to EUR 100;
• a seniority allowance that in a given month amounts
to EUR 250.
In the current situation, the Spanish engineer is entitled
to the relevant wage scale minimum (in total: EUR
1,800). In the future situation, he would also be entitled
to an overtime and seniority allowance and, therefore,
his salary would amount to EUR 2,150.
After the 12 (or 18) month-period, all of the mandatory
Dutch labour law provisions will have to be complied
with. This can include for instance leave regulations:
for example, the Spanish engineer might be entitled
to specific age-related leave. Premiums for research &
developments funds might also have to be paid by the
sending employer. Please note that the Dutch dismissal
laws are in principle excluded.
Assignment timeline
1st year 2nd year 3rd year 4th year 5th year 6th year 7th year 8th year
Social
security Up to 5 years: home state social security After 5 years: host state social security
considerations
12 months:
core set of Possible
Labour law
labour law extension of 12 or 18 months: all the mandatory local labour law provisions have to be complied with,
considerations
including 6 months termination rules and supplementary occupational retirement pension schemes excluded*
equal pay
*Do note that if the contractually chosen labour law is more beneficial to the employee, this will continue to be applicable.
Other PWD related employers obligations
In a move to further guarantee that the rights and working conditions of
employees are protected throughout the EU, employers today face greater
obligations and liabilities in most Member States with respect to their
international assignees and business travelers.
Since the implementation of the Posted Workers Enforcement Directive, strict
compliance requirements are being imposed on employers, such as the prior
notifications of posting, retention of social documents, appointment of a liaison
person for the authorities, etc. These new employer obligations are increasingly
under the spotlight, with greater scrutiny and strict penalties being imposed for
failures with compliance.
We can refer you to our Posted Workers Directive Webtile for a more
comprehensive analysis.
Policy Timeline
1996 1999
Adoption of the Posted Workers Directive
Posted Workers implemented into
Directive national legislation
2018 2016
Adoption of the revised Enforcement Directive
Posted Workers Directive implemented into national
legislation
2016 2014
Proposal for revision Adoption of the
of the Posted Enforcement
Workers Directive Directive
2020
Revised Posted Workers Directive
implemented into national legislation
Way forward
The transposition and application of the revised directive is currently foreseen 2 years after the
entry into force.
This new legislation will consequently be implemented throughout the EU as of 2020.
Deloitte will continue to closely monitor the ongoing legislative process as well as the related
developments and keep you posted of any update in that regard.
Deloitte’s recommendation is to take advantage of the implementation period of 2 years to:
• Define a strategy on how to tackle the PWD topic within the company or group of companies
• Follow-up on the national implementation in countries where you have assignees and assess
the revised rules’ impact on remuneration policies for assignees in various sectors and
professions
• Assess the impact of the reduced secondment period from a labour law point of view on
assignment policies
• Have a 360° view on the PWD impact for assignees and business travelers (host country
legal compliance, registrations, liaison persons, social documents, …), considering the policy
framework is getting stricter in the near future
Key Contacts
If you have any questions concerning the items on this website, please
contact your labour and social security law team at our Deloitte office in
Belgium:
Nicolaas Vermandel Filip Van Overmeiren
Partner Director
Global Employer Services Global Employer Services
Deloitte B elgium Deloitte Belgium
M: +32 498 10 22 11 M: + 32 486 90 11 98
nvermandel@[Link] fvanovermeiren@[Link]
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© June 2018 Deloitte Belgium
