Directive 96/71/EC, commonly known as the Posted Workers Directive, was enacted in 1996 and sets out rules for the posting of workers across the EU Member States, in line with the free movement of services. Through this framework, workers are usually temporarily sent to another EU Member State by their employer. The Directive establishes minimum working and employment conditions for the workers being posted in another country.
The EU Court of Justice delivered a significant but controversial judgement in case C-540/22 – SN and Others v Staatssecretaris van Justitie en Veiligheid. In this judgement, the Court analyses the posting of third-country nationals under the framework of the Posted Workers Directive. In SN, the Court allowed the possibility of certain restrictions, acknowledging that these could potentially have an impact on the fundamental principle of free movement. A balance is to be struck between the enforcement of a Member State’s immigration laws and the protection of workers’ rights.
This case concerned the posting of Ukrainian Workers by a Slovakian company before Russia’s invasion of Ukraine. At that time, work and residence permits were a necessity for Ukrainian Nationals to be employed within the European Union. The workers in question were in possession of temporary residence permits issued by Slovakia. Noteworthy that today, Ukrainians can freely move within the EU through the Temporary Protection Directive.
The Slovakian company relied on Directive 2014/67/EU which allowed it to legally declare the posting of its workers to the Dutch Authorities. However, it later transpired that construction activities for which the workers were posted for were to take longer than originally planned. Since the employees were to reside in the Netherlands for a longer period, fixed-terms residence permits were issued by the Dutch Authorities, but these were not sufficient to cover the entire duration of construction project.
The company therefore initiated annulment proceedings based on Article 56 and 57 TFEU which govern the free movement of services. It challenged the Dutch obligation requiring a permanent residence permit, the duration of their validity, and the processing fees for such permits. The questions referred to the CJEU dealt with the aforementioned.
Regarding the derived right of residence for third-country nationals vis-à-vis Article 56 and 57 TFEU, the Court referred to C-673/16, in which it was held that such right of residence is linked to the concept of EU citizenship. This derived right was only applicable in relation to third-country nationals; being natural persons and EU citizens. Therefore, in this case, the service provider is a legal person and cannot enjoy such derived right of residence – this derived right cannot apply to undertakings posting workers in other Member States.
Furthermore, the residence permit requirement did constitute a restriction on the free movement of services, which could only be justified by overriding reasons of public policy, so long as the aim is legitimate and proportionate. Two justifications were accepted by the Court:
- Facilitation of the exercise of the right of legal certainty for posted workers
- On grounds of public policy, in which case the proportionality test is carried out by the National Authorities.
The limited duration of the work permit, along with the additional processing fees were deemed to be consistent EU Law. While the Court partially upheld the reasoning behind the restrictions imposed by the Dutch Authorities vis-à-vis the posting of third-country nationals, it still went on to uphold all the measures put in place by the Netherlands.
The EU legal framework for posted workers underwent significant reform, with the aim of strengthening the application of the Directive. Directive 2014/67/EU, the Enforcement Directive, was introduced to enforce better the Posted Workers Directive. The Enforcement Directive specifically addresses the issues of fraud, circumvention of rules, and communication of information between the relevant Member States. The Directive aims to better enhance compliance by also providing a list of national control measures which can be applied within the Member State. This was followed by Directive 2018/957 which was brought into force to further strengthen labour protections.
In theory, the posting of workers is a lawful practise, as confirmed through the Vander Elst Judgement. The Vander Elst principle holds that third-country nationals who are lawfully and habitually employed in one Member State need not have a working permit when posted in another Member State. However, problems arise when the Directive is resorted to with the aim of bypassing national immigration laws, in breach of this fundamental principle.
In the SN Case, the issue related to the lack of evidence to show whether the Ukrainians were habitually working in Slovakia, and whether the posting was genuine. Although the CJEU did not explicitly refer to the Vander Elst principle, it still stated in para. 61 that the Directive is “without prejudice to national laws relating to the entry, residence and access to employment of third- country workers”.
The Court’s acceptance of the overriding reasons which were justified as being proportionate also highlight its awareness of the complexities linked to the posting of third-country workers. A breach of the Vander Elst principle would in fact constitute a threat to the country’s public policy and security, and workers could suffer great consequences if they are not habitually employed in the sending Member State.
Despite the steps taken to reform the Posted Workers Legal Framework, it can still be argued that third-country nationals are not sufficiently covered. Gaps persist in Directive 2018/957/EC, and this means that even if it had been brought into force prior to the case in question, the outcome would have likely remained unchanged, despite concerns about the vulnerabilities within this category of workers. In fact, the Commission’s stance that no further reforms are required suggests that national authorities are being relied on when it comes to enforcement, leaving potential issues relating to third-country national unaddressed.
Rachel Lowell
Trainee
Mifsud & Mifsud Advocates
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