In the EU, the construction sector is the biggest industrial employer. With more than 18.5 million employed, it represents 6.8% of total employment. The number of posted workers is 1.2 million in Europe and many of them work in the construction sector.
Door: Nuria Ramos Martín
The European social partners of this sector -EFBWW (trade union federation) and FIEC (employers’ organization) recognize that there is a high share of self-employment in the sector and that the figures of cross-border posted workers are growing in the EU. The EFBWW emphasizes that cross-border posted workers are often exploited, as many of them are employed with poor social security arrangements, low wages, no compensation for overtime, and lack of decent accommodation facilities and that self-employment in the sector, often corresponds to bogus self-employment.
In this context of growing misuse of posting of services and deterioration of the social protection of posted workers, two important advancements can be noticed. The first one is the adoption of the new Directive 2014/67/EC aimed to foster the enforcement of the mandatory labour law protection measures set up by the posted workers Directive. The second is a recent ruling for the ECJ, Case C-396/13 (Sähköalojen ammattiliitto), which is clearly recognizing the right of posted workers to be represented by a trade union in legal proceedings -as long as that possibility is allowed by the legal order the host Member State- and establishing a broader definition of “minimum wages” in the context of a posting of services.
Article 56 of the Treaty on the Functioning of the European Union provides for the freedom to provide services. As a result, workers can be sent by their employers to work to another Member State of the EU. The status of posted workers is governed by Directive 96/71/EC. This Directive establishes mandatory rules regarding the terms and conditions of employment to be applied to posted employees. The Directive pursue the aims of guaranteeing that posted workers’ rights are protected and decent working conditions are applied throughout the European Union and avoiding that through “social dumping” foreign service providers can undercut local service providers because their lower social costs.
Recently, the ECJ ruling in the Sähköalojen ammattiliitto case addressed the minimum labour law protection of posted workers in the construction sector. In this case, the ECJ dealt with several questions posed on a preliminary ruling procedure. The dispute was between the Finnish trade union, Sähköalojen ammattiliitto ry, and a Polish undertaking, Elektrobudowa Spółka Akcyjna (‘ESA’). Several Polish workers concluded employment contracts with ESA in Poland and were posted to and ESA branch in Finland, to perform work in the construction site of a nuclear power plant.
In this case the Court ruled that, on the basis of Directive 96/71/EC read in the light of Article 47 of the Charter of Fundamental Rights of the European Union, the “posting” country (Poland) may not prohibit a trade union to bring an action before a court of the “host” country (Finland) in order to recover pay claims for the posted workers, which have been assigned to it in conformity with the law in force in the host country.
In addition, the ECJ hold that the definition of “minimum wage” is for the Members States to determine. However, it elaborated on the different elements to be included (a daily allowance, a compensation for daily travel) or excluded (the cost of workers’ accommodation and meal vouchers) from this definition and, on the other hand, it has stated that – during a period of annual leave – workers should be paid the same as during the reference period for that leave.
Another positive development enhancing social protection of posted workers is the new enforcement Directive 2014/67/EC. This legislation aims to avoid fraud resulting from the location of the posting company in a country with lower social protection by clarifying the rules used to determine whether or not a posting is genuine and temporary. For that purpose, the implementing directive provides for definitions to ascertain, in particular, whether the company posting workers really operates in the country where it is established, and that there is no use of posted workers without application of the minimum labour standards of the host Member State.
This new enforcement Directive has already being criticized by several EU Member States and the EU sectoral social partners for not providing stricter rules against abuses of posting in cross-border provisions of services in the construction sector. The main criticism concerns the absence of provisions governing the social security of posted workers. Indeed, the posted worker -or the posted self-employed- remains affiliated to the regime of the posting company’s home country by virtue of the EU regulations on coordination of social security systems (through the A1 form).
In April 2015, the European sectoral social partners of the construction industry, aware of the weaknesses of the new legislation, have presented to the European Commission some joint practical proposals against social fraud in the cross-border provision of services, including:
- Ensuring a correct implementation and application of the enforcement Directive (2014/67/EC), with the direct involvement of the national social partners;
- Improving the reliability of the A1 forms;
- Improving the collection of social security contributions in case of temporary cross-border provision of services;
- Creating a single European business register number;
- And providing legal clarity as regards the position of temporary agency workers in the framework of “posting”.
The recent financial and economic crisis has significantly increased the competitive pressures on companies in the construction sector and thereby focussing the competition on the «lowest price» of services. This situation, combined with deficiencies in the legal framework for cross-border provision of services, has led to an increase in unfair forms of competition and social fraud, to the detriment of workers and companies in that sector. However, advancements in the social protection of posted workers in the construction sector are envisaged due to the recent adoption of new enforcement legislation; the new jurisprudence of the ECJ in the Sähköalojen ammattiliitto case, reinforcing the protection of posted workers’ access to legal remedies; and the joint actions of the EU sectoral social partners, stating their willingness to collaborate with the European Commission for the implementation of several proposals, in order to ensure a long term sustainable development of growth and employment in the construction industry. These developments at EU level and the proposed innovative measures of the social partners might help to ensure decent working conditions and prevent abuse of posting arrangements in the construction sector in the mid-term.
Further information on social protection in the construction sector in the EU can be found in the reports of the EU funded project BARSORIS-Bargaining for Social Rights at Sector Level: http://www.uva-aias.net/40
Nuria Ramos Martin is Universitair Docent aan de Universiteit van Amsterdam.