Step 3 - The Territorial Scope
Under the Posted Workers Directive (PWD), a posted worker is an employee who is temporarily dispatched by their employer to carry out work in a member state of the EU/EEA/Swiss area, without being fully integrated into the host country labor market.
The crucial next step on this PWD Compliance Roadmap is to determine whether the work arrangement falls within the territorial scope of the PWD.
1. Defining the Territorial Scope
The PWD applies across the 27 EU member states, as well as the EEA countries: Norway, Iceland, and Liechtenstein.
Switzerland is not an EU/EEA member, but maintains its own national legislation that mirrors the PWD, creating a similar framework for posted workers.
For clarity, the term "EU" as used by the Navigator refers to the EU/EEA/Swiss territorial scope.
2. Identifying the Sending State (the Home Country, the country of origin)
The Sending State is the country where
The employer legally operates within the EU’s internal market framework. This is not about the employer's headquarter but the base location of the employer's operations.
The employer initiates the worker's posting. It is not a strict legal prerequisite for the worker to be posted directly from the country where they habitually work.
The worker is subject to social security (often confirmed by an A1 certificate).
The employer is subject to specific legal obligations during the posting, including proper documentation and registration.
The employer must submit mandatory PWD notifications to the host country authorities.
Non-EU based employers
In a strict interpretation of the PWD, the sending state must be an EU member state. However, an increasing number of member states apply PWD rules also to non-EU employers: Belgium, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Hungary, Italy, Latvia, Lithuania, Luxemburg, Poland, Spain, Sweden.
3. Identifying the Receiving State (the Host Country)
The receiving state is the EU/EEA country where
the posted worker temporarily performs their work,
The destination country where the service is being delivered,
The country that benefits from the posted worker’s labor.
Elaboration
Why the Sending State Matters
The sending state determines:
Caution
Anti-Abuse Safeguards
To prevent misuse (e.g. “letterbox companies”), authorities assess:
Tips & Best Practices
Practical Scenarios
When an Austrian company posts a worker to France for a service contract, Austria is the sending state, even if the worker typically works in Hungary.