Step 6 - Classification of the Employer
Posting of workers can take place in various scenarios: provision of services, temporary transfer between group companies and hiring-out via temp agencies. Each is governed by its own unique and often intricate regulatory framework.
A clear understanding of these distinctions and their implications for the sending employer is crucial for ensuring compliance.
1. Identify the Scenario
Under the PWD, posting of workers typically occurs in the following scenarios:
A company securing a contract in another country and deploying staff there to fulfill it.
Employees being temporarily transferred within a multinational group of companies.
Temporary agencies assigning workers abroad for specific tasks.
2. Identify the Legal Framework
These scenarios are primarily governed by one of the following core legal frameworks:
Direct-hiring of workers based on a service contract,
Hiring-out via a temp agency: providing workers as a resource,
(Sub)Contracting: sending employees to deliver a specific result, product, or complete a defined task.
Why the Distinction Matters
Misclassifying these arrangements can lead to severe consequences:
Invalid postings and legal penalties
Loss of social security coverage
Chain Liability implications.
Many Member States rigorously scrutinize these arrangements to prevent bogus subcontracting or disguised employment.
Elaboration
Direct Hiring, Hiring-out, Subcontracting
Direct-hiring, hiring-out, and subcontracting involve cross-border postings under the PWD, yet they are legally and structurally distinct. Understanding these differences is crucial for compliance.
Caution
Joint Liability: Key Enforcement for Posted Workers
Joint liability under the PWD regime serves as a crucial enforcement mechanism. Its primary goal is to prevent exploitation in subcontracting chains and guarantee that posted workers receive their rightful entitlements.