This section leverages the Navigator to provide a clear understanding of the European Union's Posted Worker Regime, guiding you through its implications and practical application. However, due to the legislation's intricate nature, expert consultation is highly recommended to ensure compliance.
The Scope of the EU Posted Workers Regime
Checklists:
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Objectives & Concepts
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The Territorial Scope
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Worker Classification
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Work Classification
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Employer Classification
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Recipient Classification
The EU Posting of Workers Directives (PWD) establish a critical regime designed to facilitate the free movement of services within the EU/EEA/Swiss area while protecting workers' rights.
The critical first step before applying the PWD regime and identifying the specific obligations, is to determine whether a given posting falls within its scope.
Obligations of the Sending Employer
Checklists:
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Recap PWD Principles
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Prior Notification
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The Liaison Person
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Remuneration
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Duty of Care
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Record Keeping
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Informing the Employee
The PWD regime protects the rights and working conditions of Posted Workers through a framework of obligations sending employers must adhere to. However, this regime created complex regulatory challenges for these employers.
This step of the roadmap provides structured checklists to navigate the obligations of the sending employer.
Obligations of the Recipient
Checklists:
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Recap PWD Principles
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Verification of Notification
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Record Keeping
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Contact Person Compliance
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Employment Conditions Compliance
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Chain Liabilities
Under the Posted Workers Directive (PWD), the recipient—meaning the company or entity in the receiving (host) state that benefits from the posted worker’s services—has several legal obligations to ensure compliance. These conditions are designed to protect workers and uphold fair competition across the EU.
Special Focus on Equal Remuneration for Equal Work
Under the Directive (EU) 2018/957, the original Posting of Workers Directive (96/71/EC) was amended to introduce the equal remuneration rule. This update replaced the previous "minimum rates of pay" with the broader concept of "Equal Remuneration for Equal Work". It mandates that posted workers receive the same total pay as local workers performing equivalent duties in the host country. This principle ensures fair treatment and prevents wage discrimination for employees temporarily working in another EU country.
Special Focus on Social Security
Within the EU/EEA/Switzerland region, a clear regulatory framework exists to ensure employees maintain social security coverage in only one country during temporary assignments.
The basic rule of this framework is that an employee is subject to social security in the country where they physically perform their work activities. However, there is a significant exception for "Postings": if the posting meets all relevant conditions, the worker can continue to be subject to social security in the country of origin.
Special Focus on Income Taxation & Payroll
An employee's presence abroad can have both corporate and personal income tax implications. The financial impact of (unforeseen) tax liabilities, additional costs and non-compliance damages on the company's profitability can be substantial. Add reputational and financial damage as a result of blacklisting to the equation, and the outcome is even more worrying.
In this section of the Navigator, we will take you through several tax-related issues that you should be aware of.
Special Focus on Audits, Enforcement & Chain Liabilities
The complexity of EU posting rules poses significant challenges for global mobility professionals. While the general principles are clear, their practical application for each unique case often proves highly difficult. Historically, the enforcement of EU posting rules has varied across Member States, but there is a growing consensus for stronger, more harmonized enforcement efforts to protect workers' rights across the EU. In this context, joint liability serves as a crucial enforcement mechanism. It holds both the direct employer (the posting company) and the contracting party (such as a main contractor or client) responsible for specific obligations towards posted workers. This ensures that even if the direct employer fails to meet its duties, the contracting party can be held accountable, providing an additional layer of protection for posted workers.
Key Tips for Success
1. Secure Expert Guidance
The Navigator serves as a tool for understanding the complexities of Global Mobility. While comprehensive, it cannot address every practical situation or legal nuance and must never replace official documentation or professional consultation.
Each situation requires tailored guidance based on specific circumstances. We strongly recommend consulting qualified experts in all relevant countries before making decisions. Use the Navigator as a guideline to navigate the various subjects you'll encounter and as a framework for developing questions when meeting with your advisers.
2. Maintain Vigilant Oversight
Even minor changes in international work arrangements can have significant legal and financial consequences. Protect all parties by implementing these three critical practices:
- Document all work terms and conditions comprehensively at the outset
- Monitor actual working conditions and circumstances regularly
- Respond promptly to any changes in the work arrangement.