Marek Benio, who will chair the 6th European Labour Mobility Congress in Krakow on 14-15 March, offers his commentary regarding the European Parliament’s proposals for the revision of regulations affecting social security schemes for posted workers.
Marek Benio is vice-president of Labour Mobility Initiative Association (LMIA).
After the posted workers directive revision had been finalised, a new, serious dispute among EU member states emerged.
The focus has now moved onto money in social security systems. On the last day of January, a contentious trilogue meeting on regulations regarding this matter took place. Western countries would like to see employees move to their respective schemes as quickly as possible. Amendments to the Regulations on Coordination of Social Security Systems, proposed by the European Parliament, would impose negative consequences that would be borne not so much by employers but rather by workers. The proposal excludes the most vulnerable job seekers from the benefits of coordination. This would lead to the uncertainty of applicable legislation. It would mean that employees, replacing other workers abroad, would be prevented from the benefits of coordination.
Basically, each member state is free to design their social security system. As a consequence, the level of both contributions and benefits differ across the EU. In a cross-border situation only one legislation applies. Which one? As a general rule it’s the legislation of the member state (MS) on the territory in which the work is carried out – lex loci laboris. But a special rule allows for continued application of the same legislation if the worker is temporarily sent to another MS. It makes no sense to divide the worker’s insurance record among different schemes. The same goes for people permanently working in many MSs. It is these two groups of workers that we are especially concerned about.
First of all, in draft Recital 16 in fine of the Preamble to Regulation 883/2004, the European Commission’s and the European Parliament’s proposals replace the concept of being ‘subject to the legislation of the member state’ with ‘a prior link to the social security system’. It means that all people recruited with a view to being posted to another MS, who were not insured under the legislation of the member state of their residence immediately before the start of employment, would be excluded from the benefits of coordination. It will affect those who are most vulnerable such as students, previously unregistered workers and unemployed persons with no rights to social benefits. This proposal also goes against the latest CJEU judgment in C-451/17 Walltopia.
A reference to ‘the legislation of the member state’ is needed instead of a reference to ‘the social security system’. It provides legal clarity in line with recent case law and improves the employability of people who need work the most. This would also provide wording consistent with that of the Regulation.
Secondly, the interpretation of the ‘non-replacement condition’ proposed in the regulation differs from the concept developed in the posted workers directive and it may create unequal treatment of the ‘sent workers’ subject to the sequence in which they are sent. If over-interpreted, it allows only the first worker sent to the same place and the same work to enjoy the benefits of coordination. It imposes negative consequences borne predominantly by workers. The non-replacement condition should only apply after the maximum period regarding the continued application of the legislation of the sending member state elapses. Under no circumstances should the ‘non-replacement condition’ preclude workers from the benefits of coordination.
According to this proposal, a French construction worker who would be sent by their employer to work on a construction site in Germany would be subject to the legislation of the country of origin. But the same worker sent to the same site for the same position, replacing his colleague, would be subject to French legislation. The applicable legislation should not depend on the sequence in which workers are sent, should it?
Thirdly, the new concept of ‘the largest share of work activities’ (Art. 13 of the Regulation), as the only factor determining applicable legislation for persons pursuing their work activities in two or more member states, undermines one of the greatest achievements of coordination – the certainty of law. ‘The largest share of work activities’ may be assessed with certainty only ex post and may change frequently. As a result, workers and their families will be affected by the fragmentation of social security contributions and frequent shifts of applicable legislation.
Let us imagine a bus driver, a travel guide or railroad personnel who pass through several MSs every week on irregular routes, a violinist playing in orchestras based in three MSs, each of them performing concerts in various countries. Taking into consideration that the largest share of his/her work activities should be determined by comparing the average weekly hours worked in each member state where the person pursues an activity, many questions come to my mind. How are they going to record these hours? Who will check it? Where and when should their social contributions be paid?
Last but by no means least, the revision is missing effective tool to tackle the matter of ‘letterbox companies’. These companies operate solely as ‘posting platforms’. They cause political tensions between member states followed by accusations of turning a blind eye when issuing PD A1 certificates. The ongoing revision of the regulation brings about a unique opportunity to provide competent institutions with an easy-to-use practical tool to tackle the problem. We recommend adding new elements when identifying potential ‘letterbox companies’. More attention should be paid to the lack of the real intentions of running a business in the member state of the business’ establishment as well as to personal or financial connections with client(s) in a host member state.
We hope that the trialogue negotiations will lead to solutions that will make the coordination of social security systems fair, transparent and one that employees can trust. We will discuss the issue, searching for the best solutions, with experts and stakeholders at 6th ELM Congress 14-15 March in Krakow.