Greater EU integration can tackle illegal posted workers

Die EU-Kommission will die Entsenderichtlinie reformieren - für eine Gleichbehandlung entsandter Zeitarbeitnehmer. [Chris_Flickr]

The fraudulent posting of workers has become an urgent problem for the EU. France has laid out new measures in the Macron bill to clamp down on its 300,000 illegally posted workers. La Tribune reports.

The impact of the growing arsenal of legislation designed to combat the illegal posting of workers has so far been negligible. French Prime Minister Manuel Valls announced tougher measures as part of his plan to help small businesses. “We need to go further in order to deal with the fraudulent practices that disrupt the balance of many business sectors,” he said.

The problem is significant. A 2013 report by the French Senate estimated the number of illegally posted workers in France alone at up to 300,000.

According to figures published by the French Minister of Labour in February this year, the number of workers legally posted in France had multiplied by ten in ten years, to 230,000.

Of these workers, 19% are Portuguese, 16% are Polish and 11% are Romanian. 37% are employed in the construction sector.

Total disrespect for the European directive

But what is posted work?

Under the 1996 Posting of Workers Directive, a company is allowed to send its employees to work in another EU country, provided the rules of the host country, including those regarding working conditions and pay, are respected. But for the first two years, the worker is still subject to the social protection standards of their company’s country of origin.

As a result, for two years, these workers and their employers are not obliged to make any social security contributions in the host country, which can lead to “social dumping”. Employers also often get around minimum pay requirements by holding back “transport and accommodation costs” from the salaries of posted workers.

The authorities lack the necessary means of inspection to tackle this fraud, and abusers of the system are hard to catch.

According to the French Federation of Builders (FFB), it is common for posted construction workers to work 60 hour weeks but to declare only 35 hours.

They also gave the example of a team of Polish workers at the Flamanville nuclear power station that had no social security, as their employer’s private insurance policy, taken out in Cyprus, was invalid.

Posted workers in their home country

And this is not the worst of it. Some workers find themselves exploited as posted workers without even leaving their home country.

Seekers of temporary work are often the first to suffer from unfair competition from temporary employment agencies headquartered in other European countries. Some of these agencies base themselves in countries with low social security costs, to then recruit staff and post them to their country of residence.

Many examples exist of French workers who are “invited” to join a temporary employment agency based in Luxembourg or Monaco, but then carry out their contract in France under the more relaxed Luxembourgish or Monegasque social security system.

This practice, which affects over 12,000 French temporary workers, is not formally prohibited under the European directive.

Strengthening the legal tools

This problem has been on the political radar of some countries for years, but the answer must be found at a European level.

In December 2013, France’s then labour minister, Michel Sapin, succeeded in having the 1996 directive amended, despite the opposition of the United Kingdom. The major change was to share the responsibility for fraud in the posting of construction workers equally between clients and contractors.

In a case of posted worker fraud, the client that commissioned the construction project would be obliged to pay, or top up, the salaries and social security contributions not paid by the contractors that fraudulently recruited the workers.

France’s new economic growth and activity bill foresees new measures, including requiring all construction site employees to carry a professional card and increasing the maximum fine for fraud from €150,000 to €500,000.

But Prime Minister Valls has vowed to take the reforms even further. He plans to ban “foreign” companies from posting workers to France, when they have “regular, stable and continuous activity in France, or when their activity in their country of origin is limited to management”.

If the employer of posted workers in France refuses to pay the minimum wage, the commissioning client will be forced to pay the difference.

The FFB has called for more comprehensive measures, including site inspections by customs officers.

A new directive on posted workers?

Without greater European integration, the fraudulent posting of workers will remain a losing battle for some EU member states.

Manuel Valls hopes to see the 1996 directive rewritten, an objective he claims is shared by Commission President Jean-Claude Junker. But certain Baltic and Central European states will not see eye to eye.

A new directive would aim to improve cooperation between European social security inspection services, as well as to extend the shared responsibility of contractors and clients beyond the construction sector.

This article originally appeared in La Tribune.

According to a 1996 EU directive, posted workers have to comply with the labour law of the host country.

However, employers pay social contributions in the country of origin, which can create a gap in labour costs and boost benefits for companies.

France has complained about the rising use of posted workers, claiming that it amounts to social dumping.

The number of posted workers in France has soared since the EU enlargement to Eastern countries in 2004. Between 2006 and 2011, their number has multiplied by four, rising from 38,000 to 145,000. They are now estimated at up to 300,000, according to the French employment ministry.

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