To prevent and penalise the circumvention of rules on posting of workers in the EU, the European Commission wishes to make the principle of 'joint and several liability' of main contractors and intermediary subcontractors the general rule. This principle is already applied by eight member states plus Norway. The idea is to tackle abuse in cross-border subcontracting that leads to circumvention of the rules. The principle is introduced in a draft directive (seen by Europolitics) drawn up by the staff of Commissioner László Andor (employment and social affairs) to clarify implementation of Directive 96/71/EC on the posting of workers.

A 'posted worker' means any worker who, for a limited period and in the framework of providing services, carries out his work in the territory of a member state other than the state in which he normally works. This phenomenon, which concerns a million European citizens a year, is governed by Directive 96/71/EC, which sets a number of minimum working and employment conditions.

Given certain identified weaknesses, the Commission agreed in the Single Market Act to revise these rules adopted 16 years ago. "Our task is to provide more advice on a number of problems that have caused difficulties and to improve the text's legal certainty so that it will be applied and implemented uniformly across member states," said Andor, on 28 June 2011, at a conference on fundamental social rights and the posting of workers in the single market.

The draft directive addresses this dual objective by proposing tangible measures to clear up certain ambiguities, prevent abuse and make it easier to transfer information. It is being analysed by the European Commission's staff and is expected to be presented on 8 February along with a draft regulation clarifying exercise of the right to collective action in the context of economic freedoms in the single market (see box).

Preventing abuse

The most important change made to the 1996 rules concerns joint and several liability for the entire subcontracting chain.

The text obliges member states to ensure that the contractor, of which the employer is a direct subcontractor, can be considered liable for non-payment of outstanding net minimum rates of pay concerned and/or contributions due to common funds or to social partner institutions and for back payments of outstanding remuneration or any unduly withheld taxes or social security contributions.

Likewise, the main contractor and all intermediary subcontractors may be held liable for these payments, in addition to or in the place of the direct subcontractor, if "they knew or should have known that the subcontracting service provider employing the posted worker did not respect" legal obligations. In addition, member states may hold the contractor, including the main contractor, liable for non-fulfilment of obligations incumbent on the entire subcontracting chain, including payment of minimum salary or contributions due to common funds or social partner institutions. On the contrary, they may discharge the contractor who has assured due diligence or adopt different measures after consulting the social partners.

On national control measures, the Commission permits member states to impose administrative and control requirements to ensure compliance with the rules (eg presentation of contracts, pay slips, etc). In the event of abuse, penalties must be "effective, proportionate and dissuasive".

Clearing up ambiguities

To help the competent authorities, companies and workers determine whether the work situation comes within the directive's scope, the draft directive in its current state contains a non-exhaustive list for information purposes of qualitative criteria/constituent elements that characterise both the temporary nature of the concept of posting and the existence of a genuine link between the employer and the member state of posting. For example, the competent authorities will be able to take account of the place of the company's registered office or the place where the worker is recruited. Where these criteria are not met, the member states in which the activity takes place may – in principle – apply a wider range of national labour regulation measures (including collective agreements or practices instead of the imperative core rules on protection of workers contained in Article 3 of Directive 96/71/EC).

Making information transfer easier

The Commission also suggests measures to ensure that the parties concerned are better informed on the terms and conditions of posting, including in so far as these are set out in collective agreements, through a website and the creation of contact points. It also proposes to facilitate administrative cooperation and mutual assistance between member states, which have been lacking in recent years. The executive proposes to make greater use of the Internal Market Information (IMI) system, defines in detail the role of the member state of establishment and lays the foundations for successful mutual assistance. On the latter aspect, it gives member states a two-week deadline - 24 hours in urgent cases - for responding to a request for information from another state.

Monti II regulation

In parallel with the draft implementing directive, the European Commission will adopt a regulation clarifying exercise of the right to collective action in the context of economic freedoms in the single market, in particular freedom of establishment and freedom to provide services. Referred to as the Monti II proposal, its aim is to clarify exercise of freedom of establishment and freedom to provide services in line with fundamental social rights, in particular the right to strike. According to several informed sources, the proposal is expected to recognise explicitly that there is no inherent conflict between exercise of the right to strike and freedom of establishment or freedom to provide services. It should also recognise the social partners' key role in actions to protect workers' rights, particularly through strikes. The Monti II egulation is also likely to contain a clause establishing an information and notification obligation (an alert mechanism) to be used in the event of major disruptions to the internal market or social turmoil in member states concerned.