Posting of Workers Reform: Imminent Collapse of Cross-border Staff Deployment?

Dr. Patrizia ChwaliszGreta Groffy

In order to implement the Reform Directive 2018/957 adopted by the EU on 28.06.2018 to amend the Directive on the posting of workers, the Federal Cabinet of Germany passed a draft law on 12.02.2020 to implement the Directive into national law. The final draft will now be submitted to the Federal Council. The Implementation Act will come into force on 30.07.2020. The new national regulations are intended to ensure the protection of workers posted to Germany and at the same time protect local wage and working conditions from unfair competition.

Main Changes introduced by the Draft Law
Currently, only the minimum wage rates applicable in the industry are applied to employees of foreign companies in Germany. In the future, all remuneration conditions will apply to posted employees. In detail, this means that overtime rates or even allowances, supplements and gratuities as well as employer-side payments in kind must be paid for all employees working in Germany. In future working conditions regulated in generally binding collective agreements valid throughout Germany will also apply to posted employees - in all sectors. The scope of the posting of workers law also includes temporary workers deployed in Germany.

Posting Costs, Protection of long-term Posted Workers and Exceptions
Furthermore, in future payments for board, travel and lodging (so-called posting costs) can no longer be offset against wages.

The draft law provides special rules for workers posted by their employer to another EU member state for more than 12 or 18 months. These are then considered to be long-term posted employees and should then in principle benefit from all German working conditions (labour laws as well as nationally and regionally generally binding collective agreements). The only exceptions to this are the regulations on company pension schemes and on the conclusion and termination of employment relationships, including post-contractual non-competition clauses.

Initial assembly and installation work under a supply contract by posted workers lasting only eight days within a year shall not be subject to the provisions of the law on the posting of workers. Furthermore, participation in meetings, conferences or trade fair visits as well as company trainings are excluded from the scope of application, provided that these do not last longer than 14 days without interruption or longer than 30 days during a twelve-months period.

Conclusion and Practical Advice
In Germany, the customs authorities will check that the pay conditions laid down in the generally binding collective agreements are complied with. Around 1,000 new employees will be hired for this purpose. The existing website zoll.de is to be expanded so that foreign employers can obtain comprehensive information before they send employees to Germany. Similarly, employers in Germany who post employees to other EU member states are forced to inform themselves about the labour law provisions of the respective member state, e.g. via the official national websites, in order to comply with EU and national law in future.

In summary, it is fair to state that the posting of workers will in future be associated with further challenges and a high administrative burden. We will monitor the developments and keep you informed about the course of the legislative procedure in Germany as well as the outcome of the infringement proceedings brought against the Reform Directive (Ref. C-620/18 and C-626/18).

Assisted by Julia Barfs.

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