New rules about posted workers and the cross-border supply of temporary workers
The legislature has implemented into national law the provisions of EU Directive 2018/957 with effect from 30/07/2020 amending the Posting of Workers Directive and fundamentally reforming the Posted Workers Act (AEntG). The aim of these changes is to prevent wage dumping and unfair competition.
In order to achieve this goal the scope of the Posted Workers Act has been significantly extended. The scope of working conditions stipulated in generally binding collective agreements is no longer restricted to specific sectors, but must be taken into consideration across all industries. The Act also clarifies that the cross-border supply of temporary workers will also be regulated by the Posted Workers Act. In addition, the Posted Workers Act provides for a two-tier regulatory model where additional working conditions will apply after workers have been posted for a certain length of time.
First tier: Specific working conditions from the first day
Specific working conditions regulated by law or in a national, generally binding and relevant collective agreement must be observed from the first day of posting. In comparison to the previous legal position, in future all regulations
- regarding pay with the exception of occupational pensions (section 2 (1) no. 1, section 2a AEntG) and no longer only regarding minimum rates of pay and
- regarding the health, safety and hygiene of accommodations provided by the employer (section 2 (1) no. 5 AEntG)
must be observed. Section 2b of the Posted Workers Act also states that the costs of posting, such as for travel, accommodation and subsistence, may not be offset against wages.
Second tier: Additional working conditions for long-term postings
For long-term postings extending beyond 12 months, or with proper notification to customs beyond 18 months, the employment contract of the posted worker will no longer be subject to only specific working conditions; instead, with a few exceptions, it will be subject to all working conditions resulting from applicable law or a national, generally binding and relevant collective agreement. Working conditions resulting from a regional, generally binding collective agreement will also apply to long-term postings, provided the collective agreement is relevant (section 13b AEntG).
As the legislature has incorporated comprehensive regulations in section 13c of the Posted Workers Act regarding deducting previous posting periods or posting periods of other employees, it would hardly be possible to avoid applying the additional working conditions in the case of longer assignments. Deduction takes place for example when the posting is interrupted and the worker returns to their home country or when a posted worker is replaced.
The Posted Workers Act has gained in practical importance thanks to the extension of its scope and the obligation to observe generally binding, regional collective agreements. This not only applies to the employers domiciled abroad but also to domestic employers due to subcontractor liability as per section 14 of the Posted Workers Act.
Particular practical difficulties arise in determining those generally binding, regional collective agreements which must be observed for long-term postings. The publicly available Collective Agreements Register is inadequately managed and does not provide legally certain information. For example, the Collective Agreements Register of the Federal Ministry of Labour and Social Affairs was last revised in 2018. There is either no or incomplete information from the German Federal States. On the customs’ website, which is responsible for compliance with the Posted Workers Act, there is only an incomplete list of the generally binding, regional collective agreements. Affected employers and clients are therefore recommended to closely examine the legal situation with regard to collective agreements and if necessary clarify this with customs. In addition to the question of working conditions, it should also be reviewed whether the employee falls under the social security system of the country they are posted to for the time they are posted. Since the end of 2016 there has been a legislative proposal of the EU Commission in this regard, envisaging the harmonisation of social security laws to those of the Posting of Workers Directive. However, no specific steps have yet been taken to implement this.