Euro Posting


The administrative cooperation imperative

The posting of workers in Europe is a complex phenomenon which at once relates to economic, social and legal issues. It originated in the business strategies, from which we can distinguish two main approaches:
  • Looking for a competitive advantage linked to the skills and human resource management (in particular including scarce or not locally available skills and dealing with labour shortages) – in line with this, transnational provisions of services, intra-group mobility, and more generally workers’ mobility help to boost the economic and social development ,
  • Looking for a competitive advantage based on the lowering of labour and social costs - this approach can lead to strategies of "social dumping".
As highlighted by Jan Cremers, "Nowadays the use of the posting mechanism ranges from normal and decent long-established partnership between contracting partners to completely fake letterbox practices of labour-only recruitment."

Posting of workers: enforcement problems and challenges - Jan Cremers, CLR-expert

These approaches are deployed through a variety of organizational patterns and in several sectors, service is currently provided under conditions which are characterised by the outsourcing of activities; this leads to subcontracting chains which are constantly being recomposed.

Take, for example, the construction sector:
This is a diagram of a construction operation.
Large companies hire qualified workers who are in charge of planning, coordination and control, whereas the development of labour subcontracting leads to a strong fragmentation of small companies or self-employed, where employees are vulnerable from the point of view of employment and working conditions.
These changes are made according to complex means which are difficult to grasp and therefore to control.

“Functional" subcontracting; as “classical" form” in the construction, allows contractors to subcontract specific skills that are not the core business (specialty subcontracting) or to outsource work for peak activity (capacity subcontracting).
“Economic” subcontracting which historically started in the early 1980s is accompanied by the refocusing of the entrepreneur’s job around the activity of coordination and a significant reduction of the size of firms in the sector.
It is the corollary of the intensification and the internationalization of competition. The contractor is a lead contractor seeking to increase its economic efficiency through a constant and maximum competition between subcontractors. The strategy focuses on reducing costs (labor costs, raw materials) to strengthen the competitiveness of the business in the marketplace, taking advantage of the differences between territories. Subcontracting networks today also follow another model that is called "financial subcontracting".
Lentic, HEC - Management School of the University of Liege XVII Congress of the HRMA, 2006).
This leads to the development of intermediaries, such as "project managers, who are players outside of the sector and who make profits solely through their financial ability to place the general employer in a position of contractual subordination".
Labour suppliers appear with propositions for supplying cheap labour wherever it is needed. Channels are developed and organisations are deployed from one country to another. These situations make it even more complex to control and supervise workplaces because decision-making centres are difficult to ascertain and the multiplication of participants in these operations muddles the customary benchmarks used by control services.
Analysis is made even more difficult by the fact that we cannot currently establish a "typical model" and therefore must find new ways to interpret and act.
The strategy behind effective control is thus to better understand the productive organisations at the origin of the posting situation and the legal and economic combinations for providing service taking into account their transnational dimension.
To better understand this "the murky" situation, locate the proper contacts, find the pertinent levers for action and ensure the tracking of these actions and their impact on workers, the control services must be subject to investigations by and cooperation with public authorities in the place where companies are located or in the country which sends posted workers.
This is why project participants share the observation that the effectiveness of control and supervision cannot be separated from the effectiveness of transnational administrative cooperation and the exchange of information between different public authorities.
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National control systems: the difficulty of working together

Which player systems need to act ?

The administrative systems to control working and employment conditions, social protection and taxation, as well as the distribution of roles between the state and its social partners, were built over time according to the economic and social history of each member state.
These national systems are coherent when it is a question of controlling internal situations but are upset by the development of transnational services.
Some labour inspectorates are "generalist"; that is, they are authorised to intervene in all areas: salary, working hours and occupational health and safety (Luxembourg, Poland, Portugal, Romania, France, etc.). In Spain, the labour inspectorate has even greater authority and also covers the social security area.
Others are competent to act only in the field of health and safety at work and thus are not able to check on labour relationships in the context of posting (Denmark).
There are also mixed models, like in Finland, where labour inspectorates are in principle «generalists», but they have strong control measures only in the field of safety and health. As regards monitoring of terms of employment and generally binding collective agreements, the control measures of Finnish labour inspectorates are mainly a written advice to the employer or a report of an offence to police.
In Belgium, one authority is competent to act "social laws and dialog" and another is competent to take care of "well-being at work."
These differences have a direct impact on the exchange of information about the type of checks carried out by host country authorities and therefore on the questions these authorities ask other public authorities through the liaison office.
In a similar way, the ability of the authority questioned to provide an answer will be limited or require long delays if it is necessary to obtain answers from other administrations when the first authority does have the requisite jurisdiction.
In some countries, the social partners have the responsibility to enforce collective agreements (as in Denmark for example), in particular, the minimum conventional wage.
Also in Finland social partners have an important role of making sure collective agreements are applied. Social partners monitor both generally binding collective agreements and other collective agreements which they have signed (Finnish labour inspectorates monitor the observance of generally binding collective agreements too).
Some liaison offices are institutionally attached to administrative authorities who do not have to power to conduct investigations in the field of posting of workers.
In these countries, the establishment of a liaison office and its institutional "scope" remains an open question, as in Denmark, for example, where the social partnership takes precedence.
Finally, certain Member States run into difficulty when attempting to answer requests for information, either because there is no authorised body to carry out the necessary investigations on salaries or the status of companies or workers for example, or because the organisational means of the authorised bodies are limited by an insufficient budget.

How should control practices be coordinated?

- The way field agents do their job depends on both the situations they encounter and their administration's strategic orientation; the transnational workshops have shed light on the plethora of control practices.
They are deployed in all "hard core" fields of the 1996 directive: some member states pay particular attention to regularising salaries, like Belgium, for instance; the priority for others is to combat illegal work, as is the case in France and Luxembourg, or as concerns the "shadow economy" in Finland.
In certain sectors, such as the woodworking industry in France, the absence of qualification of the Bulgarian workers who take care of woodcutting tasks and the multiplication of serious or mortal accidents gave rise to controls.
In addition, actual conditions in the field show that transnational services and labour providers do not stop at the borders of Europe. In countries bordering the European Union, such as Lithuania, Estonia, Portugal or Romania, controlling bodies have been confronted with service providers and workers from "third-party countries" (coming from the Ukraine or the Maghreb, for example) or even, and this is a growing phenomenon, from Southeast Asian countries, as in the case of rose growing in Portugal or public works in Poland.
- They also depend on the national legal framework and the power of control services: collective agreements (whether generally applied or not), worker status, company obligations, etc…
These different national legal frameworks raise question of a shared interpretation of the legal standard in particular of the "hard core" of the directive (minimum wage, status of self-employed, etc…).
The authority to act on a penal or administrative level influences the type of investigations and the type of request for information formulated by public authorities (for example, the possibility of incriminating the “client” in countries where this possibility exists).

Concerning answers from the other side of the border, documents are not necessarily available or may not exist. Certain information cannot be communicated by the authority questioned (in particular if this authority does not have to power to investigate service providers, for example, or in the case of self-employed).
In this case, investigations cannot be continued and the control services of the requesting authority may find themselves blocked and unable to act.
Concerning the impact of controls and a decrease in fraud, participants estimated results to be mediocre; however, this evaluation is "intuitive" and "subjective" and is based on personal experience because we were unable to collect sufficient objective data on this subject.
There are several legal tools, and a first overview of the transnational workshops tends to show that it is generally difficult to bring criminal proceedings to a conclusion, excepting a few spectacular judgements and highly publicised proceedings.
This is because state authorities cannot act against a foreign company unless the company is located on national territory.
Inversely, the authorities of the state sending workers are unable to apply their social rules to the execution of services; they are able only to enforce rules which are applicable on their own territory.
This weakness is exploited by volatile service provider companies who organise their procedures among different Member States, thereby avoiding legal pursuit.
Certain countries have implemented a joint responsibility for principals, and this is a key lever in posting operations for maintaining the possibility of action.
This question is being debated in Europe, in particular during discussions concerning the new directive project
Directive project for application of Directive 96/7/CE

The most effective controls in terms of impact seem to be those related to occupational health and safety, for which labour inspectors have more extensive power to act directly on situations while the company is still present (administrative sanctions).
However, countries like Belgium have acquired know-how in the matter of salary regularisation (€2,017,064 of total salary regularisation in 2011) and the ability to follow cases over time (with Poland, for example).

What means of control can be used in the future?

Member States guarantee the effectiveness of the 1996 Directive on their territory and the protection of workers, but they cannot, however, implement or impose constraints on service providers as concerns controls which interfere with the freedom to provide services (ECJ dated November 23, 1999, C-369/96 and C-376/96, Abade).

The enforcement Directive project for Directive 96/71/CE takes up Articles 9 and 10 of these obligations.
It provides a restricted list of the type of possible administrative measures for exercising control from the host country.
The ECJ has condemned certain practices related to previous declarations, for example, or to constraints set by national frameworks on service providers (Luxembourg, Belgium).
The idea is thus for the authorities concerned to adapt to the changes in productive organisations while respecting the limits set by the European framework, with the imperative of modifying the legal means made available to their agents in the field.
These condemnations upset field agents, who were obliged to reorient their professional practices while facing more complex situations in the field.
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Effective Levers

Nonetheless, the shared analysis of practices opens paths to greater effectiveness.

IMI: a shared tool

All project partner countries use the IMI (Internal market information system) pilot application, which enables identifying the proper administration partner in another country and communicating with this contact on all standard questions related to posting.
IMI improves the speed of information exchange, although project participants point out that the time it takes to receive answers may vary. The time spent for giving an answer may depend on resources and jurisdiction of inspectorate and legislation of a Member State.
IMI also structures the implementation of liaison offices in some countries (Estonia, Lithuania).
However, project participants are equipped in different ways: thus, only public administrations in charge of legal missions have access to IMI.
They are also the main beneficiaries of bilateral cooperation agreements which aim to stimulate and reinforce exchange. Without a doubt, these agreements have improved the quality and speed of answers supplied.
These tools enable searching for information on service provider companies (legal existence, declared activity and number of employees), posted personnel (work contracts, salaries, social security affiliation), applicable regulations in the sending country, etc…
The existence of this type of exchange, in particular when it concerns service provider companies and their possible illegal activity, has awakened the interest of employer organisations: in some Member States, companies are severally liable in case of failure by service providers. Being able to access certain data would enable these companies to secure their subcontracting operations.
- They could either request this data from liaison offices in charge of information or use Article 12 and Preamble 17 of Regulation No. 1024/2012 dated October 25, 2012 to obtain an evolution in IMI functionality:
"Although IMI is primarily a communication tool reserved for administrative cooperation between authorities and is not meant to be available to the public at large, it might be necessary to develop technical means which would allow external participants, such as individual citizens, companies and organisations, to interact with the authorities in order to supply information, recover data or exercise their individual rights. These technical means should include the appropriate guarantees to ensure data protection. To guarantee a high level of security, public interfaces of this type must be elaborated in such a way as to be totally independent from IMI on a technical level; only IMI users should be able to access this system".
- A strong demand from employer organisations has thus emerged for employer access to certain data concerning the legal situation of service providers with whom they are planning to draw up a contract.

Estonia liaison office

Lithuania liaison office

Finland liaison office

New organisations oriented toward administrative cooperation

Investigations are carried out in different ways, depending on whether the authorities act at workplaces in the country of destination for services and posted workers or at the place of origin of companies and workers.
On the one hand, the idea is to control or keep watch over the places where work is done and implement effective means to obtain regularisation or impose sanctions; on the other, the idea is to carry out appropriate investigations to meet requests for information and ensure regularisation.
Understanding how these aspects work together enables implementing better internal coordination in support of administrative cooperation.
Some countries reinforce the pertinence of information exchanged by consolidating the link between the liaison office(s) and the authorities who supervise the workplaces.
This link allows orienting investigations in a more precise way, targeting pertinent issues and ensuring mutual information on the consequences of the controls and regularisations undertaken.
Coordinated organisation enables sorting the different types of requests and treating them in different ways by distinguishing simple requests for information on company registration (which is available on the Internet) from requests to carry out more in-depth investigations on complex cases.
  • "Control units" which are specialised in combating unfair competition in countries like Belgium, for example, and which carry out a sufficient number of controls, increase the pertinence and effectiveness of verifications and reinforce control service expertise.

    Belgium liaison office

  • Networked organisations which are supported by relay labour inspectors, as in Poland, lead to better-quality answers and greater exchange reactivity.

    Poland liaison office

  • Decentralised offices, as in France, or a liaison office included within control services, as in Luxembourg, promote rapid exchange across borders and enable organising coordinated and targeted controls.

    France liaison office

  • In Finland, there have been some preliminary discussions on placing the liaison office to some of the labour inspectorates (Regional State Administrative Agencies) in the future. In addition, the Regional State Administrative Agencies start to use the IMI system by themselves during year 2013 in order to fasten the information exchange process.

    Finland liaison office

  • Romania plans to decentralise IMI users toward regional inspectorships in order to implement a general framework of information exchange which is an efficient as possible.

    Romania liaison office

We thus observe that certain control systems have implemented internal organisations which increase their ability to cooperate with other countries.
"Back-and-forth" operations over time based on "transnational" control practices can then be developed for certain cases affecting the situation of workers; this can involve issues such as ensuring salary regularisation

Better coordination of action by public authorities

As a central issue with respect to the problem of social dumping, cooperation between public authorities (labour, social protection, taxation) is implemented in a more or less formal way within project partners’ countries.
Whether these are inter-institutional arrangements, as in Luxembourg (CIALTI), Belgium (SIRS) and France (DNLF), collaboration agreements, such as in Romania; or more informal means, such as in Finland, Lithuania or Estonia, there is a strong consensus to implement coordination in an operational way.
This requires defining coherent action strategies in terms of goals, targets and expected impact, as well as sharing information and data.

OL 3 Power Plant (Finland)

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Identifying and sharing: tools to support control

Identifying workplaces: the prior declaration on the posting of workers

These declarations enable measuring in a more precise way the number of interventions by foreign companies providing services and their evolution over time, as well as the number of employees the company plans to post.
They enable establishing a list of posting characteristics: nationality, period of posting, sector of activity, worker qualification.
- They also enable locating the workplaces where workers are posted, identifying large operations and collecting data on companies and workers.
- They promote the emergence of control strategies which can be further elaborated by sector of activity, industry, territory or even by operator when necessary, and which help to orient control and supervision operations by developing "targeted" actions, for example

Belgium liaison office

France liaison office

Sharing information and data

The project has enabled the different participants to present their actions, tools and partnerships. Since posting is inherently a cross-border operation, players have attempted to address the situation according to the functions and tools available to them by developing cooperation efforts internationally with their counterparts in other countries or in a given geographical area with the help of other participants (employer and trade union organisations, public administrations).
The effectiveness of controlling bodies implies the ability to query a database established on the EU scale, in which all companies involved in illegal activities would be listed. This would be a first step before accessing a database listing all active companies. The application directive proposal currently under discussion attempts to find a compromise on this issue. Paragraph 6 of Article 6 stipulates: "Member States shall ensure that the registers listing service providers, which may be consulted by their national authorities, may also be consulted under the same conditions by authorities from other Member States".
Social partners in some Member States have pointed out their lack of means to ensure effective assistance to their adherents and even, to non-adherents.
One work axis could therefore concern sharing information between participants who have the same goals, such as the prevention of social fraud and undeclared work, where participants have an interest because this works against fair competition between companies, deprives employees of their rights and decreases the resources required by public administrations to carry out their missions.
National experience has shown that cooperation is already effective in some cases.
In Belgium public administrations combating illegal work (Federal Public Service for Employment, Work and Social Dialogue, Federal Public Service Public for Social Security, National Office of Social Security, National Employment Office) signed a collaboration agreement on June 22, 2012, with employer and trade union organisations in the construction sector with the purpose of attacking social fraud and undeclared work in this area. This agreement follows similar agreements concerning more limited territories.

Convention Hainaut Belgium

In Finland, both the public administrations and social partners have control functions. They have their own duties and jurisdiction, but they all share the same goal: respect of labour, social security and tax regulations. The social partners of construction sector meet different authorities regularly and they act together to guarantee the application of regulations and to fight against grey economy.

Sharing tools

Certain Member States attempt to meet these challenges by implementing databases which are fed by posting declarations from companies involved in cross-border operations (Belgium) or by mandatory tax declarations (Finland).
Belgium has implemented a database of service provider companies and their employees which enables tracking their activities (identity, dates of intervention, workplaces, social security coverage). These data, which are collected through the Limosa interface, are shared among national public administrations, enable answering questions from foreign counterparts and are used by control organisms in the context of posting. They are not, however, available to the public. This tool is remarkably effective and observers cannot help but wonder why it is not deployed toward public administrations in other Member States which share the same goals.
In Finland, a tax administration register centralises the tax numbers attributed to individuals working in Finland on construction sector (national and foreign, permanent or posted). This register is public and can be accessed via Internet. It thus allows a main contractor, a subcontractor or an employer to verify whether the employees present at a construction site are properly registered; if this is not the case, they are not allowed to access the site or work.

Finland liaison office

Controlling access to workplaces

In Finland, legislation related to safety and health at work requires every contractor and employer to ensure that all individuals working at a shared construction site wear a pictorial identification card (name, photo and tax number of the worker, status of the worker as an employee or an independent worker, also the name of the employer). The obligation to wear a pictorial identification card at all shared construction sites has been effective in Finland since 2006. Since 2013 also the tax number (registered into a public tax number register) has been obligatory information in a pictorial identification card.
According to Finnish safety and health legislation the main contractor shall maintain for labour inspection purposes a list of all individuals working at a construction site. This obligation will be reasserted and made more detailed by new legislation which will be effective on 1 of July 2014. In addition, according to new Finnish tax legislation a main contractor has to give to Finnish tax authorities quite detailed information on employers and individuals working at a shared construction site. This obligation will be effective on 1 of July 2014.
The principle of systematic recording of persons present on a construction worksite was also -implemented in Belgium through the law dated December 27, 2012. Joining this requirement to the mandatory wearing of a badge is being discussed.
National registers and badges are two ways to distribute information oriented towards controlling employment and combating the grey economy
Although these tools are already available to control organisms, their effectiveness is greatly improved by collaboration with social partners, as foreseen by partnership agreements in Belgium.
- However, the existence of these registers alone is not enough to guarantee the proper establishment of posting operations. The nuclear power plant construction site of Olkiluoto3 in Finland involved the posting of employees on a large scale over the national territory and destabilised a model operating on the control of companies by trade union organisations. The near absence of Finnish companies affiliated to an employer organisation undoubtedly contributed to the scope of irregularities found at the construction site and played a role in ruling out Areva/Siemens as suppliers for the construction of a new nuclear power plant at Pyhäjoki. OL 3 Power Plant (Finland)

Advantages and limits of a shared tool: A1 (E 101) forms

These are documents delivered by social security administrations in the country where the service provider/posted labour employer is located. They confirm that the employer pays contributions in the country of origin and that employees therefore have social security coverage; i.e., that the employees have been declared.
In some countries, they are the only tool which enables tracking the evolution of posting situations. Here again, a consensus has arisen concerning the fact that the A1 forms are under-declared and thus do not allow a realistic appraisal of the phenomenon.
However, they may be requested by the controlling authorities in a country for execution of work services, and their absence leads to a suspicion of illegal work conditions.
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Keys to improving administrative cooperation:

  • IMI: a structuring tool

  • Toward new organisations oriented along the lines of administrative cooperation

  • Toward better coordination of action by public authorities

  • Identifying and sharing: tools to support control

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