Jean Monnet Chair of EU Labour Law Academic Year Silvia Borelli: an-labour-law Please, check the web site for any materials distributed during the course! Lesson an-labour-law European Labour Law

Freedom of establishment and freedom to provide services The freedom of establishment, set out in Article 49 of the Treaty and the freedom to provide cross border services, set out in Article 56, are two of the “fundamental freedoms”.Article 49Article 56 The principle of freedom of establishment enables an economic operator (whether a person or a company) to carry on an economic activity in a stable and continuous way in one or more Member States. The principle of the freedom to provide services enables an economic operator providing services in one Member State to offer services on a temporary basis in another Member State, without having to be established. These provisions have direct effect. This means, in practice, that Member States must modify national laws that restrict freedom of establishment, or the freedom to provide services, and are therefore incompatible with these principles. Member States may only maintain such restrictions in specific circumstances where these are justified by overriding reasons of general interest, for instance on grounds of public policy, public security or public health; and where they are proportionate.

Freedom of establishment and freedom to provide services Establishment means the actual pursuit of an economic activity by a service provider, as referred to in Article 49 of the FEU Treaty, for an indefinite period and through a stable infrastructure from where the business of providing services is actually carried out. Free provision of services is the exercise of a service activity in a Member State on a temporary basis. It is characterized by the absence of a stable and continuous participation in the economic life of the host Member State by a service provider which is established in another Member State. The temporary nature of the activity in question has to be determined not only in light of the duration of the provision of the service, but also in light of its regularity, periodicity or continuity. The fact that the provision of services is temporary does not mean that the provider of services within the meaning of the Treaty may not equip himself with some form of infrastructure in the host Member State (including an office, chambers or consulting rooms) in so far as such infrastructure is necessary for the purpose of performing the services in question.

Service Directive (2006/123/EC) The Services Directive aims to create a legal framework for ensuring that both service providers and recipients benefit more easily from the fundamental freedoms guaranteed in Articles 49 and 56 of the Treaty. The Directive requires the Member States to simplify procedures and formalities that service providers need to comply with. In particular, it requires Member States to remove unjustified and disproportionate burdens and to substantially facilitate: the establishment of a business, i.e. cases in which a natural or legal person wants to set up a permanent establishment in a Member State, and the cross-border provision of services, i.e. cases in which a business wants to supply services across borders in another Member State, without setting up an establishment there. The Services Directive also strengthens the rights of recipients of services, which can be both consumers and businesses. For instance, it prohibits discriminatory conditions based on the nationality or residence of the service recipient, such as discriminatory tariffs.

FREEDOM OF ESTABLISHMENT FOR PROVIDERS Member States shall not make access to a service activity or the exercise thereof subject to an authorisation scheme unless the following conditions are satisfied: (a) the authorisation scheme does not discriminate against the provider in question; (b) the need for an authorisation scheme is justified by an overriding reason relating to the public interest; (c) the objective pursued cannot be attained by means of a less restrictive measure, in particular because an a posteriori inspection would take place too late to be genuinely effective (art. 9). Art. 14: Prohibited requirements National requirements regarding the access to or the exercise of a service activity that are particularly restrictive to the freedom of establishment are black-listed: they must be eliminated by Member States Art. 15: Requirements to be evaluated Other national requirements that restrict the access to or the exercise of a service activity must be examined and, unless non-discriminatory, justified by an overriding reason of public interest and proportionate, must also be eliminated or amended by Member States

FREE MOVEMENT OF SERVICES Member States shall not make access to or exercise of a service activity in their territory subject to compliance with any requirements which do not respect the following principles: (a) non-discrimination: the requirement may be neither directly nor indirectly discriminatory with regard to nationality or, in the case of legal persons, with regard to the Member State in which they are established; (b) necessity: the requirement must be justified for reasons of public policy, public security, public health or the protection of the environment; (c) proportionality: the requirement must be suitable for attaining the objective pursued, and must not go beyond what is necessary to attain that objective. Member States may not restrict the freedom to provide services in the case of a provider established in another Member State by imposing any of the following requirements: (a) an obligation on the provider to have an establishment in their territory; (b) an obligation on the provider to obtain an authorisation from their competent authorities […] The Member State to which the provider moves shall not be prevented from imposing requirements with regard to the provision of a service activity, where they are justified for reasons of public policy, public security, public health or the protection of the environment and in accordance with paragraph 1. Nor shall that Member State be prevented from applying, in accordance with Community law, its rules on employment conditions, including those laid down in collective agreements (art. 16).

The freedom to provide services includes the right of undertakings to provide services in another Member State, to which they may post their own workers temporarily in order to provide those services there. It is necessary for the purpose of the posting of workers to distinguish this freedom from the free movement of workers, which gives every citizen the right to move freely to another Member State to work and reside there for that purpose and protects them against discrimination as regards employment, remuneration and other conditions of work and employment in comparison to nationals of that Member State (whereas n. 2 Dir. 2014/67/EU).

Reg. 593/20008 (Rome I) An individual employment contract shall be governed by the law chosen by the parties (art. 8). Such a choice of law may not have the result of depriving the employee of the protection afforded to him by provisions that cannot be derogated from by agreement under the law that, in the absence of choice, would have been applicable pursuant to the following rules: 1.the contract shall be governed by the law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract. The country where the work is habitually carried out shall not be deemed to have changed if he is temporarily employed in another country. [work carried out in another country should be regarded as temporary if the employee is expected to resume working in the country of origin after carrying out his tasks abroad]. 2. Where the law applicable cannot be determined pursuant to the abovementioned rule, the contract shall be governed by the law of the country where the place of business through which the employee was engaged is situated. 3. Where it appears from the circumstances as a whole that the contract is more closely connected with a country other than that indicated above, the law of that other country shall apply.

Posting of Workers A "a posted worker" is a worker employed in one EU Member State but sent by his employer on a temporary basis to carry out his work in another Member State. The Posting of Workers Directive (Dir. 96/71/EC) covers employees being sent to another Member State in three situations:Dir. 96/71/EC When an employer posts a worker to another Member States on his own account and under his direction, under a contract which the employer has concluded with the party in the State for whom the services are intended; When an employer posts a worker to an establishment or to an undertaking owned by the group in the territory of a Member State; When the employer, being a temporary employment undertaking or placement agency, hires out a worker to a user undertaking established or operating n another Member States. The employment relationship between the employer and the posted worker must be maintained during the period of posting (art. 1).

Posting of Workers The European Union law has established a core of mandatory rules regarding the terms and conditions of employment to be applied to an employee posted to work in another Member State (whereas n. 13). Member States shall ensure that, whatever the law applicable to the employment relationship, the undertakings guarantee workers posted to their territory the terms and conditions of employment covering the matters indicated in art. 3 which, in the Member State where the work is carried out, are laid down: — by law, regulation or administrative provision, and/or — by collective agreements or arbitration awards which have been declared universally applicable. “Paragraphs 1 to 6 shall not prevent application of terms and conditions of employment which are more favourable to workers” (art. 3 par. 7).

Directive 2014/67/EU on the enforcement of Directive 96/71/EC In order to determine whether an undertaking genuinely performs substantial activities, other than purely internal management and/or administrative activities, the competent authorities shall make an overall assessment of all factual elements characterising those activities, taking account of a wider timeframe, carried out by an undertaking in the Member State of establishment, and where necessary, in the host Member State. Such elements may include in particular: (a) the place where the undertaking has its registered office and administration, uses office space, pays taxes and social security contributions […]; (b) the place where posted workers are recruited and from which they are posted; (c) the law applicable to the contracts concluded by the undertaking with its workers, on the one hand, and with its clients, on the other; (d) the place where the undertaking performs its substantial business activity and where it employs administrative staff; […] (art. 2 par. 2)

Directive 2014/67/EU on the enforcement of Directive 96/71/EC In order to assess whether a posted worker temporarily carries out his or her work in a Member State other than the one in which he or she normally works, all factual elements characterising such work and the situation of the worker shall be examined. Such elements may include in particular: (a) the work is carried out for a limited period of time in another Member State; (b) the date on which the posting starts; (c) the posting takes place to a Member State other than the one in or from which the posted worker habitually carries out his or her work according to Regulation (EC) No 593/2008 (Rome I) and/or the Rome Convention; (d) the posted worker returns to or is expected to resume working in the Member State from which he or she is posted after completion of the work or the provision of services for which he or she was posted; (e) the nature of activities; (f) travel, board and lodging or accommodation is provided or reimbursed by the employer who posts the worker and, if so, how this is provided or the method of reimbursement; (g) any previous periods during which the post was filled by the same or by another (posted) worker (art. 3 par. 3).

Directive 2014/67/EU on the enforcement of Directive 96/71/EC Article 12 - Subcontracting liability In order to tackle fraud and abuse, Member States may […] take additional measures on a non– discriminatory and proportionate basis in order to ensure that in subcontracting chains the contractor of which the employer (service provider) covered by Article 1(3) of Directive 96/71/EC is a direct subcontractor can, in addition to or in place of the employer, be held liable by the posted worker with respect to any outstanding net remuneration corresponding to the minimum rates of pay and/orcontribu­ tions due to common funds or institutions of social partners in so far as covered by Article 3 of Directive 96/71/EC. The liability referred to shall be limited to worker's rights acquired under the contractual relationship between the contractor and his or her subcontractor. Member States may provide that a contractor that has undertaken due diligence obligations as defined by national law shall not be liable.

Temporary Agency Workers Member States may provide that the undertakings referred to in Article 1 (1) must guarantee workers referred to in Article 1 (3) (c) the terms and conditions which apply to temporary workers in the Member State where the work is carried out. The making available of labour is a service provided for remuneration, within the meaning of the first paragraph of Article 57 TFEU, in respect of which the worker made available remains in the employ of the person providing the service, no contract of employment being entered into with the user. It is important to draw a distinction between, on the one hand, the making available of workers and, on the other, a temporary movement of workers who are sent to another Member State to carry out work there as part of a provision of services by their employer, a movement for those purposes being referred to also in Article 1(3)(a) of Directive 96/71 […] a worker who is hired out, within the meaning of Article 1(3)(c) of Directive 96/71, works under the control and direction of the user undertaking. […] the hiring-out of workers, within the meaning of Article 1(3)(c) of Directive 96/71, is a service provided for remuneration in respect of which the worker who has been hired out remains in the employ of the undertaking providing the service, no contract of employment being entered into with the user undertaking. It is characterised by the fact that the movement of the worker to the host Member State constitutes the very purpose of the provision of services effected by the undertaking providing the services and that that worker carries out his tasks under the control and direction of the user undertaking (Vicoplus).

Temporary Agency Workers employees of agencies for the supply of manpower may in certain circumstances be covered by the provisions of Articles 45 TFEU to 48 TFEU and the European Union regulations adopted in implementation thereof [...] owing to the special nature of the employment relationships inherent in the making available of labour, pursuit of that activity directly affects both relations on the labour market and the lawful interests of the workforce concerned. […] an undertaking engaged in the making available of labour, although a supplier of services within the meaning of the FEU Treaty, carries on activities which are specifically intended to enable workers to gain access to the labour market of the host Member State. That finding is justified by the fact that a worker who has been hired out pursuant to Article 1(3)(c) of Directive 96/71 is typically assigned, during the period for which he is made available, to a post within the user undertaking which would otherwise have been occupied by a person employed by that undertaking (Vicoplus).