Employment Law05.10.2021 Newsletter
When French employees are posted to Germany by their employer, the provisions of European law on the posting of employees have to be observed. The revised European Posting of Workers Directive was transposed into German law on 30 July 2020 with the reformed German Act on the Posting of Workers [Arbeitnehmerentsendegesetz - AEntG]. Since then, the regulations for posting workers have become even stricter. Violations of the relevant requirements can result in fines. It is therefore worth taking a new look at the essential provisions.
The structure of the AEntG is quite complex. The manifold integration of collective bargaining requirements distinctly increases this complexity. Three broad areas can be distinguished: (1) the application of specific terms and conditions of employment, (2) the civil liability, and (3) the monitoring and enforcement of the application of the AEntG.
Right to essential terms and conditions of employment when posted
The ‘posting of workers’ means the temporary work of an employee in a foreign country (within the EU) at the employer’s instruction, i. e. in a country other than the one in which the employee normally performs his work. The purpose of the employee’s posting is
- to perform a contract for services or work of his employer,
- in the context of personnel leasing, if he is deployed as a temporary worker in Germany,
- or in the case of a release from duties in order to work in a consortium (ARGE [Arbeitsgemeinschaft] = cooperation or merger of companies in the construction industry).
Thus, business trips abroad or contractually agreed employment in case of an on-site hiring in Germany do not constitute a posting of workers. The provision in Section 24 AEntG clarifies insofar the cases in which the Posting of Workers Act does not apply. This clearly defines with respect to the area of the fulfilment of service and work contracts that the Posting of Workers Act only does not apply exclusively in case of a posting of less than eight working days within a working year; this is probably one of the greatest limitations.
Insofar as the assignment of a French employee in Germany constitutes a posting in accordance with the EU Posting of Workers Directive and the AEntG, the French legal provisions fundamentally apply for the duration of the posting. This is because, if the assignment in Germany is only temporary, the usual place of work is still in France. French employers nevertheless have to comply with certain working and employment conditions in Germany for the protection of employees. These are provisions on pay, holiday, working hours, safety conditions at work and protection against discrimination (according to Section 2 AEntG). The French employer must therefore observe provisions such as those of the German Federal Holiday Act [Bundesurlaubsgesetz - BUrlG], the German Working Hours Act [Arbeitszeitgesetz - ArbZG], the German Occupational Health and Safety Act [Arbeitsschutzgesetz - ArbSchG] and the German Anti-Discrimination Act [Antidiskriminierungsgesetz - AGG]. As a rule, this is not critical, as the French working conditions are almost identical to the German ones. In cases of employment in Germany for longer than 12 months, German labour law applies to a greater extent (Section 13b AEntG). Collective agreements also apply in these cases. Here, it is disputed whether this exclusively concerns regionally applicable collective agreements.
The application of collectively agreed working conditions is of far-reaching significance if a posting is made in a specific industry pursuant to Section 4 (1) AEntG (e. g. construction industry, waste management industry). For these decisions, the collective bargaining regulations of the respective industry must be applied.
Joint liability in the event of unfulfilled wage claims
The Posting of Workers Act contains a clear civil liability regime. The basis of this liability regime is Section 14 AEntG: according to this provision, an entrepreneur who contracts another entrepreneur with the performance of work or the provision of services is liable as a directly enforceable guarantor for the obligation of that entrepreneur, any subcontractor or any temporary work agency contracted by the entrepreneur or subcontractor, to pay the minimum wage. In other words, the workers employed by the contractor have a de facto choice as to whether they want to sue their employer, i. e. the contractor or subcontractor or temporary work agency, or the employer's client for unfulfilled claims to minimum wages. Ultimately, the client and the contractor are therefore liable as joint and several debtors.
The liability is limited to so-called general contractors. Therefore, only the contractor who undertakes to provide a service or perform work and does not perform the contract in question using its own labour but uses one or more subcontractors to perform its obligations is liable. The general contractor’s liability is for fault. The scope of liability is limited to the net remuneration, i.e. the general contractor is only liable for the amount to be paid to workers after the deduction of taxes and contributions to social security and for the promotion of employment or corresponding social security expenses. The net remuneration does not include constituent elements of remuneration in excess of the minimum wage pursuant to Section 5 sentence 1 No. 1a AEntG.
The regulation is flanked by the penalty provisions of Section 23 (2) AEntG. According to this provision, whoever has a significant amount of work performed or services provided by contracting, in the capacity as entrepreneur, another entrepreneur, and knows or negligently does not know that that entrepreneur, in fulfilling that contract, will not pay the minimum wage or will not pay it on time, is to be sanctioned. The infringement is deemed to be a regulatory offence, for which a fine of up to 500,000 euros can be imposed.
Pursuant to Section 15 AEntG, employees posted to Germany can file a legal action before the German labour courts to be granted the above-mentioned working conditions and to enforce the claim to minimum pay.
For cases of cross-border personnel leasing, Section 15a AEntG stipulates that the user enterprise must inform the temporary work agency in text form before employing a temporary worker in Germany. In this case, it must also inform the temporary work agency of the essential working conditions that apply to comparable employees at the business of the user enterprise. This serves to ensure that the temporary work agency is aware of its obligations with regard to compliance with the working conditions applicable in Germany for temporary workers deployed across borders.
Strict requirements for notification obligations
The notification obligations and controls pose a considerable practical challenge. In essence, the following applies: in Germany, in sectors which are known to have high rates of undeclared work, a notification obligation exists for foreign workers. In case of a posting in industries pursuant to Section 2a of the German Act to Combat Undeclared Work [Schwarzarbeitsbekämpfungsgesetz - SchwarzArbG], the employer based in France must register its employee posted to perform work or provide services with the customs authority via its online “Minimum Wage Registration Website Portal” [Meldeportal-Mindestlohn]. The notification must be made in writing and in German. It must be accompanied by an assurance of compliance with the obligations under Section 20 of the German Minimum Wage Act [Mindestlohngesetz - MiLoG]. Pursuant to Section 20 MiLoG, the foreign employer is obliged to pay the minimum wage, which in Germany has been 9.60 euros since 1 July 2021. In France, however, the minimum wage is higher, namely at 10.25 euros.
In case of postings in industries with collectively agreed minimum working conditions pursuant to Section 4 AEntG, the employer is obliged to submit the notification and assurance on the basis of Section 18 (1) and (2) AEntG. In this respect, it is always obliged pursuant to Section 8 AEntG to grant collectively agreed working conditions, in particular the payment of a fixed industry minimum wage. In addition to the original construction sector, numerous other economic sectors such as the care sector, building cleaning and security services have been included.
There are exceptions to the notification obligation in the case of a perpetual gross monthly salary of more than EUR 2,958 or a perpetual gross monthly salary of more than EUR 2,000, insofar as the French employer can prove that it has paid this salary for the last full twelve months (Section 1 (1) German Ordinance on the Obligation to Document Minimum Wages [Mindestlohndokumentationspflichtenverordnung - MiLoDokV]. Close family members who work at the employer's business under an employment contract also do not need to make a notification.
If work is carried out at least partly before 6 a.m. or after 10 p.m., in shift work, at several places of work on the same day or exclusively in the form of mobile work, the French employer has to submit an assignment plan to the customs authorities instead of the notification. In the case of exclusively mobile work, the assignment plan can cover a period of up to six months, otherwise up to three months.
In the event of a breach of the notification obligation, the foreign employer faces fines of up to 30,000 euros, and even up to as much as 500,000 euros if the obligations are not met. Furthermore, it faces the exclusion from public contract awards.
In order to enable the customs authorities to effectively check compliance with the conditions, the employer must in all cases record the beginning, end and duration of the daily working time of its employees in a timely manner and keep these records for at least two years.
French companies should obtain appropriate data protection declarations from their employees before posting them. By passing on personal data and, for example, pay slips to the customs authorities for purposes of checking the obligations, they are therewith ensuring their authorisation to do so.
Avoidance of double social security obligation
In terms of social security law, the posting of workers constitutes an exception to the place of work principle for the applicable law. Provided that the assignment of the French employee in Germany does not exceed 24 months and no other person is being replaced with the posting, French social security law continues to apply (Article 12 (1) EC Regulation 883/2004). To avoid a double social security burden, the French employer first of all must apply for an A1 posting certificate in France as proof of social security in the home country. Unlike in Germany, in France the locally competent health insurance fund (CPAM) itself decides upon application on the law that is to be applied and subsequently issues the A1 certificate. If the posting exceeds the above-mentioned period, an exemption can be applied for in accordance with Article 16 EC Regulation 883/2004.
No residence permit necessary
In terms of residence law, the employee posted from France and with French citizenship is fundamentally classed as a foreigner within the meaning of the German Residence Act [Aufenthaltsgesetz - AufenthG], but as a citizen of the Union he does not require a residence permit due to the general freedom of movement within the EU (Section 1 (2) No. 1 German Residence Act, Section 2 (2) No. 1, German Freedom of Movement Act [Freizügigkeitsgesetz - FreizügG]). The employee therefore needs neither a visa, residence permit nor work permit, but is only obliged to provide proof of identity and to register in accordance with European regulations.
Doubts exist as to the reconcilability of some individual provisions of the AEntG with European law, which means that we can expect the ECJ to provide clarification on this soon.
In addition, the European Commission recently called on 24 member states, including Germany, to comply with EU laws on the posting of workers. It wishes to continue enabling the posting of workers in the internal market without unnecessary obstacles for employers, whilst simultaneously guaranteeing the rights of posted workers.