Beware of high penalties when posting workers abroad

Although the European and Czech regulation of special rights of employees posted abroad is quite old, many employers are unaware of its existence or choose to ignore it arguing that no one will find out. With such ignorance, they are risking heavy fines, as the inspection authorities carry out systematic checks in this area. A case in point may be the EUR 54,000 fine faced by a Slovak company posting its workers to Austria.

The EU Posting of Workers Directive, which has been amended several times since 1996, is the source of the strict regulation. The directive responds to the impact of the free movement of services within the EU on labour relations, in particular the possibility of social dumping in the cross-border provision of services. If a company from a member state with lower levels of worker protection and minimum wages were to provide its services to a foreign customer in a country with higher standards, it would have a major advantage over local suppliers. Its employees, on the other hand, would be disadvantaged in their entitlements compared to their local colleagues. The directive therefore introduces several rules to correct these inequalities.

The first category of obligations is rather formal, in particular the obligation of the posting employer to inform the regional branch of the Czech Labour Office about the posting of the worker and about any changes to or the termination of the posting, as well as the obligation to keep a register of posted workers at the workplace and copies of documents proving the existence of the employment relationship in Czech, i.e., for example copies of employment contracts.

To meet the obligations in the second category, i.e., the obligations to guarantee employees a certain standard of working and pay conditions according to the place of posting, is quite more demanding. These conditions include, e.g., maximum working hours and minimum rest periods, minimum annual leave, minimum wages, mandatory remuneration components, accommodation conditions, and reimbursement of travel expenses. However, foreign standards apply to posted employees only if these are more favourable to them than the terms and conditions of employment under the law of their home country. In practice, this means that employers need to look at the labour law of the country to which they are posting their employees and compare whether it is more or less favourable to the workers. This is often very difficult. Long-term postings are even more complicated - if they last more than a year or a year and a half, the posted employee becomes entitled to an even wider catalogue of local working conditions.

The Czech Labour Code applies to foreign employers posting their workers to the Czech Republic. Other member states have similar regulations, which must be complied with by Czech employers who provide their services there through posted employees. And both in the Czech Republic and abroad, inspection authorities monitor compliance with the rules arising from the directive.

The Labour Inspection Office was very active last year in checking compliance with cross-border posting obligations and is focusing on checks in this area this year as well. Foreign inspection authorities are doing even more: e.g., in a case pending before the Court of Justice of the EU, a Slovak company is fighting a fine of EUR 54 thousand imposed by the Austrian authorities for failing to comply with several obligations, in particular requirements relating to payroll and social security records. Ignoring the obligations associated with posting workers abroad may therefore definitely not pay off.

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