Atypical “posting arrangements”-another way to staff your projects

In C-18/17 (Danieli and Other), the ECJ clarifies the relevance of the European Law in determining the rules applicable to atypical “posting arrangements”.

The case in the main proceedings

An undertaking established in Italy (D1) has concluded a contract of provision of services with an Austrian undertaking, to carry out assembling work.

To provide the service, (D1) wished to deploy to Austria, Croatian nationals employed by an undertaking established in Croatia (D2), and third-country nationals employed by another undertaking established in Italy (D3). The undertakings D1, D2 and D3 belong to the same group and the workers were transferred by D2 and D3 to D1 (the workers are employed by D2 and respectively D3 and subjected to the social security system in Croatia and respectively in Italy).

D1 has registered the workers with the competent authority in Austria, in the capacity of posted workers. The Austrian authority has rejected the application for confirmation of the posting. Where there is no employment relationship between the workers and D1 (the undertaking has concluded the contract of provision of services), pursuant to the national legislation, a work permit Is required.

Questions referred for a preliminary ruling

The Supreme Administrative Court of Austria, has referred to the ECJ two questions can be summarised as follows:

Whether considering the atypical “posting arrangements”, Articles 56 and 57 TFEU (freedom to provide services) and the Posting of Workers Directive (96/71/EC), preclude Austria from requiring a work permit for:

  • Croatian nationals (inter alia bound by restrictions to the free movement of persons, pursuant to the 2012 Act of Accession).
  • Third-country nationals.

The European Court of Justice ruling

Following the Opinion delivered by AG Wahl, interpreting the Directive 96/71/EC, the ECJ clarifies the type of posting applicable to such atypical arrangements, and in turn, the compatibility with the EU law of the requirement of a work permit (notably with Articles 56 and 57 TFEU and where applicable, the transitional provisions annexed to the 2012 Act of Accession).

The ECJ underlines that the scope of the Directive 96/71/EC is to cover different situations in which workers are transferred from one Member State to another in the context of cross-border provision of services. In context, the directive covers provision of services under a contract concluded between an undertaking and the party for whom the services are intended and the hiring out of workers for use by an undertaking in the framework of a public or a private contract.

In the present case, workers employed by D2 and D3 have been transferred from Croatia and respectively Italy to a user undertaking D1 established in Italy and operating in the host Member State (Austria).

Recalling settled case-law of the ECJ (Martin Meat C‑586/13), the ECJ observes that the three conditions required to qualify such a transfer as hiring out of workers are met.

In regard to the particular case of hiring out of workers by (D3) to (D1), both established in Italy, the ECJ underlines that pursuant to the ECJ’s case law (Commission/France, C‑154/89), the service is provided on the territory of a MS other than the one where the user company (D1) is established, and as a consequence , Article 56 and 57 TFEU are of relevance.

In the same context, the ECJ observes that although the posting of third-country nationals in the framework of a transnational provision of services is not harmonised on the EU level, according to the ECJ settled case law, Austria may not derogate from the provisions of Articles 56 and 57 TFEU (Essent Energie Productie C‑91/13).

In his Opinion, AG Wahl has clarified on the one hand the relevance of the Directive 96/71/EC in determining the type of posting, and on the other hand, in identifying the undertaking making the posting : the undertakings D2 and D3 established in Croatia and respectively Italy, are posting workers to Austria, by means of hiring out such workers to the undertaking D1, established in Italy and operating in Austria, for the purpose of the provision of services, in the framework of a contract concluded between the latter and an undertaking established in Austria.

Pursuant to Articles 56 and 57 TFEU, interpreted in the light of settled case-law, and considering the transitional provisions annexed to the 2012 Act of Accession, the ECJ rules that:

  • The work permit requirement imposed to Croatian nationals can be justified (the referring Court shall ascertain whether the activities carried out justify such a requirement)
  • Articles 56 and 57 TFEU interpreted in the light of settled ECJ case law (Essent), preclude Austria from requiring a work permit for third-country nationals.

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