Posted Workers Directive (Employers’ Guide)

 

The Posted Workers Directive is no longer applicable in the UK. The rights of workers posted to the UK are now based solely on UK law, with new provisions due to come into effect in October 2024 under the Worker Protection (Amendment of Equality Act 2010) Act 2023.

 

 

 

Following the UK’s withdrawal from the EU, the UK revoked the provisions of the Posted Workers (Agency Workers) Regulations 2020 (SI 2020/384) and Posted Workers (Enforcement of Employment Rights) Regulations 2016 (SI 2016/539) on 31 December 2023 by virtue of the Retained EU Law (Revocation and Reform) Act 2023.

The UK is introducing its own domestic legislation to protect the rights of posted workers under the Worker Protection (Amendment of Equality Act 2010) Act 2023, which aims to provide similar protections to those previously offered by the Posted Workers Directive. The Act received Royal Assent on 26 October 2023 with specific provisions expected to come into force in October 2024.

 

UK Legislation Affecting Posted Workers

 

The Worker Protection (Amendment of Equality Act 2010) Act 2023 represents a significant shift in the regulatory landscape for UK employers, particularly in relation to how they manage workers sent abroad, often referred to as “posted workers.” This new legislation came into force as the UK sought to adapt its labour laws post-Brexit, effectively replacing the EU’s Posted Workers Directive with a more UK-centric framework.

The 2023 Act aims to strengthen protections for workers against discrimination and harassment, expanding the scope of the Equality Act 2010. While the EU’s Posted Workers Directive focused primarily on ensuring that workers temporarily posted to another country were afforded similar employment rights to those of local workers, the Worker Protection Act emphasises the responsibility of UK employers to protect their employees, both domestically and internationally, from discriminatory practices and unsafe working conditions.

UK employers must be particularly attentive to the broader definitions of workplace harassment and discrimination introduced by the 2023 Act. The legislation imposes a duty on employers to take proactive steps to prevent harassment, including by third parties, such as clients or suppliers, which is especially relevant for employees working abroad. The Act mandates that employers must demonstrate they have taken “all reasonable steps” to prevent harassment or discrimination, extending their obligations beyond UK borders when employees are posted overseas.

A key change under the Worker Protection Act is the introduction of stronger enforcement mechanisms and penalties for non-compliance. Employers can now be held liable not only for incidents of discrimination or harassment that occur within the workplace but also for failing to prevent such incidents in contexts where their employees are interacting with external parties. This includes situations where employees are posted to other countries for work assignments, making it essential for UK employers to be fully aware of the working environments their posted workers will encounter.

One of the significant risks for UK employers is the potential for increased litigation. The broader scope of protections and the stringent requirements placed on employers to actively prevent discrimination and harassment mean that employers must be diligent in their compliance efforts. Failure to meet the obligations set out in the Act could lead to legal challenges, financial penalties, and damage to an employer’s reputation.

Another consideration is the need for UK employers to update their policies and training programmes to reflect the changes introduced by the Worker Protection Act. It is essential that employers ensure their managers and HR professionals are fully trained on the new requirements, particularly in relation to handling complaints of harassment and discrimination. Moreover, employers should review their contracts and agreements with third parties, such as clients and suppliers in other countries, to ensure these external parties are also aware of the standards expected under UK law when dealing with posted workers.

Employers must also consider the cultural differences and local labour laws in the countries where their workers are posted. While the Worker Protection Act applies UK standards, it is important for employers to understand how these standards interact with local laws. In some cases, UK employers might need to provide additional support or resources to ensure their workers are not exposed to environments that could lead to discrimination or harassment.

 

What is a posted worker?

 

A posted worker is a worker who, for a limited period, will be carrying out a service, or their work, in a different EU member state to the one in which they normally undertake their work.

The posted worker could be assigned to another EU country to provide work under a contract of services under the direction of their employer, where that employer has secured an overseas contract in that country as a service provider.

It may also be that the posted worker is required to undertake work for a subsidiary company or other organisation closely linked to their employer’s business. Further, any worker hired by a temporary employment or placement agency in an EU member state to carry out work for a client in another EU member state falls within the definition of a “posted worker”.

Accordingly, posted workers are different from EU mobile workers in that they are not destined to integrate the local labour market of the host country, rather they remain in that country only temporarily in the context of either a contract of services for their domestic employer or, alternatively, an intra-group posting or a hiring out through an employment or placement agency.

In contrast, EU mobile citizens who seek and find work in another EU member state will be automatically entitled to equal treatment with nationals of the host country in the context of employment rights and working conditions.

 

Does the Posted Workers Directive Apply to UK Employers?

 

The Posted Workers Directive (PWD) no longer applies to the UK or to UK employers since the UK left the European Union (EU) following Brexit. The PWD was an EU regulation that established rules to protect the rights of workers temporarily sent by their employers to work in another EU member state. It ensured that these workers received certain protections, such as minimum wage and working conditions similar to those of local workers in the host country.

Post-Brexit, the UK is no longer bound by EU legislation, including the Posted Workers Directive. As a result, UK employers sending workers to EU countries must now comply with the individual labour laws and requirements of the specific EU country where their employees are posted, rather than relying on a uniform directive like the PWD.

For UK employers, this means increased complexity when posting workers to EU countries, as they must navigate the specific regulations, minimum standards, and compliance requirements of each country. Additionally, UK employers must be mindful of the fact that the Worker Protection (Amendment of Equality Act 2010) Act 2023 has now introduced new domestic obligations, particularly regarding protection from discrimination and harassment, which must be upheld even when workers are posted abroad.

 

Background to the Posted Workers Directive

 

The Posted Workers Directive (‘the Directive’) provides the framework of rules that govern the circumstances in which an employer can temporarily post a worker to another EU member state in order to provide a service.

The Posted Workers Directive affects any EU employer posting workers to another EU member state. While the revised version came into effect in 2018, EU member states had until 30 July 2020 to implement the new provisions and adapt their national laws. Until then, the rules under the original 1996 Directive continued to apply.

In particular, it guarantees that the rights and working conditions of posted workers are protected across each member state by obliging employers to comply with a core set of labour law provisions in the host country – for example, maximum work periods and minimum rest periods, minimum rates of pay and minimum paid annual holidays – throughout the period of the posting.

The original Directive, dating back to 1996, was introduced to address concerns surrounding the use of cheap foreign labour as a means of undermining the minimum local labour laws. In other words, it sought to address the issue of “social dumping” arising from the free movement of workers in the EU, where foreign service providers were able to undercut local service providers because their labour standards were lower.

In particular, the provision that any worker hired by an employment agency in an EU member state to carry out work in another member state falls within the definition of a “posted worker” was introduced to stop foreign companies from hiring Eastern European workers at a cut-price rate to undertake work on a short-term basis in Western Europe.

The revised Posted Workers Directive adopted by the European Council on 21 June 2018, and brought about largely in response to changing mobility patterns in recent years, aims to strike an even greater balance between, on the one hand, the need to protect the rights of workers posted from one EU country to another and, on the other hand, the need to promote the free movement of services and fair competition between posting and local companies.

In particular, the 2018 Directive is designed to:

 

• Offer greater protection to the rights of posted workers by guaranteeing a common set of employment rights in order to prevent unfair treatment and the creation of a low-cost workforce, and
• Create a more level playing field for the cross-border provision of services between foreign and local service providers in a way that is as unrestricted as possible.

 

 

Key provisions of the Posted Workers Directive

 

The 1996 Posted Workers Directive defines a set of mandatory rules regarding the terms and conditions of employment to be applied to posted workers. This is so as to guarantee that the rights and working conditions of posted workers are protected across all EU member states.

Under the directive, even though workers posted to another EU member state are still employed by the posting company and subject to the laws of their domestic country, they are additionally entitled to a set of core rights in force in the host member state.

More specifically, regardless of the domestic law applicable to the particular employment relationship in question, under the Directive all EU member states guarantee workers posted to another member state the terms and conditions of employment of that host country where the work is to be carried out in respect of the following matters:

 

• Maximum work periods and minimum rest periods
• Minimum paid annual holidays
• Minimum rates of pay, including overtime rates
• Conditions of hiring-out of workers, in particular, the supply of agency workers by temporary employment undertakings
• Health, safety and hygiene at work
• Protective measures with regard to the terms and conditions of employment of pregnant women or women who have recently given birth, and of children and of young people
• Equality of treatment between men and women, as well as other rules to prevent discrimination.

 

As such, where the host EU member state affords the posted worker greater statutory rights than those to which that individual would otherwise be entitled to back home, their employer must meet those rights as an absolute minimum. It is always open to an employer to offer its posted workers greater employment rights, but, by law, the employer cannot offer less.

 

Changes to the Posted Workers Directive

 

The principal reforms of the revised Directive can be summarised as follows:

 

• The introduction of the principle of “equal pay for equal work” between posted and local workers from day one, and
• The full application of the host country’s mandatory labour law for assignments exceeding 12 months, extendable to 18 months on notification of the service provider.

 

The revised Directive included the application of universally applicable collective labour agreements to posted workers across all sectors and the equal treatment of temporary agency workers and local workers.

 

Equal pay for equal work

 

The principle “equal pay for equal work” is based on the notion that the remuneration of posted workers should be at the same level to local workers, including bonuses or allowances. In other words, this is designed to ensure that the same work done at the same place should be remunerated in the same way.

While under the 1996 Directive employers are only required to pay “the minimum rates of pay” applicable in the host country, under the revised 2018 Directive employers will be required to guarantee equal “remuneration” to local workers. Broadly speaking, therefore, the core set-requirement to comply with the “minimum rates of pay” will be changed to the core set-requirement to comply with the “remuneration” rules of the host country.

Although this doesn’t necessarily mean that a posted worker will be entitled to an identical salary and benefits package as a local worker – rather equal pay refers to the wage scales and specific allowances applicable due to local legislation or generally binding collective labour agreements – this could include, for example, bonuses, allowances or salary increases according to seniority level, in addition to the minimum rate of pay.

 

Full application of the host country’s law

 

The full application of the host country’s labour law means that after 12 months of working in the host country, or in some cases 18 months, the posted worker will benefit from the full mandatory labour law provisions of that country, rather than just the core provisions. The only exceptions here are the rules relating to the conclusion or termination of employment contracts, as well as supplementary occupational retirement pension schemes.

Although the 1996 Directive defines a posting as temporary in nature, ie; for the limited period of time necessary for a worker to carry out in another member state the work for which they have been posted, there is no limit to its duration. In contrast, the 2018 Directive introduces a time limit of 12 months, extendable only by a further 6 months on the basis of justification by the service provider.

This means that for long-terms postings, ie; beyond 12 or 18 months, the posted worker will become entitled to the same rights and working conditions afforded to local workers where these are more favourable. As such, to avoid these more onerous provisions under the new rules providing the long-term posted worker with an enhanced level of employment protection, employers will need to restrict the length of the overseas posting to an absolute maximum of 18 months.

 

How is the Posted Workers Directive enforced?

 

In the years following the adoption of the original Posted Workers Directive, the rapid growth in the number of posted workers since 1996, not to mention the increase in EU member states, created enforcement challenges at a national level. In particular, real concerns were raised as to whether the Posted Workers Directive provided a sufficiently strong legal framework.

As such, in a move to ensure better protection for the rights and working conditions of employees throughout the EU, and to fight circumvention and abuse of EU rules on posting of workers, the Posted Workers Enforcement Directive (‘the Enforcement Directive’) was introduced in 2014. The aim here was to enhance and harmonise the execution and enforcement of the original Posted Workers Directive, and to ensure that the rules on posting were applied uniformly by employers and national authorities throughout the EU.

The Enforcement Directive imposes strict practical requirements on employers, not least in relation to prior notification of new postings and the tracking of overseas postings, as well as the allocation of a liaison person for labour inspections and the retention of social documents, such as payslips, employment contracts and work schedules. Further, administrative penalties and fines imposed on service providers by one EU member state can now be enforced and recovered in another EU member state.

Overall, these general enforcement measures relating to better information exchange between authorities, efficient controls and stricter sanctioning of non-compliance, are now subjecting employers to greater scrutiny and the imposition of stricter penalties for any failure to comply with the rules on posting workers.

 

Summary

 

The Posted Workers Directive is a European Union regulation designed to protect the rights of workers who are sent by their employers to perform tasks in another EU country on a temporary basis. It sets out the conditions under which these workers should be treated, ensuring they receive the same rights and protections as local workers in the host country. This includes aspects such as minimum wage, working hours, and health and safety standards.

 

For UK employers, particularly after Brexit, the Directive presents several important risks and considerations. Employers must ensure compliance with the host country’s labour laws, which can differ significantly from those in the UK. Failure to adhere to these regulations could result in legal penalties and reputational damage. Additionally, understanding the reporting requirements and documentation necessary to prove compliance is essential.

UK businesses must also be aware of the potential for increased costs due to differences in wage levels and mandatory contributions to local social security systems. Proper planning and thorough understanding of the Directive’s implications are crucial for UK employers sending workers abroad, to avoid legal issues and ensure fair treatment of their employees.

 

Need assistance?

 

DavidsonMorris are specialist employment lawyers and global mobility advisers. We advise employers on the implications of overseas assignments, from employment law compliance and risk management to the provision of support services for employees to help ensure a successful assignment.

If you have a question or need advice on any aspect of the Worker Protection (Amendment of Equality Act 2010) Act 2023, the Posted Workers Directive or deploying personnel overseas, contact us.

 

Posted Workers Directive FAQs

 

What is the Worker Protection (Amendment of Equality Act 2010) Act 2023?

The Worker Protection (Amendment of Equality Act 2010) Act 2023 is a piece of legislation that amends the existing Equality Act 2010 to introduce stronger protections against workplace harassment and discrimination. It places greater responsibility on employers to prevent harassment, including by third parties such as clients or customers. It also include provisions relating to posted workers, replacing the repealed EU legislation ‘Posted Workers Directive’.

 

When does the Worker Protection Act 2023 come into effect?

While the Act received Royal Assent on 26 October 2023, its specific provisions are expected to come into force in October 2024. Employers should use the time until then to ensure they are fully compliant with the new requirements.

 

Does the Worker Protection Act apply to employees posted abroad?

The Act applies to UK employers and their responsibilities towards employees, even when those employees are working abroad. Employers must ensure that posted workers are protected from harassment and discrimination, and that the working environments they are sent to are compliant with UK standards.

 

How does the Worker Protection Act differ from the Posted Workers Directive?

The Worker Protection Act focuses on preventing harassment and discrimination, with specific emphasis on employer responsibility. The Posted Workers Directive, which no longer applies in the UK post-Brexit, was an EU regulation that primarily focused on ensuring posted workers received equivalent pay and conditions to local workers in the host country.

 

What should UK employers do to comply with the Worker Protection Act?

UK employers should review and update their workplace policies, particularly those related to harassment and discrimination. It’s important to provide training for staff and management on the new requirements, ensure robust reporting and response mechanisms are in place, and take proactive steps to create a safe and inclusive work environment.

 

What are the consequences of not complying with the Worker Protection Act?

Failure to comply with the Act could result in legal action against the employer, including claims of harassment or discrimination. Employers could face financial penalties, reputational damage, and an increased likelihood of litigation if they do not meet their obligations under the Act.

 

Do I need to update my contracts with clients or suppliers due to the Act?

Yes, it may be necessary to update contracts and agreements with third parties, such as clients or suppliers, to ensure they are aware of the standards required under the Worker Protection Act when interacting with your employees. This helps protect your business from liability related to third-party harassment.

 

Glossary

 

Term	Definition
Worker Protection Act 2023	Legislation amending the Equality Act 2010, aimed at strengthening protections against workplace harassment and discrimination.
Equality Act 2010	A UK law that consolidates and strengthens anti-discrimination legislation, covering various protected characteristics.
Posted Workers Directive (PWD)	An EU regulation that ensured workers temporarily posted to another EU country were afforded similar rights as local workers.
Royal Assent	The formal approval by the monarch, which is required for a bill to become law in the UK.
Third-Party Harassment	Harassment of employees by individuals who are not directly employed by the company, such as clients, customers, or suppliers.
Compliance	The process of ensuring that a business adheres to relevant laws, regulations, and standards.
Brexit	The UK’s withdrawal from the European Union, which resulted in changes to many regulations, including those affecting employment law.
Discrimination	Unfair or prejudicial treatment of individuals based on characteristics such as race, gender, age, or disability.
Harassment	Unwanted behaviour that creates a hostile, intimidating, or offensive environment for the victim.
UK Standards	Legal and regulatory requirements specific to the United Kingdom, particularly relevant post-Brexit.
Litigation	The process of taking legal action or being involved in a lawsuit.
Reputational Damage	Harm caused to a company’s reputation, which can affect its business operations and relationships with stakeholders.
Transition Period	A designated time frame during which businesses and individuals must adjust to new laws or regulations before they are fully enforced.