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Posted Workers Directive – What is new in 2020?Copyright © 2020 Deloitte Development LLC. All rights reserved. 2

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Posted Workers Directive –What is new in 2020?

29 July 2020


Your speakers


Speakers

With you today

Christine leads the Swiss Employment Law Practice of

Deloitte in Switzerland. She joined as a Senior Manager

in March 2020. Christine is a Swiss-qualified attorney-at-

law with over 11 years of professional experience. She

advises Swiss and international clients on all public and

private employment law matters and has an in-depth

knowledge of immigration law.

Christine BassanelloHead of Employment Law

Deloitte Legal

David has 20 years of experience in the area of

international corporate and individual taxation planning.

He specialises in addressing the complex compliance

needs of a cross-border workforce with varied elements

of compensation.

David WigersmaPartner

Deloitte Global Employer Services

Harry is a Senior Manager within the Global Employer

Services team of Deloitte in Switzerland. He is leading

our Posted Workers Directive (PWD) offering and is co-

leading our international social security team in

Switzerland. Harry has more than 9 years of experience

with Deloitte Belgium and Switzerland. He supports

companies on global mobility related matters and is

specialised in coordinating global mobility programs. He

advices on tax, social security and PWD related matters.

Harry VerougstraetePWD Specialist for Switzerland

Deloitte Global Employer Services


Your speakers

Posted Worker Directive (PWD) – an overview

Equal Pay for Equal Work (EP4EW)

What can Swiss employers do?

Risk Assessment

Q&A

Agenda


Posted Workers Directive (PWD) – an overview


Posted Worker Directive Overview

PWD

overview

1

2

3

Implementation Posted Worker

Legal framework

Implementation

• Generally applies to all business travellers and assignees.

• Registration requirement is fairly binary – Generally, Member States have not applied a ‘de minimis’ threshold with respect to days of presence. This means that as little as one day spent in another EU country may trigger the PWD rules.

• EU Member states have implemented the new enforcement rules to varying degrees. Some countries have decided to implement the provisions not only to the posting of workers between Member States, but also workers coming from non-EU countries.

3

Posted workers

• EU legislation to ensure that ‘posted workers’ – i.e. those working temporarily abroad in other EU states – have the same level of social protection as domestic workers.

• Business travellers who work in more than one EU Member State also qualify as posted workers.

• The Directive has led to a requirement for increased governance andcompliance with pre-travel obligations.

1

Legal framework

• EU Posted Workers Directive 96/71 – aim was to guarantee that the rights and working conditions of posted employees are protected throughout the EU.

• EU Posted Workers Enforcement Directive 2014/67 – aim was to strengthen the protection of posted workers and stop circumvention/abuse of the rules.

• EU Posted Workers Directive 2018/957 – aim is to adjust the Directive 96/71 by introducingequal pay for equal work concept and making the host country labour law mandatory for postings over 12 months

• EU Directive 2019/1152 – aim is to increase the transparency and predictable working conditions in the EU. Member States will need to ensure that a posted worker as covered by the Directive 96/71 receives relevant information prior to the posting. This will come into force as of 1 August 2022

2


PWD – New employer obligations introduced as of 2016

Social documents

• Obligation to keep or make available and/or retain copies of all relevant documents (e.g. employment contract, payslips, work schedules).

• Obligation to provide a translation of the relevant documents into one of the official languages of the host Member State or into (an)other language(s) accepted by the host Member State on request.

• Obligation to deliver the documents referred to under previous point, after the period of posting or travel, at the request of the authorities of the host Member State, within a reasonable period of time.

Contact person for authorities

Obligation to designate a contact person for the authorities in the host Member State in which the services are provided.

Posting declaration

Obligation to make a declaration to the competent national authority, at the latest before the beginning of a travel/assignment, containing relevant information necessary in order to allow enforcement at the place of work.

Employers’ obligations


What is the impact for Swiss employers?

Swiss employers are directly impacted by the EU Posted Workers Directive. Swiss companies with business travellers or assignees in EU countries must comply with the rules contained in the EU Posted Workers Directive.

A distinction needs to be made between the direction of the move:

Swiss outbound posted workers:

• The PWD notification requirements need to be verified based on the host country requirement.

• The Swiss employer will need to file the posting declaration, designate a contact person and a representative.

Swiss inbound posted workers:

• The EU Posted Workers Directive is not applicable.

• Swiss employers need to comply with Swiss immigration rules (in particular the Swiss Foreign Nationals and Integration Act and Ordinance as well as the Swiss Posted Workers Act and Ordinance).


Equal pay for equal work (EP4EW)


PWD 2020: Revised core set of labour law provisions

The Directive 96/71/EC

Applies where

• A company agrees to provide a serviceto a client in another EU Member State (subcontracting)

• A worker is posted to another company of the group (intra-group posting)

• A worker is posted through an agreement between a user and an employment agency (temporary work)

• However: often implemented broader!

Objectives

• Guaranteeing that the rights and working conditions of workers are protected throughout the EU

• Avoid “unfair competition”

Sending employer must respect minimum labourstandards of host state

Minimum terms and conditions of employment:

• “Minimum wage”

• Working time

• Health and safety

• Paid annual holidays

• Conditions for hiring out workers

• Pregnancy and maternity protection

• Discrimination law

• Other public policy rules

1996

Equal Pay for Equal Work30 July 2020

Minimum terms and conditions of employment:

• “Remuneration”

(all salary elements embedded in local legislation and generally applicable collective agreements)

• Working time

• Health and safety

• Paid annual holidays

• Conditions for hiring out workers

• Pregnancy and maternity protection

• Discrimination law

• Other public policy rules

+ host state meal, transport & accommodation allowances

+ all host mandatory labour laws after 12/18 months

2020


Cyprus

In which country is the draft legislation already available?

Sweden

France

Poland

GermanyLatvia

Bulgaria

Hungary

Lithuania

Portugal

Croatia

Slovak Republic

Czech Republic

Belgium

Netherlands

Luxembourg

Estonia

Spain

Romania

Austria

Denmark

Finland

Greece

Ireland

Italy

Malta

Slovenia

Available

Unavailable


In which countries will there be no difference in remuneration between the current situation and the revised situation?

DCountry Further remarks

Belgium

Finland Expected, although new legislation is not available yet

IrelandNo additional legislation will be required: Irish legislation already confers full Irish employment rights on posted workers

Malta

Portugal

Slovenia Expected, although new legislation is not available yet

Sweden

The Netherlands No substantial changes


2 Examples

In which countries will there be a significant difference?

Country Current situation Revised situation

France• National minimum wage/minimum wage

under applicable national CBA

• Minimum wage• Other mandatory elements laid down by law or CBA:

seniority bonuses, 13th monthly salary, dirty-work bonuses, …

Czech Republic• Minimum wage• Relevant lowest level of guaranteed wage • Overtime allowance

• Minimum wage• Relevant lowest level of guaranteed wage• Wage/Premium or compensatory leave for overtime work• Wage/Premium or compensatory time off work on public

holidays• Wage/Premium for night work, arduous working

environment, work on Saturdays, Sundays• Travel allowances


What does EP4EW mean in practice?Example of a remuneration comparison

Host country Home Country

Wage 2500 Wage 2700

Daily allowance 400Compensation for cost of accommodation

400

Compensation for travelling time 200 Payment for Sunday work 200

Total 3100 Total 3300

Is this employer compliant?

• Yes?

• No?


What does EP4EW mean in practice?

Important Note:

Certain elements paid to the worker in accordance with home country rulescannot be taken into account in the host country as elements of the required remuneration:

• Payments for overtime

• Payments for expenses occurred due to the assignment

• Payment as compensation for additional work/work under particular conditions

Example of a remuneration comparison

Host country Home Country

Wage 2500 Wage 2700

Daily allowance 400(Compensation for cost of accommodation)

400)

Compensation for travelling time 200 (Payment for Sunday work 200)

Total 3100 Total 2700

Is this employer compliant? No


Which mandatory employment terms and conditions have to be additionally taken into account after 12/18 months?

1 General conclusionAll of the labour law becomes applicable, except the provisions regarding the conclusion and termination of the employment agreement and provisions regarding complementary pension.

2 Terms and conditions additionally to be taken into accountStill to be verified per country.


In which countries do PWD-requirements apply?

Short-term business travellers

Belgium Ireland

Bulgaria Latvia (unless no work is performed)

Croatia Luxembourg

Cyprus Malta

Denmark The Netherlands

Estonia Poland

France Sweden


Exceptions

Short-term business travellers

Country Further remarks

Czech Republic<30 days combined in a year and not on behalf of a work agency: requirements for minimum age, relevant lowest level of guaranteed wage and overtime allowance (under revised PWD minimum remuneration) do not apply.

Finland

Lithuania 30 days in one-year period

Slovakia90 day threshold:*For business talks: no further steps*For work: <90 days: notification to Labour office required

Sloveniabusiness travellers not considered posted workers <-> if not merely attending business meetings/trainings: posted workers as of day 1

Spain 8 days per year: under review


PWD & EP4EW - Implications for Swiss employers

• What is the country of destination?

• What is the purpose? What is the duration?

• Are we meeting the remuneration requirements?

• Are we in line with minimum employment T&Cs respectively the local mandatory employment rules in case of assignments of more than 12/18 months?

• Who has to inform whom internally?

• What documents need to be prepared/amended? What further actions need to be taken?

• Do processes need to be amended?

• Mobility management/compliance governance

• Mobility policies & documents

Key Questions for defining the specific implications and necessary actions:

Possible areas for need of improvement:


No

Yes

Amend policies/ letters

No further actions

No

Yes

No further actions

No further actions

Are we in line with local mandatory employment law

rules?

T&C’s as per employment

contract/policies

Do we meet requirements of PWD?

No

Yes

Update current assignments letters and

amend assignment letter/policies

Does assignment exceed 12/18 months?

No

Yes

PWD & EP4EW – Decision Tree

What is purpose of the travel?

Business travel

Does host country foresee applicability of PWD? Are

thresholds met?

Are we meeting requirements of PWD? Does

host country foresee additional requirements and do we meet these

requirements?

Assignment

Amend existing documents or prepare new

documents/ term sheets

No

Yes


What can Swiss employers do?


How are companies approaching PWD compliance?

Penalties for non-compliance with PWD can be high and can easily escalate based on travel volumes.

Many clients are moving towards compliance and away from non-compliance due to the risk of the following:

• Reputational damage

• Damage to employee relationships

• Damage to business relationships

• Financial exposure

• Regulatory requirements

Support compliance with PWD obligations in all jurisdictions, taking into account all related requirements for future travels.

Inform key stakeholders about new guidelines and processes.

We are seeing an ever growing number of clients taking this approach to mitigate the non-compliance risks.

Identification of high risk locations using historic travel data to analyse and review the following:

• Volume of impacted population (business travellers, short term and long term assignments)

• Level of penalties

• Audit activity

In addition, review if:

• Remuneration requirements are met

• Local employment rules are met for long term assignments

• Policies and documentation requirements are fulfilled

Consideration and application of PWD compliance across:

• Agreed groups of travellers.For example: expats only

• Agreed jurisdictionsFor example: PWD compliance undertaken for all travellers to France

• An agreed travel threshold above which PWD compliance is undertakenFor example: PWD compliance undertaken for all trips in excess of 7 days

• Amend processes and documentations based on the above points

Not doing anything Risk assessment Risk based approach to compliance Complete compliance


Risk Assessment


Recent PWD audit activity in Europe

No changes in audit activity post PWD implementation

Increased audit activity and penalties

Increased audit activity but no penalties imposed so far

Authorities in all EEA Member States are required, as part of the PWED implementation, to:

• Increase the capacity and capability to conduct social audits;

• Enforce the core principles of the PWD and help fight social dumping practices.

We are seeing audit activity with regards to the registrations, but mainly as part of the underlying labour law enforcement.

*High audit activity in Germany, but limited to certain industries.

France

Poland

Bulgaria

Spain

Czech Republic

Belgium

Luxembourg

Romania

Italy

Austria


Risk Analysis for PWD notification requirement – High Exposure Locations

Country Number of trips

Level of audit activity

Penalty for failure to notify authorities in host country (per infringement)

Illustrative potential exposure for failure to notify the authorities

Status

Belgium* 329 Medium € 50 to € 24,000 € 329,000

Austria 89 High € 1,000 to € 10,000 From € 89,000 to € 890,000

France 510 High € 4,000 to € 8,000 € 500,000 (fine is capped per audit)

Spain* 434 High € 625 to € 187,515 € 434,000

Italy 445 Medium € 150 to € 500 From € 66,750 to € 150,000 (fine is capped per audit)

Total Illustrative Exposure From € 1,418,750 to € 2,303,000

• For countries like Belgium and Spain where the range in fines prescribed by local legislation is particularly wide, we have taken an illustrative amount of € 1,000 per infringement to calculate the potential exposure as in practice authorities are unlikely going to apply the top end of the penalty range for each infringement.

• A key element that brings down the total number of notifications required is the Purpose of Travel. Various countries have implemented exemptions based on a business traveller’s activity and/or length of trip. The data provided did not include any detail about the activity/purpose of travel; therefore the above potential illustrative exposure does not factor in any such exemptions that would certainly lower the number of notifications required in some countries.


Some examples

Risk Exposure in case of non-compliance with EP4EW

Country Penalties for failure to comply with EP4EW

The Netherlands Up to EUR 12’000

France Up to EUR 10’000 per posted employee

Poland Not specified, additional claim for damages by employee


Q&A’s


Key take away points for Swiss employers

PWD applies to posted workers (assignees and business travellers) from Switzerland to an EU Member State

The PWD notification is a pre-travel requirement.

The principle of equal pay for equal work is not only for minimum salary requirements but other salary elements.

After 12 (or 18) months of assignment the full mandatory labour law provisions of the host country will be applicable (excluding starting and termination rules as well as occupational pensions).

There is no one size fits all. The implementation of the Directive happens on a Member State level. In other words, there are 27 different set of rules to be considered.

The enforcement regime is real and penalties are very significant.

The reputational impact of non-compliance is arguably more significant.

Centralisation of process and compliance governance is critical.


• Christine Bassanello, Senior Manager, Deloitte Legal, Zurich

+41 58 279 72 34 | [email protected]

• Harry Verougstraete, Senior Manager, GES, Basel

+41 58 279 6813 | [email protected]

Your contacts

mailto:[email protected]

mailto:[email protected]

This publication has been written in general terms and we recommend that you obtain professional advice before acting or refraining from action on any of the contents of this publication. Deloitte AG accepts no liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.

Deloitte AG is an affiliate of Deloitte NSE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”). DTTL and each of its member firms are legally separate and independent entities. DTTL and Deloitte NSE LLP do not provide services to clients. Please see www.deloitte.com/ch/about to learn more about our global network of member firms.

Deloitte AG is an audit firm recognised and supervised by the Federal Audit Oversight Authority (FAOA) and the Swiss Financial Market Supervisory Authority (FINMA).

© 2020 Deloitte AG. All rights reserved.

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