FNV v Van den Bosch, or the thin line between the free movement of services and ‘social dumping’ in the never-ending story of posted workers
December 2020 began in Luxembourg with a focus on the posting of workers, as the CJEU delivered its judgment in a dispute between the Federation of Dutch Trade Unions (FNV) and a transnational group of undertakings in the transport sector. Case C-815/18 FNV v Van den Bosch is the second act in a tragedy of errors, initiated exactly a year earlier in Case C-16/18 Dobersberger concerning the definition of a ‘posted worker’. Against the current of the ongoing reform of the EU framework on posted work, Dobersberger cast doubts over the applicability of the Posted Workers Directive (PWD) to the transport sector. In FNV, the Grand Chamber has now corrected its previous stance by confirming that transport workers can also be posted workers. Yet, the Court erroneously persists in applying the test of a sufficient connection to the territory of the receiving country, which workers have to pass before they can benefit from the protection of that state. This concept, albeit nowhere to be found in the wording of the PWD, further deepens the inequalities between different types of intra-EU labour migrants whose realities are often similar.
Van den Bosch is a group of undertakings in the transport sector consisting of three sister companies registered, respectively, in the Netherlands, Germany and Hungary. All three have the same director and the same shareholder. In 2012, the Dutch branch entered into a collective agreement with the FNV, yet it did not apply the agreement’s terms and conditions to drivers who had been subcontracted from the sister companies in Germany and Hungary. The PWD was revised in 2018, but at the time of the case it provided that outside the construction sector, Member States could extend collective agreements that had been declared universally applicable to posted workers. While the collective agreement at issue was not universally applicable, the FNV argued that Van den Bosch had entered into it to avoid signing another collective agreement which, for its part, was universally applicable in the entire transport sector. And the content of both agreements was practically identical.
The FNV brought a legal action against Van den Bosch. The Court of First Instance agreed that the defendant should apply the non-universally applicable collective agreement to the German and Hungarian subcontractors. Yet, the Court of Appeal, not questioning the FNV’s claim in relation to compliance with the collective agreement, decided that the foreign subcontractors could not be considered as posted to the Netherlands, as most of their activity took place outside the Dutch territory. When the dispute reached the Dutch Supreme Court, the latter decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling. The national court firstly sought to establish whether the PWD applies to drivers in international road transport and if so, under what conditions. Secondly, it asked whether the PWD allows Member States to extend non-universally applicable collective agreements to foreign subcontractors.
The Court’s ruling
1. Drivers in international road transport can be posted workers too
The PWD applies to workers who, for a limited period, carry out their work in the territory of a Member State other than the one in which they normally work (Article 2(1)). In general, such workers travel within the EU not under the free movement of workers (Article 45 TFEU), but under the free movement of services (Article 56 TFEU). But in its 2019 judgment in Dobersberger, the CJEU voiced doubts over the applicability of the PWD to transport services, noting that the legislation covered services within the meaning of Article 56 TFEU. Transport services, conversely, are governed by separate provisions, namely Articles 90-100 TFEU. Such interpretation went against the EU’s official stance on transport services. For instance, Directive 2014/67 on the enforcement of the Posted Workers Directive has introduced measures aimed at ‘mobile workers in the transport sector’. Furthermore, in July 2020, the EU adopted Directive 2020/1057 which explicitly states that the Posted Workers Directive applies to the road transport sector.
In FNV, similar arguments as in Dobersberger were put forward by the Hungarian and Polish governments, yet the CJEU corrected its previous statement by confirming that transport services do fall within the scope of the PWD. The Court argues that the definition of a posted worker does not mention any restriction as to the worker’s sector of activity. Article 1(2) PWD, the Court observes, excludes the seagoing personnel of merchant navy undertakings from its scope and, thus, implies that all other types of transport workers are covered by the Directive (paras 32-33).
2. Taking collective rights on board
As for the collective rights issue, the CJEU – following the Advocate General’s advice – confirms that the manner of declaring collective agreements universally applicable to extend them to posted workers should be left to the discretion of the Member States (paras 69-71). Looking at the circumstances of FNV, the Court points out, it was clear that compliance with either of the two collective agreements was compulsory in the Netherlands, and Van den Bosch could not have opted out of both. This reasoning chimes with the most recent changes to the PWD introduced in 2018. The revised Directive contains a reference to fundamental rights in Article 1(1), including the right to take collective action, while the criteria for extending collective agreements onto posted workers laid down in Article 3(8) have been relaxed. Member States can now apply collective agreements other than those declared universally applicable not only in the absence of a system for declaring them universally applicable, but also in addition to this system.
3. ‘Sufficient connection’ disconnected from reality
Worryingly, in FNV, the Grand Chamber insists on adding to the definition of a posted worker the test of a sufficient connection to the territory of the ‘host’ Member State, first introduced in Dobersberger. Advocate General Bobek shared this view in his Opinion, also basing his reasoning on Dobersberger. In its 2019 judgment, the Court held that workers who provided cleaning and catering services aboard Austrian trains were merely passing through the Austrian territory and did not have a connection that was sufficient to classify them as posted workers. The notion of a ‘sufficient connection’ might have been borrowed from private international law; it features, for example, in the Rome I Regulation. But in the field of posted work, it is an entirely novel concept, never mentioned either in the PWD or in the CJEU’s previous case law.
In FNV, the Court continues to stick to the sufficient connection test for posted workers and provides further clarification of this concept which Dobersberger lacked. Such test requires ‘an overall assessment of all the factors that characterise the activity of the worker concerned’ such as the nature of the activity, the degree of connection between the activity and the territory of the ‘host’ Member State, and the proportion of this activity in the entire transport service (para 51). In this vein, a driver who merely transits through a country cannot be considered posted to it. Furthermore, a driver employed by a Hungarian company who carries out transport operations exclusively between Hungary and the Netherlands, cannot, according to the CJEU, be considered as posted to the Netherlands (para 49).
This reasoning turns the established definition of a posted worker upside down and further muddies the waters. Article 1(3) PWD lays down three posting scenarios, one of which, when workers are posted between undertakings owned by the same group, matches the circumstances of FNV. Yet, the Court insists that meeting the criteria of this scenario is immaterial (para 57), for as long as the sufficient connection test has not been passed, there is no posting
When working abroad, posted workers are entitled to some labour law protections of the receiving country which are enumerated in Article 3(1) PWD. But the remainder of their employment contract and social security affiliation are governed by the law of the employer’s country of establishment, which leaves room for service providers to compete on employee costs. This practice has been sometimes referred to as ‘social dumping’. One way to practise it is for undertakings to open subsidiaries in countries where employee costs are lower, as was the case in FNV. The establishment of an additional exception from the PWD broadens the grey area of situations in which employers do not have to guarantee labour law protections of the ‘host’ state for migrant workers.
In FNV, the Court explicitly states that most of the German and Hungarian subcontractors did not have a sufficient connection to the Dutch territory and should not be considered posted workers. In contrast, argues the CJEU, those drivers who carried out cabotage operations taking place entirely on the Dutch territory and governed by Regulation 1072/2009, should be deemed posted workers (paras 62-63). This means that while all drivers at issue worked for the defendant, only some of them qualified as posted workers and their status depended on the finer details of their working arrangement in practice. Consequently, there is a danger that the FNV judgment will have disastrous implications for foreign subcontractors, and, in particular, for creating double standards for workers carrying out similar activities is likely to lead to more legal uncertainty.