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Managing human resources through the pandemic

Posting of workers across EU member states – new rules in force

By Ewa Guerri, international tax specialist, Accreo
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Are you a home company, posting your worker abroad? Or you are a host company, benefiting from expats’ work?

Following the implementation of Directive (EU) 2018/957, the rules on the posting of workers between EU member states have significantly changed. The main objective of the Directive is to guarantee the fundamental social rights of posted workers, to prevent the creation of cheap labour and the phenomenon known as ‘wage dumping’ (harmful wage competition). The aim is to ensure that basic working and employment conditions for temporary staff are in line with conditions that would apply to those employees as if they were directly employed by the user business in the same position.

Poland has implemented the Directive in law through the act of 24 July 2020, amending the act on the posting of workers within the framework of the provision of services. The act lays down conditions for workers posted to Poland (working in Poland, but their employer is foreign). The act has been in force since 30 July 2020. Here are the main findings of the Polish legislation.

The Directive is being implemented across the EU, so it will apply to Poles who work abroad (and to their Polish employers). For this reason, companies that send employees abroad should follow the national procedures of the country to which the employee is being sent, and to check whether the legislative process  of enacting the Directive into that country’s national law has been completed.

Length of stay

The new law introduces a precise division of secondment into ‘short’ and ‘long’. Each is governed by its own laws.

Short secondment is of a specific length, up to 12 months. Based on reasoned notification of the business that posts an employee, the secondment may be extended to a maximum of 18 months. This period is ‘per job’ and not ‘per employee’. For example, when an employee has been in the position for 12 months, and he has returned to the country, and his colleague took his place, the posting period for the second employee can only last six consecutive months (that is until the 18-month limit is exceeded in the same position).

A long secondment is any secondment that lasts more than 18 months.

Salaries and conditions of employment

Until now, the salary of the employee posted to another country could not be less than the minimum rates in force in the host country of posted workers. In practice, in the case of Poles working abroad, earning a minimal wage has most often been the case.

On ‘short’ secondment, under the new rules, the worker must be remunerated on the same terms as the national citizen, who will work in the same job at the same time ‘same work for the same pay’. In other words, Poles sent abroad should receive salaries as calculated as their colleagues from that country. Does this mean that their remuneration is to be the same in absolute terms?  Well, no. The law only deals with the principles of calculation – the minimum base, mandatory add-ons, etc. According to the Directive, remuneration must be made up of the same components, which does not mean that it has to be equal. Although there were many votes in favour in the debate preceding the adoption of the directive to introduce a full-wage levelling obligation, it was ultimately decided not to do so. The biggest opponent of this radical solution was Poland, who feared that Polish workers will no longer be attractive on the western labour market.

As regards to the other conditions of employment, over a period of up to 18 months, the rules provide for a so-called ‘closed directory’. These are selected employment conditions from the Labour Code.

With ‘long postings (over 18 months), all employment conditions provided for in the labour code and other laws governing the rights and obligations of employees. In practice, this means that posted workers are equated with local workers.

To implement the ‘same work for the same pay’ principle, individual member states are required to publish information on wages arising from laws or collective agreements, and the employer is required to verify market benchmarks.

Principle of benefit

If, after a maximum of 18 months and after aligning local and host employees proves that labour law in the home country is more favourable to the worker than the labour law of the host country, then there is a possibility of applying the more favourable conditions of employment of the home state. This is possible according to the ‘principle of benefit’, according to which legislation imposing the application of the law of the host state. Due to this principle posted workers ‘will never lose’, since more favourable legislation of one of the member states will be applicable.

Role of the labour inspectorate

A foreign employer who delegates their employee/s to Poland must submit a ‘statement of the employer that delegates an employee on the territory of Poland’ by the date on which the service commences at the latest. Should there be a change in the facts, the employer (a foreign entity) has seven days from that change occurring to notify PIP, Poland’s national labour inspectorate.

This body assumes the role of the liaison body cooperating with the relevant authorities from other countries. They will exchange information about the conditions of employment of staff, the reporting of irregularities and delegation offences, and can request inspections.

Next steps

You should review the changes and verify that responsibilities are being met and how their fulfilment should look like. A tax advisor can help you with that and will assist your company in analysing the current structure of the compensation of employees in view of the new responsibilities and their impact on the existing model.

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