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Freedom to provided services

1 December 99

Report on the European Court decision in Arblade and Leloup on employers' obligations in relation to workers sent temporarily abroad

The freedom to provide services in another Member State, as enshrined in articles 49 and 50 if the EC Treaty (formerly articles 59 and 60), has formed one of the fundamental principles of European Law.  Its importance, along with the right of establishment and the free movement of workers, has increased as opportunities to work abroad have become greater and more and more people take advantage of thee opportunities.  Consequently, the rules applying to those taking advantage of their EU rights in this area having come under increasing scrutiny.  That scrutiny also extends to the co-existence of the freedom to provide services with the right of workers to social protection, an area which is becoming more and more central to EU law.  This inter-relationship has recently been examined by the ECJ.

Workers temporarily deployed abroad

The ECJ ruled on 23 November 1999 in the joined cases of Arblade (C-369/96) and Leloup (C-376/96) in the obligation of employers who send their employees to work abroad on a temporary basis to comply with the Health and Safety and employment legislation of the host Member State.  In this case, the two companies, both based in France, carried out works in connection with the construction of a complex of silos in Belgium.  This involved having workers on site in Belgium for a number of months during 1991-1993.  During this period, the site was inspected by the Belgian Social Law Inspectorate which demanded production of the various documents which Belgian Law obliges employers to maintain.  Both companies argued that they were only obliged to confirm to French Law in that respect and they were thereafter prosecuted under Belgian criminal law for non-compliance with the obligations imposed by that legislation.  The court suspended proceedings and referred various questions to the European Court of Justice in order to ascertain the extent of the application of the then articles 59 and 60 of the EC.  Treaty to this situation.  Specifically, the Court sought to clarify whether articles 59 and 60 permitted national legislation to require an undertaking based in one Member State and temporarily carrying out work in another to maintain documentation conforming to the law of the host Member State, to pay the minimum wage stipulated by the host state and to make contributions to the host Member State’s scheme for bad weather and loyalty payments for construction workers.

Elimination of discrimination

In its consideration of the case, the ECJ restated the obligation to eliminate all discrimination on the grounds of nationality against providers of services who are established in another Member State.  The Court reiterated that this obligation applied also to discrimination which arose only as the result of the application of the same legislation to both national service providers and those based in another Member State.  The Court went on to state that even if there is no harmonisation in the field, the freedom to provide services may be restricted only by rules justified by overriding requirements relating to the public interest.  However, such a restriction is not permissible where the public interest is safeguarded by the rules to which the provider of such a services is subject in the Member State where he is established.

“Public Order” legislation

The Belgian Government argued that the classification of these rules in Belgium as “public order legislation” meant that they were exempt from compliance with Community Law.  The ECJ dismissed that argument.  Although the Court had ruled in a previous case (279/80 Webb) that the protection of workers did constitute an overriding reason relating to the public interest it now explained that considerations of a purely administrative nature do not justify a derogation from the principle of freedom to provide services.

The court then went on to consider whether the obligations imposed by Belgian legislation had a restrictive effect on the freedom to provide services and, if so, whether they were justifiable.

Minimum wage

According to the ECJ, a Member State may apply legislation for the payment of a minimum wage to workers deployed only on a temporary basis within its territory, regardless of the state in which the employer is established.  However, this principle is limited in its application in that the obligation may only be imposed by appropriate means.  In this particular case, for example, criminal prosecutions may be brought only where the provisions allegedly infringed are sufficiently clear and precise.

Employers’ contributions

The Court judged that for the payment of employers’ contributions to be obligatory in the host Member State the contributions must confer a social advantage on the workers concerned.  Where essentially the same protection for the workers exists in the Member State in which the employer is established, the employer is, in effect, disadvantaged by having to make the same payment in the host state and this may deter them from providing their services abroad.

Social documentation

The Court noted that, as the two companies were obliged to keep documentation in France which was comparable to the documentation required in Belgium, any additional requirement by the Belgian authorities constituted a restriction on the freedom to provide services as it involved extra expense and administrative burdens.  This restriction, according to the ECJ, would never be justified by the need to make it generally easier for the authorities in the host state to perform their supervisory task.  However, the protection of workers may require that certain documentation be kept on site for inspection but it is for the national court to decide whether that protection could not equally be afforded by the production within a reasonable delay of the documentation kept in the home state or by keeping copies of those documents on site.

This case considered a particular set of circumstances involving construction workers working across the French / Belgian border.  However, the potential for conflict between national legislation designed to protect workers and the freedom to provide services exists in all Member States whose nationals take advantage of this Treaty freedom or who receives nationals of other Member States on the same basis.