26 November 2024
The European Commission recently published its second report on posted workers within the EU based on data collected in 2022 (the “Report”). The main source of data is from systems for mandatory prior registration of posted workers and data on issued A1 certificates for Social Security.
The main conclusion from the Report is that the number of posted worker registrations within the EU in 2022 increased with a corresponding increase in the number of non-EU national workers being posted within the EU.
The posting of workers entails an employer sending workers from one EU Member State to carry out services in another Member State for a limited period of time. In 2022, workers were posted mainly in the context of contract of services. Only in France and Italy were more than 10% of postings related to temporary agency postings.
The data in the Report shows that in 2022, 1.9 million workers were posted with 4.7 million individual postings being made from both within and outside the EU. This means that the average worker was posted 2.5 times with Germany, Austria, Belgium and France being the main recipients of posted workers. Sweden, Luxembourg, the Netherlands, Italy and Denmark had increased number of postings in 2022.
In terms of which countries have the highest figures for workers being sent, Germany, Poland and Lithuania were the leading jurisdictions. The registration of posted workers working in the international road transport sector has from February 2022 been centralised within the EU registration system. However, some employers have continued to report the postings in this sector locally. When the data in relation to this sector is excluded, the statistics still show that the registration of posted workers has increased by 14%.
The duration of postings was on average 115 days. Only 5% of postings in 2022 were for a period of more than 12 months with, 28% of postings being for a period of less than 8 days. This data shows that the majority of postings are for short durations.
From an Irish perspective, 4,766 workers were recorded as posted to Ireland. This is an increase of 87.12% from 2021. The majority of employees were posted from Germany and Bulgaria with the main sectors being manufacturing and construction.
Another takeaway from the data is that the number of third country nationals being posted within the EU is substantial and increasing. The figures show that on average, 1 out of every 4 posted workers is a national from outside the EU.
While not all Member States have given data based on these figures, the statistics that are available show that more than a quarter of the non-EU nationals being posted to Belgium, Lithuania, the Netherlands and Austria are Ukrainian. Other notable nationalities include; the UK, Morocco, Belarus, Bosnia and Herzegovina, Turkey and Brazil. Around 6.5% of postings were from non-EU employers directly.
One of the insights that is clear from the Report is that the posting of workers is generally increasing within the EU and that employers in many Member States are increasing their compliance with the requirements associated with posted workers.
In an analysis by our colleague Daida Hadzic, Director in the Washington National Tax Team in KPMG US, it was noted that Lithuania, a smaller Member State is a large exporter of labour and services and that this could indicate that postings from here, and other similar size Member States could be subject to increased scrutiny by local authorities as they tend to have lower salaries compared to other Member States.
While some Member States do not show a major increase in their compliance with registration obligations, certain jurisdictions have dramatically increased their registration figures. For example, Sweden has seen an increase of 45% of registered postings and has now become one of the main recipient countries of posted workers.
The collection and sharing of this data is important as it allows authorities to track and make deductions concerning compliance by employers with terms and conditions of employment of posted workers. It allows the EU and Member States to monitor compliance and enforcement of the rules regarding the posting of workers within an EU context.
Any employer either within the EU or outside the jurisdiction should be mindful of complying with the prior declaration obligations placed on them with regard to posted workers as failure to do so can lead to penalties, prosecution, as well as a disruption to business and reputational damage.
In November of this year, the EU Commission published a proposed regulation to facilitate an electronic means of notification of posted workers. It is proposed that a multilingual electronic system will be put in place that will be connected to the Internal Market Information System (the same system that is currently used to track registration of posted workers in the international road freight transport sector). The current position in Ireland is that declarations can be made either by post or through email.
It is envisaged that the e-declaration system will be on a voluntary basis, therefore Member States will not be obliged to use the centralised system. However, if the proposal is implemented and a large number of Member States agree to participate in the e-declaration system, this could have a major impact on the amount of data available to the EU Commission. The streamlining of data reporting would alleviate the need for Member States to collect their own data and then subsequently report their data to the EU Commission. Equally, the simplified system will also benefit employers as the administrative burden of reporting will be eased through the e-declaration interface.
While it is unclear at this stage whether the proposal will be passed and whether Member States will be eager to participate, it is a welcome development to the area of registration of posted workers. We will be keeping clients updated on any further developments in this area.
Employers should be mindful of their obligations in respect of posted workers, not just in terms of declaring the posting but also ensuring workers enjoy their full entitlement of labour laws associated with their posting. Compliance with the requirements should be a priority for any employer who is either involved with sending workers to another Member State or receiving workers from another Member State.
Our Employment and Immigration Law team can guide you through all matters relating to the posting of workers and can provide guidance on the movement of your workforce across Member States. Please contact a member of the team for more information.
