Local Law Reigns in EU Posted-Worker Dispute

(CN) - Union workers posted to a different EU member state than their own are subject to the labor laws of the host state - which can also represent them in court, the EU high court held Thursday.

The case stems from a minimum wage dispute between Polish company Elektrobudowa Spolka Akcyjna, or ESA, and employees it sent to Finland for electrical installation work on a nuclear power plant.

According to the employees, ESA had an obligation to pay them according to collective bargaining agreements for Finland's electricity and building technology sectors - not wages according to their pay scales in Poland - under the EU's posted workers directive.

The ESA employees assigned their claims to the Finnish electricity sector trade union, which filed a lawsuit on their behalf in a Finnish court. There, the trade union argued that the Polish employees are entitled to be paid based on the same criteria used for Finnish electrical workers and should receive the same benefits, including paid holidays and travel expenses.

For its part, ESA claimed that Polish law forbids the assignment of claims in an employment dispute - so the Finnish trade union lacked standing to bring the suit.

Given the seemingly conflicting interplay between Finnish and Polish law, the EU constitution and the posted workers directive, the Finnish court asked the European Court of Justice to weigh in on whether the trade union has standing to bring the case on behalf of ESA's employees - as well as whether the posted workers directive also applies to fringe benefits available in Finland but not in Poland.

In a 9-page opinion issued Thursday, the EU high court said that the question of standing is governed by Finnish law as the host member state, and that Polish labor law in this case is irrelevant.

"The posted workers directive makes absolutely clear that questions concerning 'minimum rates of pay' within the meaning of the directive are governed, whatever the law applicable to the employment relationship, by the law of the member state to whose territory the workers are posted in order to carry out their work: in this case, Finland," the Luxembourg-based court wrote.

"The directive prevents a rule of the member state of the seat of the undertaking that has posted workers to the territory of another member state - under which the assignment of claims arising from employment relationships is prohibited - from barring a trade union from bringing an action before a court of the second member state, in which the work is performed, in order to recover for the posted workers pay claims which relate to the minimum wage and which have been assigned to it, that assignment being in conformity with the law in force in the second member state," the court added.

According to the high court, the purpose of the posted workers directive is to level the playing field between businesses that operate nationally and transnationally, and to ensure that the minimum protections provided by a host state also applies to workers posted there from other member states.

Given that, issues of how posted workers' pay and benefits are calculated must be decided by the laws of the host state. But those rules must also be binding, clear and accessible for the posting company - ESA - which is a matter for the Finnish court to decide, the EU high court said.

The court also ruled that daily allowances and compensation for travel time must be considered part of the posted workers' minimum wage, given the need to ensure social protection and compensate them for the inconvenience of being posted away from their homes. But since ESA pays for the employees' accommodations and meals while they're in Finland, those items don't apply to the collectively bargained minimum-wage guarantee, the court said.

And since all workers in the EU are entitled to annual paid vacations, the posted workers' holiday pay must be at the same rate they receive while working, the court concluded.

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