Germany restricting freedom of movement by adopting MiLog

On 01.01.2015 German law on minimum wage entered into force. It provides a national minimum wage of 8.5 Euro / hour, the amount to be paid by German employers not only to their employees, but also to those deployed in the territory of the federation. If thus far, the logic and legality of this provision may be argued, the following provisions have raised troubling questions about compliance with Community provisions, hurting international carriers.

The law provides that the minimum wage amounting to 8.5 Euro / hour applies not only to German Companies, but also for Companies with their headquarters abroad, who have workers performing work in Germany. This interpretation includes people in transit through the country, if these are involved in labour relations.

In order to analyse the legality of the above-mentioned provisions from the perspective of Community law, we must analyse the provisions of the Treaty on the functioning of the European Union (TFEU). The TFEU governs intra-Community transports of people and goods, art. 96 providing that “The imposition by a Member State, in respect of transport operations carried out within the Union, of rates and conditions involving any element of support or protection in the interest of one or more particular undertakings or industries shall be prohibited, unless authorised by the Commission “.

This provision regarding the minimum wage law suggests an element of protection in favour of German citizens, given the economic impact that granting this minimum wage has on developing countries that are in transit in Germany.

The law on minimum wage, as translated into English, provides within art. 16 that “an employer established abroad who has one or more posted employees is required to file a declaration with the Customs Administrative Authority, at the beginning of the posting, in the German language.”

It may be noted that the provision in question makes express reference to posted employees, the form sent by the customs authority also indicating the provisions of art. 18 (1) of the German law as the legal argument on the posting of workers. The provisions of the previously mentioned law dispose in the following manner within said article: “to the extent to which the legal norms of a collective agreement declared generally applicable (…) apply to the employment relationship, an employer established abroad, which posts employees in the field of application of this law, is obliged to inform the competent customs authorities, by a written notice, written in German, presented before the beginning of each provision of services, which contains essential information for verification”.

Considering the object of the law, posting of workers respectively, it is understood that the employer based abroad, which often hires or posts employees in Germany will be obliged to apply the provisions regarding the minimum wage during the period for which the employee is on the territory of the federation.

In order to standardize posting rules at European level, Directive 96/71 / EC has been adopted, Art. 2 stating that “for the purpose of this Directive, ‘posted worker’ means a worker who, for a limited period, carries out his work in the territory of a Member State other than the State in which he normally works”.

The European Commission construes the notion of posting of workers as the action by which an employee works in another EU country for a short period of time (maximum 2 years) and remains insured under the social security system of the country of origin, but benefiting from the provisions of the law on minimum wage.

Analysing the German legal provisions in this light, in relation to the European Directive, it is understood that when an employer established outside of Germany posts an employee in Germany, the Company will be obliged to pay the minimum wage established by law. This interpretation is consistent with Community provisions.

However, by including transit, transit in the transports field in our case, certain aspects must be considered.

Regulation no. 1072/2009 concerning the international carriage of goods, provides in point no. 17 of the preamble that “the provisions of Directive 96/71 / EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of provision of services apply to transport undertakings performing a cabotage operation.”

By construal, it can be argued that, given the express provision that the Posting of Workers Directive shall only apply to cabotage operations, when the necessary conditions are not met, employees will not be considered posted workers.

Thus, if there is a situation like this: The Shipper and the Transporter are established in the same state, in our case Romania and the Recipient is located in Germany. The Recipient is considered a third party beneficiary in relation to the Transport Agreement concluded between the Shipper and the Transporter, and is not party of the Agreement. Typically, after the completion of the economic transaction including the Transport Agreement, the Shipper and the Recipient conclude a Sales of International Goods Agreement regarding the merchandise which is the subject of the transport. We emphasize that it is not necessary to have any specific contractual relationship between the Transporter and the Recipient, as the transport operation represents a legal deed between the subjects. National experts consulted about the applicability of the Directive on posting of workers, namely those from Romania, Italy and France, have concluded that the above-presented operation cannot be considered a posting of workers, as it is defined as a transnational transport.

What could have been considered a problem would have been the presence of transnational measures as provided in art. 1.3. of the Directive, which provides that it is applicable if the Recipient of the service provisions is an active subject in a Member State other than that in which the Company that performs the posting of workers is established. The above-presented case indicates that the parties of the Transport Agreement are established in the same Member State. Therefore, although a transnational transport occurs, the presented case does not present a transnational posting of workers, in the meaning presented by Directive 96/71 / EC.

In the case of cabotage, Regulation No. 1072/2009 clearly states that the provisions regarding the posting of workers are applicable.

The following situations may also occur: the Transporter and the Recipient are in the same state, and the Shipper is located in another state or the Shipper, the Transported and the Recipient and are located in different states.

By analysing these two cases, a part of the above-mentioned experts considered that the provisions of the Directive are applicable, while others decided that these operations are not part of the scope of the Directive. Nonetheless, all of them agreed that an extended application of the Directive is difficult to implement and sanction.

Considering the difficulties related to the application of a national law, for each part of the transport that would be considered transit on the territory of a certain state, from the point of view of the workers and of the employers involved, these cases would better fit within the international transport system, as opposed to the community posting of workers system, the worker being entitled to his allowance.

Given all of the above-mentioned, it is difficult to provide a safe and complete solution for the legal issue concerning the applicability of the Directive on the posting of workers in cases of transnational transport. The issue of national legislation applicable to workers involved in transnational transport in the EU was recently approached and partly-resolved by the Court of Justice of the European Union in the Koeltszch case(C-26/2010). Indeed, even if the Koeltzsch case does not specifically refer to the posting of workers within the Community, it still provides important information in terms of national legislation applicable to individual labour agreements regarding a worker (driver) routinely conducting transnational road transport of goods (reference to the applicable law is included in art. 8 of the Rome I Regulation on contractual obligations). In this particular case, the Court states that “in a situation in which an employee carries out his activities in more than one Contracting State, the country in which the employee habitually carries out his work in performance of the contract, within the meaning of that provision, is that in which or from which, in the light of all factors which characterise that activity, the employee performs the greater part of his obligations towards his employer”. Given this type of expanded interpretation of the Court regarding the provision of the Rome I Regulation, the applicable law would be the one of the state” starting from which” the driver carries out his transnational work, and the one in which he performs the greater part of his transnational work.

Following complaints made by Romania, Poland, the Czech Republic, Hungary and the United Kingdom of Great Britain and Northern Ireland, the European Commission has requested explanations from the German authorities, given the grounds that the problematic law in question would violate EU legislation, granting them a period of 30 days in order to issue a response. The German government believes that the new minimum wage law complies with European legislation, but will be required to submit an official response to the European Commission. The representatives of the German Government have suspended the application of the provisions regarding transit on its territory until the situation regarding conformity with Community regulations is resolved, while the rest of the provisions are still applicable.

So far the European Commission has not reached a decision regarding the compliance of the German law on minimum wage with Community legislation, requiring more time to reach a conclusion. It was also stated that the Commission will consider all concerns and questions raised by members of the European Parliament, stressing the need to clarify the current situation as quickly as possible. It has also been revealed that the Commission will develop a new package of legislative rules relating to road transport until 2016, in order to consolidate social measures and regulations.

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