Posting of workers: Enforcement, compliance, and reform
| Date | 01 June 2020 |
| Published date | 01 June 2020 |
| DOI | 10.1177/1388262720931658 |
| Subject Matter | Articles |
EJSS
Article
European Journal of Social Security
2020, Vol. 22(2) 212–234
Posting of workers:
ª The Author(s) 2020
Enforcement, compliance,
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and reform
DOI: 10.1177/1388262720931658
journals.sagepub.com/home/ejs
Nicolas Rennuy
York Law School, The University of York, York, UK
Abstract
This article analyses the enforcement deficit plaguing the posting of workers. The rule subjecting
posted workers to the social security system of their State of origin is enforced almost exclu-
sively, but rather poorly, by that State. Because of its limited incentive and capacity to enforce
the requirements for being posted, it often issues posting certificates without adequate ver-
ification. These rubber-stamped certificates bind the social security institutions and courts of the
State of destination, thus hindering its enforcement machinery. The resulting gap in adminis-
trative enforcement enables employers to unilaterally choose the applicable social security
legislation, quite possibly depriving their workers of the more generous social security pro-
tection of the State of destination while gaining an unfair competitive advantage over under-
takings based there. Helpful though they may be, pending reforms of Regulation 883/2004 and
Regulation 987/2009 are held back by an incomplete problem definition. Building on rationalist
and managerial theories, I argue that the effectiveness of administrative enforcement depends on
whether each posting requirement can be monitored by a State that is both willing and capable of
doing so. The existing and envisaged allocation of administrative enforcement powers suffers
from a misalignment between incentives, capacities and competences to monitor, which can be
addressed by heightening incentives, by enhancing capacities, and by transferring competences to
the State of destination.
Keywords
Posted workers, migrant work, undeclared work, administrative enforcement, practical
implementation, compliance, EU administrative law, reform of EU social security law, social
security coordination.
Corresponding author:
Nicolas Rennuy, York Law School, The University of York, Freboys Lane, York, YO10 5GD, UK.
E-mail: nicolas.rennuy@york.ac.uk
Rennuy
213
1. Introduction
Workers are generally subject to the social security laws of the State in which they work.1 Con-
sequently, States apply their laws territorially, migrant workers are treated in the same way as local
workers, and employers cannot escape the social security contributions of the place where their
workers are active. Posting is an exception to all of this. In certain circumstances, workers and self-
employed persons can temporarily work on the territory of one State the State of destination
while remaining exclusively subject to the social security law of their State of origin. Without the
posting rule, employers would have to register their workers with the social security system of the
State in which they perform short stints of work.2 In this way, this rule aims
to promote freedom to provide services for the benefit of undertakings which avail themselves of it by
sending workers to Member States other than that in which they are established. It is aimed . . . at
encouraging economic interpenetration whilst avoiding administrative complications, in particular for
workers and undertakings.3
Much depends on the enforcement of the posting rule. This determines: (i) whether States can
apply their laws on their own territories and levy contributions from people who are active there;
(ii) which social security system workers and self-employed persons are subject to; and (iii) the
contribution rates and thus the competitive position of employers and self-employed persons.
The enforcement of the posting rule is almost entirely in the hands of the State of origin. It
issues a Portable Document A1 (previously the E 101 certificate and hereinafter ‘the certificate’),
which attests to the applicability of its social security legislation and the inapplicability of the
social security legislation of the State of destination. Crucially, certificates are binding on the
social security institutions (hereinafter ‘institutions’) and courts of the State of destination. The
certificate is at the heart of the enforcement of the posting rule, and therefore affects the interests of
States, workers, self-employed persons and employers.
The problem is that all too often the State of origin grants certificates on request from the
employer or self-employed person without much verification of the requirements for posting
rubber-stamping rather than investigating. This gap in enforcement creates propitious conditions
for non-compliance: it enables employers and self-employed persons to provide services in a
Member State without paying contributions there and without complying with the posting require-
ments. As a result, certificates that may well be dubious bind the social security institutions and
courts of the State of destination. This is all the more problematic as posting is a significant and
growing phenomenon—in 2018, 1.8 million certificates were issued to an estimated 1 million
people, up from about 1 million certificates in 2010.4 Posting is also asymmetric, varying widely
between sectors and countries, with only 8 per cent of certificates covering postings to EU-13
Member States.5 These figures are conservative, given that many workers and self-employed
persons are posted without a certificate.
1. Art. 11(3)(a) Reg 883/2004.
2. Case 35/70 SARL Manpower v Caisse primaire d’assurance maladie de Strasbourg [1970] ECR 1251, para 11.
3. Case C-202/97 Fitzwilliam Executive Search Ltd v Bestuur van het Landelijk instituut sociale verzekeringen [2000] ECR
I–883, para 28.
4. De Wispelaere, De Smedt and Pacolet (2020: 23–35).
5. ibid.
214
European Journal of Social Security 22(2)
What, then, can be done to address the enforcement and compliance deficits? In line with the
‘enforcement turn’ taking place in the free movement of persons, where the emphasis is put on the
enforcement rather than the creation of rights,6 the EU legislature has foregrounded the fight
against fraud and error in a reform package that is under negotiation.7 In March 2019, an agreement
reached in trilogue8 (hereinafter ‘the Draft Regulation’) was defeated in the Council, after which
the Parliament refrained from voting. The trilogues resumed in the autumn, but only one issue that
is relevant for this article is seemingly being renegotiated.9 All but one of the amendments
discussed in this article are therefore likely to be final, at least if the package is adopted.
Although those reforms should contribute to narrowing the enforcement and compliance gaps,
they only partially engage with the root of the problem, which is that the State of origin lacks the
capacity and incentive to monitor compliance with the posting rule assiduously. I infer that some of
its administrative enforcement powers should be transferred to the State of destination.
The posting rule connects with several wider debates. It delimits a patch of home State regu-
lation in a field, EU social security law, which is dominated by host State regulation. Those modes
of regulation, alongside the mutual recognition of the certificate, constitute core themes of EU
internal market law. The reasons for the enforcement gap the preserve of compliance studies
include a lack of cooperation in the composite administration and difficulties in access to judicial
review, which may call for reconsideration of the Member States’ institutional and procedural
autonomy to implement EU law topoi of EU administrative law. My methodological goal is to
embed the analysis of the enforcement of the posting rule, especially in EU administrative law
‘the set of rules governing the administration of the European Union and national administrations
when they are acting within the scope of application of EU law’.10
Much as EU social security law is part of EU administrative law, it is hardly ever framed as
such.11 Cutting this umbilical link hurts here, as the issue at hand—the allocation of enforcement
powers to a plurality of administrative and judicial authorities—is eminently administrative. What
EU social security law scholars would phrase as an issue of fraud and error afflicting the posting
rule arising from the binding effect of the A1 certificate, their EU administrative law colleagues
would frame as an enforcement and compliance gap arising from the recognition of a transnational
administrative decision.
6. E.g. Directive 2014/54 on measures facilitating the exercise of rights conferred on workers in the context of freedom of
movement for workers [2014] OJ L128/8; Directive 2014/67 on the enforcement of Directive 96/71 [2014] OJ L159/
11; Regulation 2019/1149 establishing a European Labour Authority [2019] OJ L186/21. Directive 2018/957
amending Directive 96/71 [2018] OJ L173/16 only partly bucks that trend.
7. E.g. proposed Recital 25 Reg 987/2009 (inserted by Art. 2(3) General Secretariat of the Council, ‘Proposal for a
Regulation amending Regulation 883/2004 on the coordination of social security systems and Regulation 987/2009
laying down the procedure for implementing Regulation 883/2004 – Analysis of the final compromise text with a view
to agreement’ 7698/19 Add 1 Rev 1, hereinafter ‘the Draft Regulation’). While ‘facilitating the exercise of citizens’
rights’, according to the Commission the amendments to the social security Regulations do ‘not...
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