The working conditions of cross-border temporary agency workers on paper and in reality

Abstract

¹ This contribution focuses on the legal position and working conditions of cross-border temporary agency workers. In the context of the relationship between the free movement of workers and the freedom to provide services, the applicability of the Temporary Agency Work Directive (TAWD) and/or of the (revised) Posting of Workers Directive (PWD) to several different arrangements for cross-border temporary agency work is explored. Furthermore, the tools to prevent circumvention and to encourage compliance with and the enforcement of these legal instruments are discussed. With regard to the role of temporary work agencies and other intermediaries in practice, there seems to be an overlap between facilitation and exploitation, with numerous studies and reports underpinning this assertion. Despite the more favourable position of ‘recruited’ transnational temporary agency workers on paper, the gap with ‘posted’ temporary agency workers is not so wide in reality. For all cross-border temporary agency workers in low-waged sectors, significant problems related to non- or semi-compliance with the applicable regulations arise. After discussing the main challenges relating to non-compliance and enforcement, as well as available tools for cross-border cooperation, some potential future solutions to the aforementioned problems are outlined. In this regard, a pragmatic stance is taken as no ‘magic bullet’ solutions exist.

1. Introduction

This contribution focuses on the rather complex legal and factual situation of cross-border temporary agency workers in the EU. With a focus on the relationship between the free movement of workers and the freedom to provide services, the applicability of the Temporary Agency Work Directive (TAWD) ² and/or of the (revised) Posting of Workers Directive (PWD) ³ to several different cross-border agency arrangements is explored. Furthermore, (non-)compliance with and the enforcement of these legal instruments in respect of cross-border agency workers and issues related to cross-border monitoring and cooperation are discussed.

The contribution is structured as follows. First, the applicable sources of EU law for specific cross-border agency arrangements are identified (section 2). Next, the relationship between the TAWD and the (revised) PWD is examined (section 3), followed by the main challenges relating to the circumvention and enforcement of the legislation on cross-border temporary agency work (section 4), as well as available tools for cross-border cooperation (section 5). Finally, potential future solutions to the problems discussed are be outlined (section 6).

2. The EU's legal framework for three cross-border temporary agency work arrangements

Several legal arrangements for cross-border temporary agency work are used in practice. Workers can be recruited in a sending Member State and employed by an agency established in the same host country as the user undertaking (1). Alternatively, workers can be assigned to a user undertaking in the host country by an agency established in the sending country (2), or they may be requested to perform work in a third (different) Member State (3). As a starting point for establishing and discussing the working conditions of cross-border temporary agency workers, this section identifies the applicable primary and secondary sources of EU law for these three specific cross-border agency arrangements.

2.1. First arrangement: temporary agency workers recruited in a different Member State than where they are hired and put to work

In the first arrangement, the cross-border element consists of the agency worker being recruited in a ‘sending’ Member State but hired and placed in a user undertaking in the host Member State by a temporary work agency (TWA) established in the host country. If the recruited temporary agency worker is a national of an EU Member State, ⁴ the right to free movement of workers applies. ⁵ This implies that the worker will be covered by the right to be treated equally with national workers, enshrined in Art. 45 TFEU, and is therefore in principle covered by the host country's labour, social security and tax laws, including its implementation of the TAWD. ⁶

Hence, the (national implementation of the) TAWD fully applies to workers who are hired and perform work in a Member State other than their own, i.e., they are treated as if they were national workers. This includes Article 5 TAWD, which stipulates equal treatment for temporary agency workers in relation to ‘basic’ employment conditions at the user undertaking. The Directive itself actually derogates from the principle of equal treatment in that only the temporary agency worker's basic working conditions must (at least) be equal with those afforded to workers directly hired by the user undertaking. These basic working conditions are described in Article 3(1)(f) TAWD; they refer to workers’ working and employment conditions on working time, leave entitlements and pay, ⁷ which are usually established in a Member State's legislation or in collective agreements. Although the Court of European Justice (CJEU) tends to interpret the term ‘working conditions’ broadly, ⁸ Member States are free to interpret what constitutes ‘pay’, pursuant to Article 3(2) TAWD. Moreover, temporary agency workers’ working conditions may change depending on their assignments.

Although the TAWD prescribes equal treatment in relation to agency workers’ basic working conditions, several derogations are possible. Member States may exempt temporary agency workers who have a permanent contract of employment with a TWA and continue to receive pay between assignments (Article 5(2) TAWD) from equal pay conditions. Moreover, if a Member State has incorporated this option into its national legal framework, ⁹ the social partners may introduce derogations in collective agreements, but must respect the ‘overall protection’ of temporary agency workers in relation to working and employment conditions (Article 5(3) TAWD). Recently, the CJEU clarified the concept of ‘overall protection’, stating that derogations in a collective agreement to the detriment of temporary agency workers must be compensated by providing countervailing benefits based on a concrete assessment for a given job of the difference in treatment with comparable workers in the user undertaking. ¹⁰ That is, Member States and their social partners must prevent derogations from the principle of equal treatment from being detrimental to temporary agency workers’ overall level of protection. ¹¹

2.2. Second arrangement: temporary agency workers hired in one Member State and posted to a user undertaking in another Member State

In the second arrangement, the cross-border element consists of the fact that the agency worker is hired by a TWA established in a ‘sending’ Member State but is placed in a user undertaking established or operating in the host Member State. In this situation, the TWA draws on the freedom to provide services in the EU (Article 56 TFEU). The (revised) PWD, which covers the posting of workers within the framework of freedom to provide services in the EU, explicitly addresses cross-border temporary agency work in its Article 1(3)(c) PWD). Therefore, it applies to the second arrangement, provided that all requirements are met.

2.3. Third arrangement: temporary agency workers hired in one Member State and posted to a user undertaking in another Member State and requested to perform work in a third Member State

The third arrangement is a variant of the second arrangement. It involves two cross-border elements. Firstly, as in the second arrangement, the temporary agency worker is hired by a TWA established in a ‘sending’ Member State and is assigned to a user undertaking in the host Member State. The TWA draws on its freedom to provide services in the EU. Secondly, the user undertaking requests the posted agency worker to perform work in a third Member State, i.e., a state other than the sending or host country. The user undertaking draws on its freedom to provide services in the EU.

In contrast to the temporary agency worker in the first arrangement, the agency worker in the second and third arrangements qualifies as a ‘posted worker’. Posted workers maintain their employment relationship with their own employer (the TWA), established in the sending country, during their (chain) posting in the host (and third) country. As a starting point, the employment contracts of posted (agency) workers are governed by the laws of their habitual country of work ¹² instead of the host country's laws. This contractual perspective reveals an important aspect of the legal position of posted (agency) workers: the employment contract of a posted worker is typically influenced by more than one labour law system, as the employment contract is concluded in one Member State (‘sending’ or home State), while the performance of the temporary service occurs in another (host State). ¹³ Hence, the arrangements for posted temporary agency workers call into question the relationship between the TAWD and the (revised) PWD, an issue that is addressed in more detail below.

3. Relationship between the TAWD and the (revised) PWD for ‘posted’ agency workers

As regards the relationship between the TAWD adopted in 2008, and the PWD adopted in 1996, recital 22 TAWD states that the TAWD should be implemented in compliance with the provisions of the Treaty on the Freedom to Provide Services and the Freedom of Establishment, without prejudice to Directive 96/71/EC. Following on from this consideration, it is clear that the TAWD, in principle, has a national scope of application, although it lacks a clear provision on its territorial scope. Moreover, it is clear that the (revised) PWD is specifically aimed at cross-border situations and that its relevant provisions take precedence over those of the TAWD. ¹⁴

Hence, the TAWD fully covers recruited temporary agency workers who are hired and perform work in a Member State other than their own as though they were domestic workers (first arrangement), while the PWD covers temporary agency workers who, in accordance with Article 2(1) PWD, are posted to a host State for a limited period, carrying out their assignment in the territory of a Member State other than the State they normally ¹⁵ work in (second and third arrangements). ¹⁶ A closer look at what this entails for the latter two arrangements is warranted.

3.1. Concept of posting

Three Posting of Workers Directives (PWDs) have been issued to date: the original PWD, amended by the revised PWD of 2018, and the Posting of Workers Enforcement Directive adopted in 2014. The revised PWD (2018) amended the PWD and complements the Enforcement Directive. The PWD covers three different types of postings described in its Article 1(3): apart from (a) postings to perform service contracts in the context of transnational subcontracting, and (b) transnational intra-company transfers, it also covers (c) transnational temporary agency work. In two of the three situations of posting, a service contract must be concluded between the employer and the recipient established or active in the country in which the service is to be performed. This requirement is mentioned in Article 1(3)(a) and (c), but does not seem to be a prerequisite for intra-company postings (Article 1(3)(b) of the Directive).

Hence, pursuant to Article 1(3)(c), the PWD notably applies to a TWA, established in a Member State, that hires out workers to user undertakings that are established or operate in the territory of another Member State, provided there is (or remains) an employment relationship between the TWA and the worker during the period of his or her posting. This provision covers both the second arrangement and the first cross-border component of the third arrangement for posted temporary agency work.

As regards the second cross-border component of the third arrangement, the revised PWD clarifies that in cases of so-called ‘chain’ or ‘double’ posting, the worker shall be considered to be posted to the territory of the third Member State by the TWA with which the worker is in an employment relationship. The user undertaking shall inform the TWA ‘in due time before commencement of the work (…)’. ¹⁷ As observed by Van Nuffel & Afanasjeva, this text not only clarifies situations of chain posting, but at the same time seems to legitimise this practice. ¹⁸ As they point out, Article 1(3) PWD requires the continuing existence of an employment relationship between the undertaking posting the worker and the posted worker during the entire duration of the posting. Hence, it could be argued that the second (‘chain’) posting of the worker abroad is not genuine and should not be considered a posting within the meaning of the Directive. However, according to recital 13 of the revised PWD, the protection of those workers should be ensured as ‘experience shows’ that workers are sometimes double posted.

To clarify what applies in relation to this rather complex third arrangement, the practical guide on posting provides the following example: ‘A temporary work agency established in Member State A hired out a worker to a user undertaking in Member State B. One month later, the user undertaking posts the same worker to Member State C in the context of a contract of services. In such a case, the authorities of Member State C must consider that it is the temporary agency established in Member State A that has made the posting. The temporary agency is responsible for complying with the right terms and conditions of employment, but, for example, also for making the declaration prior to posting. In such a case, the worker is entitled to the more favourable terms and conditions of employment of the two, i.e.,: - either the terms and conditions of employment applicable in the user undertaking in Member State B; - or the terms and conditions of employment applicable in Member State C.’ ¹⁹

That is, the TWA, as the employer of the ‘double’ posted agency worker, remains responsible for guaranteeing the rights and protection the respective worker is entitled to under the PWD. Moreover, the user undertaking is made responsible for informing the TWA in due time before the posted worker starts performing his or her tasks in the third Member State.

While some authors contend that these rules will make a genuine difference in practice, as the rules on postings have been further clarified and are enforceable in situations that were formerly in a ‘grey zone’, ²⁰ others criticise the requirement that the user company must provide information as ‘highly insufficient’, ²¹ or state ‘that it is highly doubtful that these new provisions on the obligation to provide information are complied with in practice’. ²² However, before looking to how the rules are (not) abided by in practice, it is important to establish first what the (revised) PWD stipulates with regard to the terms and conditions of employment for both the second and the third arrangements.

3.2. Terms and conditions of employment according to the (revised) PWD

The PWD coordinates Member States’ legislation by providing for a set of mandatory rules that employers who post workers to a Member State in which the service will be provided ²³ must comply with. According to Article 3(1) PWD, Member States must ensure that undertakings that fall within the scope of the PWD guarantee workers who are posted to their territory the terms and conditions of employment stipulated in mandatory law, including collective agreements that have been declared universally applicable. Hence, Article 3(1) PWD specifies the nature of the employment standards that must be applied in the host Member State, but does not specify the substance of those standards.

These ‘host State standards’, as amended by the revised PWD, include, e.g., the duration of working time; rest periods and holidays; remuneration; health, safety and hygiene at work; the conditions for hiring out workers, in particular the supply of workers by temporary work agencies, ²⁴ as well as equal treatment between men and women. The guarantee of equal remuneration includes all elements of remuneration that are mandatory in the host State (both in statutory law and in mandatory or generally binding collective labour agreements), and applies to both domestic and posted workers. ²⁵ This means that employers have a duty to apply all of the host country's rules on pay/remuneration, as stipulated in national laws or in universally applicable collective labour agreements. Moreover, Article 3(8) PWD has been amended to allow for the application of generally applicable agreements or agreements concluded by the most representative organisations not only in the absence of, but also ‘in addition to’, universally applicable ones. ²⁶ The constituent elements of remuneration include thirteenth month allowances, travel expenses, and compensation for work on public holidays or for night work. ²⁷ The condition of workers’ accommodation and allowances or reimbursements for travel, board and lodging costs for workers who are away from home for professional reasons have been added as matters belonging to the ‘hard core’ of employment conditions in the host State. These are the ‘hard core’ of employment conditions all workers posted for less than one (or one-and-a-half) year(s) are entitled to. Special rules for long-term postings were also introduced by the revised PWD. ²⁸ It can be concluded that a ceiling for the protection of posted workers still exists, but it is now at least higher.

3.3. Terms and conditions of employment specifically for posted temporary agency workers

The highest ceiling applies to posted temporary agency workers. The revised PWD links the protection of posted agency workers to the TAWD's ‘equal treatment provision’ (Article 5), which stipulates equal treatment for temporary agency workers in the user undertaking. ²⁹ Contrary to other types of posted workers, this implies that the guaranteed terms and conditions of employment for posted agency workers are not limited to those specified in law or in universally applicable collective agreements. If a collective agreement exists at the level of the user undertaking that must be applied to domestic temporary agency workers, it must also be applied to posted agency workers. In addition to the provisions of Article 5 TAWD, Member States are entitled to require posted agency workers to benefit from other terms and conditions that apply to domestic agency workers in the Member State in which the work is being performed. ³⁰ Moreover, Article 1(1)(c) of the revised PWD strengthens the protection of agency workers involved in ‘chain’ or ‘double’ postings (see above third arrangement). Apart from improving posted agency workers’ legal position, the amendments together also contribute to a level playing field for the TWAs involved.

Hence, while recital 22 TAWD implies that the relevant provisions of the PWD shall take precedence over the former Directive's provisions, the revised PWD simultaneously links the protection of posted agency workers to the TAWD's ‘equal treatment provision’, establishing the equal treatment of temporary agency workers in user undertakings. ³¹ This amendment was introduced to improve consistency between the PWD and the TAWD, thereby eliminating any source of uncertainty about the application of the principle of equal treatment to temporary agency workers. Since the purpose of agency workers’ posting to host Member States is the provision of services, and considering that they perform tasks under the control and direction of the user undertaking, ³² this special link with the host Member State's labour market warrants workers who are posted by TWAs benefitting from the principle of equal treatment.

As regards the option of Member States to extend equal treatment to other employment conditions that are applicable to domestic agency workers, this could, in principle, include the rights stipulated in Article 6 and in subsequent provisions of the TAWD. Accordingly, posted agency workers would be informed of any vacancies in the user undertaking, opening up to them the same opportunities available to other workers in the undertaking to find permanent employment. Also, they could enjoy equal access to collective facilities such as the canteen, childcare facilities or transport services. Would posted agency workers benefit from national laws or collective agreements that improve temporary agency workers’ access to training in TWAs, even during periods between assignments, to pursue career development goals and increase their employability, and to improve access to training for all of the user undertaking's workers? Interestingly, if posted temporary agency workers were granted these rights indeed, it would open up opportunities to them for long-term access to the host Member State's labour market. ³³

But what about the other side of the coin? Under what circumstances can the law that applies to the employment contract (‘home State’) continue to cover posted temporary agency workers? As stated in the Explanatory Memorandum to the PWD's first draft, the designation and application of mandatory rules to be observed by foreign service providers in the host State must be compatible with the temporary nature of the performance of work in the host country and consistent with the PWD's stated aims and objectives. As regards mandatory rules on form, suspension, alteration and termination of the employment contract and workers’ rights to information, consultation and participation, the idea is that the posted worker shall continue to ‘belong’ to the labour market he or she habitually works in. ³⁴ This would suggest that posted agency workers are covered by the home State's measures against abuse as stipulated in Article 5(5) TAWD, in particular in relation to successive assignments. From a compliance and enforcement perspective, that is rather problematic.

3.4. Difference in the terms and conditions of recruited cross-border agency workers

Finally, considering the distinction between workers’ free movement under Article 45 TFEU and the provision of services under Article 56 TFEU, recruited cross-border agency workers (first arrangement) gain full access to all social and fiscal benefits provided in the host Member State, whereas posted agency workers (second and third arrangement) remain insured and covered by the social security benefits provided in their home State. A recruited cross-border agency worker is thus still entitled to a higher level of protection than a posted agency worker, and perhaps even more importantly, to aligned protection within one legal system. This crucial difference means that the recruited cross-border agency worker is in a less complex legal situation than posted agency workers, which makes a huge difference in terms of monitoring and enforcement, to which we will now turn.

4. Preventing circumvention and encouraging enforcement of the rules on cross-border temporary agency work in theory and practice

4.1. Weak remedies provided by the TAWD

In the first arrangement, recruited cross-border agency workers are dependent on one national legal framework for the enforcement of their rights. Despite the enactment of the TAWD, the regulatory models of EU jurisdictions still differ widely, ranging from traditionally protective systems that promote licensing and implement stringent sanctions, to more liberal approaches that treat TAW as a common form of flexible employment. ³⁵ Moreover, besides ‘traditional’ agency work (whereby the ‘staffing agency’ matches labour demand and supply for temporary work), there are now also other types of intermediaries active on the labour market that use other types of contracts, such as subcontracting. These forms of triangular employment relationships are not covered by the TAWD, thus undermining its effectiveness. ³⁶

Apart from Articles 5(5) and 10 TAWD, which aim to prevent abuse, ³⁷ the Directive does not provide solid remedies against the abusive use of temporary agency work. Article 5(5) stipulates that appropriate measures must be taken in accordance with national law and/or practice to prevent misuse in the application of Article 5, and in particular, to prevent successive assignments designed to circumvent the Directive's provisions. ³⁸

The distribution of responsibilities between the TWA and the ‘user undertaking’ remains uncertain under the TAWD. As a result, there are major variations from one Member State to another. In contrast with this approach, regarding liability for the protection of workers’ health and safety, Directive 91/383/EEC concerning temporary workers’ safety and health at work includes provisions on the responsibilities of both the TWA and user undertaking: in addition to the TWA's responsibilities enshrined in national legislation, the user undertaking is responsible for complying with the conditions regulating the performance of work during the agency worker's assignment. ³⁹ Beyond health and safety, a more favourable solution for temporary agency workers would be recognition at EU level of a rule according to which both the TWA and the user undertaking are jointly responsible for the labour and employment regulations applicable to such workers. ⁴⁰

4.2. A ‘balanced approach’ to monitoring and enforcement in the PWDs

Both in the second and third arrangement, the TWA must comply with all of the provisions of the Posting of Workers Directives, including the relevant administrative requirements and control measures.

That posted workers’ employment (and social security and tax) conditions are always linked to more than one legal system creates (additional) obstacles in terms of identifying, applying and/or monitoring and controlling posted workers’ rights for employers, intermediaries, workers, trade unions and other worker representatives, as well as for inspectorates. The fluidity in the cross-border context, with firms often disappearing across borders or going out of business, complicates efforts to enforce (and execute) national labour standards. The Enforcement Directive (Directive 2014/67/EU) addresses these salient issues with a ‘comprehensive approach to enforcement’. This approach was explained in the proposal for the Enforcement Directive as follows: ‘The comprehensive approach to enforcement includes awareness raising (better information), state enforcement mechanisms (inspections and sanctions) and private law enforcement mechanisms (joint and several liability). All aspects are deemed important for a balanced approach. Weakening one of the aspects would imply strengthening other aspects of enforcement in order to achieve a similar result’. ⁴¹ Measures and tools include:

a non-exhaustive list of indicative factual elements to help competent authorities such as labour inspectorates determine whether the establishment of the posting company in the sending State is genuine (Article 4(2) of the Directive) and to assess whether posted workers are only temporarily performing work in a Member State other than the one they normally work in (Article 4(3) of the Directive);

a framework for improving access to information in host Member States, relevant for the posting of workers (Article 5) in terms of strengthening legal certainty for service providers;

a framework for strengthening administrative cooperation between authorities and other stakeholders across countries (Articles 6 and 7);

a (non-exhaustive) list of justified and proportionate administrative requirements and control measures that can be applied by the Member States (Article 9);

an obligation upon Member States to ensure effective mechanisms for posted workers to lodge complaints and initiate judicial/administrative proceedings (also through trade unions) against their employer (also) in the host Member State (Article 11);

a subcontracting liability arrangement for wages (Article 12). This measure is restricted to the construction sector despite clear evidence that the practice of subcontracting has spread to other sectors such as transport, meat processing, agriculture and other labour intensive sectors (currently Member States are free instead of obliged to expand the scope to these sectors).

Stricter registration rules (such as notification systems, dissuasive penalties for non-compliance with the rules, making service recipients co-responsible for registration) for service providers that post workers are allowed (but are not mandatory) under the Enforcement Directive, and have been introduced in the Member States to improve the quality of data collection on postings and to facilitate the monitoring and enforcement of rights of posted workers.

The revised PWD includes some additional surveillance and control measures. To strengthen legal certainty and the enforcement of laws, Member States are required to publish ‘without undue delay and in a transparent manner’ information on the constituent elements of remuneration on their (single) official national website, in addition to the other information referred to in Article 5 Enforcement Directive, as well as on any additional terms and conditions of employment applicable to postings that exceed 12 or, where applicable, 18 months. Each Member State must ensure that the information on its (single) official national website is accurate and regularly updated. Failure to comply with this obligation will be taken into account when determining fines for infringement of national provisions adopted pursuant to the (revised) Directive, ‘to the extent necessary to ensure the proportionality thereof’. ⁴² The revised PWD complements the Enforcement Directive by introducing an obligation for the host State to create a sanctioning regime. Clearly, the PWDs facilitate and encourage enforcement in some respects, but real commitment with budgetary implications and strong political will at the level of the host Member State is also called for.

4.3. Similar vulnerabilities of recruited and posted temporary agency workers in practice

Notably, for both recruited (first arrangement) and posted cross-border temporary agency workers (second and third arrangements), any rights that cannot be enforced are basically useless. Despite the more favourable position of recruited transnational agency workers on paper, the gap to posted agency workers is not so wide in practice. In both situations, significant problems related to non- or semi-compliance with the applicable regulations arise. Despite the differences in terms of their legal status, what all (newly arrived) transnational (temporary agency) workers have in common is that they are unfamiliar with the laws of the host Member State they (temporarily) work in. Therefore, specifically low-wage ⁴³ mobile workers may more easily be cheated out of their rights than their domestic counterparts. Often, transnational (temporary agency) workers lack awareness of their genuine (and sometimes volatile) legal status and of who is their (real) employer. Moreover, such workers are often ⁴⁴ effectively excluded from the well-established fundamental right of collective representation. ⁴⁵

In some sectors and regions of the EU, intermediaries have become strongly associated with transnational worker abuses and cost-reduction practices. While the majority of labour market intermediaries are formally listed enterprises, some operate informally and without being registered. Complex and non-transparent triangular employment relationships and a chain of subcontractors and intermediaries, often operating in several countries, make the monitoring and detection of fraudulent forms of TAW extremely difficult. According to a recent study by the European Platform tackling undeclared work, ‘…[t]his is further compounded when there is the involvement of “letterbox” TWAs, unregistered/unlicensed agencies, and “phoenix” activities across long and complex subcontracting chains involving numerous entities, with TWAs employed at the lowest level of the chain.’ ⁴⁶ In addition, labour inspectorates have limited mandates, especially when it comes to cross-border issues, which is another obstacle to effective monitoring. Furthermore, monitoring recruitment and temporary work agencies in the cross-border context involves many other considerable challenges.

One crucial loophole that hampers the enforceability of the regulatory framework is linked to corporate mobility law. Some legal advisers specialise in setting up letterbox companies, which are legal entities with little or no activity in the country of registration. These companies implement strategies across legal areas, ⁴⁷ while inspectorates are often divided along the lines of legal areas (‘silos’). One major challenge in fighting exploitative bogus arrangements is that the CJEU has facilitated the establishment of letterbox companies through its case law in a number of judgments, starting with Centros and more recently confirmed in Polbud. ⁴⁸ At the same time, the CJEU has ruled that a TWA can only benefit from the posting provision in Regulation 883/2004 on the coordination of social security systems if it carries out a ‘significant part’ of its activities of assigning temporary agency workers in the territory of the Member State where it is established. ⁴⁹

The role of these TWAs and recruitment agencies in a cross-border context remains a matter of concern. It is consistently noted that temporary agency workers are at an increased risk of being subject to exploitative working conditions. ⁵⁰ According to Eurofound, although labour market intermediaries have gained importance in facilitating international mobility, there may be an overlap between facilitation and exploitation. ⁵¹ Exploitative working conditions have been confirmed in many other studies, for example in the EU Fundamental Rights Agency's study entitled ‘Severe labour exploitation: workers moving within or into the European Union’. ⁵² All studies mention excessive working time, poor living conditions and hazardous working conditions, and a disregard for occupational health and safety standards.

All these findings reveal the important role TWAs play in helping transnational temporary agency workers find work but also in creating multiple dependencies, thereby contributing to increased vulnerability and exploitation of the (recruited or posted) workers involved. In particular, the sometimes long or complex chains in which labour is subcontracted via the employer or TWA (and/or other intermediaries) to the user company increases transnational (temporary agency) workers’ vulnerability. ⁵³ Moreover, academic studies highlight the profound difficulties states and enforcement authorities face in terms of controlling wages and other working conditions, such as the occupational safety and health (OSH) of transnational (temporary agency) workers in the EU. ⁵⁴

Recent studies also indicate that transnational recruitment and the posting of (temporary agency) workers is not only on the rise, but now increasingly includes third-country nationals (TCNs). What is concerning is that TCNs tend to be even more vulnerable than other (recruited or posted) workers because they often depend on work visas issued by the sending countries. Losing their employment may result in the automatic loss of their visa and their right to stay in the EU. ⁵⁵ Empirical research confirms that (certain groups of) posted TCNs are among the most vulnerable groups of workers on the EU labour markets. In a recent empirical study on posting and social rights access, the group of TCN workers was found to be ‘the most alienated and, therefore, much more susceptible to exploitation. Their vulnerable labour market position is exacerbated by their lack of host country context specific knowledge, including language, willingness to accept poorer work conditions, and a high level of dependency of the employer.’ ⁵⁶ Their work life in the EU consisted of a series of temporary jobs in various countries, without being embedded in a single Member State's labour and welfare system. A recent report shows that fraudulent arrangements and non-compliance issues are exacerbated when TCNs are involved, making enforcement of the rules in relation to TCN posting a barely realistic prospect. ⁵⁷

Moreover, the COVID-19 pandemic pronouncedly brought to light the substandard living and working conditions of many mobile workers in the EU. While transnational workers were among the groups most exposed to risks during the pandemic due to their ‘essential’ jobs, legislative and policy focus on protecting their well-being and health, including access to care, as well as their labour and social rights, remained modest (beyond emergency measures). ⁵⁸

5. Tools available for cross-border cooperation

Ensuring that the rights of transnational temporary agency workers are adequately protected requires comprehensive cooperation—such as joint visits to the work sites and increased information exchange—by national actors (depending on the national system, these could be labour inspectorates, other public bodies, social partners). Moreover, although the posting of (temporary agency) workers falls under the scope of the regulations of both the ‘sending’ and receiving country, enforcers of the rights of posted workers (e.g., trade unions, labour inspectorates) do not have competence to act beyond their own national jurisdictions.

Hence, cross-border cooperation is crucial to more effectively monitor and enforce the rights of posted workers. Although cross-border cooperation has increased over the last decade, ⁵⁹ especially in relation to postings within the framework of the freedom to provide cross-border services, the procedures are lengthy and time-consuming, and no proper sanctions are available. Certain improvements can be expected, as the Enforcement Directive links inspectorates’ information exchange to the so-called Internal Market Information (IMI) system. Also, in 2019, the Regulation (EU) 2019/1149 to establish a European Labour Authority (ELA) was adopted. The ELA aims to provide more comprehensive and easily accessible information and services, and to stimulate cooperation between authorities, including joint inspections, across legal areas of, e.g., social security and labour law.

The ELA facilitates collaboration and the exchange of information between Member States and supports effective compliance with cooperation obligations. It aims, in particular, to support national authorities in identifying the relevant contact point of national authorities in Member States, to facilitate follow-ups on requests and information exchange between national authorities, and supports cross-border enforcement procedures. ⁶⁰ One important task of ELA is to coordinate and support concerted and joint inspections at the request of one or more Member States by agreement of the Member State(s) concerned. Notably, ELA does not have a proper mandate to organise such inspections, but depends on the willingness of Member States to participate in them. Such inspections shall be carried out by the inspection services of the Member States concerned in accordance with the law and practices of the Member State in which the inspection takes place. ELA shall provide conceptual, logistical and technical support, including translation and interpretation services, as well as legal expertise. ⁶¹ ELA has recently launched a ‘Posting 360 mutual learning and understanding programme’ for the relevant stakeholders, with six priority areas covering relevant topics: (i) implementation of the PWD; (ii) posted TCN workers; (iii) application of social security coordination rules to posted workers; (iv) information exchange and digitalisation opportunities for authorities, employers and workers; (v) effective administrative procedures and control measures; and (vi) facilitation of the collection and quality improvement of data. ⁶²

An interesting ‘best practice’ in cross-border cooperation occurred in Spring 2022, when the Dutch labour inspectorate engaged in enforcing the rules on decent employment and housing conditions for temporary agency workers employed by Dutch TWAs who were residing in the German border region. The German local and regional authorities took the initiative to enforce a new North Rhine-Westphalia law on decent housing for migrant workers (Wohnraumstärkungsgesetz). While the German authorities concentrated on the workers’ housing conditions, the Dutch inspectorate investigated the payment of statutory minimum wage and potentially illicit deductions for the workers’ deplorable housing conditions. The case was extensively covered in the media, with the TWA's practices named and shamed. ⁶³

6. Possible future solutions to the issues discussed

One conclusion based on the issues discussed above can easily be drawn: the regulatory framework on (the legal arrangements for) temporary agency work within a cross-border context continues to be plagued by serious defects in terms of its application, monitoring and enforceability. It is too complicated and inconsistent. Since no magic bullet exists with which we can resolve these issues, ⁶⁴ some (non-exhaustive) piecemeal recommendations are presented below.

6.1. Measures to improve the European framework

The PWD Enforcement Directive (Directive 2014/67/EU) could more effectively fight letterbox (TAW) practices, if Article 12 (on joint and several liability) and Article 4 (on criteria to identify genuine postings and genuine establishments of posting companies) were strengthened. As regards Article 12, obligatory chain liability, including all participants in the chain and the end-user (client), is recommended. Moreover, not only minimum wage but—in line with Article 3(1)(c) revised PWD—the full range of wage components should be covered by the liability regime; the liability regime should also cover all economic sectors (including TWAs) instead of only the construction sector. ⁶⁵ As regards Article 4, instead of merely suggesting an application of indicators for non-genuine postings and posting companies, an obligation to do so would strengthen the potential effectiveness of these instruments.

The introduction of an EU notification system (together with an European register appropriate for both statistical purposes and for facilitating monitoring and enforcement) would be a win-win for (decent) service providers, workers and inspectorates alike. As outlined in a recent Eurofound report, improving the monitoring of posting of (agency) workers in Europe would require an incremental strategy that comprises action in two areas: (i) improvement of the scope and quality of data collected, and (ii) improvement of coordination and data sharing between Member States. Pursuing both approaches would lead to an ‘ideal scenario’, characterised by the availability of comprehensive data and easy access to such data at both the Member State and European levels. ⁶⁶

Furthermore, the procedural position of transnational workers (specifically, low-wage (temporary agency) workers in high-risk sectors) requires further improvement. A roadmap to improve their access to trade union representation and their individual position needs to be developed. In this regard, the practical relevance of the Legal Aid Directive (Directive 2003/8/EC) for cross-border workers merits further examination (and, if need be, improvement). Extension of the scope of the Small Claims (EC) Regulation 861/2007 (as amended by (EU) Regulation 2015/2421) to include outstanding wage claims and other simple employment law claims not exceeding an amount of EUR 5,000 might also be helpful.

6.2. Measures to improve national frameworks

As long as EU rules on corporate mobility do not provide for a workable solution for one of the most crucial loopholes in the current legal framework, stronger dissuasive measures can and should be introduced at the national level. One possible way forward towards creating clear, fair and enforceable rules could be to restrict or even prohibit the possibility of using temporary agency workers altogether – at least in certain risk sectors (on a temporary basis), such as in the agriculture, care, meat, construction and road transport sectors. ⁶⁷ In Germany, temporary agency work in the meat industry has been prohibited since April 2021, in response to investigations during the COVID-19 pandemic into claims that agency workers in the meat industry worked in extremely precarious conditions. Also, the use of temporary agency workers in this sector was particularly high. ⁶⁸ The prohibition applies to the core businesses of the meat industry (slaughtering, cutting and meat processing). A possibility of strictly limited exceptions remains for a period of three years, which is dependent on the conclusion of a collective agreement, but has not yet occurred. ⁶⁹ These measures were contested before the German courts for imposing discriminatory restrictions. However, the Constitutional Court rejected the claims brought by several temporary work agencies and a sausage manufacturer. ⁷⁰

Indeed, in accordance with Article 4(1) TAWD, measures to prevent abuse can be justified. This includes measures such as restrictions on the nature of the tasks that may be assigned to temporary agency workers, the possibility for national collective agreements to set quantitative limits on the use of contracts for agency work, or the need in certain cases for the user undertaking to obtain the consent of its union delegation before using agency workers. ⁷¹

Furthermore, there is an urgent need to strengthen national monitoring and enforcement mechanisms. ⁷² Article 4(4) TAWD leaves measures related to registration, licensing, certification and financial guarantees or the monitoring of TAW fully within Member States’ remit. So, licensing systems for TWAs could, inter alia, be adopted or improved (and monitored!), which—to prevent the establishment of letterbox companies—should include clear criteria for establishing operating premises, such as a minimum amount of square meters, technical equipment and other ‘substantial requirements’ relating to, e.g., a minimum percentage of turnover in the country of establishment, in addition to stringent requirements for working conditions, such as adequate health and safety policies, decent accommodation for workers and transport or reimbursement of such costs, equal pay and training.

Imposing genuine dissuasive sanctions at the earliest appropriate moment upon detection of fraud and/or abuse is crucial. In high-risk sectors, the possibility of suspending the provision of services in the event of serious breaches of legislation on postings or of applicable collective agreements should be more frequently applied (especially if there is a pattern of companies disappearing soon after being targeted by monitoring and enforcement measures).

6.3. Concluding remarks

Arguably, where enforcement is weak, the bona fide temporary work agencies will suffer from the poor image of their mala fide colleagues and from unfair competition. In fact, without strict rules to distinguish the ‘good’ TWAs from the ‘bad’ TWAs, the positive aspect of temporary agency work would probably never have had an opportunity to prove itself in the first place. At a European level, the first policy documents on temporary agency work in the 1970s emphasised the need to eliminate abuses that characterised the activities of TWAs at the time. ⁷³

In a similar vein, fostering and facilitating the stepping stone function of temporary agency work in the context of national labour markets may benefit from a focus on effective prevention of abuse (and hence, of unfair competition) of cross-border temporary agency workers. ⁷⁴ Moreover, the remaining scope for bona fide use of cross-border agency workers may even result in a ‘stepping stone’ function of temporary agency work for this particular group of workers itself, improving their employment opportunities, career prospects and even their work-life balance. ⁷⁵