The concept of ‘temporary agency work’ in EU law. C-441/23,ECLI:EU:C:2024:916 ( Omnitel Comunicaciones and Others )

Abstract

This case note discusses the concept of ‘temporary agency work’ in EU law following the Omnitel Comunicaciones and Others judgment of the CJEU. The analysis focuses on the relevance of administrative authorisation for being a temporary work agency, the matter of occasional assignments and the division of supervision and direction in triangular working relationships.

1. Introduction

The Temporary Agency Work Directive (TAWD), ¹ which has been required to be implemented in the law of the Member States since 2011, has recently come up more frequently in the case law of the Court of Justice of the EU (CJEU). After rulings on, inter alia, the temporary nature of temporary agency work ² and the equal treatment provision of Article 5 TAWD, ³ in Omnitel Comunicaciones and Others the CJEU sheds pivotal light on the notions of ‘temporary work agency’, ‘temporary agency worker’ and ‘user undertaking’. After an account of the facts (section 2) and the CJEU's ruling (section 3), I subject the decision to further analysis (section 4). The commentary focuses on the relevance of administrative authorisation for being a temporary work agency, the matter of occasional assignments and the division of supervision and direction in triangular working relationships.

2. Facts

After completing an occupational traineeship at Microsoft, LM entered into successive employment contracts with three companies, Omnitel Comunicaciones, Indi Marketers and Leadmarket, between 24 August 2011 and 1 August 2017. The companies had concluded successive service agreements with Microsoft, under which LM was responsible for performing the contractually agreed services. Under the employment contract entered into on 1 August 2017 between Leadmarket and LM, LM was employed as a sales consultant and performed marketing services for Microsoft which were not provided by any of its employees. LM used a computer supplied by Microsoft to provide, from her home, remote assistance to customers of Microsoft. She was in regular contact with Microsoft managers and travelled to Microsoft's headquarters once a week, and had an access card for that purpose. Leadmarket's director received a monthly report of her activities, approved her leave, and set her hours.

During LM's pregnancy, Microsoft informed Leadmarket that, for financial reasons, the service agreement would be discontinued after 22 September 2020. From 22 September 2020, LM was temporarily unable to work and subsequently took maternity leave, parental leave and annual leave. On the date of her return to work, 29 April 2021, LM received a letter from Leadmarket informing her that her employment contract had been terminated with effect from 27 April 2021, based on a reduction in demand due to a number of planned projects being dropped. LM brought an action before the Spanish Court, seeking a declaration that her dismissal was invalid, or unfair, and that Leadmarket and Microsoft were jointly and severally liable.

In appeal, the Tribunal Superior de Justicia de Madrid (High Court of Justice, Madrid, Spain) expressed doubts as to whether the TAWD applied to the dispute. It referred five preliminary questions to the CJEU, concerning: (1) the applicability of the TAWD if the employer is not recognised as a temporary work agency by national law due to the absence of administrative authorisation; (2) whether an assignment such as that of LM to Microsoft constitutes temporary agency work; (3) the level of salary compared to persons employed directly by the user undertaking; (4) the right of a worker to return to work at the user undertaking following maternity leave; and (5) the liability of a temporary work agency and user undertaking following the nullity of a dismissal. Though interesting, questions 4 and 5 were declared inadmissible by the CJEU and are therefore not discussed further here.

3. Ruling of the CJEU

The CJEU reiterated that, according to settled case law, in interpreting a provision of EU law it is necessary to consider not only its wording, but also the context in which it occurs and the objectives of the rules of which it is part. Article 3(1)(b) TAWD defines a temporary work agency as ‘any natural or legal person who, in compliance with national law, concludes contracts of employment or employment relationships with temporary agency workers in order to assign them to user undertakings to work there temporarily under the supervision and direction of those undertakings’. From this wording, the CJEU inferred that the requirement of compliance with national law refers to the procedure for concluding contracts of employment or the manner of concluding employment relationships. Nothing in the definition, however, requires the undertaking to have administration authorisation. This interpretation is supported by the context of Article 3(1)(b) and the objectives of the TAWD. The TAWD only provides for minimum requirements and leaves a broad discretion to the Member States. However, interpreting the scope of the TAWD as covering only undertakings which, under national law, hold an administrative authorisation to operate as a temporary work agency, would mean that the protection of workers would vary between Member States, would risk undermining the objective of the TAWD to protect temporary agency workers, and would undermine its effectiveness by inordinately and unjustifiably restricting its scope. Such a limitation would allow any undertaking, by not being in possession of such authorisation, to escape the application of the TAWD and impede workers from receiving the protection afforded by the TAWD. The TAWD therefore applies, regardless of whether national registration requirements are met.

As to the second question, the CJEU set out that the TAWD does not make the status of temporary work agency subject to the condition that an undertaking must assign a certain number or percentage of workers to another undertaking, nor does it require temporary agency work to be the undertaking's main activity. Nevertheless, it is not sufficient that the undertaking assigns one of its workers, or occasionally a proportion of its workers, to another undertaking. As regards the concept of ‘temporary agency worker’, the CJEU acknowledged that the assignment of temporary agency workers is a complex situation. It involves a twofold employment relationship in which the temporary work agency retains an employment relationship with the worker but transfers the responsibility for supervision and direction to the user undertaking, thereby establishing a new relationship of subordination between the temporary agency worker and the user undertaking. The existence of such a relationship of subordination must be assessed in light of all the factors and circumstances characterising the relationship between the parties. The fact that the temporary work agency receives a monthly activity report may be taken into consideration. As for the approval of the workers’ leave and the setting of their hours, the CJEU noted that it is not unusual for a temporary work agency to carry out these tasks, though the national court has to determine whether other circumstances might suggest that the temporary work agency has retained the supervision and direction of the worker. Simultaneously, the concept of ‘user undertaking’ presupposes that this undertaking has a power of direction of supervision over the worker. According to the CJEU, this means that the user undertaking imposes on the worker the services to be performed, the manner of their performance and the requirement to comply with its instructions and internal rules, and monitors and supervises the way in which the worker performs their duties.

The CJEU's answer to the third question was brief: according to Article 5(1) TAWD, a temporary agency worker must, for the duration of the assignment at the user undertaking, receive a salary that is at least equal to that which they would have received if they had been recruited directly by that undertaking.

4. Commentary

4.1. National registration requirements

The CJEU's answer to the first preliminary question is unsurprising. ⁴ The reasoning that Member States may not themselves influence the scope of a Directive by adding additional requirements and conditions is known from the CJEU's previous case law, also in areas other than temporary agency work. The same reasoning applies, for example, to labour law concepts such as ‘worker’, ‘employer’ and ‘redundancy’. However, the CJEU's answer to the first question is important for a different reason. It makes clear that the TAWD does not place restrictions on the use of agency work as such, in the sense that assignments that do not meet the definition of temporary agency work are not automatically prohibited by the TAWD. ⁵ Indeed, the CJEU has made clear that requiring prior authorisation would mean that temporary work agencies could escape the applicability of the TAWD altogether. Such agencies would not, as an alternative, automatically contravene (the national implementation of) the TAWD. This clarification is especially helpful in light of the CJEU's 2023 ruling in ALB Fils Kliniken. In this case, the CJEU held that for an assignment to be covered by the TAWD, an employer must have the intention to temporarily assign the worker to another undertaking. The intention must be present both when the employment contract is concluded and when each of the assignments is made. ⁶ Read together with Omnitel Comunicaciones and Others, it is clear that assignments without such an intention do not violate the TAWD but, instead, the worker is not granted the protection of the TAWD. This is only different when the assignment is not temporary altogether, for which the CJEU developed a separate legal framework on the basis of Article 5(5) TAWD (prevention of abuse) in the cases KG and Daimler. ⁷ By extension, the Omnitel Comunicaciones and Others case makes clear that the definitions of the TAWD must not be interpreted narrowly, as to not unnecessarily limit the TAWD's scope of protection. ⁸

4.2. Occasional assignments

In light of the foregoing, it can be considered somewhat surprising that, in its answer to the second question, the CJEU attached certain conditions to the existence of a ‘temporary work agency’. The CJEU ruled that, to classify an undertaking as a temporary work agency, it is not sufficient for that undertaking to assign one or other of its workers, or occasionally a proportion of its workers, to another undertaking. According to the CJEU, such situations would amount to the provision of services by one undertaking to another and not to the provision of temporary agency work. Instead, the TAWD only applies to ‘real’ temporary work agencies who habitually supply manpower to user undertakings. ⁹ At first glance, this delineation of the TAWD's scope may seem logical. In particular, it can be argued that bringing occasional assignments under the scope of the TAWD would put too heavy a burden on employers and would therefore go beyond the objectives of the TAWD. ¹⁰ On closer inspection, however, the way the CJEU has achieved this goal is questionable. First of all, in the case of occasional assignment, the worker will not be employed by the temporary work agency with the ‘intention’ to be assigned to another undertaking. Therefore, he or she will not qualify as a ‘temporary agency worker’ within the meaning of the TAWD and, thus, will not be entitled to the protection of the TAWD. ¹¹ In other words, occasional assignments are already excluded from the scope of the TAWD, meaning there is no (obvious) reason to narrowly interpret the concept of ‘temporary work agency’.

Furthermore, the result of the CJEU's approach is that, even if an individual worker is employed with the intention of being assigned to another undertaking, the worker will not fall under the scope of the TAWD if their employer does not have temporary agency work as one of its regular activities. This result stands in stark contrast with the TAWD's goal to protect workers on the basis of the undertaking in which they work by granting them a right to equal treatment with workers directly employed by the user undertaking. In light of this goal, if the individual assignment of a worker to a user undertaking ‘ticks all the boxes’, the other activities of the employer should arguably be irrelevant. Focusing on the individual worker would also be better aligned with the KG and Daimler cases, in which the CJEU ruled that the concept of temporary agency work refers to the way in which the individual worker is assigned. ¹²

Finally, the CJEU's narrow interpretation of the concept of ‘temporary work agency’ leads to a remarkable difference between the TAWD and the Posted Workers Directive (PWD). ¹³ The PWD regulates which law applies to the employment contract of cross-border posted workers. Article 3(1b) of the PWD stipulates that Article 5 of the TAWD applies mutatis mutandis to cross-border temporary agency workers, meaning these workers are granted the same right to equal treatment as ‘normal’ temporary agency workers. Although the PWD lays down three criteria for the existence of cross-border temporary agency work, the general activities of the employer (i.e., is he a ‘real’ temporary work agency) is not among them. ¹⁴ This means that, in a purely national context, a temporary agency worker might miss out on the protection of Article 5 TAWD, whereas in a cross-border context the exact same worker might be entitled to this protection. In other words, the CJEU's approach in Omnitel Comunicaciones and Others could lead to reverse discrimination. ¹⁵

4.3. Supervision and direction

In Omnitel Comunicaciones and Others, the CJEU considered, for the first time, how the division of supervision and direction in a triangular working relationship must be understood for the purpose of the TAWD. Unlike the notion of temporary work agency, the elements of supervision and direction serve a clear purpose in the TAWD. They substantiate the TAWD's aim to protect workers on the basis of the undertaking in which they work and, by extension, ensure that triangular working relationships in which the worker remains employed in the undertaking of his employer, as is for example the case with contracting, remain outside the scope of the TAWD. In general, two types of supervision and direction can be distinguished: work-related (i.e., factual) and disciplinary (i.e., formal) supervision and direction. The CJEU has acknowledged that, in the case of temporary agency work, the right to work-related supervision and direction is delegated to the user undertaking, whereas the right to disciplinary supervision and direction is usually retained by the employer. ¹⁶ As to the retention of disciplinary supervision and direction by the employer, the recognition fits in with Article 12(1) Regulation 883/2004 on the coordination of social security systems, ¹⁷ which requires, inter alia, an ‘organic link’ between the employer and the worker. According to the CJEU, an organic link arises, in particular, from the exercise of disciplinary supervision and direction, more specifically the payment of salary and the possibility to dismiss the worker. ¹⁸

With regards to the TAWD, the crucial question is when a user undertaking exercises sufficient work-related supervision and direction to distinguish the working relationship from, say, contracting and trigger the applicability of the TAWD. According to the CJEU in Omnitel Comunicaciones and Others, the existence of a relationship of subordination with the user undertaking must be assessed in light of all the factors and circumstances characterising the relationship between the parties. ¹⁹ It is not sufficient for the user undertaking to verify the work carried out or give general instructions. ²⁰ Instead, the user undertaking must (1) impose on the worker the services to be performed, the manner of their performance and the requirement to comply with its instructions and internal rules; and (2) monitor and supervise the way in which the worker performs their duties. ²¹ Although these considerations place certain demands on the level of supervision and direction to be exercised by a user undertaking, the CJEU has predominantly made clear that the right to work-related supervision and direction must indeed be exercised by the user undertaking. Whether this is truly the case is something that has to be assessed, in each individual case, by the national court on the basis of all the circumstances characterising the working relationship. This division of competences between the CJEU and national courts, which is inherent to EU law, gives national courts a certain margin of discretion and, by extension, leaves them a certain leeway to colour the European definition of temporary agency work in light of their own, national views.