As of 30 July 2020, the principle of “equal pay for equal work” between posted and local workers, is due to become law across the EU. This principle is mandated by the revision of the Posted Workers Directive in 2018 (European Union (EU) Directive 957/2018).
What is the change?
This revision implies that the remuneration of posted workers should be at the same level as that of their local peers.
The Posted Workers Directive does not define the concept of “remuneration” as such, except by specifying that remuneration includes all “the constituent elements of remuneration rendered mandatory by national law (…) or by collective agreements (…) which have been declared universally applicable.”
Each country separately is to determine the different elements of remuneration on its own territory and this to go live on 30 July 2020.
What is the current status?
In most countries the draft legislation has been published (such as France, Belgium, Spain, Portugal, Poland, and Sweden). For other countries, there are currently no details are available (such as Germany, Denmark, Ireland, Slovenia, and Spain).
Having analysed the new concept of “remuneration” across the EU, a significant number of countries are stipulating that additional salary components will include overtime pay; allowances for night work, or dangerous or difficult work; and work on Sundays and public holidays, etc. In some countries where salary requirements had already been implemented in a very broad sense, no substantial changes are expected (such as Austria, Belgium, The Netherlands, Portugal, Sweden, and Ireland).
What are the main challenges?
The most challenging aspect for employers will be identifying precisely what elements of remuneration must be paid exactly to comply with local labour law and collective bargaining agreements. In most countries, a distinction is made per sector, in addition to which there are further differences according to function, seniority and others. Local authorities are expected to provide very transparent information about this. However, the huge complexity of each country’s collective bargaining agreement and labour law landscape will create a significant problem for employers.
Adding to that complexity is the fact that, in most countries, the local remuneration requirements must also, in principle, be considered for short-term business travellers. This will put a huge burden on employers with highly mobile populations, as they need to keep track of all moves within the EU and implement salary uplifts or allowance adjustments, perhaps for only a few days.
Lastly, for assignments more than 12 months (extendable to 18 months), all mandatory labour law of the host country will need to be respected, with the exception of local termination and occupational pension rules. This will necessitate an even broader scan of local requirements and for home HR functions to be more aware of compliance issues than ever before.
Considering the above, we strongly recommend that employers have the July 2020 changes high on their agendas. Of course, we will closely monitor the progress in all countries and keep you informed of new developments.
What is the impact for Swiss employers?
While Switzerland is outside the EU, this Directive still impacts Swiss employers that are sending (short term) business travellers and/or assignees to EU Members States.
In addition, the PWD provisions are also applicable to the posting of workers between EU Member States, but also workers coming from non-EU countries. Therefore, in case business travellers and international assignees are managed centrally from Switzerland, special attention should be paid to the PWD requirements.
Currently business travel is hugely reduced as a result of the ongoing measures aimed at limiting the spread of Covid-19.
Whilst movement may be on hold currently due to these restrictions, our expectation is that this pause will be temporary, and employers should use this time to define and implement processes for when business activities resume. We have outlined below a few activities to consider in relation to the Posted Workers Directive more broadly:
- Carry out a review to understand in which EU/EEA countries you have a presence of inbound business travellers/expats.
- In advance of the new rules coming into force on 30 July 2020, look to implement processes to ensure compliance with the existing legislation on posted workers (such as pre-travel notifications, appointment of liaison persons, and social documents).
- Review the applicable collective bargaining agreements (CBAs) for your business/industry in the relevant European countries.
- Take time to assess the elements of the CBAs that will influence an employee’s remuneration package.
- Review payroll processes and consider what enhancements need to be put in place to enable salary uplifts for posted workers.
- Understand the capabilities and breadth of information stored within your HR systems.
- Monitor for the latest developments regarding the revision of the Posted Workers Directive and its implications in every EU country, but particularly those in which you have a larger population.
In case you would like to find out more about the general PWD requirements and the Deloitte solution, you can watch the following video or contact our key contacts below.
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