Posted Workers and EU Intra-Corporate Transferees – How to Differentiate and Ensure Compliance

The EU Intra-Corporate Transferees (EU ICT) Directive has been a major instrument through which the EU has attempted to develop a more attractive and less challenging immigration framework for multinational companies. This legislation presents a huge opportunity for businesses to plan for multi-country assignments in a more dynamic and efficient way.

However, certain national implementations are creating a double burden for companies, by requesting the submission of Posted Worker Notifications (PWN) even when the assignee has obtained a combined work and residence permit based on the EU ICT regulations.

In this blog, we look at the differences between the EU ICT and PWN Directives and highlight the compliance implications in scenarios of double requirement.

Who are the Posted Workers?

A Posted Worker, according to the related Posting of Workers and Enforcement Directives (the ‘PW Directives’), is either an EU or non-EU national with an employment contract in an EU or EEA (European Economic Area) country, who is going to another EU or EEA country to provide services for a temporary period of time.

The main purpose of the PW Directives is to create a level playing field in the provision of services across the EU market while ensuring the protection of employment rights to employees posted to another Member State under an intra-corporate transfer scheme, to an external client location as part of a service agreement or via a temporary agency or placement work.

For this reason, the PW Directives, on one hand, confirm a set of employment law-related core conditions to be observed in the host country (in parallel with the regular immigration-related work and residence conditions) and, on the other hand, create a framework to facilitate the monitoring of compliance with these conditions by the labour authorities.

Who are the intra-corporate transferees?

For the purposes of the EU ICT Directive, an intra-corporate transferee is a non-EU national with an employment contract in a non-EU country, who is assigned to an entity in the EU belonging to the same group of companies as the home entity.

The EU ICT Directive presents a remarkable change in the planning of assignments for non-EU employees. For the first time, non-EU employees in the EU under an intra-corporate transfer can enjoy the benefits of intra-EU mobility during the validity of their main EU ICT permits, allowing them to work in other countries without applying for full work and residence permits (subject to simpler immigration formalities).

It must be noted that direct sponsorship by a client is not possible under the EU ICT scheme and working on a client site is only allowed in certain countries. Given all, it must be highlighted that, per definition, intra-corporate transferees are not posted workers. However, certain national implementations are requesting the submission of a Posted Worker Notification with work and residence permits, such as the main EU ICT application and/or intra-EU mobility under the EU ICT scheme.

What does this mean?

The European Commission has already stated in an informal document that Posted Worker Notifications should not be required for assignees under EU ICT intra-EU mobility. This requirement is unnecessary given the information that must be provided to the authorities for the EU ICT application.

The EU ICT Directive clearly states that all labour conditions (such as collective bargaining agreements) applicable to posted workers in a similar situation must apply to assignees under the EU ICT scheme. In fact, the EU ICT Directive goes one step beyond the labour protection provided to posted workers by stating that assignees under the EU ICT scheme must be equally paid to colleagues in a similar position in the host entity.

Furthermore, it needs to be highlighted that the submission of a Posted Worker Notification will create additional visibility to other host country authorities in relation to the compliance of the assignment, as well as document retention obligations.

Nonetheless, given current implementations in Member States, Posted Worker Notifications may be required for employees on EU ICT work and residence permits, as well as under other types of permits with a non-EU contract.

Overall, this double requirement and the important differences in terms of national implementations can result in compliance issues for companies that may not be aware of when PW and EU ICT Directives are coming into place.

How we can help

Companies can benefit from the new immigration rules, but only by knowing how to navigate and strategically plan around these changes. Fragomen can assist with providing combined advisory services for EU ICT and Posted Workers.

We can also address the social security implications linked to intra-EU mobility and provision of services within the EU.

For additional information on this topic, contact [email protected] indicating your interest in EU ICT/PWN advisory services.