European Union: CJEU rejects complaints of Poland and Hungary against the revision of the Posting of Workers Directive

Poland and Hungary have invested a lot of time and energy to block the revision of the Posting of Workers Directive, as they feared that the new rules would further limit their competitive advantage of low-cost labour. But now they have lost the (final ?) battle.  

It was no secret that most Eastern-European EU Member States were not a big fan of the revision of the EU posting rules of Directive 2018/957. This revision grants an increased protection for posted workers and therefore allows hosting Member States to apply more of their social legislation to fight social dumping. However, only Poland and Hungary were willing to attack the revision through the court, which led to the Grand Chamber cases C-626/18 (Poland) and C‑620/18 (Hungary).

Although both legal actions requested the annulment of Directive 2018/957, the cases were not joined. However, the outcome is similar: none of the arguments of Poland and Hungary were accepted by the Court (nor by the Advocate General). These arguments included the claim that the revision did not use the correct legal basis. The revision was based on Article 53(1) and Article 62 TFEU, which permits the adoption of directives seeking to make it easier to exercise the freedom to provide services. However, according to Poland and Hungary, the legal basis should have been the social policy provision of art. 153 TFEU, as the Directive has as a purpose to grant the protection of posted workers.

The Court disagreed, as the revision is an amendment of existing legislation (the Posting of Workers Directive), which is also based on the legislative power to coordinate the rules to exercise the freedom to provide services. According to the CJEU, it was open to the EU legislature to adjust the balance inherent in the Posting of Workers Directive, by strengthening the rights of posted workers in the host Member State so that competition between the undertakings posting workers to that Member State, and the undertakings established in that State, could develop on a more level playing field. Other arguments claimed an infringement of Article 56 TFEU, guaranteeing the freedom to provide services, and an infringement of the ‘Rome I’ Regulation.

Directive 2018/957 had to be implemented by the Member States by 30 July 2020. Both Poland and Hungary have taken measures to transpose the provisions of the Directive.

For more information on these articles or any other issues involving labour and employment matters in European Union, please contact Chris Van Olmen (Partner) of Van Olmen & Wynant at chris.van.olmen@vow.be or visit www.vow.be.