Free movement of workers, free movement of services and the posted workers directive: a Bermuda triangle for national labour standards?

Abstract

Against the backdrop of EU enlargement and the ill-fated Services Directive, the interaction between free movement of workers and free movement of services has gained substantial interest in academia, legal practice, business and beyond. The topical and sensitive debate as to whether European integration and the internal market will work as a Trojan horse to Old Europe’s highly regulated labour markets and costly welfare states is exemplified by the issue of transnational posting of workers and applicable labour standards. After an initial blank check inRush Portuguesa the ECJ has backtracked and developed an intricate balancing act that permits a conditional application of host country labour standards whilst maintaining unfettered free movement as a crowning principle of Europe’s internal market. The balancing is essentially to be performed by the competent national judge or authority who, under the ECJ’s guidance, must ascertain on a case-by-case basis whether the imposed application of national law to a transnational services provider is justified by an overriding public interest. The task is far from menial, since it requires both a legal and a factual comparison of labour standards in both the country of origin and the host country, as well as a creative brainstorm on proportionality and necessity. As a result, the Posted Workers Directive and its national implementations can only be deemed compatible with the TEC’s free movement of services to the extent that their application in a particular case indeed survives the requisite balancing. It is by no means a perfectly clear or predictable situation, but one that leaves room for flexibility and succeeds in what the so-called “European Social Model” should probably stand for: a combination of both free competition and social protection, not the domination of one over the other. The combination of free movement of workers, free movement of services and the Posted Workers Directive is not a Bermuda triangle for national labour standards. But it is not their guardian angel either.