Posted Workers vs Secondment – Part 1

This is the first part of two articles on the notion of secondment and posting.

You may be aware that certain aspects of employment law provide an opportunity for employees to work for different employers or else travel abroad for work. This is allowed via the concept of Secondment and the Process of Posting of Workers. In either such case, employment conditions of the employee may vary, and employers must ensure that all procedure requirements are according to law for the smooth-running of services, avoidance of legal issues and the full protection of the employee.

Posted Worker

Defining Posted Worker

A posted worker is employed and based in one EU Member State by his employer but for a definite and limited time period, is sent and “posted” to another EU Member State, to carry out such work as stipulated by the employment contract.

This is clearly defined in the EU Directive 96/71/EC: “’posted worker’ means a worker who, for a limited period, carries out his work in the territory of a Member State other than the State in which he normally works”; and it is identically defined in local legislation.

The employment relationship between the original employer and employee, as well as the role of a posted worker in this cross-border provision of services remains the same; it is simply the location of such employee which is temporary altered.

Legislation

The system of Posting of Workers in Malta is regulated by Subsidiary Legislation 452.82, entitled ‘Posting of Workers in Malta Regulations’ and recently amended by Lega Notice 262 of 2020. This transposes Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of employees in the framework of the provision of services into the local scene. Overall, the current law aims to guarantee the appropriate level of protection of posted workers and their rights, by establishing provisions, measures and control for more uniform implementation within employment matters of Posted Workers in the EU. Essentially, a consistent and equal standard of rules would promote equality in the field, ensuring that an employee posted in another EU Member State is not subject to conditions which may be less favourable compared to those standards which he receives in his home state, or compared to similar employees in that situation.

Applicability

The two scenarios in which the posting of employees may occur are the following;

1. 1. To perform a contract for service for a foreign undertaking, sent on the employer’s own accord and with the employer’s direction, for a 3^rdparty client or a subcontractor;
   2. To be temporarily assigned to an establishment located abroad to provide services.

(Note that posted workers do NOT include migrant employees who go to another State to seek work and are employed there, or else any seafarer personnel employed on vessels falling under the Merchant Shipping Act.)

The role of the Competent Authority

The competent authority (in Malta, it is the Department of Industrial and Employment Relations, or the DIER) must initially make an assessment of all factual elements related to whether a person qualified as a posted worker.

Secondly, to determine whether an undertaking is genuinely performing substantial activities as an undertaking and requires an employee to be posted in another country, once again the Maltese authority will assess the elements and activities which that undertaking carries out.

Thirdly, an evaluation is made on those elements which indicate that a posted worker is temporarily carrying out work in Malta, regard being had on the nature of his work and the temporary period of time being worked. All such factual elements are indicative and non-cumulative, meaning that they need not all be proven, to prove that an employee is considered a posted worker. The law simply specifies that there must be a substantial amount of evidence to show that the undertaking having an established and registered within the EU is requiring one of their employees to work for a provisional time period in another EU Member State.

Equal Conditions of Employment

The law stipulates that based on the principle of equality and equal treatment of employees, the sending party, as employer, must guarantee the same employment terms and conditions as applied to various other classes of employees in the same manner and amount, including those basic conditions of employment stipulated under Chapter 452 of the Laws of Malta (The Employment and Industrial Relations Act or hereinunder referred to as the Act), which include among others;

• • Maximum work periods;
  • Minimum rest periods;
  • Minimum paid annual leave;
  • Remuneration, and added at over time rates;
  • Health and safety regulations;
  • Protective measures for employment of children and young persons;
  • Equality of treatment and non-discrimination between men and women employees;
  • Reimbursement of expenditure allowances regarding travel and lodging expenses when such travel is necessary in the case of posted workers.

Specifically however, where the effective duration of a posting is more than 12 months long, the sending parties must guarantee such employees who are working in Malta the basic working terms and conditions under the Subsidiary Legislation and all the applicable conditions of employment by virtue of the Act, excluding  two conditions;

• • Those conditions regarding the conclusion or termination of an employment contract;
  • Those conditions relating to supplementary occupational retirement pension schemes.

The law allows a sending party to submit a motivated notification to the Maltese competent authority to extend the period of posting to 18 months instead of 12 months.

It is of interest to know that if a sending party is to replace a posted worker by another posted worker who would be performing the exact same task at the same location, then the duration of such posting shall be a cumulative duration of both employees concerned.

Notification of a Posted Worker

The initial role of any undertaking which decides to send an employee to Malta must first notify the Maltese competent authority of their intention to post an employee. The notification must be done prior to the actual posting of such employee, or at the latest, at the commencement of posting. In Malta, posted workers coming from the EU or an EEA country are exempted from applying for a work permit. This is the same for posting of third country employees, employed by an undertaking established in the EU. However, such posted worker must already hold a working permit issued in the country where the posting undertaking is established (additional immigration formalities would be required here). For third-country nationals posted in Malta by an undertaking established outside an EU/EEA country, the third-country national must obtain an employment licence issued by Jobsplus.

For EU/ EEA posted workers coming to Malta, what is vital is that the DIER is notified of the posting through a Posted Workers Notification online, not later than twenty-four hours from initiating their work. This overall promotes the free movement of employees within the EU.

The notification must include the following facts:

1. 1. The identity of the undertaking (such as their registration name and number if it is a company);
   2. The original address of the employee;
   3. The anticipated number of employees to be posted;
   4. Their personal details including their name, date of birth and nationality;
   5. The anticipated fixed time duration of posting, including a start and end date;
   6. The nature of the services justifying the posting and the type of work that will be carried out by the employee;
   7. Information of the undertaking in Malta where the employee is to be posted upon their arrival.

The undertaking is to keep a copy of the employment contract and if necessary to make it available to any interested party. It overall needs to include basic conditions of worker such as “indicating the beginning, end and duration of the daily working time and proof of payment of wages or copies of equivalent documents during the period of posting in an accessible and clearly identified place in the undertaking making use of the services of the posted worker.”[1]

Besides the ‘Notification of a Posted Worker to Malta’ form, sent to DIER, a copy of the posted worker’s employment contract between the undertaking and posted worker must also be sent to show the established employment relationship. In a situation of a third country national posted worker from an EU/EEA country, a copy of the employee’s existing working licence should furthermore be sent to DIER prior to the commencement of the posting.

Moreover, the remuneration of a posted worker, working more than 4 consecutive weeks in another Member State, must be in line with the law of the host Member State as well as in Malta. The employee shall further, be notified of any allowances specific to the posting, relating to the payment arrangements for travel and lodging reimbursements; and also notified of the single official national website of that undertaking established by the host Member State.

Other relevant Information

The law very much emphasises the need for cooperation between the Maltese competent authority which handles such circumstances with the competent authorities in another Member State. Information must be shared among such authorities and it is important for the continuous monitoring and carrying out of checks inspections and investigations where required by any requesting member state. It also aims to ensure the easy and quick facilitation of information regarding an employment scenario of posted workers to be “clear, transparent and comprehensive” as well as user-friendly and accessible for use only in respect of matters for which such information is requested.

Should the situation arise where a posted worker feels that there was an  infringement of his rights, he may submit a written request to the employer to provide him with a written statement including such reasons for why he was treated in a different manner. The employer must provide such statement within ten (10) working days from the date requested. Another guaranteed right is initiating civil proceedings with the Courts of Malta and any liabilities which may arise from disregard in the rights of the employer as a posted worker in Malta.

Finally, any person who is found to be in contravention and guilty of an offence may be liable to pay a fine of a minimum of one hundred and seventeen euros (€117) and a maximum of one thousand one hundred and sixty five euros (€1,165). Additionally, as specific penalties, if the employer fails to pay the posted worker, unduly withholds back-payments, refunds of taxes or social security contributions from the posted worker’s salaries or else withholds or even deducts any costs for accommodation, of the posted worker, then the Court can also order to refund or pay to the posted worker such amount due by him as a way of compensation or repayment.

Authors: Ann Bugeja & Christine Borg Millo

Footnote

[1] S.L. 452.82