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EU Rights

EU Rights in the Spotlight – February

On 12 February, the European Court of Justice (ECJ) made an important ruling concerning the Posted Workers Directive, whereby it clarified the rights of posted workers with regard to their minimum rates of pay.

More concretely, in the judgement C-396/13- Sähköalojen ammattiliitto vs y v Elektrobudowa Spółka Akcyjna, the ECJ provided its interpretation of article 3.1 of Directive 96/97 on Posted Workers, which states that posted workers must be guaranteed the minimum rate of pay of the host country, as defined by the national law and/or practice of the Member State to whose territory the worker is posted.

In this case, the dispute concerned 186 Polish workers of a Polish electricity company with a branch in Finland, who claimed that they had not received from their employer the minimum pay rate due to them under the applicable Finnish collective agreement in their sector. Each of them took their wage claims to the Sähköalojen ammattiliitto (the Finnish trade union for the electricity sector) so that it could represent them before the Satakunta District Court.

Sähköalojen ammattiliitto argued that the appropriate criteria used to calculate the employee’s minimum pay rate under Finnish law (in particular the method of categorising employees by pay groups, as well as by the holiday, daily and travel allowances they were entitled to) were more favourable than those applied by the Polish employer to its posted employees in its branch in Finland. The Polish employer contended that the Finnish trade union had no standing to bring these proceedings to Court on behalf of the Polish workers, on the grounds that Polish law forbids the assignment of claims arising from an employment relationship.

In its judgement, the ECJ accepted the Finnish trade union’s right to represent the posted workers in light of article 47 of the Charter of Fundamental Rights of the European Union, which grants the right to effective remedy. The ECJ also recalled in its judgement that article 3.1 of the Posted Workers Directive states that questions concerning minimum rates of pay, including the methods of calculation of such rates, are governed by the law or practice of the host Member State, in this case, Finland, whatever the law applicable to the employment relationship is.

With regard to the scope of the ‘minimum pay rate´, as enshrined in article 3.1 of the Directive on Posted Workers, the Court concluded that this concept must be interpreted as meaning that:

–       It does not preclude a calculation of the minimum wage for hourly work and/or piecework that is based on the categorisation of employees into pay groups, as long as that calculation and categorisation are carried out according to transparent and binding rules;

–       a daily allowance must be regarded as part of the minimum wage under the same conditions as those governing the inclusion of the allowance in the minimum wage paid to local workers;

–       compensation for daily travelling time, which is not paid in reimbursement of expenditure incurred by the worker on account of the posting, but based on the duration of his daily journey to and from his pace of work, must also be regarded as part of the minimum wage of posted workers;

–       coverage of the cost of the posted workers’ accommodation and allowances taking the form of meal vouchers to compensate for living costs are not to be regarded as part of their minimum wage;

–       the pay which the posted workers are entitled to receive for the minimum paid annual holidays corresponds to the minimum wage to which those workers are entitled during the reference period.

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