Relevant conditions of employment: the Secondment Directive (Directive 96/71/EC)

Transcription

1 Relevant conditions of employment: the Secondment Directive (Directive 96/71/EC) Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services. Directive 96/71/EC of the European Parliament and of the Council concerning the posting of workers in the framework of the provision of services was adopted on 16 December It aims to abolish the obstacles and uncertainties that impede implementation of the freedom to supply services, by improving legal certainty and facilitating identification of the employment conditions that apply to workers temporarily employed in a Member State other than the Member State whose legislation governs the employment relationship. It endeavours to strike a balance between the economic freedoms bestowed by the EC Treaty and employees' rights during their period of posting. Three cross-border posting situations The Directive applies to undertakings which post workers to work temporarily in a Member State other than the State in which they habitually carry out their work in performance of their contract. This Directive applies to the extent that these undertakings take one of the following transnational measures: Post workers to the territory of a Member State on their account and under their direction, under a contract concluded between the undertaking making the posting and the party for whom the services are intended, operating in that Member State, provided there is an employment relationship between the undertaking making the posting and the worker during the period of posting; Post workers to an establishment or to an undertaking owned by the group in the territory of a Member State, provided there is an employment relationship between the undertaking making the posting and the worker during the period of posting; Being a temporary employment company or placement agency, hire out a worker to a user undertaking established or operating in the territory of a Member State, provided there is an employment relationship between the temporary employment company or placement agency and the worker during the period of posting. The key content of Directive 96/71/CE The Directive seeks to guarantee that workers who are being posted will enjoy, whatever the law applicable to the employment relationship, the rights as laid down in certain minimum protective provisions in force in the Member State to which they are posted. To this end, Article 3(1) of the Directive lays down the mandatory rules to be observed by employers during the period of posting with regard to the following issues: 1. maximum work periods and minimum rest periods; 2. minimum paid annual holidays; 3. the minimum rates of pay, including overtime rates; this point does not apply to supplementary occupational retirement pension schemes; 4. the conditions for hiring-out of workers, in particular the supply of workers by temporary employment agencies; 5. health, safety and hygiene at work;

2 6. protective measures with regard to the terms and conditions of employment of pregnant women or women who have recently given birth, of children and of young people; 7. equality of treatment between men and women and other provisions of nondiscrimination. These rules must be laid down in the legislation of the host country and/or in collective agreements or arbitration awards which have been declared universally applicable in a sector. Implementation of the Secondment Directive in the Netherlands: The Secondment Directive seeks to ensure that if an employee is temporarily employed in another member state than the one where he normally works, the laws of the country where the work is being carried out is applied to a number of matters ( the so-called core of conditions of employment) that are listed in the Secondment Directive. They are both legal minimum provisions and universally binding provisions from collective labour agreements related to the aforementioned issues. In the Netherlands the Secondment Directive has been implemented to the extent that that had not already been done via the Terms of Employment (Cross-border Work) Act, or its Dutch acronym Waga. For a number of issues (maximum working hours and minimum resting periods, minimum wages, supply of workers, equal treatment of men and women and other provisions of nondiscrimination) the Secondment Directive did not need to be implemented because at the time of adoption of the directive (1997) laws were already in force in the Netherlands applicable to all labour in the Netherlands, irrespective of the legislation governing the employment contract. They are the following laws: Minimum Wage and Minimum Holiday Allowance Act (WML), Working Hours Act (ATW), Working Conditions Act (Arbowet), Temporary Agencies Act (Waadi) and the Equal Treatment Act. The other provisions of the Secondment Directive have been implemented via the Waga. They are on the one hand some articles from the Civil Code (concerning minimum paid annual holidays, health, safety and hygiene at work, employment protection for pregnant women and equal treatment as far as set out in the Civil Code) and on the other hand Art. 2, par. 6 and 7 of the Collective Labour Agreements (Declaration of Universally Binding and Non-binding Status) Act. The latter was necessary to ensure that all universally binding provisions of collective labour agreements on issues covered by the Secondment Directive apply to foreign workers posted in the Netherlands. Statutory minimum provisions Below you will find information on statutory provisions relevant to secondments. 1. Maximum work periods and minimum rest periods [Article 3(1)(a) of the Directive] Maximum work periods and minimum rest periods are laid down in the Working Hours Act (Dutch acronym: ATW). The rules that will be effective as from 1 April, 2007 are as follows: The maximum working time, including overtime, is fixed to 12 hours per shift and 60 hours

3 per week. Measured over a 4 week period, the average working time is fixed to 55 hours per week and measured over a 16 week period, the working time may not exceed 48 hours. Furthermore, in general an employee must have 11 hours of rest every day, which can be limited once every week to 8 hours, and 36 contiguous hours once every week or 72 hours every two weeks. The employee is entitled to short breaks. In order to ensure health and safety, certain rules for working hours and periods of rest apply. The rules apply to everybody carrying out work in a relationship of authority. It is not necessary to have a formal employment contract. The rules do not apply to the self-employed. The exception is when a self-employed person is working in situations involving risks for third parties, such as in traffic. In that case the minimum rest periods must be observed and respected by the employer. The rules apply to all employees working in the Netherlands, even when they have a foreign nationality. The hours of work and rest also apply to employees working for a Dutch employer abroad on a sea-going vessel, in an aeroplane or in road transport (lorry or coach), or on a mining installation on the Dutch part of the Continental Shelf. The time an employee is compulsory present at the workplace also counts as work, so waiting for customers, for instance, also counts as work. Which rules exactly apply to the hours of work and hours of rest of a specific employee depends on the actual situation in which he is working. Night work is subject to strict rules. If an employee works night shifts he is not allowed to work more than an average of 40 hours per week. After a night shift ending after 2.00 AM the employee must rest for at least 14 hours, and after a series of shifts he must rest for at least 46 hours. Different rules apply to employees performing special types of work such as musicians, medical specialists or employees in the offshore industry. The same holds true for employees in the transport sector (inland shipping, aviation, road traffic, shipping and fishing). 2. Minimum paid annual holidays [Article 3(1)(b) of the Directive] Minimum paid annual holidays are laid down in Art.634 t/m 642, 645 Book 7 Civil Code (Dutch: Burgelijk Wetboek, BW). Employers must allow their employees to take the minimum leave to which they are entitled each year (cf. Civil Code, Art. 7:638). The statutory minimum (annual leave) is four times the amount of working hours per week (so, for a fulltime job of 40 hours the statutory annual minimum is 20 days or 160 hours). The statutory minimum leave can never be paid out. The Dutch Civil Code Article 640, paragraph 1 is also clear on this: the general leave an employee is entitled to, will never be paid out. Hours and days above the statutory minimum may be paid out. This is in accordance with Article 7 of the Council Directive 2003/88/EC, on certain aspects of the organisation of working time. Unused leave entitlement lapses after a period of five years (cf. Civil Code, Art. 7:642). Except in the case of a holiday shut-down period, employers must respect their employees wishes in this regard, unless important business considerations militate against it. In that case, the employer is obliged to ensure that the employee can take a period of leave of two weeks consecutive, or with the employee s consent two one-week periods. Employers also have an obligation to respond promptly to their employees requests for leave. If an employee has communicated his preferences and the employer is unable to approve them, he must provide compelling reasons for this refusal within two weeks; otherwise the leave will be assumed to have been scheduled in accordance with the employee s wishes. It is not possible to depart from this two-week period other than by written agreement, and any such exception may only apply to leave days due to the employee over and above the statutory minimum. Employers

4 must allow employees to take their leave in days or hours if they so wish, unless there are compelling reasons not to do so. The minimum payment of holiday allowance (which exists alongside to the right to payment of wages during holidays) is laid down in Art.15 WML. 3. Minimum rates of pay [Article 3(1)(c) of the Directive] Minimum rates of pay, including overtime rates are covered by the Minimum Wages Act. As an employee in the Netherlands you are entitled to at least a statutory minimum wage. With regard to employees under the age of 23, a minimum youth wage applies. The minimum wage is adjusted twice a year to the average wage trend. The minimum wage applies to a full working day, week or month without overtime. If you work part-time, you will be paid pro rata. The gross wage may consist of various elements: bonuses for shift work or irregular working hours, for instance; remuneration given by third parties resulting from the work such as tips; a number of remunerations in kind such as board and lodging. There are no legal maximums. Unlike gross wages, net salaries are not prescribed by law. They can vary from sector to sector, depending on deductions for provisions such as social security. Depending on the agreements made in this respect, you will receive your pay per week, month or every four weeks. You will receive a wage slip from your employer. This enables you to check the wages paid. In addition, many provisions regarding wages have been laid down in collective labour agreements (CAO s) or other collective schemes. Besides the legal minimum wage rate a worker posted in the Netherlands is entitled to the minimum wage rate as laid down in a collective agreement which has been declared universally applicable in the sector where he or she is employed. If such a scheme applies to you, this might mean that you are entitled to a higher wage than the minimum (youth) wage. Your employer, the personnel department, the wage records department or the labour union can tell you whether such a scheme is applicable to you. You can find out for yourself also by checking out the table containing information of sectors where collective agreements exist which have been declared universally applicable as submitted to this website. 4. The conditions of hiring-out of workers, in particular the supply of workers by temporary employment undertakings [Article 3(1)(d) of the Directive] Temporary Agencies Act (Dutch acronym: Waadi): Conditions of hiring-out of workers, in particular the supply of workers by temporary employment undertakings, are laid down in the Temporary Agencies Act (Dutch acronym: Waadi). The most important provision of the Waadi is Article 8: Temporary workers are entitled to the same wage and other allowances as comparable workers in the industry where the worker is temporarily carrying out his work, unless a (applicable) collective agreement provides other

5 rules (the so-called comparable wage norm). Article 8 Waadi: Main rule: Article 8, par. 1 Waadi ensures that those supplying workers owe those workers the wages and other allowances equal to the wages and other allowances paid to workers in equal or equivalent positions in the company to which the workers are supplied. The reason for this is that the terms of employment of the hired workers should not distort the system of terms of employment operative in the company hiring the workers. There are two exceptions to the main rule: On the basis of par. 2 and 3 Article 8 Waadi two exceptions may be made to the main rule as laid down in par. 1: Art. 8, par. 2 Waadi: The main rule does not apply when the collective labour agreement of the supplier contains provisions on the wage rate and other allowances of supplied workers. In that case the wage provisions in the collective labour agreement of the supplier take precedence and deviation from the aforementioned main rule is allowed; Art. 8, par. 3 Waadi: The main rule also does not apply when a collective labour agreement applies to the hiring company that contains provisions on the basis whereof the company must pay the supplied workers wages and other allowances in accordance to the provisions of that collective agreement. The exceptions to the main rule mentioned above pertain to collective labour agreements in force in the Netherlands., i.e. collective labour agreements that comply with the Dutch Collective Labour Agreement Act that have been submitted in compliance with Article 4 of the Wage Formation Act. Furthermore, Article 11 Waadi obliges the employer to give temporary workers all information about necessary vocational qualifications and working conditions, before the temporary work begins. Civil Code (Dutch: BW): Article 7:690 Civil Code: a contract for temporary work is an employment contract. 5. Health, safety and hygiene at work (Article 3(1)(e) of the Directive) The basic principle of working conditions legislation in the Netherlands is that the situation in which work is carried out, should be safe for every worker. It is the joint responsibility of employers and employees to make sure working conditions are adequate. The employer is liable for the safety and health of employees in the workplace and the provision of proper work equipment and personal protection equipment, the suitability of the employee, supervision and information/instruction, whatever the legal status of the employee. Safety and health legislation does not distinguish between employees on the basis of the validity of their work permit, residence permit or nationality. Whether or not workers are legally employed has no bearing on the applicability of the working conditions legislation. The Dutch working conditions legislation applies to employees with a labour contract or an appointment at a public body, to temporary workers and other hired workers, and also in cases of labour under supervision (e.g. interns, prisoners). Legal provisions with respect to work associated with special safety and health hazards, are applicable to the self-employed, employers on-the-job and volunteers. The working conditions legislation also contains

6 provisions with regard to the client, designer and construction supervisor at a building site, third parties and collaborating employers. The nationality of a company, the nationality of the employer or the employees does not matter. This entails that work carried out on Dutch territory in or for a foreign company with foreign workers must abide by the Dutch working conditions legislation. The Working Conditions Act stipulates that, whoever is working with temporary workers, the user company, is the employer of the temporary worker. The user company is the de facto employer and thus has the duty to provide optimum working conditions within its organisation. This should be done on the basis of a risk assessment and evaluation. The user company is obliged to provide the temporary employment agency with a description, based on the risk assessment and evaluation, of the hazards and preventative measures and the risks to the employee at his workplace. The temporary employment agency must supply this information to the temporary worker. The agency must also supply the temporary worker with information about the professional requirements for the temporary job. A worker may interrupt work when in his reasonable judgement there is a clear danger to persons and the danger is so imminent that the Labour Inspection cannot intervene in time. The employee must report the interruption to the employer and to the Labour Inspection. 6. Protective measures with regard to the terms and conditions of employment of pregnant women or women who have recently given birth, of children and of young people [Article 3(1)(f) of the Directive] Protective measures with regard to the terms and conditions of employment of pregnant women, women who have recently given birth, children and young people are found in the Working Hours Act (Dutch: Arbeidstijdenwet), Working Conditions Act (Arbeidsomstandighedenwet 1998), Work and Care Act (Wet Arbeid en Zorg) and the Minimum Wages Act (Wet minimumloon en minimumvakantievakantiebijslag). For pregnant workers who have been posted Art.7: 670(2) Civil Code (BW) also applies. Working Hours Act (Arbeidstijdenwet): The employer should make extra allowances for pregnant workers: allow more breaks, make sure they work in a stable and regular pattern of work and rest periods and in principle no night shifts. The employer must observe these provisions until six months after childbirth. Absolutely no work is allowed immediately before and after childbirth. No work is allowed 28 days before the day the baby is due and 42 days after. Work and Care Act (Wet Arbeid en Zorg): Pregnancy and maternity leave: Pregnant employees are allowed to take leave from six weeks before the likely day of giving birth. This leave should start no later than four weeks before the day the baby is due. (When childbirth takes place earlier than the date the baby was due those days are added on to the maternity leave, so that there is always a sixteen week leave.) Birth Leave: Two days birth leave for the partner of the woman who has given birth or the person who acknowledges the child. The employer is obliged to continue paying the employee s wage during the birth leave.

7 Working Conditions Act (Arbeidsomstandighedenwet): When the employee has reported her pregnancy to the employer the latter is obliged to provide information, within two weeks, about possible hazards at work and the steps taken to protect the employee and her unborn child against those hazards. Certain types of work are not allowed during pregnancy, such as physically demanding work. If it is not possible to carry out the work although adjustments have been made or working hours have been changed, the employer is obliged to temporarily offer different work. The employee will be exempt from work if such is not possible. Civil Code (Burgerlijk Wetboek): To pregnant workers who have been posted Art.7: 670(2) Civil Code (BW) applies which protects pregnant women and young mothers (for a certain period) against dismissal. 7. Equality and non-discrimination [Article 3(1)(g) of the Directive] Equal treatment of men and women and other provisions on non-discrimination are laid down in the Equal Treatment Act (Dutch: Algemene wet gelijke behandeling) amongst others and in Art. 646, 647, 648 book 7 Civil Code (Dutch abbreviation: BW). For a large part the Dutch rules pertaining to equal treatment are a transposition of EU directives into national legislation. Dutch law bans discrimination of workers on the grounds of: religion, belief, political conviction, race, sex, nationality, sexual orientation, marital status, age, disability or chronic disease and type of contract (temporary or permanent and full-time or part-time). There are exceptions to the ban on discrimination.the ban on discrimination on the grounds of nationality is not enforced when it is based on universally binding provisions or written or unwritten rules of international law. Everyone involved in work falls under the scope of the legislation, such as of course employers and employees, but also trade unions and employers organisations, the parties that negotiate agreements on working conditions. It also includes government as an employer and civil servants and the self-employed without personnel. The legislation covers the following areas of work: recruitment and selection (such as publishing vacancies, procedures for job interviews), job placement activities (temping agencies, but also careers guidance and offering trainee posts), employment contracts, dismissal, terms of employment (such as pay, holidays, leave, reimbursement of travel expenses etc.), vocational education and additional training, internal recruitment and promotion and finally working conditions. The Equal Treatment Commission (CGB) is monitoring compliance with laws on equal treatment. The CGB is an independent body of experts. Everyone experiencing a situation of perceived unequal treatment can go to the CGB. The Commission can launch an investigation if a complaint has been lodged. The CGB will then assess whether the equal treatment legislation has been properly observed. The Commission decision is non-binding, in contrast to a verdict by a judge. But often the parties concerned will find some sort of agreement after the Commission has reached a decision. The website of the Commission is:

8 Universally binding provisions of collective labour agreements Collective agreements or arbitration awards which have been declared universally applicable in a sector. As mentioned above the Directive seeks to guarantee that workers posted abroad will be covered by certain minimum protective provisions in force in the Member State to which they are posted. These rules must be laid down by the legislations of the host country (see the information above) and/or by collective agreements or arbitration awards which have been declared universally applicable in a sector. The application of collective agreements which have been declared universally applicable in a sector is based on Article 2 (6) of the Collective Labour Agreements (Declaration of Universally Binding and Non-binding Status) Act. For foreign employees who have been posted in the Netherlands Article 2, par. 6 of the Collective Labour Agreements (Declaration of Universally Binding and Non-binding Status) Act is important. It reads: Universally binding provisions also apply to employees who are temporarily working in the Netherlands and whose employment contract is governed by other legislation than Dutch legislation, when these provisions concern: maximum work periods and minimum rest periods; minimum period of annual holidays, for which the employer is obliged to pay; the minimum rates of pay, including overtime rates; but excluding supplementary occupational retirement pension schemes; the conditions for hiring-out of workers; health, safety and hygiene at work; protective measures with regard to the terms and conditions of employment of children, young people and pregnant employees or employees who have recently given birth; equal treatment of men and women and other provisions of non-discrimination. Employers are obliged to apply universally binding provisions from collective labour agreements on the core terms of employment mentioned above to cross-border employees when their work is carried out within the timeframe for which the collective labour agreement has been declared universally binding. Information of some collective agreement parties concerning the applicable terms and conditions of employment in the situation described above, can be found here.

9 Aliens Employment Act (WAV) For a worker who is not yet enjoying free movement of labour a work permit is needed. In some cases, where international provisions relating to freedom to provide services are applicable, the employer may suffice to give a prior notification instead of applying for a work permit. This is set out in the Aliens Employment Act (WAV). The employer should send applications for work permits or notifications to the public employment service, UWV WERKbedrijf. Which of the two is required depends on the type of secondment: Three cross-border posting situations 1. Post workers to the territory of a Member State on their account and under their direction, under a contract concluded between the undertaking making the posting and the party for whom the services are intended, operating in that Member State, provided there is an employment relationship between the undertaking making the posting and the worker during the period of posting 2. Post workers to an establishment or to an undertaking owned by the group in the territory of a Member State, provided there is an employment relationship between the undertaking making the posting and the worker during the period of posting 3. Being a temporary employment company or placement agency, hire out a worker to a user undertaking established or operating in the territory of a Member State, provided there is an employment relationship between the temporary employment company or placement agency and the worker during the period of posting. Commitment Notification i) Work permit ii) work permit Notes: i Notification is possible when a Dutch company commissions a company abroad to carry out, for a specific period, certain well-defined activities. A work permit is required if the service consists of supplying workers. The foreign company will normally also carry out those activities within its own territory. If, for example, the service consists of simple manual harvesting, where the Dutch client determines where, how and for how long the work is being carried out, it is a matter of supplying workers. In that case notification will not suffice, but work permits must be applied for; ii Exception: In case of highly skilled workers (so called knowledge workers ), a work permit is not obliged when the employee possesses a permit to stay as knowledge worker.

10 Surveillance of compliance with provisions pertaining to labour law in Acts and universally binding provisions of collective labour agreements: general information Rules covered by the Secondment Directive are enforced through both private law and for some of those rules public law. Enforcement through private law: The applicable issues laid down in the Civil Code, Temporary Agencies Act (Waadi), the Equal Treatment Act and the Aliens Employment Act, are enforced exclusively through private law. The Working Conditions Act (Arbowet) and the Working Hours Act (ATW) are being enforced through public law, although the employee has some recourse in private law as well. In the Netherlands workers posted from abroad can, pursuant to Article 98 of the Code of Civil Prodedure, go to court to ask whether Dutch laws applicable to employment relations can be applied to their contract during their secondment. Workers who have been posted from abroad can also demand compliance with the seven core provisions of universally binding collective labour agreements. Workers posted abroad can also ask courts in their country of permanent residence (i.e. the country where they habitually carry out their work) to apply the central core of enforcable provisions of the country to where they have been posted to their contract during their posting. With regard to universally binding collective labour agreements, employers organisations or trade unions of which members are party to a contract to which a universally binding collective labour agreement is applicable, can claim compensation from the employer when the employer does not or not fully comply with the universally binding collective labour agreement. So when universally binding provisions of a collective labour agreement are not applied to a worker posted from abroad, the social partners can claim compensation from the employer in question. Enforcement through public law: Besides all this, labour law enforced through public law is applicable to the employment relationship of workers posted from abroad. This is the remit of the Labour Inspection. The Labour Inspection has its own investigational- and enforcement duties with regard to the Working Conditions Act and the Working Hours Act. The Labour Inspection also has investigational and enforcement duties with regard to the Aliens Employment Act. With regard to the Temporary Agencies Act and the Collective Labour Agreements (Declaration of Universally Binding and Non-binding Status) Act, the Labour Inspection only has investigational duties: the results of any investigation will be communicated to the parties concerned, who can, if necessary, take further action themselves. In more detail: Working Conditions Act and Working Hours Act: At present the Working Conditions Act and the Working Hours Act are being actively enforced through the Labour Inspection s own inspection projects and more reactively on the basis of tip-offs and reports from third parties (employees, other employers, citizens). The Labour Inspection will investigate

11 whether or not the statutory minimum standards are being enforced. When rules have been breached the Labour Inspection can issue a warning or impose an administrative fine. The amount of the fine depends on the seriousness of the offence and the size of the company. In the case of a fatal accident the matter will have to go through a criminal court and a record will be sent to the public prosecutions department. The results of the investigation will be sent to the employee concerned, who can take action through private law. If collective labour agreements or other agreements at company level contain additional provisions, the Labour Inspection will not take these into account when performing its investigational or enforcement duties. Aliens Employment Act: The WAV is also actively being enforced through the Labour Inspection s own inspection projects and jointly with enforcement partners such as the Tax Department, the Social Security Agency and municipalities in socalled multidisciplinary intervention teams and reactively on the basis of reports of police findings and tip-offs and reports from third parties. In case of illegal labour the Labour Inspection can impose a fine on the employer. If it s the third violation within a certain period of time a report is made. Temporary Agency Act (Waadi): Investigations into enforement of the Waadi (comparable wage norm, ban on blacklegging) occasionally take place on the basis of complaints lodged on non-compliance with minimum statutory provisions. Collective Labour Agreements (Declaration of Universally Binding and Nonbinding Status) Act (AVV): And finally, pursuant to Article 10 of the AVV, parties to collective labour agreements have the option to let the Ministry of Social Affairs and Employment investigate (to be carried out by the Labour Inspection) compliance with universally binding provisions of collective labour agreements. Minimum wage act: As from the beginning of may 2007 the instrument of administrative fines and orders for penalty payments have been introduced to the Minimum Wage Act.

12 Enforcement of the Minimum Wage and Minimum Holiday Allowance Act Administrative enforcement and exchange of information The Minimum Wage and Minimum Holiday Allowance Act (WML) is enforced both through private and public law. The text below examines enforcement of the WML through public law. The employer provides the employee with a wage slip. This should contain the following information: the gross wage the wage components (basic wage, additional performance pay etc.) amounts withheld by employer for tax and social security payments the legal minimum (youth) wage and the minimum holiday allowance applicable to the employee name of employer and employee period for which the payment is made (e.g. the month of June)

13 the number of hours the worker is contracted to work If an employee receives or thinks he receives less wages than he is entitled to, the best course of action for the employee is first to talk to the employer about a solution. If this has no results, the employee can go to the Labour Inspection. Every employee who thinks he is being underpaid, can report this to the Labour Inspection. The Labour Inspection will then check compliance with the Minimum Wage Act. If it is determined there has been underpayment, the Labour Inspection can impose an order for penalty payments and a fine on the employer. That won t be the case if there is an apparent error or erroneous banking transfer, or when the degree to which an obligation has not been met per offence is less than 5%. In those cases a caution in writing is sent to remind the employer to fulfill his obligations and to produce, within a month, written proof that he has done so. If the employer still fails to fulfill his obligations an order for penalty payments and a fine can be imposed. Order for penalty payments The order for penalty payments entails that the Labour Inspection summons the employer to pay the employee the correct minimum wage. The order for penalty payments ensures the underpayment is rectified. A deadline is set before which the employer must have paid the wages owed. If the employer still doesn t pay the wages owed, a penalty payment is due, payable to the Labour Inspection. The Labour Inspection can collect the payment, plus costs, from the employer with a bailiff s writ. In principle the Labour Inspection will, before imposing an order for penalty payments, give the employer four weeks to pay the wages owed. Only when the employer fails to do so the Labour Inspection will impose an order for penalty payments. When more than one employee has been underpaid by the same employer, the Labour Inspection will include all wages owed to all those employees in the order for penalty payments. An order for penalty payments can also be imposed when the Labour Inspection establishes that a former employee has been underpaid during a certain period, although there is no longer a contract between employer and employee. But because there was a contract at the time of the underpayment, the former employee should still be paid the arrears by the employer. The period of time over which the Labour Inspection checks compliance with the Minimum Wage Act and the period over which the Labour Inspection summons the employer to pay the correct minimum wage is normally one year. An employee can start civil proceedings when the period of underpayment is longer, with a maximum of five years. Fine The amount of the fine the Labour Inspection can impose is in part related to the degree of underpayment. In other words, the greater the percentage the employee has been underpaid, the higher the fine will be. This is detailed in the administrative fine rules accompanying the draft law. The amounts are payable for each employee individually. If it is established that an employer has underpaid ten employees, the fine will be imposed ten times. When inspectors are carrying out checks and it emerges that an employer does not have any documents to prove the nature of the employment relationship, wages paid or the number of hours worked, the procedure is slightly different. The Labour Inspection will first investigate the nature of the employment relationship and may involve the Tax Department, the Social Information and Investigation Service and the Social Security Agency. If it is established

14 there is an employment contract, the Labour Inspection will impose the maximum fine of 6.700,-. If there have been breaches of fiscal and social security laws the agencies mentioned above will also take steps against both the employer and employee in question. If within a period of 24 months it emerges again that the employer is failing to comply with obligations from the Minimum Wage Act, the fine to be imposed will be increased by 50%. The total fine could then be more than 6.700, per employee. When an administrative fine has been imposed, the Labour Inspection will pass on the name of the company to the relevant trade unions and employers organisations. The reasoning behind that is that if an employer hasn t paid the statutory minimum wage and a collective labour agreement is in force, the employer also hasn t paid the wage as negotiated in the collective bargaining agreement, because the lowest wage in a collective labour agreement will always be at the level of the minimum wage or higher. Enforcement of (universally binding) provisions of a collective labour agreement are the responsibility of the parties to the agreement. On grounds of the Collective Labour Agreements Act and the Collective Labour Agreements (Declaration of Universally Binding and Non-binding Status) Act, the parties involved (employee, trade unions and employers organisations) can demand compliance. Receiving the name of an employer who has been ordered to pay an administrative fine, provides the parties to a collective labour agreement with a concrete cause to investigate whether or not that employer has complied with provisions from the collective labour agreement and if necessary demand compliance.

15 Payment of social security contributions The Community provisions on social security are contained in Regulation (EEC) No 1408/71. This Regulation provides for coordination of the national systems with respect to the crossborder aspects in the field of social security. Employed as well as self-employed persons, who are insured under the legislation of one of the Member States of the European Union, are falling under the scope of Regulation (EEC) No 1408/71. Regulation (EEC) No 1408/71 stipulates that employed and self-employed persons are only subject to the legislation of one Member State at the time. The basic principle is that employed and self-employed persons are insured in the Member State where they exercise their occupational activity. However posting abroad is an exception to this rule. Posting means that the applicable legislation will not change, when the undertaking which employs an employee in one Member State sends the person concerned temporarily to another Member State. In this case, the person concerned will remain insured under the legislation of the sending Member State even whilst posted in another Member State. This means that no contributions have to be paid in the receiving Member State. This rule is especially made for workers posted abroad in order to avoid the change of the applicable legislation for short periods of employment abroad. Employed and self-employed persons going abroad for posting will receive an E101 form from the sending Member State which certifies that the person concerned remains covered by the legislation of the sending Member State. The duration of the work abroad may not exceed

16 12 months. In case of unforeseen circumstances, an application for extension of the posting period of up to 24 months can be made.

17 Payment of pension contributions During their secondment workers posted abroad can continue to be affiliated to the pension scheme in their country of origin. When payments of contributions are being continued in another EU Member State, workers posted from other EU Member States and their employers are exempt from paying contributions towards the Dutch pension scheme. This is stipulated in Article 97 of the Pensions Act and stems from the Directive 1998/49/EC. For the definition of a posted worker the definition in Regulation 1408/71 of the Council of the European Community is followed. It is important to check whether, although a worker has been posted to the Netherlands from a Member State of the EU, there is no connecting factor making Dutch jurisdiction relevant. This could entail that an obligation pursuant to the Compulsory Affiliation to a Sectoral Pension Fund Act 2000 (Bpf 2000) is applicable. In that case Article 15 of Bpf 2000 allows to apply for an exemption of that obligation. Pursuant to Article 5 of the regulations with regard to applications pursuant to Bpf 2000 the exemption can only be granted when affiliation to the pension scheme in the country of origin is being continued. The aforementioned Directive 1998/49/EC also stipulates that a worker who moves to another Member State after ending affiliation to a pension scheme should not be treated less favourably with regard to his acquired pension rights than a worker continuing to live in the same Member State. Upon reaching retirement age the pension can, on request, be paid out in a different EU Member State. In the Netherlands this is stipulated in Articles 53 and 55 of the Pensions Act. Workers who have acquired pension rights in the Netherlands may exercise the right to transferability of pension rights, as stipulated in Article 85 of the Pensions Act. This right to transferability does not stem from Directive1998/49/EC and does not apply in all Member States. Employer s obligation to inform employees of the conditions applicable to the contract or employment relationship (Directive 91/533/EEC) Based on Council Directive of 14 October 1991 on an employer's obligation to inform employees of the conditions applicable to the contract or employment relationship (91/533/EEC) an employer is obliged to notify his employee of the essential aspects of the contract or employment relationship. The details of this obligation are elaborated in the legislation of the country where the worker who has been posted is normally employed most of the time this will be the country where his employer is established. The obligation to provide information may be met by means of a written contract, a letter of appointment or one or more other documents or, if they are lacking, a written statement signed by the employer. In the case of expatriation of the employee, the latter must, in addition to the main terms of

18 his contract or employment relationship, be supplied with relevant information connected to his secondment. Relevant are the articles 2-5 of the Directive: Article 2 Obligation to provide information 1. An employer shall be obliged to notify an employee to whom this Directive applies, hereinafter referred to as 'the employee', of the essential aspects of the contract or employment relationship. 2. The information referred to in paragraph 1 shall cover at least the following: (a) the identities of the parties; (b) the place of work; where there is no fixed or main place of work, the principle that the employee is employed at various places and the registered place of business or, where appropriate, the domicile of the employer; (c) (i) the title, grade, nature or category of the work for which the employee is employed; or (ii) a brief specification or description of the work; (d) the date of commencement of the contract or employment relationship; (e) in the case of a temporary contract or employment relationship, the expected duration thereof; (f) the amount of paid leave to which the employee is entitled or, where this cannot be indicated when the information is given, the procedures for allocating and determining such leave; (g) the length of the periods of notice to be observed by the employer and the employee should their contract or employment relationship be terminated or, where this cannot be indicated when the information is given, the method for determining such periods of notice; (h) the initial basic amount, the other component elements and the frequency of payment of the remuneration to which the employee is entitled; (i) the length of the employee's normal working day or week; (j) where appropriate; (i) the collective agreements governing the employee's conditions of work. Or (ii) in the case of collective agreements concluded outside the business by special joint bodies or institutions, the name of the competent body or joint institution within which the agreements were concluded. 3. The information referred to in paragraph 2 (f), (g), (h) and (i) may, where appropriate, be given in the form of a reference to the laws, regulations and administrative or statutory provisions or collective agreements governing those particular points. Article 3 Means of information 1. The information referred to in Article 2 (2) may be given to the employee, not later than two months after the commencement of employment, in the form of: (a) a written contract of employment; and/or (b) a letter of engagement; and/or (c) one or more other written documents, where one of these documents contains at least all the information referred to in Article 2 (2) (a), (b), (c), (d), (h) and (i). 2. Where none of the documents referred to in paragraph 1 is handed over to the employee within the prescribed period, the employer shall be obliged to give the employee, not later than two months after the commencement of employment, a written declaration signed by the employer and containing at least the information referred to in Article 2 (2). Where the document(s) referred to in paragraph 1 contain only part of the information required, the written declaration provided for in the first subparagraph of this paragraph shall cover the remaining information.

19 3. Where the contract or employment relationship comes to an end before expiry of a period of two months as from the date of the start of work, the information provided for in Article 2 and in this Article must be made available to the employee by the end of this period at the latest. Article 4 Expatriate employees 1. Where an employee is required to work in a country or countries other than the Member State whose law and/or practice governs the contract or employment relationship, the document(s) referred to in Article 3 must be in his/her possession before his/her departure and must include at least the following additional information: (a) the duration of the employment abroad; (b) the currency to be used for the payment of remuneration; (c) where appropriate, the benefits in cash or kind attendant on the employment abroad;(d) where appropriate, the conditions governing the employee's repatriation. 1. The information referred to in paragraph 1 (b) and (c) may, where appropriate, be given in the form of a reference to the laws, regulations and administrative or statutory provisions or collective agreements governing those particular points. 2. Paragraphs 1 and 2 shall not apply if the duration of the employment outside the country whose law and/or practice governs the contract or employment relationship is one month or less. Article 5 Modification of aspects of the contract or employment relationship 1. Any change in the details referred to in Articles 2 (2) and 4 (1) must be the subject of a written document to be given by the employer to the employee at the earliest opportunity and not later than one month after the date of entry into effect of the change in question. 2. The written document referred to in paragraph 1 shall not be compulsory in the event of a change in the laws, regulations and administrative or statutory provisions or collective agreements cited in the documents referred to in Article 3, supplemented, where appropriate, pursuant to Article 4 (1).