In order for it to be considered that it “normally carries out its activities” in a Member State of the European Union, a temporary-work agency must carry out a significant part of its activities of assigning temporary agency workers for the benefit of user undertakings established and carrying out their activities in the territory of the same Member State, the Court of Justice of the EU (CJEU) stated in its judgment of Thursday 3 June) (Case C-784/19).
The judgment follows a request for clarification from the Administrative Court of the Bulgarian city of Varna in a dispute between the city and the temporary employment company Team Power Europe.
During 2018, Team Power Europe had concluded a contract with a Bulgarian national under which he was assigned to a user undertaking established in Germany for a period of approximately two months.
While Team Power Europe requested a certificate stating that Bulgarian social security legislation was applicable to this worker during his assignment, the revenue service for the city of Varna considered that the direct relationship between Team Power Europe and the worker had not been maintained and, secondly, that this company did not carry out a substantial activity on Bulgarian territory.
According to the Commission, the situation of this worker therefore did not fall within the scope of Article 12(1) of the European Regulation (883/2004) on the coordination of social security systems. Under this article, a worker who pursues an activity as an employed person in a Member State on behalf of an employer that “normally carries out its activities” there and who is posted by that employer to work in another Member State remains subject to the legislation of the first Member State under certain conditions.
Following the rejection of Team Power Europe’s complaint, the case was referred to the CJEU.
Firstly, it considered that the selection and recruitment of temporary workers by an undertaking established in a Member State is insufficient for the latter to be regarded as performing “substantial activities” there, since only the provision of these workers to user undertakings actually generates a turnover.
It went on to state that Article 12 of Regulation 883/2004 is an exception which “cannot apply” to a temporary-work agency which carries out its activities of making workers available in the Member State where it is established only to a negligible extent.
Finally, the CJEU judgment points out that applying the derogatory rule to temporary-work agencies that direct their provision of workers exclusively or mainly to one or more Member States other than the one in which they are established would risk encouraging them to engage in forum shopping by establishing themselves in the Member State with the most favourable social security legislation.
Welcoming the CJEU decision, the General Secretary of the European Federation of Building and Woodworkers (EFBWW), Tom Deleu, said: “We had warned that, if the Court ruled in favour of the Advocate General’s Opinion, it would give an important incentive to fraud and to set up letterbox companies, acting as temporary-work agencies and posting cheap labour to other Member States”.
See the Court’s judgment: https://bit.ly/34JTTaQ (Original version in French by Damien Genicot)