EUROPEAN REVIEW

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ISSUE 61 page 6

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‘Exported workers’ and firms must pay social security where they work

Since the enlargement of the European Union in 2004 there has been an influx of workers from the New Member States (NMS), mainly in eastern Europe, to the original 15 EU countries. There have been various abuses by employers, sometimes involving ‘posted worker’ status but also social security contributions. Now a case from Poland has closed one loophole.

 

As well as getting away with paying lower wages to workers posted abroad than those agreed for locals (see Viking and Vaxholm judgements in many previous issues) eastern European companies have often chosen to make social security payments where the cost is lowest, often in their home countries. A recent decision of the European Court of Justice (ECJ) has, however, made this impossible in certain circumstances. It revolved around a Mr.Kita, a Pole who worked for a Warsaw-based construction firm, Format. He could not be classed as a ‘posted worker’ as Format did not conduct ‘a major part’ of its business in the country where it was registered, although he never worked in Poland but in a number of other Member States. Even so the company contended that he was ‘a person normally employed in the territory of two or more Member States’ and, under EEC regulations, they and he were allowed to pay social security contributions in his home country. The Warsaw office of ZUS, the Polish social security system, disputed this and refused to certify Mr.Zita as a worker thus leaving him uncovered.
The ECJ ruled that he fell outside the regulation invoked by Format as, although he had worked in Finland, France, Germany, Ireland and the UK, he did not move continuously between them but was employed for extended periods in one country alone. Therefore he should make contributions to the system of the state where he was actually working, as should his employer. Between contracts he should be covered by the Member State where he was then living. Companies will now be unable to choose the cheapest system to which to make social security payments unless they are genuinely posting workers for a limited period from their home base. As the decision is thought to affect 40,000 Polish workers, plus some in all the other NMS, employers have complained that they will lose a competitive edge in supplying cheaper labour to western Europe.

Recent rulings from the European Courts

Turkish court backs sacked airline protesters

Spanish part-time pensions law discriminatory

We reported in our last issue on the 305 employees of Turkish Airlines whom the company dismissed for protesting against a government-imposed strike ban in their industry. Now, as well as the withdrawal of the ban, the Hava-Is trade union has won another victory. An Istanbul court has ruled that one of the 305 must be reinstated. President of the union, Atilay Ayçin, believes that ‘it seems likely that identical decisions will be made by other labour courts regarding the remaining unfair dismissal cases’ but warns that the employer may take up the option to pay higher compensation rather than give the workers their jobs back.
In order to qualify for a state retirement pension in Spain an applicant must be over 65 and have worked for at least 15 years. In an effort to accommodate part-time workers two corrections are applied to this general rule: the theoretical work day is only five hours long and the number of these days is then multiplied by 1.5 when working out the ‘work year’. Ms. Elbal Moreno worked as a cleaner for 4 hours a week for 18 years until she was 66. She was refused a pension on the grounds that she had only racked up about 3 years of contributions based on the above calculation. However the European Court of Justice found that as well as receiving a lower pension in proportion to their working hours part-timers were discriminated against in having to work longer to qualify for it. Thus Ms.Moreno would need to work for about 100 years to satisfy the 15-year requirement. Furthermore the vast majority of the affected workers were women so EU equality directives had also been infringed.




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