ESA, a company established in Poland, carries on business in the electricity sector. It has a branch in Finland. In order to carry out electrical installation work at the construction site for a nuclear power station in Finland, ESA concluded, in Poland and under Polish law, employment contracts with 186 workers. The latter were posted to ESA’s Finnish branch. They were assigned to the construction site and were provided with accommodation. The workers argued that ESA did not pay them the minimum remuneration that was due to them under Finnish collective agreements for the electricity sector, which they argued were applicable under EU law. They individually assigned their pay claims to Sähköalojen, a Finnish trade union, so that it could recover those claims.

Sähköalojen has submitted to the local court in Finland that the relevant Finnish collective agreements provide for a calculation of employees’ minimum pay which is based on criteria that are more favourable to employees than those applied by ESA. Those criteria include the way of categorising employees by pay groups, of classifying pay on the basis of time or piecework, of granting employees a holiday allowance, a daily allowance and compensation for travelling time and of covering their accommodation costs. By two actions, Sähköalojen requested an order that ESA pay to it a total amount of €6,648,383.15, plus interest, in respect of the claims that had been assigned to it.

ESA contended that those actions should be dismissed. It has argued, in particular, that Sähköalojen does not have standing to bring proceedings on behalf of the workers, on the ground that Polish law prohibits the assignment of claims arising from an employment relationship. At the request of Sähköalojen, the local court ordered ESA’s assets to be attached to the extent necessary for the trade union’s claim to be secured to a maximum of €2,900,000. Once the decision on the attachment became final, ESA provided the competent authority with a bank guarantee for that amount, which will be valid until 30 September 2015.

Since it had some doubts concerning the interpretation of EU law and, in particular, of Article 3 of Directive 96/71, the local court decided to stay the proceedings and to refer a number of questions to the Court of Justice EU (CJEU) for a preliminary ruling.

Consideration by CJEU

The standing of Sähköalojen to bring proceedings before the referring court is governed by Finnish procedural law, which is applicable according to the principle of lex fori. Thus, the rules set out in the Polish Labour Code, to which ESA refers, are irrelevant with regard to the locus standi of Sähköalojen before the referring court and do not prevent that trade union from bringing an action before the local court. Moreover, the subject-matter of the main proceedings relates to the determination of the scope of the concept of ‘minimum rates of pay’, within the meaning of Directive 96/71, to which the Polish workers posted to Finland are entitled. The second subparagraph of Article 3(1) of Directive 96/71 makes absolutely clear that questions concerning ‘minimum rates of pay’ within the meaning of the directive are governed, whatever the law applicable to the employment relationship, by the law of the Member State to whose territory the workers are posted in order to carry out their work; in this case, Finland.

Furthermore, the assignment of pay claims to Sähköalojen is in conformity with Finnish law and that, moreover, the Polish undertaking which engaged those workers has a branch in Finland to which they were posted. That being so, there is nothing in the present case, contrary to what was argued by ESA before the referring court, which gives any ground for calling in question the action which Sähköalojen has brought before the referring court.

The CJEU held that:

1. Directive 96/71/EC prevents a rule of the Member State of the seat of the undertaking that has posted workers to the territory of another Member State — under which the assignment of claims arising from employment relationships is prohibited — from barring a trade union from bringing an action before a court of the second Member State, in which the work is performed, in order to recover for the posted workers, pay claims which relate to the minimum wage, within the meaning of Directive 96/71, and which have been assigned to it, that assignment being in conformity with the law in force in the second Member State.

2. Article 3(1) and (7) of Directive 96/71, read in the light of Articles 56 TFEU and 57 TFEU, must be interpreted as meaning that:

• it does not preclude a calculation of the minimum wage for hourly work and/or for piecework which is based on the categorisation of employees into pay groups, as provided for by the relevant collective agreements of the host Member State, provided that that calculation and categorisation are carried out in accordance with rules that are binding and transparent, a matter which it is for the national court to verify;
• a daily allowance such as that at issue in the main proceedings must be regarded as part of the minimum wage on the same conditions as those governing the inclusion of the allowance in the minimum wage paid to local workers when they are posted within the Member State concerned;
• compensation for daily travelling time, which is paid to the workers on condition that their daily journey to and from their place of work is of more than one hour’s duration, must be regarded as part of the minimum wage of posted workers, provided that that condition is fulfilled, a matter which it is for the national court to verify;
• coverage of the cost of those workers’ accommodation is not to be regarded as an element of their minimum wage;
• an allowance taking the form of meal vouchers provided to the posted workers is not to be regarded as part of the latter’s minimum salary; and
• the pay which the posted workers must receive for the minimum paid annual holidays corresponds to the minimum wage to which those workers are entitled during the reference period.

Why is this decision important?

Workers posted by their employer to another Member State may be entitled to the benefit of collectively agreed pay awards in the host State even if the employer has agreed a lower rate of pay in their home State. The rights of workers are also enhanced by the right to assign such pay claims to a trade union in the host State. If an employer wins a contract in another Member State and decides to send its employees to that State to provide the relevant services, the employer will need to seek advice on the rates of pay which may be claimed by the workers in the host State.