C-49/98

FINALARTE AND OTHERS

OPINION OF ADVOCATE GENERAL MISCHO delivered on 13 July 2000 1

Table of contents

The German rules on paid holiday and the facts in the main proceedings I - 7836 Questions referred for a preliminary ruling I - 7839 Applicability of Article 48 of the Treaty I - 7841 The first question I - 7843 (a) Whether there is a restriction of the freedom to provide services I - 7850 (b) Whether there is discrimination I-7852 (c) Whether there is an overriding reason of public interest I - 7853 (d) Whether the public interest in question is safeguarded by the rules of the State where the provider of services is established I - 7856 (e) Whether the same result may be achieved by less restrictive rules I - 7858 The second question I - 7860 (a) Duration of paid leave I - 7860 The observations submitted I - 7861 Legal assessment I - 7863 (b)The method of payment for holiday pay I - 7864 The observations submitted I - 7864 Legal assessment I - 7866 (c) The information to be provided I - 7867 The observations submitted I - 7869 Legal assessment I-7871 The third question I-7875 The observations submitted I - 7877 Legal assessment I - 7878 The fourth question I-7879 Conclusion I-7882

1 — Original language: French

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2. The German scheme of paid leave for workers in the building industry, which forms an integral part of their terms and conditions of employment, is governed by the Mindesturlaubsgesetz für Arbeitneh- mer — Bundesurlaubsgesetz (Law on minimum holiday entitlement for workers, 'the BUrlG') and by the Bundesrahmentar- ifvertrag für das Baugewerbe (Collective framework agreement for the construction 4. The BUrlG 2enables collective labour industry, 'the BRTV). The scheme is agreements to lay down derogating provi- implemented by means of a system of funds sions to the extent necessary to enable for paid leave governed, essentially, by the construction workers to preserve their Verfahrenstarifvertrag (Collective agree- entitlement to an unbroken annual holiday, ment on the social fund scheme, 'the in spite of the frequent changes of VTV). The abovementioned collective employer. agreements have been extended to the whole of the building industry by an order of the German Government. 2 — Paragraph 13(2) of the BUrlG.

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10. Through the Law on the posting of workers of 26 February 1996 4 ('the 7. The German employers contribute 14.45 AEntG') the provisions of the construction % of the total gross wages of their business industry's collective agreements concerning to the holiday pay fund, in return for which entitlement to paid leave (cited above) were they are entitled to obtain full or partial applied with effect from 1 March 1996, reimbursement of the benefits they have and, subject to certain conditions, to paid to workers (holiday pay, additional holiday allowance, or a lump sum on a 4 — Gesetz uber zwingende Arbeitsbedingungen bei grenzübers- chreitenden Dienstleistungen — Arbeitnehmer- Entsende- gesetz — AEntG of 26 February 1996 (BGBl. I, p. 2271 (Law on compulsory employment terms applicable to the 5 — Paragraph S of the BRTV. cross-border supply or services).

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OPINION OF MR MISCHO — JOINED CASES C-49/98, C-50/98, C-52/98 TO C-54/98 AND C-68/98 TO C-71/98

employment relationships between under- payable by the undertaking under the takings whose registered office is in a system of social security funds, and it Member State other than the Federal extends this to undertakings having their Republic of Germany ('foreign providers registered office abroad and to their posted of services') and workers they send for a workers'. The German Government fixed term to carry out construction work emphasises that the legislature has thus on sites in Germany ('posted workers'). confined its intervention to the essential terms and conditions of employment rele- vant to posted workers.

12. The German Government points out in its written observations, however, that 'the system of social security funds in the construction industry includes a host of benefits laid down by collective agreement. Besides the holiday pay scheme, both sides of the construction industry have, taking into account the particular nature of the 14. When a posted worker wishes to claim industry, also entrusted the social security his right to paid leave, the foreign provider funds in that sector with the administration of services must notify Ulak, which then of the following benefits: bonus pay for the gives the worker directly the amount of periods 24 to 26 December and 31 Decem- holiday pay to which he is entitled. 7Unlike ber to 1 January, supplementary retirement employers established in Germany, the benefit and continuing vocational training. foreign service provider is not, therefore, The AEntG is only concerned with the required to advance the worker the holiday administration of the "paid leave" benefit, pay due to him. Nor, consequently, is it entitled to be reimbursed by Ulak.

5 — Amending collective agreement of 18 December 1996. 6 — New Paragraphs 55 to 71 of the VTV. 7 — Paragraph 65 of the VTV.

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FINALARTE AND OTHERS

15. The same procedure applies, under of holiday pay funds, and, more particu- Paragraph 66 of the VTV, where compen- larly, to the obligation to pay contributions satory holiday pay is given when the posted and provide information to Ulak. worker returns to his own country without having taken the leave entitlement acquired in Germany. 8

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OPINION OF MR MISCHO — JOINED CASES C-49/98, C-50/98, C-52/98 TO C-54/98 AND C-68/98 TO C-71/98

benefits in connection with workers' joint bodies of the parties to the holiday entitlements by joint bodies of collective agreements whereas, in parties to collective agreements, and the case of employers established thus the provisions of those agreements abroad, they do not provide for concerning the scheme to be complied such a claim but instead for a with in that regard, to employers direct claim by the posted workers established abroad and their workers against the joint bodies of the who have been posted to the area parties to the collective agree- within which those collective agree- ments; and/or ments apply?

2. On a proper construction of Arti- cles 48, 59 and 60 of the EC Treaty, are those provisions infringed by the (c) in connection with the social fund second sentence of Paragraph 1(1) and scheme to be complied with under the first sentence of Paragraph 1(3) of those collective agreements, the AEntG which result in the applica- impose on employers established tion of provisions of collective agree- abroad obligations to provide the ments declared to be generally binding joint bodies of the parties to the which: collective agreements with more information than that required from employers established in Ger- many?

(a) provide for leave which exceeds the minimum length of annual leave laid down by Council Direc- tive 93/104/EC of 23 November 1993 concerning certain aspects of the organisation of working time; and/or 3. On a proper construction of Arti- cles 48, 59 and 60 of the EC Treaty, are those provisions infringed by Para- graph 1(4) of the AEntG under which — for the purposes of classify- ing businesses as covered by a collec- tive agreement which has been declared (b) allow employers established in generally binding and which, under the Germany to claim the reimburse- first sentence of Paragraph 1(3) of that ment of expenditure on holiday Law, also applies to employers estab- pay and holiday allowances from lished abroad and their workers who

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OPINION OF MR MISCHO - JOINED CASES C-49/98, C-50/98, C-52/98 TO C-54/98 AND C-68/98 TO C-71/98

carrying out activities in Germany in exer- 28. Ulak advances the same interpretation cise of the freedom to provide services. of Article 48 as the German Government and points out that the Arbeitsgericht Wiesbaden bases its view on pure supposi- tion, since there has been no reduction in the number of workers posted to Germany as a result of the entry into force of the AEntG. 25. Finalarte and Portugaia claim that Article 48 of the Treaty applies to the posting of workers. They claim that the application of national provisions which make foreign providers of services subject to the German holiday fund scheme con- 29. For my part, I consider, along with stitutes a restriction of the freedom to Ulak, the Belgian Government and the provide services enshrined in Article 59 of Commission, that the issue has already the Treaty, and at the same time breaches been dealt with in the judgments in Rush Article 48 of the Treaty in that it prevents Portuguesa and Vander Elst. 9As stated in posted workers from 'following' their paragraph 21 of the latter judgment, 'work- employer to the host State and working ers employed by an undertaking established there on the same terms as in their State of in one Member State who are temporarily origin. sent to another Member State to provide services do not in any way seek access to the labour market in that second State, if they return to their country of origin or residence after completion of their work'.

31. The referring court by its first question wishes to know essentially whether the extension of the holiday fund scheme to employers established abroad who post workers to Germany as part of the provi- sion of services breaches Articles 59 and 60 of the Treaty.

32. In the introduction to its order for 34. The Advocate General cannot dismiss reference, the Arbeitsgericht Wiesbaden such preliminary observations of the refer- observes that 'reservations arise because ring court as mere incidental comment. the explanatory memorandum to the They constitute the background to the AEntG indicates inter alia that its declared questions raised, and also appear to reflect aim is to protect business in the German a common preoccupation of several courts construction industry from the increasing in Germany. The Court will shortly turn its pressure of competition in the European attention to the case of Portugaia Constru- internal market, and thus from foreign ções (C-164/99), in which the referring providers of services'. The referring court court asks, in the body of one of the indicates that, from the beginning of dis- questions, whether overriding reasons of cussions on the AEntG project, it was public interest justifying a restriction of the pointed out several times that such a law freedom to provide services can include not was intended, above all, to combat 'unfair only the social protection of posted work- competitive conditions resulting from low- ers, but also the protection of the national pay competition in Europe' and 'wage and construction industry and the reduction of social dumping'. unemployment in the host country.

38. Those laws necessarily prevent certain national undertakings from obtaining a competitive advantage over other under- takings established in the same country by imposing less favourable terms of employ- ment on their own employees. 36. However, even if views were expressed during the political debate preceding the adoption of the AEntG, and expressions used in the introductory summary of that law itself, which could give rise to the impression that, in this case, it concerned the protection of an economic sector against foreign competition, we can only 39. There is nothing in the Treaty which examine the content of that law and the requires Member States to accept a differ- other relevant texts in order to determine ent interpretation of competition when the whether, objectively viewed, they guarantee interests of undertakings established in to posted workers, as the German Govern- other Member States are involved, and to ment asserts, a level of social protection accept that such undertakings may obtain a identical in substance to that enjoyed by competitive advantage by not respecting workers in the construction industry who the law in question. On the contrary, the are established in Germany. Court recognised at paragraph 25 of the Vander Elst judgment, cited above, that it is permissible to seek to exclude 'any substantial risk of workers being exploited or of competition between undertakings being distorted' (ECR I-3803 and I-3826).

37. First, it is clear that most (and probably all) of the Member States have enacted minimum wage provisions, the purpose of which is to guarantee decent living condi- tions, as well as provisions governing daily, 40. It will be recalled that social policy, weekly and annual working time, intended including rules on working conditions remains in principle within the competence of the Member States. Under Article 118 of 10 — Case 352/85 Bond van Adverteerders and Others [1988] the EC Treaty (Articles 117 to 120 of the ECR 2085, and Case C-398/95 SETTG [1997] ECR I-3091. EC Treaty were replaced by Articles 136 to

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OPINION OF MR MISCHO — JOINED CASES C-49/98, C-50/98, C-52/98 TO C-54/98 AND C-68/98 TO C-71/98

the adoption of an economic policy which 49. In the following recital in the preamble is based on the close coordination of they recognised that 'the removal of exist- Member States' economic policies, on the ing obstacles calls for concerted action in internal market and on the definition of order to guarantee steady expansion, common objectives, and conducted in balanced trade and fair competition'. accordance with the principle of an open market economy with free competition'.

50. In the 1957 version of Article 117 of the Treaty they were agreed on the 'need to promote improved working conditions and 46. It does not follow from those provi- an improved standard of living for workers, sions, however, that Community law places so as to make possible their harmonisation greater value on the principle of free while the improvement is being main- competition than it does on the other tained'. principles. The fact is that the European Treaties simultaneously pursue several objectives, which must be reconciled.

51. This passage was reinforced in Arti- cle 136 EC, which is the successor to Article 117 of the EC Treaty, by further references to the 1961 European Social 47. The Arbeitsgericht Wiesbaden is right, Charter, to the 1989 Community Charter of course, when it points out that nobody of the Fundamental Social Rights of Work- has ever thought to challenge the competi- ers, to the objective of promoting employ- tive advantage which results from the lower ment, to proper social protection, dialogue wages paid in certain Member States, so far between management and labour, the as concerns the production cost of goods development of human resources with a which are then exported to other Member view to lasting high employment, and to States. the combating of exclusion.

that the principle of non-discrimination (in to in the present cases, Council Directive that case, in the context of the free move- 93/104/EC of 23 November 1993 concern- ment of workers) not only has the effect of ing certain aspects of the organisation of allowing nationals of other Member States working time 14 ('the working time direc- equal access to employment in each Mem- tive'), and Directive 96/71/EC of the Eur- ber State 'but also... of guaranteeing to the opean Parliament and of the Council of State's own nationals 13 that they shall not 16 December 1996 concerning the posting suffer the unfavourable consequences of workers in the framework of the provi- which could result from the offer or sion of services 15 ('the posting directive'), acceptance by nationals of other Member are a reflection of that. States of conditions of employment or remuneration less advantageous than those obtaining under national law, since such [offer or] acceptance is prohibited'.

55. The fifth recital in the preamble to the last-mentioned directive states: 53. The German and French Governments therefore adopt the spirit of that decision when they state that if, on the same construction site, posted workers could be paid less than those of the host country and/or in other respects be given less favourable working conditions, that might jeopardise the level of social protection enjoyed by workers in the country in '... any such promotion of the transnational question, and perhaps even their jobs. The provision of services requires a climate of Belgian Government has adopted essen- fair competition and measures guarantee- tially the same position. ing respect for the rights of workers.'

'It is well-established that Community law the holiday fund scheme. The characteris- does not preclude Member States from tics of that scheme must be examined in applying their legislation, or collective detail, however, because Article 60(3) of labour agreements entered into by both the Treaty does not mean 'that all national sides of industry relating to minimum legislation applicable to nationals of that wages, to any person who is employed, State and usually applied to the permanent even temporarily, within their territory, no activities of undertakings established matter in which country the employer is therein may be similarly applied in its established, just as Community law does entirety to the temporary activities of not prohibit Member States from enforcing undertakings which are established in other those rules by appropriate means. How- Member States'. 17 ever, it is not possible to describe as an appropriate means any rule or practice which imposes a general requirement to pay social security contributions, or other 59. This is because, as the Court noted in such charges affecting the freedom to paragraphs 33 to 38 of its decision in provide services, on all persons providing Arblade: 18 services who are established in other Mem- ber States and employ workers who are nationals of non-member countries, irre- spective of whether those persons have '33 It is settled case-law that Article 59 of complied with the legislation on minimum the Treaty requires not only the elim- wages in the Member State in which the ination of all discrimination on services are provided, because such a gen- grounds of nationality against provi- eral measure is by its nature unlikely to ders of services who are established in make employers comply with that legisla- another Member State but also the tion or to be of any benefit whatsoever to abolition of any restriction, even if it the workers in question.' applies without distinction to national providers of services and to those of other Member States, which is liable to prohibit, impede or render less advan-

minimum wages. Broede v Sandker [1996] ECR I-6511, paragraph 25, and Case C-222/95 Parodi v Banque H. Albert de Bary 58. There is therefore no doubt that the [1997] ECR I-3899, paragraph 18). Federal Republic of Germany is also enti- tled to impose on foreign providers of services its rules as to the period of leave 17 — Case 279/80 Webb [1981] ECR 3305, paragraph 16. and, at least in principle, the mechanism of 18 — Joined Cases C-369/96 and C-376/96 [1999] ECR I-8453.

35 The application of national rules to providers of services established in other Member States must be appro- priate for securing the attainment of the objective which they pursue and must not go beyond what is necessary in order to attain it (see, in particular, Säger, paragraph 15, Case C-l 9/92 Krans v Land Baden-Württemberg 38 However, overriding reasons relating to [1993] ECR 1-1663, paragraph 32, the public interest which justify the Case C-55/94 Gebbard v Consiglio substantive provisions of a set of rules dell'Ordine degli Avvocati e Procurati may also justify the control measures di Milano [1995] ECR I-4165, para- needed to ensure compliance with them graph 37, and Guiot, cited above, (see, to that effect, Rush Portuguesa, paragraphs 11 and 13). cited above, paragraph 18).'

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OPINION OF MR MISCHO — JOINED CASES C-49/98, C-50/98, C-52/98 TO C-54/98 AND C-68/98 TO C-71/98

62. In this regard it is possible to distin- 65. The second, even more important, guish the situation in the present case from distinction between this and the earlier that in Seco, Guiot and Arblade (cited cases lies in the fact that it appears from the above) in two respects. German law itself that the obligation on employers to pay contributions to the holi- day fund is removed for employers estab- lished abroad who post workers to Ger- 63. In those three cases the referring courts many once it is shown that contributions were able to refer to the existence, in the for those workers are made to a compar- country of origin of the undertakings, of able fund in the State of origin (Paragraph obligations to contribute to funds covering 8(11.2) of the BRTV). the same risks and having objectives which were the same as, or at least similar to, those of the scheme in question. The Court 19— Arblade, cited above, paragraph 50, and Guiot, cited could therefore take that observation as its above, paragraphs 14 and 15.

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66. The system in place is therefore orga- ded by rules to which the provider is nised in such a way that a double obliga- subject in the Member State where it is tion to contribute, such as that at issue in established'. Seco, Gniot and Arblade (cited above), should not arise.

20 — In so far as they concern the period spent by the posted 72. If, on the other hand, as is conceivable, worker in Germany. the employer providing services need not

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OPINION OF MR MISCHO — JOINED CASES C-49/98, C-50/98, C-52/98 TO C-54/98 AND C-68/98 TO C-71/98

pay the worker for leave days (whether or provide services. It must therefore be con- not taken) but can leave that entirely to the cluded, if this case-law is to be followed, holiday fund, he would save the corre- that there is in the present case a restriction sponding sums, and the additional financial or obstacle. burden which he would actually have to bear would be equal only to the difference between the burdens arising from the holi- day scheme in his home country, on the one hand, and the German scheme on the other.

(b) Whether there is discrimination

73. It is for the national court to determine which of these two situations applies in this case. 77. The referring court and the parties to the main proceedings claim that certain aspects of the German rules are discrimi- natory and that they are, therefore, only admissible subject to the special conditions 74. In the second situation, the foreign laid down by Article 55 of the EC Treaty employer will find himself no worse off (now Article 45 EC), Article 56 of the EC than employers established in the host Treaty (now, after amendment, Article 46 Member State. To adopt the phrase used EC) and Article 66 of the EC Treaty (now in paragraph 58 of Arblade (cited above) he Article 55 EC), which are not satisfied in will find himself 'on an equal footing, from this case. the standpoint of competition', with them.

80. Whilst a certain confusion has arisen 83. As for the additional protection which from the fact that the Federal Republic of the scheme may provide for posted work- Germany has adopted an amendment to its ers, four different situations may be con- law to take account of the fact that under- sidered. takings established in other Member States are, necessarily, not in exactly the same position as undertakings established in the host country, nevertheless, as the Court held at paragraph 17 of Webb, cited above, 'regard being had to the particular nature First situation: the foreign worker takes the of certain services, specific requirements leave to which he is already entitled before imposed on the provider of the services completion of the work carried out by his cannot be considered incompatible with the undertaking in Germany Treaty where they have as their purpose the application of rules governing such activ- ities'.

84. I repeat that I am starting from the assumption that, under German law, the worker is entitled to more holiday, and to a higher daily rate of holiday pay, than in his country of origin. That benefit is paid to (c) Whether there is an overriding reason of him by the holiday fund. public interest

81. All those who have submitted observa- 85. If the employer were not required to tions are agreed that in this case the only contribute to the fund, he might be tempted overriding reason of public interest which to pay the employee only the lower wage in might be taken into consideration is the force in the country of origin, and to grant 'social protection of construction workers' fewer days' leave. which was accepted in Guiot and Arblade, cited above.

89. If he changes employer after his return 92. The referring court takes the view that to the country of origin, and without this situation is purely hypothetical and having taken any holiday whilst with the that only the first and second cases occur in former employer, he will be dependent practice. upon the goodwill of the former employer in respect of the amount that he receives for holiday not taken in Germany, assuming that the law of the home country requires employers to pay those who leave their service a sum in lieu of the leave which they 93. The German Government quoted sta- did not want, or were not able, to take. tistics at the hearing, however, to the effect that 22% of posted workers take advantage of that possibility. Furthermore, that figure, it maintained, does not include posted workers who enter into employment with an undertaking established in Germany, 90. It may be that the law of the home who are also very numerous (see the fourth country imposes no such obligation. In that situation, considered below).

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94. If employers are required to contribute 98. The posted worker may therefore find to the German fund scheme, the posted himself in a less favourable position than if worker will receive from that fund a he can receive payment directly from the payment calculated on the basis of the holiday fund for the leave not taken. number of days' entitlement to leave accu- mulated as a matter of German law, and on the basis of his 'German wage'. He would be able to take this holiday whilst with his new 'foreign' employer, at no cost to the Fourth situation: the foreign worker leaves latter, once he has accumulated holiday his foreign employer during his stay in entitlement with the latter over and above Germany in order to join an employer the minimum beyond which, according to established in Germany German law, holiday may be taken.

new employer (established in Germany) 107. It is therefore justified by an over- once the worker has taken his annual riding reason in the public interest. holiday from the latter's service. That is a practical detail which was not discussed during the hearing before the Court, but which has no effect on the social protection of the worker.

(d) Whether the public interest in question is safeguarded by the rules of the State where the provider of services is established 103. If the 'foreign' employer were not required to contribute to the fund, the worker would once again be dependent 108. I have already touched on this aspect upon his goodwill, or on the possibility of of the question in the course of examining obtaining a court order in his favour. the four possible situations above, but it is necessary to return to it in greater detail.

104. In this case, also, the social protection of the worker is therefore less well assured 109. The Portuguese companies which are than by the holiday fund scheme. party to the main proceedings claim that the law of their country confers on workers holiday entitlement which not only satisfies the minimum set by the working time directive but is almost as generous as that provided for by the German rules. 105. In summary, the holiday fund scheme therefore confers on the posted worker in the majority of cases, and primarily in the case of a change of employer, additional social protection. 110. The German Government's response is as follows:

106. It also serves to bring about the objective sought, which is to guarantee 'The public interest has not already been holiday entitlement accumulated with one taken into account by the law of the State employer and an unbroken holiday of a in which the provider of services is regis- certain period from a new employer, not tered. That would for example be the case only for workers employed by undertakings if, by contrast, the national provisions established in Germany, but also for posted applying to workers in the construction workers. industry in Portugal ... or the United King-

'Compulsory participation in the holiday In the present case, it suffices to say that pay fund scheme would constitute an there is no equivalent body, either in inadmissible restriction of the freedom to Portugal or in the United Kingdom, to the provide services if there was a guarantee German paid leave fund ... Furthermore, the that employers who post their workers first sentence of Paragraph 1(3)2 of the confer on them the same holiday entitle- AEntG provides that benefits which an ment as that laid down by the German rules undertaking registered abroad has already contained in the collective agreements. It granted by way of paid leave, before the would, furthermore, be necessary to guar- posting, to workers whom it posts abroad antee holiday pay equal to that laid down are to be taken into account. That provi- by the German collective agreements. Fur- sion affects undertakings which are not thermore, the worker must be entitled to already wholly exempt from participation carry over his holiday entitlement when he in the German paid leave fund scheme by changes employer during the posting. reason of Paragraph 1(3)1 of the AEntG'. Lastly, the worker must be entitled to

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OPINION OF MR MISCHO — JOINED CASES C-49/98, C-50/98, C-52/98 TO C-54/98 AND C-68/98 TO C-71/98

holiday pay as provided for by Paragraph (e) Whether the same result may be 8(9) of the BRTV-Bau if he has not taken achieved by less restrictive rules his holiday in Germany during his posting, and his holiday entitlement with regard to his employer remains outstanding.

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provide the holiday fund with the quite guage and legal system of the State to detailed information which the referring which they are posted is a disadvantage for court describes in its second question. them. To that must be added the fierceness of competition in the construction industry, which naturally makes it less likely that undertakings would accept, for their work- ers, paid leave (for a longer period) acquired under foreign, and therefore, less 120. For the worker, the result, from a well known legislation. In the cases of Seco, strictly financial viewpoint, would be the Rush Portuguesa and Vander Elst ... the same. However, he would not be able to Court itself formally recognised the Mem- benefit from the cumulation of holiday ber States' competence to ensure respect for entitlement which the fund system allows. their laws by appropriate means'. Also, where the employer is not a member of the fund, the worker would be at greater risk in the case of insolvency of the employer.

123. I have not found a convincing coun- ter-argument to these observations any- where in the file. The parties to the main 121. There remains the case of the worker proceedings point simply to the burden who leaves Germany with his employer imposed by the German system. The Neth- without having taken any holiday. How erlands and Swedish Governments do the could it be guaranteed, without the inter- same, but emphasise that their own legisla- vention of a holiday fund, that the worker tion gives adequate holiday entitlement to would be paid according to the German posted workers. rules?

'1. Member States shall take the measures The second question necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such 128. The question may be divided into leave laid down by national legislation and/ three parts. or practice.

2. The minimum period of paid annual (a) Duration of paid leave leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.'

129. By the first part, the referring court asks essentially whether Articles 59 and 60 22 — Emphasis added.

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132. Article 15 of the working time direc- meet the public interest of "social employ- tive, under the heading 'Most favourable ment protection"'. provisions', provides:

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OPINION OF MR MISCHO — JOINED CASES C-49/98, C-50/98, C-52/98 TO C-54/98 AND C-68/98 TO C-71/98

139. The Belgian Government takes the 142. The Commission considers that the view that the decision in Rush Portuguesa, Member States can extend their holiday that, as a matter of Community law, the rules to employers established abroad and Member States are not precluded from to workers posted by them even when those extending their legislation or collective rules lay down a minimum annual leave labour agreements to all persons who period exceeding the minimum period laid provide services in their territory, should down by the directive. That is indicated apply in this case. It considers that this sufficiently by Article 60(3) of the Treaty, principle also applies to national measures under which the freedom to provide ser- concerning the minimum period of paid vices may be exercised under the conditions leave, and that the fact that the working- which the host State lays down for its own time directive provides for a lesser period nationals, and it also complies with the than that laid down by the BRTV does not directive on the posting of workers. alter that. The Belgian Government empha- sises, in common with the German Gov- ernment, that the working-time directive only lays down minimum requirements.

143. The working-time directive only con- tains minimum requirements which, by virtue of Article 15, may be exceeded by the Member States and the two sides of industry even in the context of individual employment relationships. 140. The Netherlands Government accepts that under Article 7 of the working-time directive in conjunction with Article 3(1) and (6) of the posting directive the posted worker is entitled to the number of days of paid leave laid down in the State of origin 'made up if need be' to the period of paid leave laid down by the State where the 144. Allowing longer leave is also justified works are carried out. by an overriding reason in the public interest, namely the protection of workers. The same result, a minimum annual leave period of 30 days worked, cannot be achieved by less restrictive rules.

148. They retain that right notwithstand- 152. I therefore consider that Articles 59 ing the minimum harmonisation of work- and 60 of the Treaty do not preclude a ing conditions at Community level. Member State from requiring, by means of a national provision such as the second sentence of Paragraph 1(1) of the AEntG, undertakings established in another Mem- ber State and temporarily carrying out works on its territory to apply legal rules contained in collective agreements provid- 149. Article 15 of the working-time direc- ing for a period of leave which exceeds the tive only serves to confirm this right, which minimum period of annual leave laid down flows directly from the Treaty. by the working time directive.

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OPINION OF MR MISCHO — JOINED CASES C-49/98, C-50/98, C-52/98 TO C-54/98 AND C-68/98 TO C-71/98

(b) The method of payment for holiday pay and for thereby not considering them, in contrast to German employers, capable of handling their workers' holiday claims properly. That constitutes (overt) discrimi- nation on the basis of the State in which the 153. By part (b) of its second question, the undertaking is established which, according referring court asks whether Articles 59 to the case-law of the Court of Justice, and 60 of the Treaty permit a scheme which would only be permissible under the spe- allows employers established in Germany cific conditions laid down by Articles 55, to claim the reimbursement of expenditure 56 and 66 of the Treaty. However, it is not on holiday pay and holiday allowances apparent that those conditions are satis- from the fund, whereas no such right is fied'. given to employers established abroad, but instead posted workers may make a direct claim against the joint bodies.

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the VTV provides, instead, for a certificate therefore constitute discrimination, but from the holiday pay fund containing the represents for them a financial advantage necessary data about the posted worker in and a lesser administrative burden. order that he can receive holiday pay.

157. As the referring court has not dealt with these matters in its observations on Question 2(b), however, I consider that the 161. Other Member States in which there question I have to address is whether the are comparable social security fund scheme in question is incompatible with schemes (the Kingdom of Belgium, the Community law simply because foreign French and Italian Republics, the Kingdom employers do not receive payments from of the Netherlands, and the Austrian the holiday pay fund directly. Republic) generally apply a system of direct payment of employee benefits by the social security funds as well. In any case the Federal Republic of Germany also expects to abandon the other procedures tradition- ally applied to national employees and to replace them by a system of direct payment. 158. The German Government and Ulak deny that that makes the scheme incompa- tible with Community law. They emphasise that undertakings established in Germany must make financial provision for the holi- days of their employees, whilst foreign undertakings have no such obligation.

162. Notwithstanding the requirement that foreign undertakings must provide addi- tional information to enable payments to be calculated by the fund, there is thus, 159. The foreign undertaking is, thus, according to the German Government, no exempt from having to calculate and make discrimination. Accordingly, part (b) of the payment in accordance with a holiday second question should also be answered in scheme with which it is not familiar. the negative.

168. I also consider that, subject to further examination to be carried out by the referring court into all aspects of the applicable scheme, it is not possible in principle to say that Article 59 et seq. of the 165. The Commission therefore considers Treaty precludes the direct payment of that it is for the referring court to ascertain holiday pay to posted workers. whether the scheme is an advantage or a disadvantage for the employer who posts workers, and whether the worker can indeed obtain holiday pay. The referring court should also take account of the claims of Finalarte to the effect that there are tax disadvantages, and that foreign providers of services will be harder hit. 169. This is because I am not persuaded that a holiday fund system which can only be regarded as compatible with the Treaty if it comprises an increased level of social protection for the posted worker should be condemned because it confers precisely this advantage on the worker directly, bypass- ing the employer. Nor should the fact be 166. To conclude, the Commission does overlooked that the worker is thus better not oppose the interpretation to the effect protected should his employer become that a difference of treatment of that nature insolvent, or against the non-payment of is compatible with the Treaty. benefits owing to the fact that the employer

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has completed his services in Germany and onerous, in terms of the information to be returned to his country of origin, whilst the provided to the joint bodies, than those worker wishes to stay on in Germany to imposed on employers established in Ger- enter employment with another foreign or many. German employer.

(5) the start date and expected duration of (2) any changes to the first notification set the work; out above;

(3) the amount of his monthly gross pay in (6) the employer's correspondence address DM. in Germany;

175. By contrast, under Paragraph 27(2) of the VTV, it is only on special request by a (7) the names and addresses of the collec- fund that an employer established in Ger- tion agencies, together with their many must notify the names and addresses addresses, to which the earnings- of the workers employed in the relevant related social security contributions accounting period, and provide a break- are remitted, and the number under down of the total gross wages for each which the worker is registered at those worker for that period. agencies;

176. Finally, under Paragraph 70 of the (8) the name and address of the tax office VTV, foreign providers of services must to which income tax is remitted and the provide Ulak and 'the Federal Labour employer's and worker's tax reference Office and its departments, and principal numbers. customs offices, with the information nee- ded in order to determine whether contri- butions have been duly paid to the holiday fund scheme'.

174. Further, Paragraph 59(3) of the VTV requires the foreign service provider to give the holiday pay fund, every month, and in 177. The referring court considers that 'the respect of each posted worker, the follow- amount of information required from for- ing information: eign employers is considerably greater than the amount which German employers must provide. The extensive additional obliga- tions to provide information make it sig- nificantly more difficult to provide services in Germany, in particular for smaller and (1) his surname, first name, date of birth medium-sized undertakings. Foreign and worker number; employers can only understand those obli-

183. The Netherlands Government consid- 179. The more extensive obligations of ers that the obligation for foreign providers disclosure and information imposed on of services to supply additional information foreign undertakings are justified because arises from the fact that Ulak alone is the latter generally have access, without entitled to calculate the allowances payable any difficulty, to the necessary information to posted workers. It contends that a simply by consulting the pay records of the notification requirement is only justified workers concerned, which information is as a means of checking that the paid leave also necessary for the calculation and to which the posted worker is entitled is at payment of the employees' wages. the same level as that laid down in the host

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State. Holiday pay must, however, be paid 185. The Commission draws attention, in accordance with the law of the State of however, to the fact that: origin.

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itoring, which can only be carried out by Having regard to the foregoing, the Com- the German authorities, on German terri- mission suggests that Question 2(c) be tory. 25 answered as follows:

"Obligations laid down by the holiday fund scheme as to the information to be provi- However, the various provisions regarding ded by employers established in another such monitoring must be proportionate, Member State which go beyond those and may not exceed that which is necessary placed on employers established in Ger- for it to be effective. In particular, the only many do not infringe Articles 59 and 60 of documents which can be required are those the Treaty if, and to the extent that, they which the employer already possesses by are necessary and appropriate to ensure virtue of rules in force in the State of effective monitoring of terms and condi- establishment. Superfluous and purely tions of employment within the meaning of bureaucratic rules should be avoided inas- Article 3 of the directive on the posting of much as they restrict the freedom to workers. It is for the national court to provide services and hinder the creation of determine whether this is the case".' jobs. It is for the national court to ensure that these principles are respected.

Legal assessment It should be emphasised in this context that Article 4 of the directive on the posting of workers favours, for the purpose of over- coming the typical difficulties posed by such monitoring, co-operation between the Member States as regards information. Implementation of the directive thus 186. A distinction should be made in my requires the competent authorities to coop- view between information necessary to erate in monitoring the employment condi- prevent undeclared work and for the effec- tions referred to in Article 1 of the direc- tive supervision of compliance with the tive. terms and conditions of employment (such as the minimum wage and the maximum length of the working day, week and year), 25 — Casc C-55/93 Van Schaik [1994] ECR I-4837, paragraph and that which is necessary for the applica- 20. tion of the holiday fund scheme.

189. Second, since foreign undertakings 59 Consequently, the imposition of such only come to Germany to carry out works an obligation constitutes a restriction on one or more specific sites, effective on freedom to provide services within supervision of them would not be possible the meaning of Article 59 of the Treaty. if they were not required to notify the competent authorities of the location of the site, or sites, the start date, and likely duration of the works, the employer's address in Germany, the number and identity of posted workers 26 and, probably, other information as well, the need for which is for the referring court to deter- 60 Such a restriction is justifiable only if it mine. is necessary in order to safeguard, effectively and by appropriate means, the overriding public interest which the 16 — That seems to me to be indispensable in particular to prevent undeclared work. social protection of workers represents.

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61 The effective protection of workers in particular, the employer, the worker, the construction industry, particularly working conditions and remuneration as regards health and safety matters may differ to such an extent that the and working hours, may require that monitoring required under the rules of certain documents are kept on site, or the host Member State cannot be at least in an accessible and clearly carried out on the basis of documents identified place in the territory of the kept in accordance with the rules of the host Member State, so that they are Member State of establishment. available to the authorities of that State responsible for carrying out checks, particularly where there exists no orga- nised system for cooperation or exchanges of information between Member States as provided for in Article 4 of Directive 96/71. 27

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of the documents kept in the Member documents and information required for State of establishment or, failing that, this purpose are strictly necessary. by keeping the originals or copies of those documents available on site or in an accessible and clearly identified place in the territory of the host Member State.'

194. As to the answer to Question 2(c), I am assisted by the response put forward by the Commission, but would wish to extend it somewhat. I therefore propose to answer 191. The references to 'site' or to 'accessi- in the following way: ble and clearly identified place' are attri- butable of course to the special features of the Belgian rules in question. There is nothing to prevent the Federal Republic of Germany from requiring the submission of documents to the competent administrative body provided they are genuinely necessary 195. In the context of freedom to provide for the purposes of monitoring. services notification requirements imposed on employers established in another Mem- ber State do not infringe Articles 59 and 60 of the Treaty properly interpreted if, and to the extent that, they are necessary and appropriate: 192. The task which falls to the national court, to compare existing documents in the State of origin with those required by the host State, is clearly not an easy one, but the fact remains that it alone is competent to apply Community law in the context of the particular case before it. — to ensure effective monitoring of com- pliance with the conditions of employ- ment in force in the host country;

196. The third question referred by the Arbeitsgericht Wiesbaden requires us to consider whether Articles 59 and 60 of the Treaty preclude a national provision such as Paragraph 1(4) of the AEntG which 'In German employment law a business is requires, in substance, that all workers of a understood to be that organisational entity foreign employer posted to Germany, and within which a businessman, by himself, or only those, be treated as a business, while a together with his staff, continuously pur- different definition of business applies to sues certain work-related objectives using employers resident in Germany, which in tangible and intangible means. It is appar- certain cases results in different businesses ent from Paragraph 7(2)(2)(2) of the BRTV- falling within the scope of the collective Bau that the parties to the collective agreement. agreement in the construction industry also proceeded on the basis of that definition of a business; in connection with rules on the payment of, and allowances for, travel expenses, that provision designates as a business "the head office, the place of business, the branch and sub-offices and 197. Paragraph 1(4) of the AEntG provides other permanent agencies of the employer" that: at which the worker is employed. It is also stated therein that if the worker is employed at a construction site, or a work site, the "nearest agency of the employer" is treated as a business. That makes it sufficiently clear that, in determining whe- ther Germans are subject to a collective 'For the purposes of classification as a agreement, a business is not, for instance, business to which a collective agreement merely the construction site, or even solely under subparagraphs 1, 2 and 3 applies, the the workers deployed on a construction workers deployed in Germany by the site, but that organisational entity from employer established abroad shall, in their which workers are posted to construction entirety, be treated as a business'. sites.

The divergent definitions of a business referred to can lead to different practical consequences in the case of so-called mixed businesses. These are businesses which carry on, in part, non-construction activ- ities, and, in part, construction activities. An example would be a business which, in part, trades in building materials, tiles for instance, and as for the remainder also employs a gang of workers who themselves lay, on behalf of third parties, the tiles sold. Under the relevant provisions of the collec- tive agreement only the laying of the tiles is a construction activity and not the purchase If, in the example given, more workers are and sale of tiles. employed in the purchase and sale of tiles than in laying them, and the individual working time of the workers employed is the same, the activity of purchasing and selling predominates from the point of view of working time, so that the business as a whole is not subject to the collective agreements in the construction industry. That has the consequence that the German Under the first sentence of Paragraph 1(2) employer in question does not need to pay VI of the VTV businesses — apart from any social fund contributions for those the special case of so-called independent workers who are engaged in laying tiles. 28 business units —· are always subject as a A foreign business with the same structure, whole to the collective agreements in the which purchases and sells tiles in the construction industry regarding social country of origin and posts a gang of tile- funds. In accordance with the relevant layers to Germany, is liable to pay holiday German case-law of the highest court... fund contributions for the posted work- mixed businesses are subject as a whole to ers... such collective agreements if —- based gen- erally on a period of a calendar year — the working time of the workers employed in 28 — Emphasis added.

The observations submitted 203. In the alternative, it submits that if the criterion for inclusion of a foreign provider of services within the trade scope of the 199. The foreign providers of services, in collective agreement is the work carried out particular Tecnamb, Finalarte and Portu- by the posted workers rather than the gaia, as well as the Netherlands Govern- totality of the activity of this undertaking, ment, adopt the same position as the this is because the AEntG has a territorial referring court. scope, so that it cannot take account of the activity of the undertaking in its country of origin. Furthermore, it is impossible to verify the information given by the foreign provider of services on this subject. In any case, the failure to take account of activity 200. The French Government considers carried out abroad may have as many that the approach taken by the AEntG is advantages as disadvantages so far as the only practicable one. mixed foreign undertakings are concerned.

201. The Belgian Government considers that this question is purely hypothetical, and that the definition of business applied 204. The position of the Commission has by the AEntG constitutes a necessary changed in the course of the proceedings. In

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its written observations, it took the view and the branch', but also 'the sub-office, that there was overt discrimination on the and other permanent agency of the basis of the country where the undertaking employer' and even 'the nearest agency of is registered. During the hearing, after the employer'. referring to the practical difficulties raised by the application of this law, it stated that it had no solution to put forward and looked to the Court for guidance on the matter.

of services do not find themselves 'on an 212. It is for the German Government to equal footing from the standpoint of com- adopt what appears to it to be the solution petition', 30 and that even if this system also best suited to the legitimate concerns of sets up discrimination as between German worker protection which inspired the crea- undertakings, there is nevertheless a restric- tion of the holiday fund scheme. tion of the freedom to provide services within the meaning of Article 59 of the Treaty.

213. In conclusion, I propose to answer the third question as follows:

210. To the extent that it is discriminatory, this restriction cannot be justified by over- 214. Articles 59 and 60 of the Treaty are to riding reasons in the public interest, no be interpreted as precluding the extension matter what form they may take. The only of a holiday pay scheme such as that at justification which could be put forward issue in the main proceedings to under- are those factors set out in Article 56 of the takings established in other Member States Treaty. It has not been shown, however, providing services in the construction that any of these factors can validly be industry if it does not apply to undertakings relied on in this case. established in the host Member State, only part of whose activity is within that sector, as regards their staff employed in that sector.

211. Various solutions may be envisaged in order to put an end to this discrimination. One possibility is to bring within the The fourth question holiday pay scheme workers carrying out an activity within the construction industry who are employed by 'mixed businesses' even when the working time of the workers employed in the construction sector 215. The last question concerns the inter- employed by these undertakings has taken pretation of Article 3(1) of the directive on the posting of workers, which provides up less than half of the working time of the that: business. Another solution is to bring 'foreign' undertakings providing services within the scheme currently applicable to this type of 'mixed business'.

(a) maximum work periods and mini- mum rest periods; 218. However, I do not consider that the directive does any such thing.

(b) minimum paid annual holidays;

219. As I explained in relation to the first two questions, the Member States are (c) the minimum rates of pay, includ- entitled under the Treaty to require under- ing overtime rates; this point does takings which provide services in their not apply to supplementary occu- territory to respect the minimum wage pational retirement pension and the minimum annual paid leave in schemes.' force for the economic sector in question.

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220. There is, therefore, no need for any event, and the question whether the direc- such authorisation from an act of second- tive can lawfully require it to avail itself of ary legislation. this right is, once again, irrelevant as regards the outcome of the main proceed- ings. It should further be noted that neither Article 3 nor any other provision of the directive requires the Member States to implement a holiday fund scheme.

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Conclusion

227. I therefore propose to answer the questions referred by the Arbeitsgericht Wiesbaden as follows:

(1) Unless an identical or higher level of protection is afforded to the worker in the country of origin Article 59 (now, after amendment, Article 49 EC) and Article 60 (now Article 50 EC) of the EC Treaty are not, in principle, to be interpreted as precluding the application of a scheme such as that set out in the first sentence of Paragraph 1(3) of the AEntG to an employer established in another Member State and to workers posted by it, provided that due account is taken of the mandatory burdens imposed on the employer by the law of his country of origin. Article 48 (now, after amendment, Article 39 EC) of the EC Treaty does not apply to the posting of workers by an employer established in another Member State.

(2) Articles 59 and 60 of the Treaty are to be interpreted as not precluding a Member State from applying to an undertaking established in another Member State and temporarily carrying out works in the first Member State of:

(3) Articles 59 and 60 of the Treaty are to be interpreted as precluding the extension of a holiday pay scheme such as that at issue in the main proceedings to undertakings established in other Member States providing services in the construction industry if it does not apply to undertakings established in the host Member State, only part of whose activity is within that sector, as regards their staff employed in that sector.

(4) 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 neither requires nor authorises the introduction of a holiday pay scheme contrary to the provisions of Articles 59 and 60 of the Treaty.

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