The Risk of Risk-Based Approaches to EU Posted Worker Compliance

When it comes to compliance with the European Union’s Posted Worker Directive the majority of businesses are taking the time to properly implement the correct processes and procedures to keep in compliance. Many however are choosing to take a risk-based approach to these legal requirements, and are gambling their organisation’s finances and reputation. Read on to see how what this approach to the Posted Worker Directive entails, and where the problems are.

Betting on the inspection and audit

Low number of posted employees

The main reasons businesses give for not complying correctly with the EU Posted Worker Directive are a combination of lack of knowledge around the subject and it not being seen as a significant risk, due to a low number of posted employees. The fact is, however, that only sending a few employees on secondment may not reduce your risk exposure as much as expected. Some industries, in particular, are subject to frequent unannounced inspections and audits, as they are deemed “high-risk” when it comes to posted worker compliance.

Low number of controls in the host country

Although the Posted Worker Directive has been in force for some time, some countries are still playing catch-up on their implementation or are just not advertising on their requirement. On the other hand, other EU nations, such as France have implemented much more specific and robust controls with clear guidelines and strong audit measures.

Just because your organisation has never sent a posted worker to a client’s office in that country before, this doesn’t mean that another company hasn’t. As such, the host location may be subject to a random inspection purely because they have a history of hosting seconded employees. Regardless of your reasoning, it’s clear that your secondment host sites could be much more prone to inspection than you may first believe.

It should be noted that penalties can also are retroactive, so taking a lax approach to declarations in a country with a low level of posted worker controls now, might bring trouble later. See below for more information.

Penalties

Another significant problem with taking a risk-based approach to posted worker declarations is that if caught in an audit, the penalties can be severe for both the foreign and local businesses taking part in the posting process. In terms of fines, there can range from anywhere between €5,000 to €500,000 depending on the severity of the case and whether this is a repeat offence for the organisation. It is especially important to note that these fines are levied on a per-employee and per infraction basis. This means that for a group posting of five employees with three infractions for each person, the company could quickly be looking at a 15x multiplier from the base fine.

The other significant downside to running afoul of this legislation is the severe reputational damage that can be inflicted both in terms of the authorities and your client base in the host country. Any penalty that affects the host organisation in addition to your own will undoubtedly cause reputational problems within your client base in the country. This could then, in turn, compromise your business’ ability to secure repeat business or even find new customers, simply because the Posted Worker Directive was incorrectly seen as too much of a burden.

Retroactive non-compliance

Another important point to consider when weighing up the pros and cons of a risk-based approach to posted worker compliance is that at present, some countries are not as “up-to-speed” as others when it comes to legislation. This means that in countries with more basic requirements for notifications there may be some retroactive checking of declarations when more advanced systems are implemented and make the process simpler. Specifically, in countries which require an extended holding period for posted worker documentation of 3 to 5 years, investigations could be triggered into previously “finished” postings.

Mitigating the risk

At the end of the day, each business must decide for itself if the risks associated with posted worker non-compliance are worth taking when balanced against the time and effort saved for preparing appropriately. Whatever your organisations’ motivation to take a risk-based approach, they should consider one of the technology options now available on the market built to assist with posted worker declarations.

Offering integrated notification and representation, posted worker technology providers can link your company with service providers who do the hard work for a low monthly fee. This business model makes this option affordable and scalable for all sizes of organisations carrying our employee secondments across the EU. If your company is one of those currently taking a risk-based approach to the Posted Worker Directive, it’s time to look at the options, before it’s too late.

Don't know where to start? Check out the new end-to-end solution for all your posted worker declarations from ReloTalent - PoWo.