Understanding the European Posted Worker’s Directive: Why It Matters

Anna, the UK HR Director of a multinational financial services business, receives a query from her counterpart in Rome questioning whether the UK project workers currently working in Italy have had Posted Worker Directive (PWD) Registrations filed in advance of their visits. The context of the query is that the Italian business is just about to undergo a labour law inspection and has been asked by the Italian labour authorities to confirm the position. 

Anna decides to speak to her advisors to find out more about the PWD.  

Anna: I’ve just been asked whether the PWD notifications have been filed in Italy to make sure we aren’t underpaying our staff. We’re a UK blue chip company – surely this sort of thing doesn’t apply to us? 

Advisor: In most countries, the PWD and the notification that goes with it applies to all workers. Even though it’s unlikely that you underpay your project workers, the Italian authorities are checking whether your workers are receiving all the rights and benefits mandated under Italian labour law.

Anna: So this applies even though the UK is no longer in the EU? 

Advisor: Some European countries, like Italy, apply these rules to all inbound workers, regardless of where they are from. Others have limited the rules to EU Nationals only. The overall picture is complicated. 

All workers in Italy have the protection of Italian labour law, even if they are employed by a foreign business. The PWD notifications enable the Italian authorities to check what is happening and verify the position. There is, with only a few exceptions, a requirement to notify the authorities of all business trips into Italy.  

Anna: When is there a requirement to notify them? 

Advisor: Broadly speaking, most visitors engaged in commercial activities will need a notification to be filed by their home country employer before they actually arrive in the country they are travelling to. This applies to longer term assignees as well as business travellers. The type of data needed in the work location varies but is mainly personal data such as date of birth, passport number etc, plus data about their work, salary and working conditions. 

Anna: Can’t we just do once they are there?

Advisor: When the EU brought in these rules, they decided that the notification had to be done pre-arrival in all countries. Fines can and have been levied and while they aren’t usually large on an individual basis, given the number of business trips your company has across Europe, the exposure to penalties could be significant. And, unfortunately the rules differ from country to country. 

Anna: Can’t our host countries just do this for us, given that they will know the local rules?  

Advisor: Unfortunately, no – the notifications have to be done by the employer, which in this case is the UK. In any event, in many cases only the employer will have the necessary details to file the notifications, and if necessary be able to make adjustments to pay, conditions and entitlements. 

Anna: What, you mean we might have to pay these guys more, or give them more holiday entitlement just because they are spending a few days in Italy?  

Advisor: Technically, you may have to, the workers are entitled to receive the level of pay and allowances, as well as other employment rights and benefits, that are mandated by local law. For example, if in your sector there is a right for Italian individuals to receive 30 days holiday a year, you must do the same for your project workers. In practice, for very short visits, the local authorities are unlikely to insist that you make adjustments, however for longer-term project workers it is a real risk that this will be imposed if there is a labour law audit, which are not uncommon in Europe. 

Anna: What happens if we don’t do this? 

Advisor: There are fines for not doing the notifications, and these are regularly imposed. For example, in Austria the fine for not filing a notification is up to €10,000 per case. There are also other penalty regimes which apply to businesses which do not meet the labour law requirements in the host country – just like the way the UK deals with businesses which don’t follow minimum wage or health and safety legislation.

 Anna: OK, so given that we already have our project workers in Italy, and perhaps in a few other places, what can we do retrospectively? 

Advisor: In practice most employers just try to get things right going forward, as retrospective action could trigger an audit. 

 Anna: It feels like a lot of work, and I can see we will need to add some steps to our processes for travellers. What is everyone else doing? 

Advisor:  Although the rules came in in 2018, it took time for the EU countries to bring them into their own legal system. Then the pandemic effectively stopped all business travel. However, since 2022 more and more businesses have been adapting their processes to give them greater oversight of business travel, and they now ask their travellers the relevant questions in order for the business to be able to file the pre-travel notifications.  

For large businesses, embedding PWD in the travel booking process, and applying various levels of automation to the notifications is becoming increasingly common. For smaller businesses, automation has been too expensive, so they are increasing the familiarity of their HR teams with the PWD rules to help increase compliance. The reality is that few companies are yet completely compliant with these rules, however, those who have a process in place are reducing their risks.  

 Anna: Good point, in HR we are not always involved before people travel.  Given these risks, we need to change that! Let’s discuss some practical solutions when we meet next week.