POSTED WORKERS WITHIN EU: Spanish Implementation
By Agustín Sáez Gómez, December 13th, 2021.
In 2018 the European Directive which regulates the displacement conditions of workers within Europe was modified. Concretely, the Directive (EU) 2018/957 implements new measures that every company which plans to transfer an employee to another European country to perform a concrete job in a temporary basis must fulfil.
The main goal of this new regulation is clear, avoid undesirable situations from European companies, which hires employees in countries where the Social Security, taxes, salaries, etc. are lower than in another European country, but later they displace these employees that second territory to perform their job there permanently, which can be considered as a fraud.
Spain finally implemented these modifications this year, adding them to our national displacement law, with new important measures which must be taken into account, specifically regarding labour, social security, immigration and tax perspectives.
A first approach: Possibilities to displace an employee within the EU
According to the European Directive and Spanish national law, in order to transfer an employee to another European country in temporary basis, these are the possibilities:
a) The posting of a worker on behalf of and under the direction of her/his company in the execution of a service agreement concluded between the home company and the host company (recipient of the provision of services), which is established or who carries out its activity in Spain.
b) The employee’s displacement to another workplace of the company or to another entity part of the same business group, located in Spain.
c) The posting of a worker by a temporary work agency to make it available to a user company that is established or carries out its activity in Spain.
From a Labour perspective
In order to fulfil the labour requirements, there is an easy procedure that every EU country has implemented: the home company must communicate to the labour authorities of the Host Country the displacements and their circumstances (employee’s, companies’ and posting’s details).
The most important point that we must highlight is that these postings will last a maximum period of 12 months, which can be extended an additional period of 6 months in extraordinary circumstances. This means the displacements are conceived in a temporary basis, so any transfer can be extended permanently.
Moreover, a posted worker cannot replace an old one who developed the same job and same functions in the same host company for the whole period allowed by this measure (18 months in total), because this could be considered as a fraud by European Labour authorities.
On the other hand, the host company must guarantee the labour conditions to the posted workers that local hires with the same category and job have, which includes salary, holidays, schedule, etc. In other words, if an employee is coming from a territory where her/his job has a minimum salary because of national laws, but the host country has a different minimum salary, which is higher than the one in the home country, the host will have to guarantee the minimum that is demanded in their territory, so the posted worker’s salary will be increased.
Summing up, European transfers are thought to be temporary from a labour perspective, so if an employee is going to be transferred more than 18 months, the host will have to think about hiring this worker locally, with the rest implications (local salary, local Social Security, company taxes, etc.). Besides, the host must guarantee local labour conditions to posted workers (Salary, holidays, work hours, etc.), according to labour national laws applicable in that territory.
From a Social Security perspective
The posted worker will keep her/his job contract with the home company which transfers them to another country, so they can also keep their Social Security at the Home Country. To keep covered by the Social Security, the Home Company will have to communicate the displacement to social security authorities. If everything is correct, the Social Security will issue an A1 certificate, stating that this employee is covered by that country for the whole period she/he is posted.
Talking about deadlines, European Regulation allows keeping Social Security at the Home country for a maximum period of 24 months. However, this period can be extended with no limitation. Then, what’s the difference between the first 24 months and the rest extension? Easy, the host country is obliged to allow that the posted worker keeps enrolled at the Social Security of another European Country along the first 24 months. Nevertheless, after that period, the host country can demand the registration at the local Social Security.
Regarding transfers of European workers within the EU, this does not affect because the displacement will last a maximum period of 18 months, so the employees will be able to keep registered at the home country Social Security along the whole period they are posted.
From an Immigration perspective
Bearing in mind we are focused on displacements of European employees, we just have to remind that there is no border within EU in terms of residence and work for European citizens, but as soon as they are in Spain, and as long as they are going to stay more than 3 months, they will have to apply for a European Identification Number at the Police Station.
Another thing could be the case of the displacement of a non-EU employee within European countries. In this case, we would have to study the national immigration law of the host country. In Spain there are different mechanisms to apply for a work permit in these cases, stressing Van Der Elst Visa for those transfers longer than 90 days.
From a Tax perspective
The home company will have to face their normal tax obligations about these employees, who will keep hired at the home country. However, we must consider employee’s situations. According to the Spanish tax regulation, an employee is considered a tax resident as long as she/he stays in the country for more than 183 days in a year.
The first approach would be to check if a tax agreement exists between both countries. These agreements will explain where the employees must submit their tax declarations, considering that they live in one country but receive money from an entity located in another one. Besides, they could have different assets in both countries, which will have to be declared too.
These tax agreements will solve the problem of double taxation.
Main Consequences of this regulation
The previous information shows that the posted workers law has been modified with a unique aim: To avoid frauds from EU companies, which used the previous Directive to hire employees in countries where the social security, taxes and salaries are lower, to transfer them later to another Member Estate to develop their jobs there in a permanent way, avoiding more expensive local hirings.
With this new measures, the displacements cannot be extended indefinitely, with a maximum duration of 12 months, extendable for an additional period of 6 months in extraordinary cases, proving the necessity of that concrete extension.
The last important conclusion is that companies do not consider the prior four perspectives we have summarized before, fulfilling the first one (labour requirements), and forgetting the other implications an international displacement has, which can trigger awful consequences for the company and the posted worker.