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European Court of Justice: transnational posting and minimum wages

  • On 15 July 2021, the European Court of Justice (ECJ) stated that the provision on the application of the minimum wages of the country in which the work is habitually carried out cannot be waived, regardless of the existence of a transnational posting.
  • The decision delimits the perimeter within which the parties to an employment contract can freely choose the law to be applied.

According to the ECJ in joined cases C-152/20 and C-218/20 concerning road transport sector, the minimum wage rules in a collective agreement can be considered mandatory.

Even if the parties to an employment contract choose the law of another country as the governing law of the contract, those rules must be applied. This is to prevent the worker from being deprived of the protection provided by conventionally non-derogable rules.

In the first case, two lorry drivers of Romanian nationality had concluded individual employment contracts, drafted both in Romanian and Italian, which provided that the clauses contained therein were to be supplemented by the provisions of (Romanian) Law no. 53/2003 on the Labour Code.

According to the workers, the Italian legislation on minimum wage was still applicable to them. In fact, although the contracts had been concluded in Romania, it was in Italy that they had habitually carried out their duties.

In particular, they claimed that Italy was the country where they had carried out their missions and received their instructions, and to which they had returned at the end of their missions. Moreover, most of their transportation activities would have been carried out in Italy.

According to the employer, on the other hand, the workers worked on trucks registered in Romania and on the basis of transport licenses issued in accordance with the applicable Romanian legislation, all instructions were provided by the Romanian company, and the workers' activities were organized in Romania.

These requests concern the interpretation of Articles 8 of EU Regulation 593/2008 (Rome I) on the law applicable to contractual obligations, according to which the parties may choose the law to be used for an individual employment contract. The choice, however, cannot deprive the employee of the protection guaranteed by the rules of national law that would be applicable in the absence of the option. In cases where there is no choice, the regulation provides that the law of the place where the employee habitually performs the service or, if this cannot be determined, the law of the country in which the office that engaged the employee is located, shall apply.

The Court upheld the workers' argument and stated that Italian rules had to be applied, according to which posted workers are subject, during the period of posting, if more favorable, to the same conditions of work and employment provided in Italy by regulations and collective agreements, including with regard to remuneration.

The same principle should be applied to the Case Cā€‘218/20, concerning the law applicable to the remuneration of a Romanian lorry driver employed by the Romanian company, who submitted that he carried out his activities exclusively in Germany and he was therefore entitled to the minimum wage provided for in German law.

The EU Court clarifies that national judges must first identify the law that would be applicable in the absence of choice and the rules that provide a higher level of protection, including those on the minimum wage: if the rules of the Country not chosen are more protective, these must be applied, with no possibility of derogation.

And this - the Court notes - applies even if the rule is included in a national labour contract.