Regulatory confusion limits freedom in the internal market

15 February 2023, Munich. The freedom for labour to provide services across national borders is one of the great achievements of the European Union. But the reality of excruciating regulatory complexity is probably to blame for ultimately preventing a fair number of postings.

Especially family businesses are irritated by unnecessary, costly regulations in the countries where their employees are to provide services for a limited period. There is an urgent need for harmonisation and simplification here. This is the conclusion of a comparative study on bureaucratic burdens undertaken on behalf of the Foundation for Family Businesses.

The reasons for the Posting of Workers Directive are clear for everyone to see. Employees should receive equal treatment, no matter whether they belong to the domestic labour market or come from abroad to help out for a few months or weeks. The issues revolve around remuneration, working times or health and safety in the workplace.

Overwhelmed and confused by unnecessary requirements

But to meet them, many different pieces of information, documents, salary records, certificates and even details of contact persons have to be produced. They differ from country to country – additionally complicated by a large number of exceptions. For shift working, for example, Germany even requires details and times to be recorded exactly for each working day. The rules on the language in which the documents have to be presented also vary in the different countries.

The requirements in some countries far exceed the framework of the original EU Directive. Excessive and confusing demands on companies in the delegating country almost seem intentional. Posting employees to France is particularly cumbersome, taking companies an average of 80 minutes to process – not including the time it takes to understand the regulations (several days in some cases). The process is more complicated than necessary in the other countries, too.

The empirical study, which is based on a large number of interviews, was conducted by the Centres for European Policy Network and Prognos AG. It investigated four EU member states (Germany, France, Italy and Austria), looking into regulatory complexity and the economic cost in business practice. The study is part 2 of a four-volume research project.

The researchers have listed concrete recommendations for employee postings::

·         Harmonise the requirements for all countries
·         Combine posting and A1 certificate on a single portal
·         Proactively provide information and assistance to companies
·         Create exemptions for short-term postings

In this regard, Professor Rainer Kirchdörfer, Chairman of the Foundation for Family Businesses, says “Employees are a scarce resource in Germany. Their flexible deployment – fed from the large pool across the entire EU – is essential, particularly for family businesses. Yet legislators in the member states hamper this dynamic process with paralysing red tape. We need lean, consistent regulations now.”