New control measures for companies with posted workers

With effect from June 2016, new rules were adopted under the Danish Consolidation Act Concerning the Posting of Workers (the “Posting of Workers Act”). The new rules implement the Enforcement Directive (2014/67/EU) and aim to ensure a better enforcement of the Act. The rules entail that the Danish Working Environment Authority (“WEA”) onwards is able to collect information regarding a foreign company’s activities in the home state in order to assess whether the company’s establishment is real.

These rules have recently been further elaborated in three new executive orders. The executive orders lay down specific rules for the WEA’s inspections and the access to issue fixed-penalty notices for violation of the rules.

Who does the Posting of Workers Act apply to?

The Posting of Workers Act only applies if the foreign company is genuinely established in the home country from which the posting takes place. The company shall therefore have other essential activities than solely internal management and administrative activities in the home state.

Moreover, the Posting of Workers Act requires that a set of conditions are fulfilled, and it does not apply to temporary workers or in situations, where the company hires a person with the sole purpose of posting the person concerned. The person must have been employed and thereby able to be posted from one workplace to another.

It is important that the need to post is temporary in nature and that it is the intention that the employee returns to the home country when the job in Denmark has been carried out.

The WEA’s access to inspections

One of the new executive orders gives the WEA access to investigate whether a company is genuinely established in the home country.

The review is conducted on the basis of a risk assessment and can either be carried out as a random test or on the basis of a specific assessment made by the WEA. It is a precondition for the review that it concerns a foreign company, which is registered in the Register of Foreign Service Providers (the so-called “RUT”-register) and that the company has employees.

A review can also take place, if the company is not registered in RUT and the WEA becomes aware of a violation of the Posting of Workers Act during an inspection on another matter. In that case, the WEA will inform the company of the duty to register in RUT, which can lead to a fixed penalty notice according to the executive order regarding penalties.

The WEA bases its decision on an overall assessment of the company’s activities in the home country over a longer period of time. In its assessment, the WEA may include information of the company’s domicile, the company’s administrative location, the turnover in the home country, information on where the company has offices and where tax and social security is paid.

Administrative fixed penalty notice for violation

According to the second new executive order, the WEA may decide to close cases by issuing an administrative fixed penalty notice to foreign companies who misinform the WEA or who do not respect the duty to register in RUT. However, the case must be clear and uncomplicated and shall not be expected to entail a higher penalty than fine.

The level of fines for failing to register in RUT is DKK 10,000 in average cases, but as a result of an amendment in 2015, the amount can be doubled to DKK 20,000 in case of repeated violation of the rules.

Cooperation within the EU and EEA countries

The third executive order lays down a duty for the EU and EEA countries’ working environment authorities to cooperate. The executive order gives the WEA access to collect information from such foreign authorities regarding relevant foreign companies for the use of inspections.

IUNO’s opinion

The Posting of Workers Act is based on EU law and the rules are to some extent implemented differently in the respective EU countries.

The companies should be attentive to the fact that they can risk unannounced inspections, because the executive orders do include a duty for the Danish WEA to inform the companies of any planned inspections.

[Executive order no. 133, 134 and 135 of 31 January 2017 – The Danish Ministry of Employment]