The Court of Justice of the European Union (CJEU) issued a ruling last week which determines who is the driver’s actual employer when employed by an employment agency abroad and which social legislation is therefore applicable to it. According to the CJEU, truckers should be employed on the basis of the law and working conditions in force in the country of the actual and not the official employer.
In a judgment in the case of the Cypriot employment agency AFMB Ltd (C-610/18), announced on 16 July this year, the Court of Justice of the EU ruled that the employer of a driver of a truck operating in international transport is the undertaking which has the actual management of that driver, bears the relevant salary costs and is actually entitled to dismiss that driver. It is not the company with which this truck driver has concluded an employment contract and which is formally indicated in that contract as his employer.
As explained by the CJEU, AFMB Ltd, a Cypriot-based company, concluded contracts with transport companies established in the Netherlands, under which it undertook, in return for the payment of a commission, to manage the trucks belonging to these operators on their behalf and at their risk. In addition, the Cypriot company concluded employment contracts with drivers of international transport trucks residing in the Netherlands. According to the wording of these contracts, it was indicated as their employer. These drivers carried out transports for these carriers in two or more EU countries as well as in one or more European Free Trade Association (EFTA) countries.
In this way, the agency gave transport companies the opportunity to place drivers ‘on the payroll’ of AFMB and then ‘hire’ the same drivers again. The aim was to save at least 30% of labour costs. This created an opportunity to compete with carriers from Eastern Europe, reports the Dutch transport portal transport-online.nl.
However, this form of employment of drivers soon raised doubts in the Dutch institutions. The Industrial Pension Fund for professional road transport (Bpf Vervoer) approached AFMB. Bpf Vervoer stated that AFMB is a private employment agency that is obliged to pay Dutch pension contributions. AFMB challenged the Fund’s decision. In 2016, the District Court ruled that AFMB qualifies as a temporary employment agency and is subject to the Dutch system of participation in occupational pension funds. Thus, the agency was obliged to join Bpf Transport and pay overdue contributions of over €360,000.
AFMB and drivers challenged the decision to be subject to the Netherlands social security system, arguing that AFMB should be regarded as the employer and that, since it is established in Cyprus, the Cypriot legislation applies. At that point, the national court hearing the case asked the CJEU for clarification as to whether the transport undertakings or AFMB should be regarded as the employer of those drivers. At the end of November last year the Advocate General of the CJEU issued an opinion on the matter, according to which the agency is abusing European law.
The Court ultimately concluded that the drivers appear to be part of the staff of the transport undertakings and that those undertakings appear to be their employers, so that Netherlands social security legislation seems to apply to them, but that it is for the national court to determine.
Prior to the conclusion of their employment contracts with AFMB, these drivers were selected by the transport undertakings themselves and, after the conclusion of the contracts, carried out their activities on behalf of and at the risk of these carriers. In addition, the actual costs of their remuneration were taken over by the transport undertakings through the commission paid to AFMB. Finally, it appears that the transport companies were indeed entitled to dismissal and some of the drivers had already been employed by these companies before concluding employment contracts with AFMB.
Photo: Flickr.com/katarina_dzurekova CC BY 2.0