So-called letterbox companies are only created to derive profits from the differences between wages in the Member States. This is a huge threat to fair competition, but also a way to exploit the employees.
The Spanish Labor Inspectorate in the Strategic Plan for 2018-2020 defines a letterbox company as one, „which established a registered office in a member state with lower employment costs in relation to the country in which it realistically operates, thereby acquiring in a manner incompatible with the right to reduce labor costs.” The Labor Inspection adds that such a company does not operate in the country where it registered its office but based on fraud posts an employee abroad, in order to be able to pay a lower remuneration and premiums.
The scourge of letterbox companies in Spain
The Spanish federation of transport unions Fenadismer has been calling the government for years against the letterbox companies. According to the organization, the activities of large companies that established headquarters in „cheaper” Eastern European countries have a very negative impact on the Spanish transport sector, and in particular on its smallest enterprises.
Recently, the Ministry of Transport carried out intensified inspections in Spanish enterprises. The results of these actions were almost alarming. Letterbox companies set up by Spanish companies abroad, mainly in Eastern Europe, generated from 75 to 90 percent of turnover in Spain, carrying out domestic transport in Spain. This means that carriers with a fleet on Spanish territory, employing drivers on „eastern” conditions, operate and earn almost exclusively in Spain.
Letterbox companies are flourishing in this country due to the loopholes in the law. The local posting regulations include employees who spend more than 8 days on Spanish territory. Thus, they do not concern transport, and if so, to a negligible extent. Carriers are demanding that the period of 8 days be settled during the whole month (i.e. after 2 days each week).
After many appeals from domestic transport unions, the government promised to work on changing these regulations, but the situation of the industry is still deteriorating.
Last week, the head of the Spanish transport federation CETM, Ovidio de la Roza, called on the government to respond to the crisis in the industry, threatening to protest.
If it’s necessary to paralyze the country, we’ll do it” – said Roza.
Roza alerts about the poor condition of the sector, in which „operating costs are constantly growing and prices are falling”, among others due to the mentioned companies, „mailboxes”
Belgian letterbox companies
However, not only Spaniards commit themselves to unfair practices. The opportunities offered by the opening of the branch in the east of Europe are eagerly used, among others by Belgians, the Dutch and the Germans.
Last year in Belgium, the police together with the prosecutor’s office closed down a transport gang operating on the basis of letterbox companies. By means of headquarters located in Eastern Europe, well-known Belgian companies employed drivers on the terms of a given state, thus avoiding paying premiums for insurance and taxes. These companies have regularly circumvented the legislation since 2014, evading 6 to 7 million euro of social security benefits.
In Belgium, the employer’s costs in the case of salaries for drivers are the highest in Europe, so it is not surprising that the practice of setting up companies in the East flourishes there. The more so because until recently the inspection was a fiction – checking the activity in Eastern Europe was too time-consuming and too complicated procedure. Last year, however, the Belgian inspection hired hundreds of new inspectors to increase the number of inspections to 10 thousand annually. And that means that owners of transport companies in Belgium, which used letterbox companies for fraudulent contributions, can no longer continue their practices unnoticed.
Letterbox companies in other countries
Similar to the Belgian business model, companies in the Netherlands also take over. An example here is the company Rotra, for which Romanian drivers employed in a Romanian company worked for 288 euros per month, although they should receive the minimum wage in force in the Netherlands. The same is true for Vos Transport, which generates 70 percent of its turnover in the Netherlands, and half of the transports are carried out there by drivers from branches in Romania and Lithuania for around 200 euros per month.
On the other hand, Germans, thanks to their branches abroad, have the possibility of doing cabotage in their own country. Chief Executive of BGL, prof. Dirk Engelhardt in an interview with dvz.pl, was asked whether the use of such a practice „is not double morality.” He replied evasively:
The issue of cabotage is primarily about what country appears on the registration plate, and secondly, about compliance with the rules on cabotage.”
How to fight these practices?
According to Maciej Wroński, head of the employers’ union Transport and Logistics Poland, the letterbox companies can be effectively identified using the existing law. In his opinion, it is enough to work properly with the national control services.
Therefore, additional regulations in this area are not needed, and any attempt to introduce them will affect honest carriers” – says Wroński commenting on the latest proposal of the Mobility Package.
In turn, the European Union sees a solution in strengthening the rules of access to transport economic activity, as well as increasing cooperation between Member States in the matter of enforcing legal regulations.
Specific actions in the EU
Some EU member states have taken action on their own to combat this dishonest behavior. Poland will soon join them. Last year, Belgium signed an agreement with Slovakia and Portugal to facilitate the exchange of information on posted workers for these countries. Earlier similar agreements were made by the Belgians with France, the Netherlands, Luxembourg, and Bulgaria.
Philippe De Backer, secretary of state in Belgium, stressed the special importance of the agreement with Slovakia:
In Slovakia, hundreds of Belgian transport companies have set up letterbox companies that only exist on paper” – said De Backer.
Thanks to the new agreement, these companies will be easier to identify. It allows to tighten the cooperation of the control services, police and courts of different countries and better counteract illegal practices in the road transport sector. The inspections mainly concern the amount of remuneration and contributions paid to the posted worker both in the country of employment and in the country of posting.