Rob Hyde speaks to Roger Steel, a partner with London lawyers Eversheds, to find out how effective this mandate is and what it means for employers.

With more and more employees being temporarily transferred to European subsidiaries there is the danger that employees will fall prey to exploitation in terms of working conditions and pay - sometimes without even being aware of it.

But a recent EU mandate - the Posted Workers Directive - was introduced with the aim of preventing this.

The Posted Workers Directive went into effect in EEA countries in 1999.

Its primary purpose is to ensure that the pay and conditions of employment that apply to nationals of a EU member state are also applied to workers who are temporarily posted to that state from elsewhere in Europe.

The act was introduced in light of the EEA agreement, which abolished work permit requirements for employees working within the EEA area.

Roger Steel, a partner of Evershed's law firm in the UK, says: "The idea of the Posted Workers Directive is to prevent 'social dumping' - where companies ship low-cost workers into high-cost economies in order to save money."

He says the directive was created with the aim of ensuring the employees' minimum protection in the country in which their work is performed.

"It is really meant to protect expat employees, and ensure that they benefit from the basic laws in their host country, which are designed to protect the host country national.

"So if someone comes from Portugal to work in Britain he will be employed within British legal requirements - and will be treated the same as his British co-workers.

"The directive is designed to create harmony, so that wherever you work in the EU you are protected by certain legal rights.

"It addresses the flipside of the freedom of movement the EU enables - namely exploitation."

But Steel emphasises that employers who need to conform to local legal requirements when assigning workers to regional assignments within Europe will need to keep an eye on changes in employment law throughout Europe to ensure compliance with the directive.

Keeping up-to-date with local employment law

"The downside for companies is that they need to be very aware of the laws in the country they are sending workers to; laws relating to holidays and pay for example.

"And they need to keep up to date and be aware of any changes in these laws."

"The danger of the directive is that it might lull companies into a false sense of security, into thinking that they have fulfilled all the legal obligations mentioned in the Posted Workers Directive."

But Steel highlights that they might have missed a part of the host country's law which is outside of the directive, but which is still important.

For example, he points out that it is sometimes necessary to have a contract of employment in the local language.

"Some countries have different religious holidays than others, and in some parts of Germany employees are required to pay Church tax," says Steel.

"The EU mandate stipulates that employees cannot be contracted out of local legal requirements, and the employee is fully entitled to demand any rights which they feel they have been denied.

"This may have a budgetary effect on a company, whereby it finds itself paying out more holiday or sick pay than it had reckoned for, or it may even lead to an employee suing for breach of contract."

The directive guarantees the application of the host country's statutory and regulatory provisions relating to:

• Maximum work periods and minimum rest periods;
• Minimum paid annual holidays;
• Minimum rates of pay including overtime rates (excluding supplementary occupational pension schemes);
• The conditions of hiring-out of workers, in particular the supply of workers by temporary employment undertakings;
• Health, safety and hygiene at work;
• Protective measures with regard to the terms and conditions of employment of pregnant women or women who have recently given birth, of children and of young people; and
• Equality of treatment between men and women and other provisions on non-discrimination.

Increased law harmonisation in the future

"The Posted Workers Directive is of course of assistance to companies but it is only a starting point.

"There are already moves to introduce stronger European laws relating to employment, meaning that issues such as pensions, and age and race discrimination will be reasonably harmonised throughout the EU."

In some countries such as Norway, areas such as employees' rights to holidays form part of the private law, which basically means that the employees themselves must make sure that their rights are upheld.

Steel says that the only drawback that the Posted Workers Directive may have for employees is that they will not be able to avoid their host country's less desirable laws, such as tax rules.

"For people who were happy to run risks and avoid paying taxes while abroad, a more formal, bureaucratic system is a disadvantage".