Germany's restriction on Polish labour deemed discriminatory

By Leo Gasteen

Germany has infringed Community law by restricting to its own undertakings alone the possibility of entering into contracts with Polish undertakings in respect of work to be carried out within its territory, the European Court of Justice (ECJ) has ruled. Labelling the restrictions as discriminatory, the ECJ found that they could not be justified by any reasonable means.

In order to address serious disturbances on its labour market, Germany may, in accordance with the 2003 Act of Accession, after notifying the Commission, limit, in the context of the provision of services, the movement of workers posted by companies established in Poland. 

The ECJ highlighted the fact  that discriminatory rules may be justified on grounds of public policy, public security or public health. Recourse to such justification, however, presupposes the existence of a genuine and sufficiently serious threat affecting one of the fundamental interests of society.

Thus, by arguing in particular that it is necessary to ensure efficient monitoring of the proper application of the German-Polish Agreement, the ECJ ruled that Germany has failed to adduce any convincing argument capable of justifying restrictions on a fundamental freedom.

Background

This restriction embodied in the 2003 Act of Accession may be maintained so long as Germany applies national measures or measures resulting from bilateral agreements to the free movement of Polish workers. However, the application of such a restriction may not result in conditions for the temporary movement of workers, in the context of the transnational provision of services between Germany and Poland, which are more restrictive than those in force on the date on which the Treaty of Accession was signed (‘standstill’ clause).

Under the 1990 German-Polish Agreement, work permits are, in principle, to be issued to Polish workers who are detached for temporary employment on a works contract between a Polish employer and an undertaking ‘from the other side’ (contractual workers) regardless of the situation and trends of the labour market.

Pursuant to instructions adopted by the German Federal Employment Agency concerning employment of foreign workers from the new Member States of the European Union, work contracts authorising the recruitment of foreign workers may not be entered into where the work is to be carried out in districts in which the average unemployment rate for the previous six months has been at least 30% higher than the unemployment rate for Germany as a whole. The list of the districts to which that prohibition applies is updated every quarter.

The Commission has taken the view that, by preventing undertakings from Member States other than Germany which wish to carry out work in Germany from concluding contracts with a Polish contractor, unless the undertakings from those other Member States establish a subsidiary in Germany, the latter Member State has failed to fulfil its obligations in respect of the freedom to provide services. In its action for failure to fulfil obligations, the Commission, supported by Poland, also alleges that Germany has infringed the ‘standstill’ clause laid down in the 2003 Treaty of Accession by extending the regional restrictions on access to the labour market.

European Court of Justice - Justice and Application - Full Texts