According to the German Law on the Posting of Workers, the legal provisions arising from a collective agreement in the construction industry declared to be generally binding apply also to an employment relationship between an employer established abroad and his employee working within the territory to which that collective agreement applies where and to the extent to which the collective agreement lays down a single minimum wage for all workers falling within its scope. A breach of the provisions is punishable as an administrative offence.

The social partners in the German building industry concluded a collective agreement laying down a minimum wage in that industry within the territory of the Federal Republic of Germany. That collective agreement was generally binding, taking effect from 1 January 1997.

According to the German law applicable to collective agreements, the social partners may conclude collective agreements at various levels, both at the federal level and at the level of undertakings. In that regard, collective agreements specific to undertakings in principle prevail over general collective agreements.

Portugaia is a company established in Portugal. Between March and July 1997, it carried out structural building works at Tauberbischofsheim in Germany and for that purpose posted a number of its workers to that building site.

In March and May 1997, the Tauberbischofsheim Employment Office inspected employment conditions on that building site. From the documents produced by Portugaia it concluded that Portugaia was paying the workers subject to the inspection wages lower than the minimum wage payable under the collective agreement. It therefore ordered payment of the outstanding sums, that is to say the difference between the hourly rate payable and that actually paid, multiplied by the total number of hours worked, making a total sum of DEM 138 018.52.

The Tauberbischofsheim District Court, before which Portugaia lodged an objection against the notice for recovery of that sum, asked the Court of Justice about the compatibility of the German legislation with Community law and, more precisely, with the freedom to provide services.

The Court of Justice, in its judgment, refers first of all to its case-law establishing that in principle, Community law does not preclude a Member State from requiring an undertaking established in another Member State, providing services in the territory of the first Member State, to pay its workers the minimum wage laid down by that Member State's national rules.

Before applying that minimum wage legislation, it is for the national authorities or, as the case may be, the courts of the host Member State to determine whether the legislation actually pursues, by appropriate means, an objective of public interest, namely the protection of employees.

Measures constituting a restriction on the freedom to provide services cannot be justified by objectives of an economic nature, such as the protection of domestic undertakings.

It is therefore for the national court to determine whether, considered objectively, the legislation in question in the main proceedings provides for the protection of posted workers.

As the Court stated in its judgment of 25 October 2001 in the Finalarte case (see Press Release No 52/01), the matter to be ascertained is whether the minimum-wage legislation entails a real advantage for the workers concerned which significantly contributes to their social protection.

On the point concerning the possible derogation provided for by the German legislation, the Court states that the fact that a domestic employer may, in concluding a collective agreement specific to an undertaking, pay wages lower than the minimum wage laid down in a collective agreement declared to be generally binding, whilst an employer established in another Member State cannot do so, constitutes an unjustified restriction on the freedom to provide services.

N.B.
The Community directive on the posting of workers in the framework of the provision of services was to be transposed before 16 December 1999. Its provisions therefore have no bearing on events concerning 1997.

                

Unofficial document for media use only; not binding on the Court of Justice. Available in German, English, French, Italian, Dutch, Portuguese and Swedish. For the full text of the judgment, please consult our internet page www.curia.eu.int  at approximately 3 pm today. For further information, please contact Fionnuala Connolly Tel: (00 352) 4303 3355; Fax: (00 352) 4303 2731.