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23 May 2019 / article

Reporting obligation on the basis of the Terms of Employment Posted Workers in the European Union Act will also affect Dutch building practice

The statutory reporting obligation pertaining to the posting of employees to the Netherlands is expected to enter into force as per 1 June 2019. Consequently, foreign companies who want to post employees in the Netherlands will have to report the posting to the Dutch authorities, and the Dutch companies receiving such services will have to verify the reporting. These obligations also affect the Dutch building industry.

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Due to the shortage of construction workers in the Netherlands, Dutch building companies use foreign workers more often. They should take good note of the future statutory reporting obligation in relation to the posting of foreign workers.

The obligation follows from the Terms of Employment Posted Workers in the European Union Act (‘WagwEU’) which is based on two EU directives, the Posted Workers Directive and the Enforcement Directive. The WagwEU was implemented in Dutch legislation in 2016 and applies to foreign service providers; the service provider can be a company or a natural person who post their employees temporarily to the Netherlands in order to provide the services. The posting can take place within or outside a multinational group or via a foreign temporary employment agency. These service providers are obliged to apply certain minimum employment conditions to their posted workers during the period that they are posted to the Netherlands. The service provider will also have an obligation to report the service before the starting date of the work. It is expected that the reporting obligation will be effective in the Netherlands as from 1 June 2019, as soon as the digital reporting system has been installed.

Pursuant to this ‘reporting obligation’, a foreign service provider must report - in advance - about (e.g.) where, when and with which employees the service will be performed in the Netherlands. In addition, the service recipient in the Netherlands must verify whether the reporting obligation has been fulfilled correctly. Should the service recipient fail to do so, they will also be liable, alongside the service provider. If the service recipient checks the report and notices any inaccuracies and informs the Dutch Labour Inspection (Inspectie Sociale Zaken en Werkgelegenheid), then the service recipient is indemnified against fines the Labour Inspection may impose. The administrative fine for not complying with the reporting obligation is (standard) EUR 12,000 per posted employee and can be moderated or increased under certain circumstances.

As the reporting obligation stems from an EU directive, it is likely that a similar reporting obligation applies to companies registered in the Netherlands when their employees perform activities in, and are posted in, other EU Member States. What obligations arise in these countries, depend on how these have been implemented based on the EU Directives and should be discussed with local counsel.

More information

For more information on project development and construction practice in the Netherlands, please be referred to our page on Lexology 'Construction in The Netherlands' and the Loyens & Loeff publication ‘Building in the Netherlands’. Development projects require a multidisciplinary approach, which Loyens & Loeff provides by combining the in depth knowledge and expertise of its tax advisers, lawyers and civil law notaries.

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