In his
opinion delivered on 31 January 2018 (C-527/16), Advocate General Saugmandsgaard Øe addresses issues related to the
coordination of the social security systems, pursuant to Regulation 883/2004
and its implementation Regulation 987/2009.

The dispute
in the main proceedings concerns the determination of the social security
legislation applicable to workers posted by two Hungarian undertakings to an
undertaking established in Austria.

The Supreme
Administrative Court of Austria decided to refer to the European Court of
Justice as regards to the following issues at hand:

·        
The
binding effect of a portable document A1 on a court
or tribunal of a Member State other than that in which the document was issued.

·        
The
binding nature of the decisions of the Administrative
Commission for the Coordination of Social Security Systems.

·        
The
retroactive effect of a portable document A1, in
particular when issued after the worker became subject to the social security
system of the host Member State.

·        
The
“non-replacement condition” applicable to posted workers in the context of
successive postings by different employers (i.e. posting workers to the same
undertaking established in another Member State).

Binding
effect of a portable document A1

Referring
to the Court’s settled case law, Advocate General Saugmandsgaard Øe takes the view that a court of
the host Member State, is not entitled to scrutinise the validity of a portable
document A1 in the light of the background against which was issued.

Binding
nature of the decisions of the Administrative Commission

The
Administrative Commission is responsible for dealing with administrative
matters, questions of interpretation arising from the provisions of regulations
on social security coordination, and for promoting and developing collaboration
between EU countries.

The
Administrative Commission concluded that Hungary had improperly declared that
it had competence over the workers concerned and that, accordingly, the
portable documents A1 must be withdrawn. However, the portable documents A1
were not withdrawn or cancelled by the competent Hungarian institution.

Pursuant to
Article 5(4) Regulation 987/2009 and in the light of the Court’s case law,
Advocate General Saugmandsgaard Øe takes the view that the Administrative
Commission must only “endeavour to
reconcile’ different points of view and as a consequence, neither the
procedure before the commission and nor its decisions have impact on the
binding effect of a portable document A1.

Retroactive
effect of a portable document A1

Considering
the Court’s case law, the Advocate General recalls that:

·        
When
issuing the document A1, the competent authority merely state that the worker
concerned remains subject to the legislation of the Member State to which that
institution belongs, throughout a given period.

·        
Although
it is preferable to issue such document before the beginning of the
period concerned, the document may also be issued during the posting period or
after its expiry.

In the same
context, the Advocate General underlines the difference between a portable
document A1 issued at the request of the person concerned or the employer, and
a decision based on the authority’s initiative, establishing that a person is
subject to the social security of a Member State. The Advocate General takes
the view that only the former can be considered as a document in the sense of Article
5(1) Regulation 987/2009, and as a consequence, only the former “shall be accepted by the institutions of the
other Member States for as long as they have not been withdrawn or declared to
be invalid by the Member State in which they were issued”.

Having
regard to the above considerations, the Advocate General takes the view that there
is nothing to prevent the portable document A1, where appropriate, from having
retroactive effect. The document is binding where was issued after the worker
concerned was made subject to the social security system of the host Member
State (the Austrian authorities had established that the workers concerned were
subject to the Austrian social security system).

The
“non-replacement condition”

As the case
at issue, the question can be rephrased to whether the “non-replacement” clause
precludes an employer B from posting workers, where employer A had previously
made such a posting (i.e. to the same recipient of services and to carry out
similar activity).

The
question is examined from two angles, in relation to whether or not, the
employers have their registered office in the same
Member State and staffing and/or organisational links are established between
them.

The
Advocate General suggests that as a matter of principle and regardless if the
employers have their registered office in the same Member State, preventing an
employer from posting workers where another employer had previously made such a
posting to carry out the same activity, would undermine the freedom to provide
services and the freedom of movement of workers. As a consequence, the
recipient of the service in the host Member State, is not prevented from making
use of successive and separate contracts with different undertakings relating
to the performance of the same work, by posted workers who are not subject to
the social security system of the host Member State.

Where the
employers have staffing and/or organisational links, it is appropriate to
examine whether the postings are aimed at circumventing the “non-replacement
condition”.

A landmark
ruling is expected.

The
“non-replacement condition”, aims to prevent situations which consist in the
fact that employers are circumventing the condition relating to the duration of
the posting by making rotations of their posted staff to be able to continue to
be subject to the legislation of the Member State of
origin, where the social security contributions are lower than in the host
Member State.

Considering
the Advocate General’s opinion, the recipient of services is not prevented from
making permanent use (for the same work) of posted staff subject to the
legislation of the Member State of origin. It must be observed that regardless
of whether the permanent rotation is sourced by the same or by different
employers, its effect on the EU single market economy is the same.

Social
dumping has been defined by Magdalena Bernaciak as “the practice, undertaken by self-interested market participants, of
undermining or evading existing social regulations with the aim of gaining competitive
advantage” (Social dumping and the EU integration process-2014). No
distinction is made between provider and recipient of services.

The overriding
reason of public interest can be invoked to justify the “non-replacement condition”
(which constitutes a restriction of the freedom to provide services), should
apply equally to both situations in discussion.

Lastly, the
question referred to the ECJ is related to the social security subjection and
the opinion delivered in the light of Article 12(1) Regulation 883/2004.

It will be
interesting to assess the question in the light of Article 4.3 Directive
2014/67/EU (criteria to assess whether a posted worker temporarily carries out
his or her work in a Member State).