In Alperind
GmbH and Others (C-527/16) the European Court of Justice confirms (once again)
the binding and retroactive effect of the Portable Document A1, adds to the
debate in regard to the interpretation of the ruling in Altun
and Others(C-359/16), and rules for a restrictive interpretation of the
“non-replacement condition”.

The case in the main
proceedings

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

Question referred for
a preliminary ruling

The Supreme
Administrative Court of Austria referred to the ECJ 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 effect of a Portable Document A1 in the context of findings and recommendations
made by the Administrative Commission for the
Coordination of Social Security Systems.

·        
The
retroactive effect of a Portable Document A1, when issued after the worker was
subjected 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).

It must be
observed that the “non-replacement condition” is at the origin of the
disagreement between the parties in the main proceedings.

The European Court of
Justice ruling and its implications

1 Binding
and retroactive effect of the PDA1

Following
the Opinion delivered by Advocate General Saugmandsgaard Øe and settled
case-law, the ECJ confirms the binding and retroactive effect of the Portable
Document A1, regardless the particular circumstances invoked by the Salzburg
Regional Health Insurance Fund and the Austrian Federal Minister of Labour,
Social Affairs and Consumer Protection.

However,
the ruling adds to the debate in regard to the interpretation of another
landmark judgment, Altun and Others(C-359/16).

In the
present case, the Court underlines that “apart
from cases of fraud or abuse of rights”, accepting that a competent
national institution could, by bringing proceedings before a court of the host
Member State to which the institution belongs, “have an A1 certificate declared invalid”, the sincere cooperation
system would be undermined.

It follows that
in case of fraud and abuse of rights, the court of the host Member State could
declare the PDA1 invalid. The social security subjection to the host Member
State legislation would be then retroactively established, and the person
concerned subject to the legislation of two countries, at least for a certain
period.

In Altun
and Others(C-359/16), the ECJ held that “in
the context of proceedings brought against persons suspected of having used
posted workers ostensibly covered by such certificates” the national court may” disregard those certificates”.

Disregard
the PDA1 would presumably not involve a subjection to the social security
systems of two Member States, on the contrary, invalidate a PDA1, is equivalent
to withdrawal of such a certificate, and results in a double social security
subjection.

It must be
observed that in Altun and Others(C-359/16). Advocate General
SAUGMANDSGAARD ØE, took the view that the situation of double social security
cover, is inherent in a finding of fraud.

In Commission
v Belgium (C-356/15), the ECJ recalled that pursuant to the ruling in Altun and
Others, a national court may disregard the PDA1 and must determine whether the
persons suspected of having used posted workers ostensibly covered by
certificates obtained fraudulently, may be held liable under the applicable
national law.

Prima
facie, such a determination cannot result in double social security subjection,
but only in an eventual conviction of the persons suspected of having used
posted workers ostensibly covered by certificates obtained fraudulently.

In regard
to the failure of the Member State that issued the PDA1 to carry out a review
and if relevant withdraw the said certificate, Articles 258 and 259 TFEU
provide the appropriate remedies.

In any
circumstances, the ECJ rejected the argument invoked by Belgium, justifying a
temporary subjection to the legislation of the host Member State, on grounds of
Article 6(1)(a) of Regulation No 987/2009.

Another
important highlight is the reference to decisions by which the competent
institution of the Member State in which the activity is carried out, decides
to make the workers concerned subject to compulsory insurance under its
legislation. A document materialises such a decision, cannot be considered as
showing the position of the person concerned, within the meaning of Article
5(1) of Regulation No 987/2009.

It should
be understood that in any circumstances, the competent institution of the
Member State in which the activity is carried out, may not proceed to an
automatic subjection to its own legislation.

2 The
“non-replacement condition”

Contrary to
the  Opinion delivered by Advocate
General Saugmandsgaard Øe, the ECJ observes that reading in conjunction the
wording of Article 12(1) Regulation No 883/2004, in the version in force at the
beginning of the period concerned, the recital 17 of Regulation No 883/2004 and
recitals 5 and 8 of the said regulation, to grant the equality of treatment of
all persons occupied in the territory of a Member State, the legislation
applicable as a general rule is that of the Member State in which the person
concerned pursues his activity.

The
exemption provided for by Article 12(1), cannot be justified in case of
recurrent use of posted workers to fill the same post, even though the
employers (sending companies) are different.

Although
the ruling addresses the wording of Article 12(1) Regulation 883/2004 in the
version in force at the beginning of the period concerned by the case at issue
“ sent to replace another person”, it
is obviously applicable to the amended Article 12(1), “sent to replace other posted person”.

“Having regard to all of the foregoing
considerations, the answer to the third question is that Article 12(1) of
Regulation No 883/2004 must be interpreted as meaning that, if a worker who is
posted by his employer to carry out
work in another Member State is replaced by another worker posted by another
employer, the latter employee must be regarded as being ‘sent to replace another
person’, within the meaning of that provision, so that he cannot benefit from
the special rules laid down in that provision in order to remain subject to the
legislation of the Member State in which his employer normally carries out its
activities”

Recipients
of services running projects by making “permanent” use of posted staff (for the
same work), will be seriously affected.

The judgment
will raise a large academic debate.

It is
interesting to understand how the restrictive “non-replacement condition” will
be practically implemented. The Administrative Commission for the Coordination
of Social Security Systems will probably bring more clarity. In any
circumstances, contracts of provision of services must be amended to reflect
the recipient liability in case of successive postings by different employers.

To further determine
project feasibility and cost, the present ruling must be considered, in
addition to the relevant legal instruments govern the posting of workers. Other
expected rulings will bring more clarity in regard to certain particular
situations.