A recent EU court ruling makes it clear that, for postings above 90 days, employers must arrange separate work permits for posted workers in each individual EEA country they want to operate in

Alex Schulte, 11 July 2024

Last month, the Court of Justice of the European Union delivered a ruling that clarifies a grey area in the bloc’s freedom of movement laws. As a result, many posted workers in the EU will now have to pass a much higher compliance bar than previously assumed.

Let’s explore the details of the case and why it impacts any company doing business in Europe.

The case

Case C-540/22 concerns a Slovak company that, in 2020, sent several Ukrainian nationals who already held temporary residence in Slovakia on a posting to the Netherlands. As Ukraine is not part of the EU, the workers were, by definition, third-country nationals.

The posting was then extended, with the new timescale extending beyond the 90-day threshold within which third-country nationals with residence in one nation can work in another without applying for new permits.

The employer therefore applied for new residence permits in the Netherlands for these workers.

The Dutch authorities then granted residence permits that only covered the remaining duration of the workers’ existing permits in Slovakia, rather than the duration of the specific posting. This meant that the employer had to apply for new Dutch residence permits for the workers a second time.

The workers then appealed to the court, objecting to being required to obtain new residence permits for the Netherlands while their Slovak residence was still valid. Pointing to EU law around the freedom to provide services—a key plank of EU free movement policy—the workers objected to the obligation, duration, and cost of the Dutch residence permits.

In the end, CJEU ruled against them.

What the court found

CJEU’s ruling legally clarified the following points, setting new precedents in case law:

• Holding a residence permit for one EU country does not automatically create a ‘derived right of residence’ for another. The Netherlands was therefore within its right to insist that the posted workers secure new residence permits.
• The freedom of individuals to supply services throughout the EU does not supersede the right of member states to control who crosses and resides within their borders.
• The fees levied on a third-party national attaining a residence permit will be greater than those charged to an EU national for a certification of residence, and that the precise amount of these fees is in the remit of the Dutch courts.

What this ruling means for UK, US and European companies

While companies from all third countries are affected, UK companies will have to make a particularly sharp adjustment after so many years in the EU’s trading structures.

The moment the UK left the EU, Britons became third-country nationals. British citizens now need work permits to carry out almost all work activities in European nations.

This has made UK-EU trade more complicated and admin-heavy. Faced with the friction of applying for different work permits for a multitude of countries, British companies who send employees into Europe may have considered securing residency for their workers in one location as a jumping-off point to the rest of the continent.

However, the CJEU ruling leaves no doubt that this tactic will not work, at least for postings that last longer than three months.

The only legal course of action for overseas companies who send employees into multiple European countries is to ensure that each posted worker has a work permit granted by each host nation, valid for the needed duration of their stay.

All this is also true for US companies, and even European businesses are affected. Companies from the bloc’s richest nations are often attracted by the low labour costs of Central and Eastern European countries that have not yet joined the EU, like Ukraine, Albania or Serbia. But as this case proves, this hiring strategy comes with its own complications and hidden costs.

Extra strategic planning

The countries that make up the EU single market are highly economically interdependent. Even small companies commonly operate in multiple neighbouring countries, taking advantage of seamless cross-border travel. This is just as true for companies from nations outside the bloc who trade in Europe.

Before posting workers into the EU for assignments over 90 days, businesses must research the specific visa and immigration compliance requirements for each country where they might wish to work.

Immigration is currently among the most volatile, hot-button policy areas in European politics. With record numbers of elections taking place in countries across the continent, regulations may change quickly. Basing your strategy on information gleaned from cursory Google searches is far too risky.

Taking care to source only the most up-to-date information is the only way to avoid compliance headaches. But it comes at the cost of time spent researching and verifying sources.

Extra costs and fees

Once companies have invested their time in finding reliable information, they’ll then have to sort the correct permits and visas for their staff, for each relevant country.

All of these will come with fees and administrative costs, which vary between nations.

For instance, the total cost of obtaining a temporary work visa in France comes to €324 (visa application fee plus tax and admin costs). Yet Italy charges different rates depending on the length of time stayed, meaning the total cost can sit anywhere between €212.46 to €292.46, plus extra administrative costs for tax stamps, postal kits and issuance.

Non-compliance penalties

When it comes to immigration compliance, businesses have no room for error. EU member states routinely impose harsh penalties on employers found to be in violation of immigration laws. For instance, in Austria, failure to submit the required notification of posting or hiring out workers can result in a fine of up to €20,000.

In the most severe cases, repeat offenders can find themselves barred from operating in their target markets.

The greater the number of companies you’re operating in, the easier it gets to make expensive mistakes.

Avoiding these penalties requires companies to manage their compliance very carefully. This may even mean hiring dedicated staff.

All-in-one compliance for businesses in Europe

To trade in Europe without legal risks, companies must commit time and resources to square the circle of cost-effective yet rigorous compliance.

Or you could let our award-winning software do it all for you.

Centuro Global’s AI platform gives you instant access to current immigration regulations for over 170 countries. We’ll then connect you to a network of experienced immigration lawyers on the ground in any territory. These expert legal teams will then process visas and work permits for your whole team, while you track it all on a customisable dashboard.

Want to see how it works? Just let us know and we’ll be in touch.