Understanding the Posted Workers Directive – an Employer’s Guide

Everything you need to know about the EU’s Posted Workers Directive law, which allows employers to send employees from one EU country to another.

11 March 2025

Sending a temporary worker from one EU Member State to another seems straightforward. After all, the European Union is a single market with a common regulatory framework. But when it comes to employment law, posted worker compliance isn’t quite so simple.

That’s where the Posted Workers Directive (PWD) comes in. Designed to ensure fair treatment for EU workers across borders, the PWD lays out rules companies must follow when sending employees to another EU Member State.

However, different Member States interpret and enforce these rules in their way, making compliance a tricky business. This is why many companies increasingly use AI-powered travel compliance tools to help them adhere 100% to the regulatory small print.

This guide breaks down specific rules of the Posted Workers Directive so you can navigate the sticky red tape (and avoid costly fines as a bonus) while ensuring compliance with minimum employment standards across the EU.

Key Principles of the Posted Workers Directive (PWD)

The EU Posted Workers Directive ensures that employees temporarily sent from one EU Member State to another on a temporary basis for secondments or other purposes will receive the same employment rights, working conditions, and wages as local workers. In short, it levels the playing field for businesses while protecting workers from unfair treatment.

The directive has three key objectives:

• Protecting workers’ rights – Ensuring posted workers receive at least the minimum wage, standard working hours, and essential protections like paid leave, health, and safety provisions.
• Preventing social dumping – Stopping companies from undercutting local wages by bringing in cheaper labour from lower-cost Member States.
• Equal pay for equal work – If a worker’s posting exceeds 12 months (extendable to 18 months), they must receive full employment terms and conditions aligned with the host country’s laws.

Of course, the Directive has undergone significant changes since its inception.

Evolution of the Directive

The Posted Workers Directive was introduced in 1996 to stop companies from exploiting cheaper labour from lower-wage EU countries. But as businesses found loopholes, reforms followed.

In 2014, the European Union introduced the Enforcement Directive to crack down on common circumvention tactics like:

• Regulatory evasion – Avoiding social security contributions by failing to declare workers.
• Regulatory arbitrage – Exploiting loopholes to bypass collective agreements and labour protections.
• Letterbox companies – Setting up fake businesses to misrepresent employment conditions and dodge social security payments.
• Worker misclassification – Labelling employees as self-employed to sidestep employer obligations.

The most significant package of EU legislation came with Directive 2018/957, which the European Union implemented in 2020. This revised Posted Workers Directive reinforced the principle of equal pay for equal work by:

• Applying full host country labour laws for postings beyond 12 months (extendable to 18 months).
• Extending universally applicable collective agreements across all sectors.
• Strengthening protections for temporary agency workers.

All Member States have integrated these updates into national law, though some discrepancies remain in enforcement.

Eligibility: Defining Who is a Posted Worker Under the Directive

A posted worker is an employee sent by their host employer to work in another EU country for a limited period. This is typically up to 12 months, though extensions are possible.

Notably, third-country nationals (non-EU citizens) residing in one EU Member State may be posted to another—but only if they’ve lived in the home Member State for (a recommended) 30 days.

We know who qualifies as a ‘posted worker’. The question is, which companies must adhere to the Directive?

Who Must Comply with the Posted Workers Directive?

The directive primarily applies to EU-based employers’ posting of workers, but some Member States also extend it to non-EU companies like foreign service providers.

Countries such as Belgium, France, Spain, Italy, Poland, and Romania require non-EU employers posting workers to comply with local labour laws. Additionally, any worker hired by an employment agency in one member state for work in another is classified as a ‘posted worker’ to prevent unfair treatment and exploitation through lower wage practices by foreign companies.

Business travellers can even fall under the Posted Workers Directive if their activities go beyond meetings and conferences. If an employee installs equipment, provides training, or performs client services, they may need to be registered as a posted worker.

This brings us to the most important issue:

What Rights Do EU Posted Workers Have?

Under EU law, posted workers are entitled to the same core protections as local employees. This includes:

• Equal pay and wages.
• Standard working hours and minimum rest periods
• Minimum paid annual leave.
• Health, safety, and hygiene standards.
• Non-discrimination protections.
• Accommodation that meets host nation standards.
• Reimbursement for travel, board, and lodging expenses.

The key distinction? While a posted worker’s conditions of employment follow the host country’s rules as set by the Posted Workers Directive to protect workers’ rights, their social security contributions remain in their own country, provided they have the proper documentation.

Let’s take a closer look.

Tax and Social Security Implications for Posted Workers

Posted workers are usually taxed in their home nation, unless they spend more than 183 days in the host country within a 12-month period. If that threshold is exceeded, they may become subject to local income tax.

Example: A Romanian engineer is sent to Germany for a 150-day assignment, meaning his taxes remain in Romania. However, if the project runs over  and reaches 190 days, German tax laws apply.

There are no EU-wide tax rules for the posting of workers, so taxation depends on bilateral agreements between Member States.

Social Security

According to EU rules, posted employees stay insured under their home country’s social security system for up to 24 months, provided their employer obtains an A1 certificate. After this period, contributions may shift to the host Member State.

Example: A Romanian engineer working in Germany for 12 months has his wages aligned with German minimum standards, but his social security contributions are paid to Romanian authorities.

Complying with the Directive and its mandatory rules, which ensure essential protections for posted workers, is tedious, to say the least. AI-powered travel assistants are a helpful way to avoid the hassle. Such tools tell you exactly how to comply with any country’s regulatory system, down to the small print.

Speaking of compliance, let’s look at…

Posted Workers Directive Compliance: A Step-by-Step Guide for Employers

A step-by-step guide for employers:

1️⃣ Obtain a PD A1 form – Secure an A1 certificate to confirm social security coverage in the home country.

2️⃣ Notify host country authorities – Submit a Posted Worker notification with details about the employer, worker(s), duration, and workplace address. Ensure compliance with the Enforcement Directive by providing prior notification to enhance tracking and oversight.

3️⃣ Appoint a liaison – Designate a representative to engage with host Member State regulators.

4️⃣ Keep detailed records – Maintain employment contracts, payslips, and working hours for audits.

5️⃣ Ensure equal treatment – Provide the same rights and benefits as local employees under that country’s labour law provisions.

As you can see, it isn’t an easy road.

Challenges in PWD Compliance

Inconsistent national interpretations

Countries like Belgium, Spain, and Poland apply PWD rules more strictly—sometimes extending them to non-EU posted workers. This lack of harmonisation makes compliance with the host country’s labour law, as required by the EU Posted Workers Directive, complex.

Regulatory loopholes and violations

Some companies attempt to game the system by:

• Misclassifying employees as self-employed to avoid social security payments.
• Setting up letterbox companies in low-tax jurisdictions.
• Withholding wages or social benefits from third-country nationals.

A notable case involved an Irish company that owed €12 million in social contributions for 460 Polish and Romanian workers posted to France.

Mistreatment of third-country nationals

Ensuring fair treatment for third-country nationals under the Posted Workers Directive remains a significant challenge. Cases of exploitation—including withheld social security contributions, confiscated passports, and failure to meet minimum wage requirements—are well-documented. A stark example is the 2011 case of 391 Bosnian workers sent to Germany, who were denied fair wages.

The problem is far from isolated. According to the 2019 annual report by the Polish Labour Inspectorate, nearly half of all postings of third-country nationals were found to be illegal. This highlights ongoing enforcement gaps and the heightened risks non-EU workers face operating under the directive.

Heavy administrative burdens

Employers must submit a pre-posting Posted Worker notification, maintain extensive records, and monitor compliance. Some EU countries, like France and Estonia, have digital systems (e.g., SIPSI and TEIS) to ease the process, while others still rely on manual paperwork.

Penalties for non-compliance

Fines imposed vary widely across the European Union—from €300 in Lithuania to €500,000 in Germany. Some countries, like Germany, have administrative penalties and may even revoke business licenses for serious violations.

The Future of the PWD

The European Union is moving toward a unified digital notification system, reducing administrative burdens and increasing transparency. Enhanced cross-border cooperation—especially among Benelux countries—means violations are more likely to be flagged. Employers must stay ahead of compliance requirements to avoid legal and financial risks.

With enforcement tightening, AI-powered compliance tools like Centuro Global’s Travel Compliance Assistant can help businesses manage obligations efficiently, ensuring smooth, penalty-free operations in an evolving regulatory landscape.

Posted Workers Directive FAQs

What are the penalties for non-compliance with the Posted Workers Directive?

National authorities play a crucial role in the enforcement and regulation of the Posted Workers Directive, and penalties for non-compliance vary by nation but can include hefty fines, work stoppages, and even bans on operating in certain Member States. For instance, France and Germany impose fines per worker, while Belgium may suspend your ability to post workers entirely.

How do I determine if my employee qualifies as a posted worker?

If your employee is temporarily sent from one EU nation to another to provide a service, they are likely a posted worker. However, factors such as the duration, the employment relationship, the nature of work, and whether they remain under your direct authority all play a role in classification.

Do self-employed workers fall under the Directive?

No, self-employed individuals are not covered under the PWD. However, if authorities suspect that a self-employed worker is actually an employee in disguise, they may investigate for misclassification, leading to legal and financial consequences.

How does the directive impact short-term business trips?

If a business traveller is only attending meetings, training, or conferences, they usually don’t fall under the directive. However, if they install equipment, provide training, or perform client services, they may need to be registered as a posted worker.

Which industries face the strictest enforcement of the PWD?

The construction, transport, healthcare, and temporary staffing sectors are subject to stricter controls because of historical abuses of labour law. Some nations, like France and Germany, require additional documentation for companies operating in these industries.

Are posted workers entitled to pension benefits in the host country?

Not usually. Posted employees continue contributing to their home country’s social security system (if covered by an A1 certificate). However, if they exceed the 24-month social security limit, they may need to switch to the host country’s pension scheme.

Can a posted worker be subject to dual taxation?

Possibly. Taxation depends on bilateral tax treaties between the home and host countries. Workers who spend more than 183 days in the host Member State may violate business travel compliance rules and become liable for local income tax, even if they still pay social security back home. If you’re worried about your liabilities, use AI-powered tools to prevent regulatory complexity from getting the better of you.

What happens if a posted worker exceeds the 12-month (or 18-month) limit?

If a posting goes beyond 12 months (or 18 months with an extension request), the worker must receive full labour law protections of the host Member State. This means they are entitled to the same employment rights as local workers, beyond the minimum standards.

How does Brexit affect UK companies posting workers to EU countries?

Since Brexit, the UK no longer applies the PWD, as the directive applies only to EU Member States. UK employers must now comply with individual EU countries’ national rules when posting workers, which often include stricter work permit and visa requirements.

Do non-EU companies need to comply with the directive when sending workers to an EU Member State?

Yes, in some cases. Countries like France, Belgium, and Spain extend PWD rules to non-EU companies posting workers to their territories. This means non-EU employers must provide the same wages, working conditions, and regulatory notifications.