EU: CJEU dismisses appeals by Hungary and Poland to annul the directive strengthening posted workers’ rights

Hungary and Poland have failed in their attempt to derail Directive (EU) 2018/957, which amends and strengthens Directive 96/71/EC concerning the posting of workers in the framework of the provision of services. On 08 December, the Court of Justice of the European Union dismissed the actions for annulment brought by Hungary and Poland against Directive (EU) 2018/957 which has applied since 30 July 2020, and which reaffirms the principle of equal treatment (cases C-620/18 and C-626/18, here). In support of their actions, both EU Member States invoked incorrect legal basis, in terms of a violation of the principle of the freedom to provide services and a misunderstanding of the Rome I Regulation (Regulation (EC) No 593/2008 of 17 June 2008 on the law applicable to contractual employment obligations). The Court however held that especially given the development of the internal market following the successive enlargements of the EU, the European legislature was fully entitled to reassess the interests of companies that are benefiting from the freedom to provide services and those of their posted workers. Furthermore, the Court considers that this directive does not remove the potential competitive advantage that service providers from certain EU member states would enjoy, insofar as “it does not in any way eliminate cost-based competition.”