Case 2 - Posted construction workers and a regional wage and guarantee regime

Framework. Posting is a provision of services (Article 56 TFEU). Directive 96/71, as amended by Directive (EU) 2018/957, sets a core of mandatory host rules but does not harmonise wages fully; Article 3 is a floor, not a ceiling, and must be read with the Court's case law on collective agreements (Laval, C-341/05; Rüffert, C-346/06).

(i) The wage rules. Article 3(1) requires the host State's rules on remuneration only where they are laid down in law or in collective agreements that have been declared universally applicable (or, under Article 3(8), where there is no such system, in generally applicable agreements applied without discrimination). The 'hardship bonus' and 'Christmas bonus' qualify only if they are mandatory components of the applicable remuneration as defined by Z's law or by such an agreement. If the sectoral agreement is not universally applicable, Z cannot extend it to BudMax or use it as a condition of the subcontract.

The allowances matter. Under Article 3(7), posting allowances count as part of remuneration unless they reimburse expenditure actually incurred. The reimbursed hotel costs are not remuneration; the EUR 25 daily allowance may well be, so BudMax can set it off against the host minimum remuneration. The posting lasts eight months, below the 12-month threshold in Article 3(1a), so the long-term posting regime does not make the whole of Z's labour law applicable.

(iv) Social security. Regulation (EC) No 883/2004, Article 12(1), keeps posted workers in the home scheme for up to 24 months; the A1 certificate is binding on Z's institutions (Regulation No 987/2009, Article 19(2)). Directive 96/71 does not list social security among the Article 3 matters. The demand for contributions in Z is therefore unlawful, and contributions already collected must be reimbursed.

Conclusion: the fine, insofar as it rests on (i), can only be upheld to the extent that the bonuses are genuinely mandatory universal remuneration, and cannot rest on (iv) at all.

Framework. Directive 2014/67 permits administrative and control measures to combat abuse, but Article 9(1) sets out a list of permissible requirements, and any such requirement must be non-discriminatory, justified, necessary and proportionate; it must not amount to prior authorisation and must not make the provision of services practically impossible or excessively difficult.

(ii) Prior declaration. A simple prior declaration with the labour inspectorate is among the recognised monitoring tools and is, in itself, permissible: it gives the host State information about the posted workers and the duration of the posting. What is doubtful is the combination of translated employment contracts with a deadline before the first day of work. Translation of the essential documents is acceptable, but a demand for the full contracts before work begins, with no short grace period, may make the posting of small subcontractors excessively difficult and is difficult to justify when the same information is available through the Internal Market Information system. The national court must verify proportionality on the facts; a declaration filed within a short period after the start would usually suffice.

(iii) The EUR 50,000 guarantee. This is a financial barrier. Article 9(1) is generally read as an exhaustive list of permitted administrative requirements and control measures, and a bank guarantee is not among them. Even outside that list, a guarantee of this size deters small and medium-sized operators, is not necessary to secure the payment of fines (which can be enforced through mutual assistance and the IMI), and is not the least restrictive means of protecting workers or the public purse. It restricts the freedom to provide services without adequate justification and is therefore unlawful.

Conclusion: requirement (ii) is acceptable in principle but disproportionate as designed; requirement (iii) is incompatible with Directive 2014/67 and Article 56 TFEU.

The fine. Sanctions are a matter of national procedural autonomy, but they must be effective, proportionate and dissuasive, and they must not be applied to conduct that EU law does not permit the host State to require. Because the fine is based on two requirements that are at least partly unlawful, the national court must set aside the incompatible parts of the national law (Simmenthal) and either annul the fine or reduce it to reflect only genuine, proportionate breaches. A single fine covering both a legitimate and an illegitimate requirement cannot stand as it is: proportionality requires the sanction to correspond to the actual obligation breached.

No local establishment. BudMax's lack of an establishment in Z cannot be used against it. Article 56 TFEU prohibits requirements of establishment, and Directive 2014/67 confirms that a service provider may be required only to communicate with the host authorities, not to maintain a branch or a permanent representative. Any rule that treats the absence of an establishment as an aggravating factor is discriminatory in effect.

Shifting liability to the client. Directive 2014/67 permits a host State to make the main contractor or client jointly liable for unpaid posted-worker remuneration, but only under strict conditions: the liability must be limited to the minimum wage or to remuneration under a universally applicable agreement, the client must have been notified of the subcontractor's obligations, and due diligence defences must be available (Article 12). A general rule that makes the client automatically liable for the subcontractor's sanctions, without a due diligence defence, is disproportionate.

Practical route. BudMax should ask the national court to disapply the unlawful requirements, and may also lodge a complaint with the Commission (Article 258 TFEU), while the inspectorate should withdraw and re-issue any cross-border enforcement through the IMI only for genuinely justified breaches.