Thursday, June 16, 2016

New Road Haulage Transport Sanctions Generate European Commission Legal Action

France and Germany in Trouble with Commission on Minimum Wages
Shipping News Feature
FRANCE – GERMANY – UK – The European Commission has decided to take legal action against France and Germany over the possible consequences of the application of their respective minimum wage legislation to the road transport sector, news that has been welcomed by the UK's Freight Transport Association (FTA), which took exception to France’s requirement for all foreign road hauliers to carry documents to prove they earn the French minimum wage.

While fully supporting the principle of a minimum wage, the Commission considers that the systematic application of the minimum wage legislation by France and Germany to all transport operations touching their respective territories restricts in a disproportionate manner the freedom to provide services and the free movement of goods.

Following an exchange of information with the French authorities and a thorough legal assessment of the applicable French legislation, which will become applicable on July 1, 2016, the Commission has decided to send a letter of formal notice to France, constituting the first step in the infringement procedure. From 1 July, foreign vehicles operating on French soil will have to implement new reporting requirements to demonstrate compliance – and with under two weeks before the deadline, the situation for operators remains woefully unclear. The French government has still not given full guidance to foreign operators, promised in a ‘frequently asked questions’ document.

In addition, the Commission decided to send a supplementary letter of formal notice to the German authorities. This follows the launch of an infringement procedure in May last year and subsequent extensive talks with the German authorities with a view to reaching an amicable solution. However, neither the reply of the German authorities to the letter of formal notice nor the subsequent discussions have dispelled the Commission's main concerns. Germany introduced a minimum wage requirement which entered into force on January 1, 2015 and set at €8.50 per hour. Protests ensued in the following months from freight operators in surrounding countries, leading to the suspension of the application on foreign truckers until matters had been clarified.

In both cases, the Commission considers that the application of the minimum wage to certain international transport operations having only a marginal link to the territory of the host Member State cannot be justified, as it creates disproportionate administrative barriers, which prevent the internal market from functioning properly. The Commission considers that more proportionate measures should be taken to safeguard the social protection of workers and to ensure undistorted competition, whilst allowing for free movement of services and goods.

The French and the German authorities now have two months to respond to the arguments put forward by the Commission. Speaking on the restrictions the French law would have on UK based hauliers in particular, Chris Welsh, FTA's Director of Global and European Policy, said:

"[The] FTA is delighted that the European Commission supports its view that the application of this new employment rule needs to be reconsidered because, as stated by the Commission itself, it would restrict in a disproportionate manner the freedom to provide services and move goods in the EU.

"On behalf of UK hauliers and customers, [the] FTA’s team based in Brussels immediately raised concerns over the application of the minimum wage legislation to the road transport. This prompt action is vital to prevent the introduction of barriers to trade that would distort competition within the EU and will help ensure the proper functioning of the international market.”

Under the country’s new law, foreign vehicles operating on French soil will have to implement new reporting requirements to demonstrate compliance. With less than two weeks before the deadline, the French government has still not given full guidance to foreign operators.

The new regulations include a requirement that the haulier must submit a ‘posting’ certificate for each worker, which must be renewed every six months, and appointing a company representative in France to liaise with staff of the enforcement body for the duration of the transport operation and for 18 months following. Critics point out such red tape seems to be a speciality of French administration in what is supposedly a free market, and this despite the current government’s attempts to loosen rigid employment law, something which has caused nationwide strikes and industrial unrest over the past few weeks.