August 2022 was the deadline for EU member states to implement the Directive on transparent and predictable working conditions (‘Directive’). Only a few Member States were ready on time, including Germany, Italy and Netherlands. Others like Belgium, Bulgaria, Poland, Portugal, Romania, Slovakia have only introduced a draft implementing law. Despite the implementation status, the Directive is a source of concern for global employers, who have initiated the necessary internal reviews in order to comply with the new rules.
Why is the Directive important?
The Directive, which was adopted in 2019 and replaces the so-called “written statement directive” from 1991, updates the existing information requirements to workers and sets out new material standards to ensure more predictability and clarity on working conditions.
The Directive applies to workers as defined by local laws e.g. those having an open ended or a fixed term contract, full time or part time and more. According to the Directive’s recitals, domestic workers, on-demand workers, intermittent workers, voucher based-workers, platform workers, trainees and apprentices could fall within scope of this directive provided that they fulfil the above criteria. Genuinely self-employed persons will not be in scope (but bogus self-employed will).
Member states are allowed to exclude from the scope those who have an employment relationship with predetermined and actual time worked equal to or less than 3 hours per week on average (against 8 hours previously). Therefore, employers have to refer to local implementing laws when defining the scope of the above obligations. For instance, the Italian legislator has excluded the above employment relationships from the scope of the local implementing law, while the Dutch one has not made use of the above flexibility.
Moreover, workers with zero hours contracts will remain in scope as the exclusion is not possible when there is no guaranteed amount of work predetermined.
Information and other rights
It confirms the existing type of information to be communicated in writing (specification and place of work, starting date, paid leave, notice period, working time details and more) and adds a few items to the list (overtime compensation, training offered by the employer, probation if and others). The Directive further allows the sharing of such information electronically, which is good news. For instance, the Italian implementing law has explicitly provided that the information can be communicated on paper or electronically. However, the German implementing law (effective as of 1 August) has not taken such approach and requires that such rights are communicated by way of a hard copy document, bearing a wet ink signature, which leads to high administrative work.
In addition, the Directive creates a number of material rights such as a limit to the length of probationary periods (6 months, with some exceptions possible), a ban on exclusivity clauses, a right to predictability for those workers with variable working schedules (and the related right to refuse calls to work if outside of what has been announced or to be compensated in case of last minute cancellation by the employer), the right to request a more stable employment (with an obligation on employers to send a justified written answer) and the right to cost-free mandatory training (which should count as working time and possibly take place during working hours).
The new information rights apply to new relationships only (unless if the worker already employed at the date of the implementation is asking for the new information to be shared) whereas the new material rights apply to all employment relationships from the day of the implementation. Therefore, existing exclusivity clauses will become null and void, unless the employer can prove that there is an objective reason for it.
The German implementing law provides for a fine of EUR 2000 per breach. However, for a long time it was not clear which authority would be responsible for the enforcement of the law. Thus, it is not expected that the authorities will act quickly. Large employers also still have difficulties to comply with the law on such short notice. The level of detail within the documentation letters as well as the complexity of individual as well as collective agreements complicate the implementation of automatic processes.
The Belgian draft implementing law, as well as the Italian implementing law, has also introduced penalties for employers that don’t comply with its provisions.
On the other hand, the Dutch implementing law seems to be silent on financial penalties.
The approach(es) on exclusivity ban
The exclusivity ban means that employers cannot deny employees to work for other employers. Nevertheless, the Directive and the implementing laws, such as the Dutch (effective as of 1 August) and the Italian (effective as of 13 August) ones, allow such clauses, where there are objective reasons. The Directive recognises as objective reasons: health and safety, the protection of confidentiality of business information, the integrity of public services, the violation of a legal breach of a statutory provision or the avoidance of conflicts of interest. The Dutch legislator has chosen not to include a definition of ‘objective reasons’ in its text. However, its parliamentary history refers to the same objective reasons as those listed in the Directive, without considering them as exhaustive. For example, if performing work for another company or person could lead to a breach of the Working Hours Act (‘Act’), this potential violation of a statutory provision may also constitute an objective justification. The Italian decree also stays loyal to the grounds provided by the Directive.
Despite it being good news for the workers, the ban on exclusivity clause comes associated with some potential risks for employers. For instance, in Netherlands, if the worker has a full-time job, an ancillary activity clause (often used and reinforced by a penalty) is also a means of ensuring that, by engaging in other activities, the employee does not work more than it is permitted under the Act. Violation of the Act may result in a fine for the employer, even when the latter is not aware of the ancillary activities of the employee. In addition, the ancillary activities in which the employee is engaged may compete with the employer's business or have a negative effect on the company’s image.
Differently, the German implementing law is silent on this question. However, under German law it was already clarified, that an employer has no right to prohibit employees to take on secondary employment. Nevertheless, the employer may include a consent clause in the employment contract to give its green light if the secondary work does not interfere with the work for and interests of the employer.
The administrative burden which the Directive has increased for employers is already visible. Another challenge for multinational employers, as with any EU Directive, is having to follow its implementation in each member states and having to adjust their practices accordingly at local level. However, none of the above hinders employers’ ability to implement flexible working arrangements and/or to make use of new forms of work.