An inevitable reconfiguration of the labor market is brewing in Europe. According to the European Commission, the number of digital workers will almost double by 2045, leading to profound changes in the relationship between employers and employees. Given the growing trend of its cross-border workforce, the European Union recognizes the need to step up its legislation to better protect European workers, regardless of the nature of their jobs.
The EU is also moving to better regulate employment contract terms. But how will these decisions affect expatriates? And what kind of adjustments should they anticipate?
The new European directive on employment contracts
The EU has always been advocating for more transparency in employment contract terms and for better protection for European workers. As such, on June 20, 2019, European Union (EU) countries adopted a new directive on employee-employer relations called the "transparent and predictable employment conditions" law. The law was published in the Official Journal (OJ) of the EU on July 11, 2019, for implementation by August 1, 2022.4
As planned, the new directive came into force on August 1 this year, replacing the existing regulation dating from October 14, 1991, which laid the foundations for transparent contractual terms between employer and employee. In fact, following this directive, companies were legally bound to provide their employees with essential information in writing pertaining to the terms of employment, like in an employment contract. However, critics argued that this rule did not go far enough and did not protect European workers adequately while international mobility was on the rise. Indeed, more Europeans are moving within the EU to study and/or look for work, hence the need for a new regulatory framework.
Strengthening the rights of all European employees, including locals and expats
First of all, the new European directive reinforces the obligation to inform the employee about the nature and scope of their work. As a matter of fact, the employer will have to provide more written information. Moreover, the directive has also widened its range of competencies. Henceforth, it will apply to all European employees, whether they are local or expatriates, including those working on digital platforms.
Better protection for digital platform workers
There are currently more than 28 million digital platform workers throughout the European Union, including at least 5.5 million registered as self-employed. They are deliverymen, drivers for Chauffeur-driven transport, amongst others, who are either employees or self-employed people carrying out their professional activity via digital platforms. However, their working conditions are quite precarious since they benefit from very poor protection. Besides, the European Commission expects around 43 million digital platform workers by 2045. Hence the urgent need to reform the current regulations.
On December 9, 2021, the European Commission proposed new measures to better protect those who work on digital platforms. These measures were designed to cater to properly established professional status, transparency of the digital platform's algorithm, and protection of workers, amongst others. The enforcement of the August 1, 2022, directive on the employment contract further supports the proposed 2021 measures.
What is changing for workers in the EU?
Obligation to inform their employees
Before the new provisions, employers were already obliged to provide information in their contracts regarding the essential elements of the job, the organization of the work and the working relationship. The August 1 directive further reinforces this obligation. From now on, the employer will have to clearly define how paid vacations are organized and provide information about the entitlements of the employees. Similarly, a precise description of the place of work (company, teleworking, external travel, etc.) and the trial period will be required. Such information has to be provided by the employer before the work contract execution.
Better control of working hours
Regarding working hours, employers are now duty-bound to keep their employees better informed. If employees work standard hours ("predictable" hours), they need to be provided with the exact rate of their fixed remuneration, as well as the exact rate in the event of exceptional shifts, changes in the pace of work, or overtime. If working hours are flexible or shifted ("unpredictable" hours), employees will also need to be officially informed of the number of hours for which they are guaranteed to receive their salary ("guaranteed number of hours paid"). Employees must also be informed of the pay for any work performed outside of this guarantee base. There again, the employer is required to inform the employee at the beginning of the contract.
Obligation to better inform posted workers
As far as the European Union is concerned, international assignees are protected in all EU countries. International assignees are sent by their employer on a short mission abroad. They keep their contract with their employer in their country for the duration of the assignment. The new EU directive strengthens the rights of these workers by requiring their employers to provide them with more precise and transparent information. This information will have to be provided before their posting abroad and has to specify the salary they will receive during the assignment, as well as any allowances they might be entitled to. Such information disclosure also applies for any reimbursements (travel and subsistence expenses, materials to be purchased for installation, work).
Mandatory coverage for any training that the worker needs to undertake
By law, employers are already under the obligation to cover training that their employees may need to undertake as part of their duties. But in practice, some companies only pay for training if the employee agrees to remain in the job for a period set by the employer; otherwise, the latter will have to pay back for all or part of the training. The new directive puts an end to such practice. The employer is now legally bound to pay for any compulsory training and must also do its utmost to ensure that the training is carried out during actual working hours.
End of clauses prohibiting an employee from engaging in sideline activities
An employment contract may sometimes contain clauses that prevent an employee from engaging in a side business. Other clauses require the employee to inform the employer of their other activities. However, these terms are often applied outside of any legal framework. From now on, employers will have to justify why they refuse to allow their employees to engage in one or more side jobs. Likewise, they will have to justify why they are seeking to know about their employee's side businesses. By "justification", the European directive means "objective justification" englobing: risk of conflict of interest, protection of data essential to the company's survival, risk to health and safety, amongst others. From now on, without objective justification, these clauses have no value. The measure concerns all current and future collective agreements.
Who does this new directive apply to?
All workers in the EU are concerned, irrespective of whether they are locals or foreigners. In this context, the term "worker" refers to "anyone bound by an employment contract or employment relationship". Trainees, apprentices, and digital platform workers are also concerned.
What is changing for expats?
The new directive guarantees further protection for expatriates thanks to European harmonization that guarantees similar rights in all EU countries. With all the disruption happening in the organization of work, exacerbated by the advent of new digital economy jobs, employees are under more pressure. Companies sometimes act as if there were no rules or as if their own rules were above the law. The new directive aims to correct an imbalance between employers and employees and to restore rights. By doing so, the European Commission wants to prove that it is being attentive to the concerns of employees, especially digital workers. Furthermore, it also allows the European Commission to demonstrate its adaptation to changes in the organization of work, changes which have been accelerated by COVID. Part-time or full-time remote workers, digital nomads are new worker profiles that the directive aims to protect better.
