In its judgment in Case C-540/22, the Court of Justice of the European Union (CJEU) clarified that Article 56 of the Treaty on the Functioning of the European Union (TFEU), which governs the free movement of services, does not prevent a Member State from requiring to companies established in another Member State to comply with specific obligations when posting third-country nationals to its territory for more than three months. These obligations include submitting a prior notification of the service provision to the government authorities of the host Member State and subsequently obtaining a residence permit for each posted worker. In its judgment of 20 June 2024 (Case C-540/22), the CJEU ruled on the dispute involving Ukrainian nationals holding a temporary residence permit issued by the Slovak authorities, who were employed by a company of that nationality and subsequently seconded to a different Dutch company. To this purpose, prior to the commencement of the posting, the Slovak employer informed the Dutch authorities of the nature and initial duration of the activity, which was slightly under 90 days. Following the commencement of work, the expiration of the period at issue was extended beyond one year. Due to said extension, the duration of the posting exceeded the 90-day limit over which, pursuant to European law (more specifically, the Convention Implementing the Schengen Agreement), foreign nationals who intend to move freely within the hosting Member State shall apply for and obtain a valid residence permit. In light of said provisions, the Slovak company submitted applications to the Dutch authorities on behalf of the foreign workers, so to obtain fixed-term residence permits, which the Dutch authorities granted. However, their validity was limited to the duration of the workers' Slovak residence permits. As a result, those issued by the Dutch authorities were valid for a shorter period than the duration of the work activities to be carried out through the workers’ posting in the Netherlands. In response to this decision, the workers lodged complaints, challenging both the requirement to obtain a residence permit for cross-border posting and the restricted validity period of the permits granted, which were dismissed. Consequently, the Ukrainian citizens initiated a legal proceeding before the European Court, seeking the annulment of the decision. Following the above, the CJEU had to rule on whether it is lawful for a Member State in which foreign workers are posted to require that each of them apply for and obtain a residence permit in that State if their stay exceeds 90 days, and if this does not limit the freedom of services provided by sections 56 and 56 of the TFEU. Additionally, the European judges assessed if it is compliant with the European acquis to allow one state Member to limit the duration of a residence permit issued to a foreign worker posted to its territory to the duration of the residence permit previously obtained by the worker in the Member State where the posting company is established. Following an analysis of the relevant European and national legislation, the Court of Justice referred to one of its own precedents establishing that, even if it imposes restrictions on the freedom to provide services, a national regulation shall be applied if it pursues an overriding reason of general interest. Among the reasons that the Netherlands government put forward to legitimize the national legislation’s restrictive effects on the freedom to provide services, the CJEU acknowledged as overriding objectives of general interest the need to (i) safeguard the national employment market (as long as such warning does not jeopardize other Member states’ workers; and (ii) verify that the posted workers do not pose a threat to the public order of the host Member state. Therefore, according to the CJEU, host States are allowed to limit the duration of the residence permits issued to the non-EU posted workers to the duration of the permit the latter have obtained by the State where they are employed. In fact, if a company providing cross-border services did not carry out this activity in compliance with the law, it would obtain an illegitimate advantage, deriving from an illicit act. For the purposes of this discussion, the prerequisite that makes the posting activity lawful is exactly the correct employment of the involved employees, including the validity of their residence permit issued by the state in which they are employed. In light of the CJEU ruling, employers intending to post foreign workers to another Member state must carefully assess the applicable local regulations. It is crucial to verify in advance the requirement for obtaining residence permits and their duration to prevent operational disruptions and administrative burdens. Additionally, employers should continuously monitor regulatory developments to ensure compliance with posting procedures and safeguard both the company and the workers involved.
2025 - Morri Rossetti
