Landmark decision on minimum wage during postings abroad

Hungary: At the request of a Hungarian court, the Court of Justice of the European Union interprets the definition of minimum wage.

A Hungarian transport company posted its employees to work in France. The drivers received a fixed daily allowance, which increased proportionally to the duration of the posting. The employer labelled the daily allowance as reimbursement of expenses.

The employees filed a lawsuit against their Hungarian employer, because in their view, their hourly wage did not reach the French minimum hourly wage – thus not fulfilling one of the main requirements of the Posting Directive. In court, the Hungarian employer argued that the daily allowance was part of the drivers’ wage, which – calculated that way – reached and even exceeded the French minimum wage.

At the initiative of the Hungarian court, the Court of Justice of the European Union (“CJEU”) conducted a preliminary ruling procedure. Firstly, it stated that the Posting Directive applies to drivers working in the road transport sector.

Secondly, the CJEU stated that in the case of an infringement of the posting rules, a lawsuit may be instituted in both the destination member state and the member state in which the employer has its registered seat.

Based on the lump sum and the progressive nature of the daily allowance – even if it was labelled as “reimbursement” – the CJEU concluded that it was in fact not a reimbursement. Rather, its purpose was to compensate the drivers for being away from home and for other disadvantages entailed by their posting. Consequently, the CJEU decided that such a daily allowance is an “allowance specific to the posting” which is part of the minimum wage. Although not mentioned in the decision, it must be noted that in this case the costs of the posting must – of course – be borne separately by the employer.

According to the CJEU, the daily allowance would not be part of the minimum wage if paid to reimburse the posting expenses actually incurred (e.g., costs of travel, accommodation and food) or if it qualified as a wage supplement (e.g., overtime bonus) under the national law of the destination country.

To sum up, it can be concluded that the daily allowance (if it really is reimbursement) is not part of the wage during posting, which therefore in itself must reach the minimum wage in the destination country.

The Hungarian lawsuit is still in progress, so no final decision has yet been made. However, it is already clear that in the case of posting employees abroad, the employer must pay particular attention to appropriate design of the wage structure.

Source: Judgment of the Court of Justice of the European Union in Case C-428/19

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