Good evening,
Please find here enclosed Claire's comment and here after the answer to the questions issues from the phone meeting concerning the employment of employees as part of the foundation.
Best regards,
Cécile
Beforehand, one issue: as we are no tax experts, the VAT-issue and the income tax issues should be checked by tax accountants. I could easily gather the information for you with an international tax accountant office. Just give me the go, if you want me to do this.
1. Executive Summary - Results in short
1.1
It is planned to deploy employees of a French, Spain or Italian companies, for a fixed
duration to a German Association (in German: Verein), the deploying companies being
part/member of the association.
1.2
As the association and deploying company are two different legal entities, such crossborder
deployment in general is possible.
1.3
Please note, that our advice is so far only based on German and European Law - this
means our answer is restricted to the option of an association in Germany and a
deployment to Germany. n addition, the national laws of France, Spain and
Italy could have restrictions for deploying employees to Germany
So please verify also compliance with your own national Laws and Own Companies Corporate policies
(, France,Spain and Italy).
1.4
There are two options for the handling of your plans (work of already employed persons1
for the association):
1) The current employment contract with the French/Spain/Italian company is put on
rest for a fixed period, so that it is in abeyance. The employee is employed for a
fixed term in Germany by the association as new employee with a new employment
contract for the fixed term. In Germany, a fixed term contract is valid without a
special reason for the first 2 years, afterwards only with reason, like e.g. a project
or replacement of other employees (illness, parental leave, or else). The fixed term
contract requires written form, which means original signatures of both contracting
parties.
Of course new hires could be either made by the association in Germany or by the core members
of the associations, also as permanent employees.
2) The current employer and the employee sign an amendment to the current
employment contract with the content, that the employee is deployed to the
association Fiware in Germany for a fixed term.
Both options are generally possible also with telework of the employees in their home
countries (France, Spain, Italy), for the following: 1 T is option 1) in telework; and 2 T is
option 2 in telework. Please note, that this is also said only from the German Law
perspective. German law foresees special requirements for telework with regard to e.g.
data protection, employment health and safety, and more. If there should be a workers
council in Germany (in case of employment with the German association), the rights of co
determination would have to be complied with. Please tell me, if you need more detailed
information. At the moment I assumed that you need only a brief overview. Foreign laws,
such as French, Spain or Italian laws could provide more requirements, exceeding the
European regulation, which also exists regarding e.g. telework (European frame
agreement with regard to health protection 2002), employment health and safety. Special
rules also apply, if the telework should be in Home offices (and not only in the home
countries of the employees).
In both options, the choice of law should be expressly made - choice should be the law of
the association in Germany.
The first option (with or without telework) could be easier, because you don´t have the
problem of a cross - border supply of temporary workers between two legal entities (see
below under 2.). But this should be clarified together with French, Italian, and Spanish
Labour Lawyers.
For the first option of handling - without telework - , social security contributions and most
likely income tax have to be paid in Germany by the German association to the German
authorities. Every individual employee might have the possibility to offset some of these
payments with regard to their national obligations in their home countries. This depends on
each individual case, if you want us to check also with tax accountants, please provide us
with more details. For the option 1 T (first option with telework in home countries)
according to prevailing opinion the social security contributions can still be paid in the
home country.
In case of the second option - fixed term deployments as supply of workers to the
association without telework with an ongoing employment contract to the current
French/Spain/Italian company -, the social security system of the current home country can
remain applicable depending on the duration of deployment (see Sec. 4 below). For the
option 2 T (second option with telework in home countries), the duration of deployment is
not relevant. Income tax possibly in Germany but should be clarified according to each
individual case and on the basis of double tax agreements with tax accountants.
1.5
As the employees are most likely also European citizens, you don´t need visa or work
permission in Germany. The employees only need the European passport. In case of
employees with other citizenship outside the European Union, they would need a
residence permit and a work permit in Germany, if they are supposed to live in Germany.
We can assist you in that matter.
The elaborate issues are as follows:
2. Supply of temporary workers - legal requirements
2.1 Two options of handling
Generally, there are two options for the handling of the aimed outcome (employee is
working for a association for a fixed period in Germany):
1) The current employment contract with the French/Spain/Italian company is put on
rest for a fixed period, so that it is in abeyance. The employee is employed for a
fixed term in Germany by the association as new employee with a new employment
contract for the fixed term. In Germany, a fixed term contract is valid without a
special reason for the first 2 years, afterwards only with reason, like e.g. a project
or replacement of other employees (illness, parental leave, or else). The fixed term
contract requires written form, which means original signatures of both contracting
parties.
2) The current employer and the employee sign an amendment to the current
employment contract, with the content, that the employee is deployed to
association Fiware in Germany for a fixed term.
For the legal requirements with regard to suppy of temporary workers, there is no
difference whether or not the employees work as teleworkers in both options.
2.2 German law on second option
The second option would be a supply of temporary workers between two legal entities,
because the deployed employee is most likely going to receive the daily directions by a
superior of the association. This would most likely be also the case, if the employee would
do telework in the home country - he would still receive directions from Germany, from the
superiors of the association. No supply of workers would be the case of a mere service by
the French/Italian/Spain company for the German Association - but then, the employee
should only receive directions by a superior in France/Italy/Spain, have in best case no
office in Germany, not being real part of the business operations of the association in
Germany. I assumed that this is not you plan as it is not practical.
According to German law, a supply of temporary workers generally requires a permission
by the Bundesagentur für Arbeit (Federal Employment Agency). There are some
exemptions, acc. § 1 Sec. 3 Arbeitnehmerüberlassungsgesetz (Law for Supply of Work),
e.g.
- for the fixed supply of workers between two companies of a corporate group
acc. to § 18 German Aktiengesetz (German Stock Companies Act) in case the
employees have not been employed for this purpose by the supplier;
- or in case of supply in order to avoid dismissals or short time work between
two companies of the same branch foreseen by a collective agreement with
trade union;
- or on case of occasional supply between employers and in case the
employees have not been employed for this purpose by the supplier;
- or in case of a joint business based on bilateral agreements beween two
countries.
As there is no safe jurisdiction with regard to "occasional" supply (third exemption), there
arguments that this provision does not comply with European Law and this most likely
does not cover well planned deployments, only the first exemption - supply of work for a
fixed term in a corporate group - could be applicable here. But I would need more detailed
information in order to assess whether or not there is a corporate business according to
the German Stock Companies Act.
With regard to cross border - supply of workers (foreign supplier and national hirer), there
does not exist high court jurisdictions of German courts yet, whether or not the law
requiring the permission, the German law for supply of workers
(Arbeitnehmerüberlassungsgesetz), is applicable or not. In the legal literature, this issue is
discussed controversially. Thus, although we could follow the arguments of parts of the
literature, that you don´t need a permission, there is also a strong opinion stating
otherwise, including according to their webpages the responsible authorities. In order to be
on the safe side, I´d therefore advise you to ask for a confirmation of the responsible
authority and if required by the authority - and if the is no exemption case - apply for the
permission. Because otherwise, the French/Italian/Spanish company risks e.g. penalties
and the German association risks that § 10 Arbeitnehmerüberlassungsgesetz (Law for
supply of workers) might be applicable. According to this provision, the employee can also
argue an employment contract directly with the entity he is supplied to (in your case the
association), if the supplier does not have the permission of the authority. If the
employment contract with the supplying company was a permanent contract he could also
argue a permanent contract with the association.
In Germany, the application for a permission means a lot of paperwork, but the permission
is going to be possible in your case, as the supplier is a European company2. I can support
you in that matter. The Bundesagentur für Arbeit (Federal Emplyoment Agency) has
delegated its responsability for permissions to different regional sub-authorities, depending
on the country of the supplier. For the first time, the permission is only for a fixed duration,
but can be prolonged.
In case of the second option you would also need a contract between the current employer
company = supplier and the German association = hirer. If you want, I could sent you a
draft - here, also a choice of governing law should be made expressly in the contract.
2.3 Changes in German law in 2017
Please note, that according to current development, it is most likley that in 2017 there will
be an amended law with regard to supply of workers. Currently, the decision of the
For companies and citizens from outside the European Union the permission is going to be
denied, acc.- § 3 sec. 2, 3, 4, Arbeitnehmerüberlassungsgesetz (law for supply of workers)
German Bundestag (German Parliament) and Bundesrat (Federal Assembly) are planned
for autumn 2016. For the time being, I set aside the planned amendmends in order to not
overload this statement.
2.4 Other laws
Here, it should be checked with the other lawyers, whether or not the laws of France,
Spain, or Italy provide more requirements for the cross border supply of work. Worst case
would be, that you need double permissions in two countries (country of supplier and
country of hirer). Most national laws, especially the German law and also to my latest knowledge, the French law only allow the fixed term supply of workers (and in France also
the basis contract with the supplier shall be fixed term, which is not required in Germany),
permanent supply of workers is forbidden3. Although this is most likely not a problem in
your case, there might be legal provisions restricting the maximum duration of the supply.
In Germany, there is no concrete maximum for the fixed duration of supply of workers yet,
but it should not be more than 18 months (as this is the current draft legislation of the
Federal Ministry of Labour for changes in 2017).
2.5 First option
According to German labour law, the first option (inactive employment contract with the
French/Spanish/Italian company and new fixed term contract with the German association)
could be easier. It should be clarified with French, Spanish an Italian lawyers as well. The
current contract should be put on rest and expressly stated that the current employer
approves the work of the employee for the association in the meantime. Also if the first
option would be with telework in home countries, this would not require a special
permission with regard to supply of workers. The legal requirements for the supply would
not apply, as the employee would be employed by the association in Germany and also
receive directions from the association (no third party = hirer involved).
There exists an agreement of the Federal Empoyment Agency (Bundesagentur für Arbeit) and the
French pendant that the French limits for supply of workers do not apply in Germany in case of
cross border supply between these countries.
3. Applicable law for the duration of work for the association
No matter what option you choose, the easiest way with regard to the applicable National
Law for the fixed duration of work for the association, would be an express choice of law in
the contract. The choice of law is possible in the European Union, acc. Art. 3 ROM I-VO.
Nevertheless, acc. Art. 8 ROM I-VO compulsory national provisions of the other engaged
country prevail.
If no choice of law is made by the contracting parties, most likely in case of only fixed term
deployments the law of the home country remains applicable, acc. Art. 8 Sec. 2, 2nd
sentence ROM I-VO. But this should always be checked in each individual case.
No matter what law is applicable, some national rules of the place of work (can be different
in case of telework in home countries) for the fixed term always apply, e.g. Art. 9 ROM IVO,
or Art. 12 Sec. 2 ROM I - VO.
With regard to the work for a German association, no matter what rule of law is made, all
legal provisions with binding minimum conditions for employment contracts apply in any
case, such as minimum salaries of 8,50 gross per working hour or more minimum working
conditions in some branches like building industry, cleaning industry, security services or in
branches where a collective agreement with trade unions is declared as binding by the
government (so called allgemeinverbindliche Tarifverträge). Here, I would need more
details in order to give you the concrete minimum conditions. But, as your case is part of
the IT-business, you should not be in conflict with minimum legal requirements. According
to the legal literature, also the equal-pay-obligation of the supplier applies (deployed
employee is entitled to the same conditions like comparable employees at the hirer). This
would also be a precondition for the permission.
Finally, the European Directive on Deployment and the European Directive with regard to
supply of workers are applicable. In addition, according to European law, European citizen
have to be equally treated like domestic citizen.
4. Social Security contribution
According to the German law, §§ 3 ff. SGB IV (Social Insurance Code), generally the
principle of territoriality applies, which means that for work in Germany, generally social
contributions have to be paid in Germany.
In case of fixed deployment to Germany from a foreign EU-country - option 2 (see above
under sec. 2.1) -, according to § 5 SGB IV the foreign social insurance remains applicable.
Deployment means, that the salary is still paid by the current employer. This would also
apply in case of telework in home countries by the employees (option 2 T, see above 2.1).
According to § 6 SGB IV cross-national law remains unaffected4. For deployments within
the EU, Regulation No. 883/2004 is such a cross-national law. These Regulations are
according to the European Court also applicable to supply of workers. According to these
Regulations, the social security system of the home country applies, if the planned
deployment does not exceed 24 months and no other already deployed employee is going
to be replaced, Art. 12 Regulation No. 883/2004. According Art. 16 Regulation No.
883/2004 other agreements are possible, by application of the employer or employee.
In case of a longer deployment, the social security system of the place of work (Germany,
except in case of telework in home country, for the latter see last section below) applies
from the first day on. The same would be the case if you had supply of workers without
permission of the responsible authority, because of the simulated employment contract to
the hirer acc. § 10 Arbeitnehmerüberlassungsgesetz(Decision of High Social Court 25
October 1988, 12 RK 21/87).
In case of the first option (2.1), there would be no deployment in the above mentioned
sense, and the German Social security system would be directly applicable. In case of 1 T
- first option (2.1) with telework in home countries being employed by the association in
Germany - the employees would not sit and work in a German office. According to the §§
3 ff. SGB IV (Social Insurance Code), the seat of the association, citizenship of the
employee, or the place of residence of the employee are irrevant for the question where
social contributions will have to be paid. Acc. to § 3 Nr. 1 IV, the determining factor is the
"Beschäftigungsort" ("place of employment"). The place of employment is defined in § 9
4 Especially if the deploying country would be ousidethe EU, have to be checked for each crossnational
employment. If you need further details, please tell me.
SGB IV. As there is nearly no jurisdiction with regard to § 9 SGB IV there is a little risk, but
the prevailing opinion in literature underlines, that in case of telework, the place of
employment is the country where the employee is living and working. Thus, social
contributions have to be paid in the home country. Please note, that this can change, if the
employees should work only part time telework in their home countries and the other part
in Germany (acc. to § 9 sec. 3 SGB IV place of employment would be the place where the
employee works most of the time).
5. Income tax
The question of income tax, which national rules apply, depend on the individual case.
General rule is, that an employee with residence and work place in Germany has to pay
tax in Germany. But special rules are given by double tax agreements.
Between Germany and France, Italy, Spain exist double tax agreements. It depends e.g.
on the kind of position (sometimes special rules apply with regard to managing directors,
proxy holders or Board members), the personal situation of the employee (e.g. residence,
also the question whether the spouse is working as well and in which country), the duration
of deployment (generally 183 days/calendar year, but not applicable in the second option
of supply of work). If you want me to provide you the double tax agreements, please tell
me.
If you need more detailed information, please provide us with more information, we would
then cooperate with tax accountants as well.
6. Summary
To sum up, on the basis of German Labour Law, the option deployment = supply of
workers is possible without a permission, if it is a fixed supply period between legal entities
of a group according to § 18 German Stock Companies Act (or any other exemption
applies) and the employee has not been employed for this purpose, otherwise the foreign
supplier company would need a permission.
In case of a deployment between EU legal entities not longer than 24 months (and in case
of not replacing another employee), or in case of telework in the home countries the social
security system of the supplying company/home country remains applicable.
In case of a deployment of a EU citizen no residence permission or work permission is
needed.
Specialized lawyers of France, Spain, and Italy should advise on that matter too - I offer
you to gather all information. The Income tax issue should be clarified after providing more details, I usually cooperate with tax accountants on that matter.
Next step would be your decision, whether you want to have detailed information for all
countries on all law fields (labour law, social security, income tax) and whether I should
gather information. FPS is member of reliable network of lawyers and I have already
worked together with lawyers of all European countries in question and also cooperate with
tax accountants.
Cécile CONDAT
Gestionnaire brevets - Assistante de Claire Le Floch - Atos Groupe
T. +33 (0)1 73 26 01 70
M. +33 (0)6 73 55 17 09
cecile.condat at atos.net<mailto:cecile.condat at atos.net>
Direction de la Propriété Intellectuelle
Rue Jean Jaurès - BP 68
78340 Les Clayes-sous-Bois
atos.net<http://www.atos.net/>
[cid:image001.gif at 01D088BA.64253900]
>>>>> Bull a rejoint le groupe Atos <<<<<
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <https://lists.fiware.org/private/fiware-foundation-legal/attachments/20160712/776225aa/attachment.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: Picture (Device Independent Bitmap) 1.jpg
Type: image/jpeg
Size: 1975 bytes
Desc: Picture (Device Independent Bitmap) 1.jpg
URL: <https://lists.fiware.org/private/fiware-foundation-legal/attachments/20160712/776225aa/attachment.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: Fiware Bylaws rev CLF.docx
Type: application/vnd.openxmlformats-officedocument.wordprocessingml.document
Size: 113540 bytes
Desc: Fiware Bylaws rev CLF.docx
URL: <https://lists.fiware.org/private/fiware-foundation-legal/attachments/20160712/776225aa/attachment.docx>
You can get more information about our cookies and privacy policies clicking on the following links: Privacy policy Cookies policy