In its judgment of 3 December 2014 in De Clercq and others, C-315/13, EU:C:2014:2408, the Court of Justice examines whether a Belgian system of declarations is a restriction on the freedom to provide services and if so, whether it is justified for some reason. There’s nothing new or earth shattering in the judgment, really, but it is a good synthesis of the current case law.

The Belgian rules in issue which the recipients of services provided by workers posted by an employer established in a Member State other than Belgium not only to check, before the beginning of the provision of the service, whether the employer of those workers has himself fulfilled the obligation to make the declaration imposed on him by Belgian legislation, but also to collect from those workers, also before beginning the provision of the service, their identification data and those of their employer and forward it, together with their own, to the competent Belgian authorities.

The Court held that such legislation is not precluded by Articles 56 TFEU and 57 TFEU. The Court held in particular, that the Belgian legislation at issue, which constitutes a restriction to the freedom to provide services is capable of being justified as safeguarding an overriding ground of public interest, such as the protection of workers or the combating of social security fraud, on condition that it is established that that legislation is appropriate for ensuring the attainment of the legitimate objective or objectives pursued and that it does not go beyond what is necessary to achieve them, these being matters for the referring court to determine.

In this case, the Belgian authorities inspected a local company to ensure that Belgian labour laws and working conditions were complied with. During the inspection, the inspectors  discovered that four Polish workers, employed by a related company in Poland, were posted to Belgium by their Polish employer. None of the declarations required by Belgian law for the posted workers had been filed by anyone with the Belgian authorities. The latter prosecuted the Belgian company for failing to file the requisite declarations. The Belgian company claimed that the obligation laid down in Belgian law to file the declarations constituted a restriction on the freedom to provide services. The Belgian court seised referred a question to the Court of Justice seeking clarification on that point.

The Court of Justice began by stating that the issue had to be examined under Articles 56 TFEU and 57 TFEU because:

1. The case concerned state monitoring measures which are outside the scope of Directive 96/71 on the posting of workers. That Directive, the Court recalled coordinates the substantive rules on the terms and conditions of employment of posted workers. Rules which monitor compliance with the substantive provisions of the Directive can be freely defined by the Member States, in compliance with the Treaty and the general principles of EU law (judgment in dos Santos Palhota and Others, C‑515/08, EU:C:2010:589, paragraphs 25 to 27).
2.  The alleged infringements took place before the entry into force of Directive 2006/123 therefore that Directive was not applicable ratione temporis.

The Court then examined whether the national measures restricted the freedom to provide services and, if they did, whether they were justified.

Restriction on the freedom to provide services

The Court recalled its settled case-law according to which Article 56 TFEU requires not only the elimination of all discrimination against service providers on grounds of nationality or of the fact that they are established in a Member State other than that in which the services are to be provided, but also the abolition of any restriction, even if it applies without distinction to national service providers and to those of other Member States, which is liable to prohibit, impede or render less advantageous the activities of a service provider established in another Member State where he lawfully provides similar services (judgments in dos Santos Palhota and Others, EU:C:2010:589, paragraph 29 and the case-law cited; in Commission v Belgium, C‑577/10, EU:C:2012:814, paragraph 38, and in Essent Energie Productie, C‑91/13, EU:C:2014:2206, paragraph 44 and the case-law cited). Article 56 TFEU confers rights not only on the provider of services but also on the recipient of those services (judgments in dos Santos Palhota and Others, EU:C:2010:589, paragraph 28 and the case-law cited, and in Strojírny Prostějov and ACO Industries Tábor, C‑53/13 and C‑80/13, EU:C:2014:2011, paragraph 26 and the case-law cited).

The Court concluded that rules which impose such obligations, non-compliance with which may attract a criminal sanction, are liable to make less attractive, to recipients of services established in Belgium, services furnished by service providers established in other Member States and, accordingly, to dissuade those recipients from having recourse to service providers resident in other Member States. Consequently, those rules amount to a restriction on the freedom to provide services, as defined in Article 57 TFEU, which is in principle prohibited by Article 56 TFEU.

It made clear, however, that all restrictions, even minor ones are caught by that prohibition. It emphasised that such a conclusion cannot be brought into question by the Belgian Government’s argument that, in essence, the effects of those rules are negligible, on the ground that only the disclosure of a limited amount of information is requested, that the obligation to make the declaration at issue is purely declaratory and that it comes into play only as an alternative. In that regard, it should be noted that, in any event, a restriction on a fundamental freedom is, in principle, prohibited by the Treaty even if it is of limited scope or minor importance (judgments in Corsica Ferries (France), C‑49/89, EU:C:1989:649, paragraph 8, and in Strojírny Prostějov and ACO Industries Tábor, EU:C:2014:2011, paragraph 42).

Justifications for the restriction

The Court recalled its settled case-law which holds that a national measure which constitutes a restriction falling within an area which has not been harmonised at EU level is applicable without distinction to all persons and undertakings operating in the territory of the Member State concerned may be justified if it meets an overriding requirement relating to the public interest and that interest is not already safeguarded by the rules to which the service provider is subject in the Member State in which he is established, and in so far as it is appropriate for securing the attainment of the objective which it pursues and does not go beyond what is necessary in order to attain it (judgments in Arblade and Others, C‑369/96 and C‑376/96, EU:C:1999:575, paragraphs 34 and 35; in dos Santos Palhota and Others, EU:C:2010:589, paragraph 45 and the case-law cited; and in Commission v Belgium, EU:C:2012:814, paragraph 44).

As regards the ability of the authorities of the Member State in whose territory services are provided to carry out checks seeking to ensure respect for the rights which the legislation of that Member State confers on workers in its territory, undertakings established in the Member State in whose territory the provision of services takes place and those established in another Member State and posting workers to the first Member State to provide a service there are in objectively different situations (see, to that effect, the judgments in Finalarte and Others, C‑49/98, C‑50/98, C‑52/98 to C‑54/98 and C‑68/98 to C‑71/98, EU:C:2001:564, paragraphs 63, 64 and 73, and in Commission v Belgium, EU:C:2012:814, paragraph 48).

The Court repeated that it has already held that overriding reasons relating to the public interest capable of justifying a restriction on the freedom to provide services include:

• the protection of workers (judgment in dos Santos Palhota and Others, EU:C:2010:589, paragraph 47 and the case-law cited),
• the prevention of unfair competition on the part of undertakings which pay their workers at a rate less than the minimum rate of pay, in so far as that objective includes protecting workers by combating social dumping (judgment in Wolff & Müller, C‑60/03, EU:C:2004:610, paragraphs 35, 36 and 41),
• and combating fraud, in particular social security fraud, and preventing abuse, in particular combating undeclared work, in so far as that objective can form part of the objective of protecting the financial balance of social security systems (see, to that effect, judgment in Rüffert, C‑346/06, EU:C:2008:189, paragraph 42 and the case-law cited).

Similarly, the Court has recognised that the Member States have the power to verify compliance with the national and European Union provisions in respect of the provision of services, and it has accepted that overriding reasons relating to the public interest which justify the substantive provisions of a Member State’s legislation may also justify measures necessary to monitor compliance with it (judgments in Arblade and Others, EU:C:1999:575, paragraph 38 and the case-law cited, and dos Santos Palhota and Others, EU:C:2010:589, paragraph 48).

It follows that the objectives of protecting posted workers and combating fraud, invoked in this case by the Belgian Government, are capable of justifying also the national rules at issue and that those rules, in so far as they constitute a control measure necessary to ensure compliance with those overriding reasons relating to the public interest, within the meaning of the case-law referred to in paragraphs 65 and 66 of the present judgment, are, a priori, appropriate for ensuring the attainment of those objectives.

It is thus for the referring court to determine whether those rules are proportionate to the attainment of the objectives identified, having regard to all the relevant factors (judgments in Finalarte and Others, EU:C:2001:564, paragraph 49, and in International Transport Workers’ Federation and Finnish Seamen’s Union, C‑438/05, EU:C:2007:772, paragraph 84).

The Court also pointed out that the imposition of penalties, including criminal penalties, may be considered to be necessary in order to ensure compliance with national rules, subject, however, to the condition that the nature and amount of the penalty imposed is in each individual case proportionate to the gravity of the infringement which it is designed to penalise (judgments in Louloudakis, C‑262/99, EU:C:2001:407, paragraphs 69 and 70, and in Commission v Greece, C‑156/04, EU:C:2007:316, paragraph 72).

Accordingly, it appears that the national legislation at issue is capable of being proportionate to the objectives stated by the referring court and the Belgian Government, this, however, being a matter for the national court to determine.