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Embargoed Tuesday, 8 June 0:001 am

Non-UK European Businesses Escape Health and Safety Law Enforcement

Non-UK European businesses providing services in Britain on a non-permanent basis may no longer have to comply with British health and safety law if the European Parliament and Council of Minister agrees to the text of a new Framework Directive currently under consultation.

The Health and Safety Executive and Local Authorities will not be able to inspect, investigate, impose enforcement notices or lay criminal charges against the company or individuals for any breaches of health and safety law, according to the "Directive on Services in the Internal market".

Non-UK European companies in Britain will instead have to comply with their own country's laws and only HSE equivalent bodies of the foreign country will be able enforce the law in Britain.

This rule would however not apply to foreign businesses operating in Britain for an "indefinite period."

Conversely, British businesses operating on a non-permanent basis on the continent will have to abide by British law and the HSE will have responsibility for inspecting, investigating and prosecuting.

To download the directive, click here
To see the DTI's consultation website page, click here

This principle is known as the "country of origin" principle. Recital 38 of the Directive states:

"It is .. necessary to ensure that supervision of service activities is carried out at source, that is to say, by the competent authorities of the Member State in which the provider is established. The competent authorities of the country of origin are best placed to ensure the effectiveness and continuity of supervision of the provider and to provide protection for recipients not only in their own Member State but also elsewhere in the Community. In order to establish mutual trust between Member States in the regulation of service activities, it should be clearly laid down that responsibility under Community law for supervision of the activities of providers, regardless of the place where the service is provided, lies with the Member State of origin."

The Health and Safety Commission are deciding how to respond to the proposed directive at a meeting today, Tuesday, 8 June 2004

David Bergman, Director of the Centre for Corporate Accountability said:

"This must surely not only be wrong in principle, but must be unworkable in practice. If HSE inspectors go to a factory and find that a non-British European business - which is not based in Britain 'indefinitely' - is failing to comply with health and safety law in the way it provides a service to the factory, the Directive would mean that the inspector could do nothing, even if the company's working practices are in serious breach of the law. The HSE would have to inform the regulator from the business's country of origin and wait to see whether they will act. A similar British company giving the same service at the same factory, in contrast, could have an enforcement notice imposed on it and if the breach is serious enough, be subject to prosecution.

"Equally, the HSE - already with limited resources - would be responsible for enforcement of safety law in relation to British companies operating (on a non-permanent basis) in the rest of Europe. How would HSE inspectors be able to do that in X number of countries when the inspectors are unlikely to be able to even speak the language of the host country.

"The reality would surely be that any European businesses operating temporarily in another European country would be outside of the reaches of the law.

"The Directive is proposing quite an extraordinary proposition - which one can't really be believe it ever meant".

This scenario would only not apply in two situations.

If the Government could show that compliance with health and safety law was "indispensable for reasons of public policy or public security or for the protection of public health or the environment" (1) (Article 16, para 17); or
If the government decided that there was "exceptional Circumstances" in a particular case. However, in addition to the situation having to be 'exceptional', the HSE would have to show (a) that the law in Britain was more stringent than the law in the country of origin; (b) would have to inform the regulator of the country of origin of why it wanted to take action and (c) wait for at least 15 days before taking any action. It could only avoid this delay if the matter was 'urgent'.

Recital 43 does indicate that the first exception might be allowed to apply to "building sites" - however this is not clear from the Directive itself.

According to the Department of Trade and Industry, "the Government strongly supports the aim of these proposals" which it says will"cut red tape in order to improve access to the European Internal Market for the service sector, a main driver of economic growth and employment in the UK."

CCA - Press Inquiries
Contact: David Bergman


020 7 490 4494 (office)
07876 364571 (mobile)



FURTHER DETAILS

The Country of Origin Principle
This Introduction to the Directive summarises this as meaning:

"service providers are subject only to the law of the country in which they are established and Member States may not restrict services provided by operators established in another Member State. It therefore enables operators to provide services in one or more other Member States without being subject to those Member States' rules. This principle also means that the Member State of origin is responsible for the effective supervision of service providers established on its territory even if they provide services into other Member States" (page 9)

It goes on to say that:

"the application of the country of origin principle will make it possible to achieve the objective of guaranteeing the free movement of services whilst allowing the various national regimes to co-exist with all their distinctive characteristics. These regimes may not be used to restrict the provision of services by an operator established in another Member State" (page 18)

To read article 16, click here

To Which type of Businesses does this Apply
The Directive applies to any business involving the provision of a service to consumers or businesses. "Recital" 14 and 15 of the Directive states that:

"The concept of service covers a wide variety of ever-changing activities, including business services such as management consultancy, certification and testing; facilities management, including office maintenance and security; advertising; recruitment services, including employment agencies; and the services of commercial agents. That concept also covers services provided both to businesses and to consumers, such as legal or fiscal advice; real estate services such as estate agencies; construction, including the services of architects; transport; distributive trades; the organisation of trade fairs; car rental; travel agencies; and security services. It also covers consumer services, such as those in the field of tourism, including tour guides; audio-visual services; leisure services, sports centres and amusement parks; health and health care services; and household support services, such as help for the elderly. Those activities may involve services requiring the proximity of provider and recipient, services requiring travel by the recipient or the provider and services which may be provided at a distance, including via the Internet.

As the Court of Justice has consistently held with regard to Articles 49 et seq of the Treaty, the concept of service covers any economic activity normally provided for remuneration, without the service having to be paid for by those benefiting from it and regardless of the financing arrangements for the remuneration received in return, by way of consideration. Any service whereby a provider participates in the economy, irrespective of his legal status or aims, or the field of action concerned, thus constitutes a service."

Principle applies only to foreign Businesses that are not "established" in Britain
The directive makes a distinction between those businesses that are 'established' and those that are 'temporary' and only applies this particular principle to those businesses that are 'temporary' (see Recital 19). The Directive defines "established businesses" as those that pursue economic activity"through a fixed establishment ... for an indefinite period." (see Article 4, para 5)

In effect therefore any business not based in Britain for an 'indefinite period' appears to be temporary.

Recital 19 of the Directive states that:

The Court of Justice has consistently held that the temporary nature of the activities in question must be determined in the light not only of the duration of the provision of the service, but also of its regularity, periodical nature or continuity. In any case, the fact that the activity is temporary does not mean that the service provider may not equip himself with some forms of infrastructure in the host Member State, such as an office, chambers or consulting
rooms, in so far as such infrastructure is necessary for the purposes of providing the service in question.

Non-Application of the Principle
As stated above, there are two circumstances - according to the directive - that would allow this principle not to apply:

General Derogation: There are a number of circumstances that allow for a derogation, but the only one relevant to safety is para 17 which states that a derogation can be made if:

"specific requirements of the Member State to which the provider moves, that are directly linked to the particular characteristics of the place where the service is provided and with which compliance is indispensable for reasons of public policy or public security or for the protection of public health or the environment."

Recital 43 of the Directive states:

"The country of origin principle should not apply to specific requirements, laid down by the Member State to which a provider has moved, the rationale for which is inextricably linked to the particular characteristics of the place where the service is provided, and which must be fulfilled in order to maintain public policy, public safety, public health or the protection of the environment. Such would be the position, for example, in the case of authorisations to occupy or use the public highway, requirements relating to the organisation of public events or requirements relating to the safety of building sites"

Case by Case derogation in exceptional circumstances: Articles 19 and 37 are set out below

Article 19 - Case-by-case derogations from the country of origin principle

(1) By way of derogation from Article 16, and in exceptional circumstances only, a Member State may, in respect of a provider established in another Member State, take measures relating to any of the following:
(a) the safety of services, including aspects related to public health;
(b) the exercise of a health profession;
(c) the protection of public policy, notably aspects related to the protection of minors.
(d) the measures are proportionate.
(2)

The measures provided for in paragraph 1 may be taken only if the mutual assistance procedure laid down in Article 37 is complied with and all the following conditions are fulfilled:
(a) the national provisions in accordance with which the measure is taken have not been subject to Community harmonisation in the fields referred to in paragraph 1;
(b) the measures provide for a higher level of protection of the recipient than would be the case in a measure taken by the Member State of origin in accordance with its national provisions;
(c) the Member State of origin has not taken any measures or has taken measures which are insufficient as compared with those referred to in Article 37(2);
(d) the measures are proportionate.

(3) Paragraphs 1 and 2 shall be without prejudice to provisions, laid down in Community instruments, which guarantee the freedom to provide services or which allow derogations therefrom

Article 37 - Mutual assistance in the event of case-by-case derogations from the country of origin principle

(1) Where a Member State intends to take a measure pursuant to Article 19, the procedure laid down in paragraphs 2 to 6 of this Article shall apply without prejudice to proceedings before the courts.
(2)

The Member State referred to in paragraph 1 shall ask the Member State of origin to take measures with regard to the service provider, supplying all relevant information on the service in question and the circumstances of the case. The Member State of origin shall check, within the shortest possible period of time, whether the provider is operating lawfully and verify the facts underlying the request. It shall inform the requesting Member State within the shortest possible period of time of the measures taken or envisaged or, as the case may be, the reasons why it has not taken any measures.

(3)

Following communication by the Member State of origin as provided for in the second subparagraph of paragraph 2, the requesting Member State shall notify the Commission and the Member State of origin of its intention to take measures, stating the following:
(a) the reasons why it believes the measures taken or envisaged by the Member State of origin are inadequate;
(b) the reasons why it believes the measures it intends to take fulfill the conditions laid down in Article 19.

(4) The measures may not be taken until fifteen working days after the date of notification provided for in paragraph 3.
(5) Without prejudice to the possibility for the requesting Member State to take the measures in question upon expiry of the period specified in paragraph 4, the Commission shall, within the shortest possible period of time, examine the compatibility with Community law of the measures notified. Where the Commission concludes that the measure is incompatible with Community law, it shall adopt a decision asking the Member State concerned to refrain from taking the proposed measures or to put an end to the measures in question as a matter of urgency.
(6) In the case of urgency, a Member State which intends to take a measure may derogate from paragraphs 3 and 4. In such cases, the measures shall be notified within the shortest possible period of time to the Commission and the Member State of origin, stating the reasons for which the Member State considers that there is urgency.

 

 

 


Country of origin principle
Article 16

(1) Member States shall ensure that providers are subject only to the national provisions of their Member State of origin which fall within the coordinated field. Paragraph 1 shall cover national provisions relating to access to and the exercise of a service activity, in particular those requirements governing the behaviour of the provider, the quality or content of the service, advertising, contracts and the provider's liability.
(2) The Member State of origin shall be responsible for supervising the provider and the services provided by him, including services provided by him in another Member State.
(3) Member States may not, for reasons falling within the coordinated field, restrict the freedom to provide services in the case of a provider established in another Member State, in particular, by imposing any of the following requirements:
(a) an obligation on the provider to have an establishment in their territory;
(b) an obligation on the provider to make a declaration or notification to, or to obtain an authorisation from, their competent authorities, including entry in a register or registration with a professional body or association in their territory;
(c) an obligation on the provider to have an address or representative in their territory or to have an address for service at the address of a person authorised in that territory;
(d) a ban on the provider setting up a certain infrastructure in their territory, including an office or chambers, which the provider needs to supply the services in question;
(e) an obligation on the provider to comply with requirements, relating to the exercise of a service activity, applicable in their territory;
(f) the application of specific contractual arrangements between the provider and the recipient which prevent or restrict service provision by the self-employed;
(g) an obligation on the provider to possess an identity document issued by its competent authorities specific to the exercise of a service activity;
(h) requirements which affect the use of equipment which is an integral part of the service provided;
(i) restrictions on the freedom to provide the services referred to in Article 20, the first subparagraph of Article 23(1) or Article 25(1).

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