The limits of European Community law relating to the free movement of workers and those providing services within the countries which comprise the European Union (the "EU") continue to be tested in the senior courts.

Article 49 of the Treaty Establishing the European Community enables companies established in one Member State of the European Union (the "EU") to "post" workers to a branch of its company in another Member State so that the company can compete on a level playing field with other companies doing business in that other country.

The Article provides:

"Within the framework of the provisions set out below, restrictions on freedom to provide services within the Community shall be prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended.

The Council may, acting by a qualified majority on a proposal from the Commission, extend the provisions of the Chapter to nationals of a third country who provide services and who are established within the Community."

Cases decided by the European Court of Justice establish that the Article does indeed apply to "third country nationals" - by which is meant nationals of non-EU countries - employed by the established company.

As we reported back in January of last year, in R on the application of Low & others v Secretary of State for the Home Department [2009] EWHC 35 (Admin) His Honour Judge David Pearl rejected the applications made by three restaurant workers (two of whom are Malaysian - the third is Chinese) for judicial review of the Secretary of State's decision to refuse to allow them to live and work in the UK but instead to detain them and to give directions for their removal.

The workers were based in Ireland, although they didn't have leave to remain there.  Joined to their action as co- claimants were their Irish employer and the company for whom the workers were to have provided services in the UK.

His Honour Judge Pearl refused the applications in strident terms.  He said that it was clear that a precondition to the exercising of rights under Article 49 was that the worker was lawfully established in the first Member State.  None of the workers was lawfully established in Ireland.

The judge went further, referring to the European Court's decision in Halifax Plc v Commissioners of Customs and Excise C-255/02 (2006) 2 CMLR 36 and saying:

"There is, in my view, no genuine posting of workers in these cases, there has been an improper attempt to invoke community rights, and there has been, in particular, an attempt by the Irish company to wrongfully secure an advantage over companies in UK. This case is an example of the abusive practices as explained by the court in Halifax at para 69 of the judgment in particular: "The application of community legislation cannot be extended to cover abusive practices by economic operators, that is to say transactions carried out not in the context of normal commercial operations, but solely for the purpose of wrongfully obtaining advantages provided for by Community law."

On appeal to the Court of Appeal the workers and the companies submitted that cases decided by the European Court of Justice established that there wasn't any need for workers to  reside lawfully in one Member State in order to be able to exercise the right as a posted worker to reside temporarily in another Member State. 

In its judgment dated 14 January 2009 the Court found that each of the cases relied on by the Appellants did not have the effect of showing that the workers didn't need to have been residing lawfully in the first Member State.  All they did was demonstrate that interference imposed by the authorities in the second Member State in the form of a work permit regime etc with rights being exercised by workers who had been living lawfully in the first Member State was unlawful.  As the Court put it:

"It was a presumption and requirement of all the cases that such employees should have lawfully resided and worked for the undertaking concerned in the country of establishment. The cases are replete with a reference to such conditions."

The Court went on to endorse His Honour Judge Pearl's remarks about abuse of European Community law and to refuse the Appellants' counsel's application for a reference to the European Court of Justice. 

Gherson is ideally placed to provide advice as to the parameters of free movement rights within the European Union.