INTRODUCTION

The European Union distinguishes itself in the first place by its internal market which guarantees the free movement of goods, services, capital and labour (Articles 26–66 TFEU). As regards labour migration, the EU internal market makes it possible for employees to go and work in other Member States or to be posted there by their employers, in the context of the freedom to provide services across the border. The internal market also influences the definition of the territorial scope of national labour law, in particular when there is a crossborder aspect. Moreover, the increasing occurrence of cross-border elements is an unavoidable consequence of the growing European market integration. As a result there can be circumstances in which work carried out on the territory of a certain Member State is not necessarily subject to that Member State's labour law. These restrictions on the application of the host Member State's labour legislation on its own territory undeniably puts pressure on the level of protection in this Member State. In the same vein, these restrictions offer employers from sending Member States the possibility of taking competitive advantage of the differences in employment protection and costs.

This chapter looks into the question of to what extent European internal market law has influenced the territorial application of labour law. First we will give an outline of the origins of the principle that labour law continues to be a matter of national competence (section 2). Subsequently, we will examine the European rules and case law relevant for the definition of the territorial scope of national labour law (section 3). This includes the legislation on the freedom of movement for workers, the rules of private international law (PIL) as well as the case law of the European Court of Justice (CJEU) regarding the freedom to provide of services. We will pay special attention to the meaning of Posted Workers Directive 96/71 and analyse how this Directive and the case law of the Court of Justice relating to this are at the crossroads of legal rules and economic interests. Finally, we will draw some conclusions on the ensuing competition between workers in the European internal market (section 4).