The rapid spreading of COVID-19 has prompted governments worldwide to implement far-reaching measures such as self-quarantine and lockdown, which are heavily impacting businesses around the globe. In times of cross-border travel bans and smart working (working from home) arrangements, companies and their employees are not only facing significant challenges from an immigration law perspective, but also from a social security compliance standpoint, as well as with regard to Posted Workers requirements.
In particular, both companies and workers are concerned about any changes in the applicable social security legislation, due to changes in the work pattern and/or work location, especially in and across Europe.
The rule
In principle, a worker is subject to the social security legislation of the country of employment.
Workers who are temporarily assigned by their employer to work in another country (Posted Workers), may remain covered under certain conditions by the social security scheme of the home country of employment, and their employer can apply for a Certificate of Coverage (e.g., an A1 form) up to a certain period of time (24 months in Europe). However, extensions are possible (usually up to five years).
Frontier workers are workers who live and reside in one country but are employed in another country; they are, in principle, subject to the social security system of the country where they work (although they may be entitled to particular benefit arrangements).
Other workers working simultaneously in more than one EU country (multi-State workers)—e.g., in both the country of residence as well as in another country—are subject to the social security system of their home country (of residence), on the condition they perform a substantial working activity there (at least 25% of total working time or remuneration). Otherwise, they will be subject to the social security system of the country of their employer.
Impact of COVID-19 measures for Europe
Governments of many countries have taken important measures to limit the free movement of their citizens, and many companies have responded with smart working arrangements, whilst facilitating cross-border employees to work from their country of residence rather than the “host” country of employment.
Such arrangements, and the change in workplace and/or work pattern that accompany them, may in principle result in a shift of the applicable social security legislation from one country to another, according to the normal rules of the EU Social Security Regulations.
Therefore, to avoid uncertainty and disruptions in the social security records of the workers, most EU Member States already have issued guidance to businesses and their employees in this respect.
Based on the currently available information, for example, the German, French, Belgian, Dutch, Luxembourg and Danish authorities already officially clarified that for cross-border workers who are currently working remotely, there will be no changes to the applicable social security legislation during the period of the validity of the COVID-19 measures.
More in particular, for posted workers who are “stuck” in the host country with an expiring A1 certificate, and who continue to work there (either in the office or from remote), no new A1 certificate will have to be applied for or issued, nor will an exceptional extension agreement have to be requested for the duration of the emergency period. If the posting was temporarily interrupted or postponed due to the current COVID-19 period, there is no need to notify the competent authorities and the already issued A1 forms remain valid. However, if the interruption of the posting will be more than two months because of a lasting COVID-19 period, it will be necessary to investigate with the competent authorities of each country whether a new A1 form should be applied for. If, on the contrary, the posting will be terminated due to the given circumstances, the authorities will have to be notified accordingly.
For frontier workers, who temporarily (wholly or partially) are working from their home country (of residence) to be safe and with their families, there will be no change to the applicable social security legislation; the social security contributions will remain due in the host country and according to host country rules, whilst the authorities of the home country (of residence) will not request employers to obtain an A1 certificate.
For multi-state workers that are not performing a substantial activity in their home country (of residence) and that through the change in work pattern are now spending more than 25% of their working time from home, no change in applicable social security legislation will occur for the duration of the emergency measures, even if the work activity is temporarily carried out exclusively from the home country. The already issued A1 certificate will keep its validity and the whole COVID-19 period will be “neutral” from an applicable social security legislation perspective.
Bilateral agreements
Workers who are posted from a non-EU country that has a bilateral social security agreement with an EU Member State, and hold a Certificate of Coverage of their home country (of employment), and who are impacted by the COVID-19 emergency measures (e.g. work remotely or from a different work location), may benefit from similar facilitations. However, this should be verified with the competent authorities on a case by case basis.
The United States Social Security Administration (SSA) has instructed that if a person returns to the U.S. prior to the end of the assignment due to COVID-19, the U.S. employer may submit a request to amend the Certificate of Coverage. If an already requested Certificate of Coverage is still pending issuance and the worker is no longer going on assignment due to COVID-19, the SSA must be duly notified and the Certificate of Coverage application will be cancelled.
What Next?
The position currently taken by several EU Member States offers legal certainty and comfort from a social security compliance perspective. It is likely other Member States will take a similar flexible approach. However, it will be important to carefully monitor the approach taken thus far, especially when the COVID-19 emergency period will be prolonged and work activities performed on the territories of the Member States will become more extensive.
To discuss or to plan strategically for the social security impact of COVID-19 on the cross-border workforce of your company, please do not hesitate to reach out to us or to your usual Fragomen contact person.
Wim Cocquyt - Director
Zuzana Jasenovcova – Senior Manager