Countries / Territories
- π
Related contacts
Managing Partner, Europe
Related offices
Related content
Related contacts
Managing Partner, Europe
Related offices
Related content
Related contacts
Managing Partner, Europe
Related offices
Related content
As a βNo Dealβ Brexit remains a distinct possibility, companies need to understand the potential implications, especially with regard to short and long term mobility of their employees. An area of major significance which is often not sufficiently headlined is the significant impact a hard Brexit may have on the salary cost and the social security cost of the employees travelling to and from the UK, for both employer and the individual.
In principle, a worker is subject to social security contributions in the country in which they work. An important exception to this is in the case of a βpostingβ, i.e. when a worker carries out duties on a temporary basis in another country, in the interest of his/her employer, and when the worker is not replacing another βpostedβ worker to the same entity. In such a case, a worker could maintain social security coverage in their Home country for a limited period of time, without becoming liable for additional social security costs in their Host country.
These exceptions are laid down in international social security agreements, such as the EU Regulations on the coordination of social security systems, which currently apply to all EU and EEA member states (including the UK) and Switzerland. As of Brexit day, in case of βNo Dealβ, the EU Regulations, allowing the βpostingβ exception, would cease to apply to the UK. Therefore, the risk of an employee going between the UK and the EU becoming liable to social security in both the EU and the UK is very real.
βOldβ Bilateral Social Security Agreements
In principle, one solution to the social security challenges post βNo Dealβ Brexit could be reviving the existing βoldβ social security agreements that the UK concluded with a number of EU member states in the past. The legal validity of their revival is a legal question, which is still being debated in many countries. However, even if such agreements were deemed still valid, consideration must be given as to whether they can be easily adapted to reflect the dynamics and characteristics of the modern day mobile workforce.
Domestic Social Security Legislation
In the absence of any βoldβ bilateral social security agreements, and unless new ones are made, the UK will be treated as a non-EU country from a social security perspective by the EU member states. This means that the social security implications in a cross border work situation would need to be addressed by looking at both the domestic legislation of the sending country as well as the domestic legislation of the receiving country.
For example, a UK worker βpostedβ to France for a temporary period of time could become liable to French high-cost social security contributions, in addition to having continuing liability in the UK. Moreover, depending on the individual circumstances of the actual cross-border employment set-up, the posted worker may also not reach minimum social contributions to qualify for future pension benefits in the UK or France. In most jurisdictions, the social security contributions paid into the system during a period of work cannot be refunded at the moment of departure from the country at the end of the posting period.
Next Steps
With informed advance planning, companies can put strategies in place to avoid a βNo Dealβ or hard Brexit becoming an overwhelming experience. A solid strategy can also help to manage the impact and expectations of their workers in relation to social security and protect salaries (and salary costs) from being impacted by a change in social security costs.
To minimize the significant cost impact of a βNo Dealβ or hard Brexit on the social security cost of a mobile workforce, and the potential need to compensate for the loss of social security entitlements (e.g. pension rights, protection of access to medical care), companies need to assess the implications, plan in advance and inform internal stakeholders appropriately:
- Assess: Conduct an in-depth internal analysis of the posting status quo to understand potential negative social security implications such as double liability costs could be mitigated by adjusting the contractual arrangements and assignment structures.
- Plan: Prepare hypothetical cost projections reflecting the most frequently occurring cross-border traveller profiles and patterns.
- Inform: Continuous communication with internal stakeholders, line managers, HR, global mobility, finance, and frequent business travellers is critical in creating awareness around the impact of Brexit on social security and to budget for increased costs, stricter compliance and increased reporting.
Countries / Territories
- π
Related contacts
Managing Partner, Europe
Related offices
Related content
Related contacts
Managing Partner, Europe
Related offices
Related content
Related contacts
Managing Partner, Europe
Related offices
Related content
Explore more at Fragomen
Blog post
Manager Russell Hodges and Immigration Paralegal Natalia Jozwiak discuss the future of the UK's science sector following the country's 2024 re-entry into the Horizon programme and shift in migration policy.
Media mentions
Partner Charlotte Slocombe discusses what is considered US residency now that Prince Harry has changed his primary residence from the UK to US.
Media mentions
Director Willys MacβOlale shares the impact the AfCFTA will have on Kenyaβs economy and immigration policies.
Video
Immigration Consultant Laura Varon Osorio explains the process for posting foreign workers to France during the eagerly awaited 2024 Olympic and Paralympic Games in Paris.
Media mentions
Partner Daniel Pierce shares how a Supreme Court visa denial case could impact challenges to employment-based visa denials.
Awards
Partner Kevin Miner is selected by the Daily Report as a finalist in the βLegal Innovatorsβ category of the publicationβs 2024 Southeastern Legal Awards.
Blog post
This blog considers how employer sponsorship of long-term residence permits in Europe could be a means for retaining their talent.
Blog post
This blog provides an overview of Switzerland's family reunion process for EU/EFTA nationals and third-country nationals.
Awards
Four Fragomen professionals are recognised in the 2025 edition of The Best Lawyers in Australia in the field of immigration law.
Media mentions
O Diretor de Imigração, Diogo Kloper, compartilha quais indústrias estão recrutando talentos estrangeiros no Brasil.
Blog post
Partner Rahul Soni and Senior Associate Xiaodan (Susan) Song help international commercial enterprise investors make informed decisions by explaining the differences between EB-5 rural projects and high unemployment projects.
Video
Immigration Consultant Azela Hadia discusses how those planning to attend the 2024 Olympics and Paralympics Games in Paris can prepare for their trip from an immigration perspective.
Blog post
Manager Russell Hodges and Immigration Paralegal Natalia Jozwiak discuss the future of the UK's science sector following the country's 2024 re-entry into the Horizon programme and shift in migration policy.
Media mentions
Partner Charlotte Slocombe discusses what is considered US residency now that Prince Harry has changed his primary residence from the UK to US.
Media mentions
Director Willys MacβOlale shares the impact the AfCFTA will have on Kenyaβs economy and immigration policies.
Video
Immigration Consultant Laura Varon Osorio explains the process for posting foreign workers to France during the eagerly awaited 2024 Olympic and Paralympic Games in Paris.
Media mentions
Partner Daniel Pierce shares how a Supreme Court visa denial case could impact challenges to employment-based visa denials.
Awards
Partner Kevin Miner is selected by the Daily Report as a finalist in the βLegal Innovatorsβ category of the publicationβs 2024 Southeastern Legal Awards.
Blog post
This blog considers how employer sponsorship of long-term residence permits in Europe could be a means for retaining their talent.
Blog post
This blog provides an overview of Switzerland's family reunion process for EU/EFTA nationals and third-country nationals.
Awards
Four Fragomen professionals are recognised in the 2025 edition of The Best Lawyers in Australia in the field of immigration law.
Media mentions
O Diretor de Imigração, Diogo Kloper, compartilha quais indústrias estão recrutando talentos estrangeiros no Brasil.
Blog post
Partner Rahul Soni and Senior Associate Xiaodan (Susan) Song help international commercial enterprise investors make informed decisions by explaining the differences between EB-5 rural projects and high unemployment projects.
Video
Immigration Consultant Azela Hadia discusses how those planning to attend the 2024 Olympics and Paralympics Games in Paris can prepare for their trip from an immigration perspective.