Social Security post-Brexit in the UK and EU

Social security is likely to be one of the key areas affected by Brexit for employers with internationally mobile employees working between the UK and other EU countries.

Currently, when an EU national is posted to work in another member state on a temporary assignment, they can apply to continue paying into their home country’s social security system. This is often seen as the preferred option in terms of administrative ease and cost. However, following Brexit, the future legitimacy of this arrangement is open to doubt. Indeed, unless measures are introduced to extend these arrangements, posted workers and their employers may face payroll withholding challenges or fragmented contributions records. They may also become embroiled in disputes between countries as to where the social security lies or be subject to a liability in multiple countries for which there is no relief for a double social security liability. The focus on ensuring that sufficient consideration is given to these issues, and that suitable policies are put in place to manage this going forward, is key to risk management.

Key Points

The UK government believes it would be desirable to maintain some aspects of continued mobility between the UK and the EU with reciprocal arrangements in a new framework. This would support the close links between people and economies so that they continue after the UK leaves the EU. The UK’s future immigration rules would incorporate any mobility provisions agreed with the EU, in the same way they currently do in respect of the UK international agreements with other trading partners. This framework would represent what the UK agrees reciprocally, allowing the UK and the EU to set their own rules in all areas (be that in relation to immigration, social security, healthcare or related matters) where no commitments are taken.

The UK government’s White Paper refers to wider mobility areas, such as the future rules around social security coordination and where the UK would seek a reciprocal system for UK and EU nationals who are able to live, work or retire in the EU or the UK in the future. This could cover:

1. Arrangements relating to the uprating of state pensions, including export rules and accompanying aggregation principles for people who have contributed into multiple countries’ systems

2. A set of rules to determine how workers pay social security contributions to ensure that individuals only pay contributions to one state at a time

3. Reciprocal healthcare access for state pensioners retiring to the EU or the UK, continued participation in the European Health Insurance Card (EHIC) scheme for people currently staying in the UK or EU and cooperation on planned treatment

The payment of certain limited benefits or social security will be subject to the upcoming negotiation.

Considerations

The UK government’s White Paper leaves areas of uncertainty for those with work patterns subject to frequent change and for those who become mobile only after Brexit, for whom no access to the European regulations is currently envisaged, but where the shape of any future social security coordination regime is unknown.

For more information reach Siobhan Owers at [email protected] and Iskra Nikolic Uskokovic at [email protected].