Cross-Border Remote Working: New Social Security Rules Forthcoming

As at local country level, the work patterns of international mobile personnel have changed significantly since the COVID-19 pandemic, with many people going back to their "home" countries to continue working remotely for their foreign employers, in a presumed safer environment and more closely connected to their families.

And although re-mobilisation "back to the office" has now begun, it is generally agreed that tele-working at local levels (from home vs. from the office) is here to stay, and it is even more true for those workers that live in a different country than the country of their employer, such as cross-border and/or frontier workers.

As the country in which one works in determines where social security contributions are paid, working remotely from a different country may have an important impact on companies and workers, both from a social security cost and benefit perspective.

Current social security rules

During the pandemic, the Administrative Commission for the coordination of social security systems adopted guidance to neutralise the impact of the current social security rules (“you pay where you work” and the so-called 25%-rule), on where social contributions should be paid for cross-border tele-workers, due to the exceptional health circumstances.

Although the situation of force majeure was recognized to have ceased as of 1 July 2022, further guidance has been offered how to apply the current rules from then onwards until 30 June 2023. An Ad Hoc group of Member State representatives has been working on a new response for the increased number of cross-border teleworkers, without amending – for the time being – the current legal provisions for multi-State workers of the EU coordination regulations, that therefore would remain applicable in those Member States that do not sign the new proposed agreement.

New proposal

The Ad Hoc workgroup has drafted a model framework agreement as an exception to the current rules on the applicable social security legislation, which is now open for signature to all countries applying the EU coordination regulations (in the period April-June 2023).

The Member States that sign the agreement and will apply the new proposal commit to systematically (i.e., automatically) agree to a request to consider the Member state of the normal workplace where the employer's registered office is located as competent, provided the employee works less than 50% of total working time in his/her home country (country of residence).

From a practical perspective, the approval of such an exceptional request will be granted, when conditions are met, without delay by the home country, with consequent issuance of the A1 certificate, without having to go through a lengthy authorisation process of back and forth with the host country authorities.

On the other hand, it is important to keep in mind that this framework agreement is applicable when only two Member States are involved, i.e., for cross-border and/or frontier workers that are living and working in one country (country of residence), while they have their employer and normal workplace in another country.

The framework agreement, which currently has a validity of five years, is assumed to enter into force amongst the signatory Member States starting 1 July 2023. For the Member States that will not opt into the framework agreement, the current rules of the EU coordination regulations for multi-State workers (such as the 25%-rule) will continue to apply to cross-border teleworkers.

How can Fragomen help?

As one of the major players in the market when it comes to "Day One Compliance," specialising in corporate immigration matters and the procedures for cross-border mobile workers, as well as in posted worker and social security compliance and advisory services, Fragomen is closely following up with the competent government authorities on the approval and implementation of the mentioned framework agreement, navigating the complexity of these additional rules introduced for cross-border remote workers.

We will be pleased to advise on terms and conditions of the agreement, as well as to provide support with drafting and submitting the exceptional requests to avoid disruptions in the social security coverage of your workforce operating remotely, as soon as the agreement enters into force amongst those Member States that are signing the agreement.

Need to know more?

For any questions related to current and evolving social security requirements, please reach out to Director Wim Cocquyt at [email protected].

This blog was published on 3 May 2023, and due to the circumstances, there are frequent changes. To keep up to date with all the latest updates on global immigration, please visit our dedicated COVID-19 site, subscribe to our alerts and follow us on LinkedIn, Twitter, Facebook and Instagram.