Social Security within the EU – Provisional agreement to new terms and conditions for employers and employees

Whilst it is not yet clear when the new regulations will become ‘active’, key points to note in relation to the proposed updates include:

1. The administration requirements surrounding the requirement for employers to obtain an A1 Certificate – where one is dealing with ‘business travellers’ – will be eased in particular situations, so that:

• A1 Certificates will not be required for short-term overseas work (classed as three working days in a 30-day period), Though this A1 easement will not apply to the construction industry; and
• A1 Certificates will also not be required for so-called business trips – that is, trips which do not involve the provision of actual services or the supply of goods

2. However, whilst the above easements should be welcomed by employers once they come into effect, as with most things involving tax and/or social security, there is also a potential ‘catch’ for employers as follows:

• Under the proposed updates, there will be a greater expectation that where A1 Certificates are required, they are applied for in advance of someone’s travel (whereas, as things presently stand, these are often only applied for by employers retrospectively); and
• It appears probable that there will be increased scrutiny from the various EU social security authorities of the A1 status for mobile workers with a consequent risk increase for those employers who are non-compliant

3. A requirement for posted workers (i.e. where we are dealing with an employee on a formal assignment to another EU state) to have been an employee in their home country for at least three months prior to the granting of an A1 Certificate;

4. Replacement workers (i.e. where one cross-border worker replaces another who was on secondment and filling a specific role) will be allowed (subject to a maximum assignment period of 24 months for the replacement employee); and

5. A1s will also still be required where one has so-called ‘multi-state workers’ (i.e. people who commute between EU member states working, say, two days per week from a home office in Country A and the rest of the time in their employer’s office).

The UK position

Whilst UK employers with EU-based staff undertaking intra-EU business travel and postings will be impacted by these changes, these new proposals do not directly impact the UK/EU social security position – that is, UK employees going overseas or EU employees coming to the UK – as this is governed by the Trade & Cooperation Agreement (TCA) rather than the EU regulations per se.

Therefore, any changes to the social security regime with regard to UK/EU touching cases will not change at this stage and will continue as they have been since Brexit in 2021, with the social security rules for UK travellers etc. to the EU continuing in accordance with the existing rules.

Therefore, whilst the TCA rules on social security co-ordination may be updated in due course to mirror these new EU-based proposals, there is perhaps now an increased risk that the EU and UK positions could increasingly diverge over the coming years, with the additional risks that this creates for businesses from an administrative perspective.

The Blick Rothenberg view

These reforms will, at least once they become active, provide some useful clarity for employers and should generally be welcomed. However, the increased divergence between social security co-ordination between intra-EU moves and those between the EU and the UK, may cause challenges for employers from an administrative perspective. Moreover, the risk of increased compliance by social security authorities and the increased need to ensure that A1 applications (where required) are obtained on a pre-travel basis may cause some real risks for employers, who will need to ensure that their systems are genuinely ‘fit for purpose’ in this regard.

Would you like to know more?

If you would like to discuss this in more detail, please get in touch with your usual Blick Rothenberg contact or Robert Salter using the form below.