Recently, a draft framework agreement on the determination of the applicable social security scheme for certain cross-borders teleworkers within the EU was agreed on within the Administrative Commission for the Coordination of Social Security Systems. This draft framework agreement aims to introduce a more permanent arrangement to determine the social security position of cross-border teleworkers in the EU as of 1 July 2023. More specifically, the framework agreement provides for a system (on the basis of article 16 of Regulation (EC) no. 883/2004 on the coordination of social security systems) whereby, when adopted by the Member States involved, teleworking in an employee’s residence state will – if a number of conditions are met – not be taken into account for the determination of the applicable social security scheme if it accounts for less than 50% of their working time.
The neutralisation of teleworking days during and after the COVID-19 pandemic
At the start of the COVID-19 pandemic, a neutralisation principle was introduced; teleworking days were temporarily not taken into account when determining the social security position of cross-border workers if they would result in a change of applicable social security scheme. Indeed, without neutralisation such change would occur if, following mandatory homeworking imposed to limit the spread of the virus, a cross-border worker would work more than 25% of their working time in their residence state.
After the height of the pandemic, cross-border workers continued to work from home more often as it brought some flexibility to their working arrangement. Therefore, in June 2022, the Administrative Commission for the Coordination of Social Security Systems recommended the introduction of a transition period for the determination of the applicable social security scheme for cross-border teleworkers, with similar principles as the COVID-19 neutralisation. This transition period will end after 30 June 2023.
Content of the framework agreement
It was clear to every party involved (employees, employers, authorities, and legislators) that cross-border telework is here to stay and that a more flexible approach on a European level is needed to accommodate this reality. Therefore, after consultation of a group of experts of different EU Member States, the draft framework agreement was drawn up; which includes a system that revolves around article 16 of Regulation (EU) no. 883/2004.
Article 16 provides for an exemption on the application of the general conflict rules of Regulation (EC) no. 883/2004, which can be requested in the interest of certain persons or categories of persons and requires the consent of the Member States involved. However, this is a time-consuming procedure and brings an administrative burden.
Therefore, the framework agreement provides for a simplified system of article 16 exemption whereby, if the Member States involved have adopted the framework agreement, the social security scheme of the country where the employer is located will apply if the following conditions are cumulatively met:
- The employee only has one employer (or more employers with a registered office in the same member state);
- The employee only works in the member state of the registered office of the employer and teleworks in their residence state; and
- The teleworking days account for less than 50% of the total working time.
In case of application for the exemption provided by the framework agreement, the competent authority will check whether the above conditions are met and, if so, will issue an A1-certificate. For cross-border work situations that fall outside the above scope, the conflict rules on simultaneous employment or posting of Regulation (EC) no. 883.2004 will continue to fully apply, even if teleworking is involved.
It's important to point out that, as mentioned above, the principles of the framework agreement will only apply when the Member States involved have signed the agreement. At the moment, there is no official announcement on the framework agreement yet and it is also not yet clear which Member States will sign it. However, as the framework agreement was drafted after consultation of 42 experts from different member states, it is expected to be reasonably widely adopted. As soon as more information becomes available, we will inform you accordingly.
As of 1 July 2023, teleworking in the Member State of residence will be treated differently than has been the case since the beginning of the COVID-19 pandemic. This could result in a change of social security legislation for cross-border workers that have benefited from the COVID-19 neutralisation period and the transition period that followed. As an employer, it’s therefore paramount to map out which of your employees find themselves in such a cross-border working situation, analyse their social security position as of 1 July 2023 and implement the changes accordingly.
If you have questions regarding the above, do not hesitate to contact us; we’d love to hear from you.