EU/EEA | Social Security | EU Court: A1 compliance enforcement is a citizens’ imperative

13 December 2023

Social  Security

EU/EEA | EU Court: A1 compliance enforcement is a citizens’ imperative

Summary

The European Court of Justice of the European Union has in a new judgment commented on the practicalities of operating A1 certificates that have been issued on a factual basis, which turns out to be incorrect. The case regards a Polish citizen, who was engaged by a Polish company to work in France. The Polish authority initially issued an A1 certificate based on the presumption that the individual worked in Poland and in France as a self-employed person. As it became clear that this presumption was incorrect the Polish authority withdrew the A1 without coordinating this action with the French authority. In its judgment the Court provides various notions, here among:

• The Polish authority was allowed to withdraw the A1 without coordinating this with the French authority.
• The A1 certificate is not a measure giving rise to rights but a declaratory act. It is at all times the facts of the case which determines the social security affiliation of the individual.
•  During the process of issuing the A1 certificate, the involved EU Member States as well as the involved citizens are required to act with loyalty, which especially means bringing all relevant facts to the table.
•  Once the A1 has been issued the involved EU Member States as well as the involved citizens has an ongoing requirement to act with loyalty, which especially means bringing all relevant facts to the table on an ongoing basis. This means that relevant changes to the facts need to be reported. The fact that the A1 has been issued does not give a carte blanche for the employee to work freely disregarding the facts and boundaries that the A1 was issued upon.

Our comments

The Court case emphasized the importance for employers to monitor and enforce the facts that the A1 was issued upon.

Should it turn out that these facts have changed or developed, the employee as well as the employer will have an obligation to report this to the relevant authorities.

In this respect it is not enough for the employer to have agreed with the employee that a certain work-pattern is to be upheld. If this work pattern has changed, it may impact the employers responsibility to withhold and pay social security contributions.

Some common scenarios

Employers should be especially aware of the following standard cases for which facts may develop beyond what was presumed in the original A1. Also, it is important to fully access the situation when filing the A1 application.

Assignments

• For standard assignments it is not uncommon that the employee maintains some work in the state of origin. This could for example be that the employee maintains 10 % of the total work-time there. This is often revealed at a later stage; for example because these workdays are likely to be taxable. If the A1 is issued based on the presumption that the employee is only working in the host country this change of facts must be reviewed.
•  Employees that are assigned to another EU/EEA Member state may have business trips to other EU/EEA countries during the assignment.  especially of the employee is assigned to a regional role. It is important that it is looked into how such trips are to be managed from an A1 perspective and are duly reported to authorities if they were not included in the original A1 application or A1 certificates have been obtained for each trip on an ongoing basis.

Cross-border commuters

•  Employees that are employed in one EU/EEA country while living in another are likely to be performing part of their work in the country where they live – often working from home. In such hybrid work scenarios, the employee must keep the work-split in the country of residence under a certain threshold in order to ensure that
  the employee is socially secured in the country of the employer. As working from home has become increasingly attractive to employees, it is important to monitor that the employee does not exceed this threshold. It is important that the employee is adequately instructed in the details of this monitoring, i. e. how to count holidays, sick days, business trips abroad, variations in workday lengths etc. As the work split is calculated on a 12-month period a half-year or quarterly review could be helpful in borderline cases.
•  As it is becoming increasingly popular to take part-time positions or gig-work jobs in parallel to the main employment, employers must manage how such positions impact social security. Such extra jobs could be anything from coaching children at the local football club, doing charity work to taking on a board position. In general, it is no longer allowed for employers to ban employees from taking such extra jobs.

How can we help?

We would be happy to assist you on how to manage the court case, including:

• Reviewing your compliance program and procedures to ensure that A1 applications are correctly filed from the beginning.
• Review your internal mechanisms for monitoring on-going compliance to endure that situations do not evolve beyond the scope of the A1.
• Review specific cases to ensure that each case is within the boundaries of the existing A1.
• Ensure that employees are properly informed on how to comply with the existing A1.
• Review your A1 compliance function to ensure that business travelers are correctly managed for assignees and commuters.

Contact us

Please reach out to your social security advisor in our territory to discuss further.

Also, please feel free to reach out to the Vialto Partners Social Security Leadership team

Adam Rewucha
Northern European Social Security Leads
adam.rewucha@vialto.com

Natalia Graf and Morgane Texier
Western and Southern European Social Security Leads
natalia.graf@vialto.com
morgane.texier@avocats.vialto.com

Barbara Kolimeczkow and Dénes Megyesi
Eastern European Social Security Lead
barbara.kolimeczkow@vialto.com
denes.megyesi@vialto.com

Lara Kodytek
UK/Ireland Social Security Lead
lara.kodytek@vialto.com

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