Global Social Security

EU/EEA | EUCJ Ruling on working in third countries—framework agreement

Summary

In April this year, we published this insight focusing on the judgement for case C-743/23, confirming that working time spent outside of the EU/EEA/Switzerland must be considered as part of the 25% substantial working time threshold in respect of Article 13 (multi-state workers).

Earlier this month, the Administrative Commission for the Coordination for Social Security systems discussed the impact of this judgement on the application of the Framework Agreement on Telework. The conclusion from these discussions is that individuals working in their country of residency and country of employment, who incur regular travel to third countries for work purposes, will not be covered by the Framework Agreement.

The detail

As a brief summary, the Framework Agreement was introduced in July 2023. It allowed a relaxation to the multi-state worker 25% threshold for individuals that spent time working in their country of residence, whilst being employed in another member state.

Individuals eligible to use the Framework Agreement would be allowed to spend up to 49% of their working time in their country of habitual residence without triggering a Social Security obligation in their state of residence.

Previously, third country days may not have been considered when reviewing an individual’s working arrangement as part of the framework agreement.

The judgement of case C-743/23 removed the unclarity on whether the ‘substantial part’ test should consider total global working time, or just working time spent within the EU/EEA/Switzerland.

Following discussions this month with the Administrative Commission for the Coordination of Social Security, which heard from numerous countries that took the floor, the EU commission supported the interpretation that individuals with working time in third countries cannot utilize the application of the Framework Agreement.

In the very short term, member states including Austria and Belgium have already had confirmation from their respective authorities that they will follow this approach going forward, and we expect a consistent approach across the EU/EEA. As part of the discussions, only Czech Republic and Austria disagreed with the stance taken.

As a result, this will impact the applicability of the Framework Agreement for individuals who spend time working outside the EU/EEA/Switzerland as part of their role, who otherwise would have qualified for the extended presence limit in their country of residence.

What this means

The EU commissions support of this interpretation will have the following impact that employers will need to consider:

• Individuals currently covered under the Framework Agreement with an A1 certificate will need to have their working arrangements reviewed to ensure they still qualify. This will be particularly important at the point of extension, as the reduced threshold in the country of residence may trigger Social Security obligations in that location.
• Employers must ensure they are fully aware of their employees’ overseas travel to ensure they are handling their compliance requirements correctly, and to avoid potential Social Security obligations outside of the member state of employment.
• Any travel to third countries must be minimal to avoid any consequences from a Framework Agreement perspective (i.e <5% of overall working time)
• Employers must also consider the Social Security impact on working time spent in third countries and consider the relevant bilateral agreements where available (for Certificate of Coverage), or domestic legislation of the country in question.

Where an individual no longer qualifies under the Framework Agreement, a request for an A1 under Article 16 of the EU Regulations remains possible under normal procedure, at the discretion of both competent authorities.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

Alan McAllin
Director

Craig Smith
Senior Manager

Daniela Haller
Senior Manager

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