April 2023
Summary
As of 1 July 2023, the social security relaxation measures for working from home are no longer applicable. There will be no extension, however last week the Administrative Commission discussed a new Framework Agreement for Telework. Such agreement entails that Member States agree to deviate from the general reference rules if a situation falls within the scope and limits of the agreement which allows for a more coordinated approach. Member States can choose to participate in this agreement or not. When participating in this Agreement, Member States will apply a threshold of 49% (instead of the initial ‘not exceeding 25%’ threshold when working in multiple states) for cross-border teleworkers.
During the next few weeks it will become clear which Member States will apply the Framework Agreement. We will keep you posted on that.
Key recommendations
The Detail
Based on the EU Regulation for social security, employees living in one country, whilst being employed by an employer established in another Member State, will be covered by the social security scheme in their home country when they work 25% or more from their time in their home country. They are covered by the social security scheme of the country where their employer is vested if they perform less than 25% of their work in their home country. If the social security position of an employee shifts to the employee’s home country as a result of an increase in working from home, this will also mean a (unforeseen) shift in compliance and contribution obligations for the employer.
During the Covid-19 pandemic, employees have been able to work from home without any constraints, including without triggering a change in their social security position. This was based on relaxation measures throughout Europe. For some countries, these relaxation measures remained in place after the lockdown periods were over but are set to expire on 30 June 2023.
Recently, a taskforce of the Administrative Commission (an expert group regarding Regulation (EG) 883/2004) has discussed solutions for teleworkers after 1 July 2023, as telework or remote work is here to stay. This has led to the suggested Framework Agreement from the Administrative Commission.
The content of Regulation (EG) 883/2004 will not change. Meaning that the European regulation still states that an employee is covered by the social security scheme of his or her home country if he or she is physically working in the home state for 25% or more. However, some Member States will accept the Framework Agreement to deviate from this main rule for teleworkers. The Member States who will accept the Framework Agreement will apply a simplified Article 16 procedure whereby, if the situation is in line with the conditions of the Framework Agreement, the authorities in the country of employer can issue an A1-statement unilaterally.
Based on the Framework Agreement, a threshold of 49% (i.e. less than half of the working time) will apply for teleworkers working from home. The Agreement only applies to employees, not self-employed persons. It also only applies to telework in the residence country for one or more employers vested in one other Member State.
Furthermore, it would only cover telework and not telework combined with non-telework in the home country.
For example, if an employee is working for a company in the Netherlands, but lives in another Member State, he or she can remain covered by the Dutch social security scheme as long as he or she works less than 50% from their home country. If the employee falls under the conditions of the Framework Agreement, you can apply for an A1 in the Member State of coverage (Netherlands).
This Framework Agreement, that will apply for teleworkers after 1 July 2023, is meant to make sure that the EU/EEA rules for the coordination of social security within the EU are more in line with the new reality of telework after the Covid 19 pandemic. For now, it looks like this simplified procedure can be applied for a maximum period of three years.
How we can help
To make sure you meet your compliance and contribution obligations, it is important that you apply the conditions of the new Agreement correctly. Vialto Partners can help you identify the employees that may fall under this Agreement.
In addition, currently, it is not clear yet which Member States will be part of the Framework Agreement. Therefore a country-by-country approach could be needed. Vialto Partners can help you understand exactly which changes will take place in the country-by-country constellations that your business operates in and implement these challenges in your policies and processes.
We are assisting large and small businesses across the EU/EEA in designing commuter policies and guidelines for Working-From-Home arrangements. We will be happy to leverage this experience to assist you in designing your policies, which are tailored to your company, business, and industry needs.
Contact us
Please feel free to reach out your local social security contact at Vialto Partners or to the Vialto Partners Social Security Leadership team:
Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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