Social Security
Netherlands | Importance of cross-border remote work agreements between employer and employee for multi-state rules
Summary
At the end of last year, the Dutch Court (the Central Board of Appeal) set forth its judgment in the case of a German employee who worked remotely from the Netherlands for her German employer. The Dutch Court ruled that, since the cross-border remote work activities were not agreed between employer and employee and were not included in the employment contract, the multi-state rules were not applicable. As a result, the employee was covered in Germany (based on the main rule of EU Regulation 883/2004) since Germany had to be considered the main work location.
Although this is a local Dutch judgment, it does provide insight into the application of the multi-state rules of the EU Regulation and the importance of making clear and upfront agreements with employees in view of cross-border remote work activities.
The Detail
Facts and circumstances
The case concerns a German employee who was living in Germany and employed by a German employer. The employee was permitted by the employer to partially work from home in Germany (1 / 2 days per week) and she worked the remainder of her time at the office in Germany.
She stayed with her partner in the Netherlands from May 2019 (while keeping her apartment in Germany and other ties to Germany) and started working two days per week from the Netherlands during 2019. On 1 January 2020, she permanently moved to the Netherlands. She has reported ill per 20 January 2020 and did effectively not perform any employment activities for the German employer after that date.
Multi-state rules
In the judgment, the Court first looks into the residency position and confirms that the employee should be considered as a German resident up to 31 December 2019 and as a Dutch resident as of 1 January 2020.
Subsequently, the Court focuses on the question whether the employee can be considered to carry out work normally in two or more Member States within the meaning of EC Regulation 883/2004, Article 13 (multi-state workers). Based on recent EU case-law1 this condition assumes that the person habitually carries out significant work in the territory of two or more Member States.
It is important for the application of the multi-state rules that there is a work pattern agreed to a certain extent on a structural basis with the employer (whether explicitly or not). The European Court has indicated that this condition is only met if the employer has, expressly or tacitly, agreed to working from home from another Member State. The employer’s consent may be evident from the employment contract or from a later document (e.g. an individual agreement or annex to the employment contract). For tacit consent, it must be unmistakable from the totality of facts and circumstances that there is conscious consent from the employer. If working in two or more Member States is common within the company, conscious consent may be considered more likely. Without this consent from the employer, the European Court was of the opinion that there is insufficient justification for deviating from the main rule.
Application to the German employee
In the respective case of the German employee, the employee did not request consent from the employer for her cross-border remote work activities in the Netherlands. She did receive consent from the employer for working from home in Germany, but did not inform the German employer on her intention to work from home in the Netherlands. Her employment contract did also not cover work activities performed outside of Germany. Within the German organization, no other employees performed remote work activities outside of Germany.
Based on the above, the Dutch Court ruled that the German employer had not expressly nor tacitly agreed that the employee could perform her activities remotely from the Netherlands.
As a result, the Dutch Court is of the opinion that the employee cannot be considered to carry out work in more than one Member State within the meaning of Article 13. The main work location of the employee was Germany and as such, based on the main rule of the EU Regulation, she was covered by the German social security scheme.
Takeaway
The judgment of the Dutch Court gives a practical insight into the importance of making clear and upfront agreements between employer and employee on cross-border remote work activities, in order for the multi-state rules to apply. Such an agreement may be decisive, also in cases where it is rather clear that the employee in fact works in two Member States. Ideally, these agreements have to be laid down in employment contracts in combination with a policy document, so that the employer’s consent for the remote work activities is clear. Without consent from the employer, it may be argued that the multi-state rules do not apply for these types of activities.
We therefore recommend ensuring sufficient communication with employees in view of cross-border remote work policies and implications of cross-border work for social security.
How can we help?
Vialto Partners are assisting large and small businesses across the EU/EEA in designing remote work policies. We will be happy to leverage this experience to assist you in designing such a policy, which is tailored to your company, business, and industry needs.
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
Wendy Toonen
Northern European Social Security Leads
Cecile de Rooij
Northern European Social Security Leads
Natalia Graf
Western and Southern European Social Security Leads
Morgane Texier
Western and Southern European Social Security Leads
Barbara Kolimeczkow
Eastern European Social Security Lead
Lara Kodytek
UK/Ireland Social Security Lead
1. Case C-570/15, X EU:C:2017:674 dated 13 September 2017 and Case C-618/18, AFMB, EU:C:2020:565 dated 16 July 2020.
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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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