UK/EFTA | Social Security | Update: Social Security coordination agreement between Iceland, Liechtenstein, Norway and the United Kingdom and Northern Ireland

Social Security

UK/EFTA | Update: Social Security coordination agreement between Iceland, Liechtenstein, Norway and the United Kingdom and Northern Ireland

In brief
On 30th June 2023, the United Kingdom (UK) and the EFTA countries (Iceland, Liechtenstein, and Norway) signed a convention on social security coordination, hereafter referred to as the EFTA agreement. This convention supports business and trade by ensuring that cross-border workers and their employers are only liable to pay social security contributions in only one state at a time.

The convention entered into force effective 1 January 2024 following compilation of all necessary statutory and constitutional requirements.

In detail
The UK and the EFTA countries have signed an agreement which will benefit individuals who live and work abroad in any of the associated countries, by ensuring they are able to receive healthcare cover and uprated state pensions, amongst other social security entitlements. It will also allow eligible individuals travelling these countries to access necessary healthcare when abroad using a European Health Insurance Card (EHIC) or the Global Health Insurance Card (GHIC). This agreement serves to close the ‘gap’ in social security coordination with these locations which arose as a result of the UK’s departure from the European Union and withdrawal from European social security coordination rules.

• The convention on Social Security Coordination covers individuals of all nationalities so long as the person(s) in question are or have been subject to the social security legislation of the UK, Iceland, Liechtenstein, or Norway.
• Similar to the EU regulation 883/2004, the new convention supports business and trade by ensuring that cross-border workers and their employers are only liable to pay social security contributions in one member state at a time.
• 24 month detached worker clause for posted workers between UK and EFTA countries.
• Multi-state worker provisions for individuals working in two or more of the states party to the convention.
• Perhaps most usefully, the convention includes an exceptions article, offering a route to prolonged coverage beyond the initial 2-year duration.
• The new agreement also removes the major issue that exists between UK/Norway under the bilateral agreement, in that any Certificate of Coverage had to be received by the home authorities within 4 months of detachment,  Failure to do so would result in no coverage being available for the assignment duration.
• The agreement covers a wide range of social security benefits for eligible individuals. Those living abroad in either country would be able to receive healthcare, upgraded pensions and other benefits. This includes healthcare cover for UK state pensions, those exporting maternity allowance and certain categories of cross-border workers.

The EFTA agreement now forms part of the overall UK touching social security coordination rules with European countries, alongside:

1. Trade and Cooperation Agreement Protocol (EU).
2. UK/CH Convention on Social Security Coordination (Switzerland).
3. UK/IE Convention on Social Security Coordination (Ireland).
4. EU regulations 883/2004 for individuals in uninterrupted cross-border situations since Brexit, i.e., with grandfathered access to these regulations (EU).

The takeaway
The EFTA agreement aims to update the previous agreement between the UK and EFTA countries to ensure that more workers are covered by social security elements while working between these countries.

To date and since Brexit, Social Security coordination between the countries in question has been determined in line with underlying bilateral agreements (except for Lichtenstein) and largely based on outdated coordination principles constructed prior to the EU regulations.

The EFTA agreement now provides up-to-date coordination principles for movement between these countries, more in line with existing regulations used across wider Europe.

For any organizations that have individuals working in/from these countries, we recommend that a review of their social security situations is completed to determine what impact this new agreement will have i.e. it may now be possible to obtain a Certificate of Coverage when under the old bilateral agreement, this was not possible.

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:

Martin Muhleder
Global Social Security Partner

Gary Chandler
UK/Ireland Social Security Director

Alan McAllin
Global Social Security Director

Andrei Ioanei
Global Social Security, Senior Manager

Leanne Birch
Global Social Security, Senior Manager

Lara Kodytek
Global Social Security, Senior Manager

Further information on Vialto Partners can be found on our website: www.vialtopartners.com

For additional alerts, please visit: www.vialtopartners.com/regional-alerts

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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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