Telework during the COVID-19 pandemic led to an increase in the amount of employee telework on a structural basis for many companies, including cross-border telework. However, habitual cross-border telework can result in a shift of the social security legislation applicable to a teleworker.
To address this issue, the EU’s Administrative Commission for the Coordination of Social Security Systems in April 2023 agreed on a framework agreement to determine the applicable social security legislation for certain cross-borders teleworkers in the EU. The framework agreement provides a system, based on Article 16 of Regulation (EC) No. 883/2004 on the coordination of social security systems, whereby teleworking in an employee’s residence state will not be taken into account for determining the applicable social security legislation if it accounts for less than 50% of the employee’s working time.
The agreement will enter into force on 1 July 2023 in those countries that sign it before that date. The 27 EU member states, as well as Norway, Iceland, Liechtenstein, Switzerland and the UK have been invited to sign the framework agreement.
Cross-border telework during the COVID-19 pandemic
During the COVID-19 pandemic, a neutralisation period was introduced during which teleworking days were not taken into account to determine the applicable social security legislation of cross-border workers. Thus, for cross-border workers who worked more than 25% of their working time in the residence state, the applicable social security legislation did not shift to the home state based on the general principles of Regulation (EC) No. 883/2004. For prior coverage, see BDO’s July 2022 GES newsletter.
The neutralisation period ended on 30 June 2022, and was followed by a new period (the transition period) during which similar principles were observed for cross-border telework up to 40% of the working time. Both periods included an exemption for the request of an A1 certificate. However, the formalities based on the posted workers directive continue to apply (e.g. the obligation to request a limosa certificate in Belgium).
The transition period, and therefore the possibility to set aside the general principles set out in EU Directive No.883/2004, ends on 30 June 2023.
As a response to structural cross-border telework after the COVID-19 pandemic, the Administrative Commission unveiled the framework agreement in April. According to the agreement, the applicable social security legislation in a cross-border telework situation can remain the legislation of the state where the employer’s registered office is located, provided the amount of telework in the employee’s residence state is less than 50% of the employee’s total working time.
The new agreement will apply if both member states involved have adopted the framework agreement, and only if the following conditions are met:
- The employee has one employer or multiple employers with a registered office in the same member state;
- The employee habitually works in the member state of the registered office of the employer and teleworks in the residence state; and
- The employee’s teleworking time is less than 50% of his or her total working time.
If the conditions are met, the social security legislation of the member state of the employer’s registered seat would continue to apply.
Application and procedure
To apply the framework agreement, a request must be submitted in the member state where the employer has its statutory seat. Requests can be filed only for future periods, not retroactively.
However, if social security contributions have already been paid in the state where the employer has its statutory seat, the framework agreement provides an exception to the pro futuro requirement. In this situation, a request may be filed for a past period if:
- The period isn’t longer than three months; or
- Specifically for the period from 1 July 2023 to 30 June 2024, a request can be submitted for a past period up to 12 months, but may not include a period before the entry into force of the framework agreement.
Example 1: An employee has been teleworking two days a week while paying social security contributions in the state where the employer’s statutory seat is situated. The employer wants to apply the framework agreement for the period from 1 July 2024 to 1 July 1 2026, and a request is filed on 1 November 2024. The framework agreement cannot be applied because the request concerns a period more than three months in the past and it doesn’t concern the specific period mentioned under (2).
Example 2: An employee is planning on teleworking two days a week. Currently, he is subject to the social security legislation of the state where the employer’s statutory seat is situated. The employer wants to apply the framework agreement for the coming two years. The framework agreement applies in this situation, because it deals with a request for a future period.
As soon as the member states reach an agreement to apply the social security legislation of the member state where the employer has its registered office, they will issue a corresponding A1 document (the document that states the applicable social security legislation). Note that this agreement, and therefore the A1 document, are limited in time, to a maximum of three years. An extension is possible considering that a new request is filed.
As indicated above, the principles set out in the framework agreement apply only if both member states involved have signed the agreement. Belgium was actively involved in the preparation of the framework agreement and has already confirmed that it intends to sign the agreement.
BDO in Belgium