Social Security Alert: How EU social security legislation is adapting to cross-border teleworking

Introduction
The COVID-19 pandemic seems more and more like a distant memory. However, cross-border teleworking is here to stay. To support these flexible work patterns, the EU’s Administrative Commission has proposed a multilateral Framework Agreement for Teleworking. This Framework would enable employers to extend the period during which individuals can work remotely from their home location abroad without affecting their social security position. This would address the current legislation’s shortcomings in accommodating hybrid cross border work scenarios.

New legislation per 1^st July 2023
Starting July 1st, 2023, it will be possible for employees and their employers together to apply for an A1 certificate (certificate of applicable social security legislation)  for cross-border teleworking from home. This certificate will enable employees to work remotely from their home abroad for up to 50% (instead of the 25% in current legislation) without triggering the social security legislation of their home country. Hence, the employee will be covered by the social security legislation of the country where the employer is located. The A1 certificate that is applied for with the SVB (or a foreign equivalent institute) will have a maximum validity period for three years. After these years, it is possible to apply for a new A1 certificate.

Who could benefit from this rule change?
The new legislation only applies to employees who work/live in a member state that has adopted this new legislation. In potential these are the EU/EEA Member States, Switzerland or and UK. The employee needs to carry out up to 50% telework from their home in their home country. Self-employed individuals or workers who do not fall under the scope of the multilateral Framework and workers who are not in possession of an A1 certificate, are not covered by this new legislation and will still be subject to the 25% threshold. This means that if the individual works at least 25% from their home country, that the social security legislation of that country is applicable.

What’s next?
It’s likely that several Member States (a.o. Netherlands, Belgium and Germany) will adopt the proposed Framework. Depending on country specific adoption, a tailored approach per country may be necessary. Crowe can assist you in comprehending the specific changes that will occur per country where your business operates and integrate these changes into your business policies and procedures. In addition, Crowe can help you in applying A1 certificates.