EU: A1 Social Security Certificates and EU Cross-border Work

The European Parliament has approved proposed changes to the management of social security co-ordination for employees who work across EU borders.

In particular, the changes remove some of the current uncertainty around when employers need to obtain an A1 Certificate for their cross-border workers.

Context

The A1 certification regime seeks to coordinate in which country the relevant social security contributions are payable for cross border workers, the worker’s “home” country or the “hosting” country.  The primary purpose is to ensure employees are not subject to double security contributions and to remove the need for the employer to register for social security payments in multiple EU countries.

The certificate is usually issued by the home country of the employee and confirms that they remain covered by that country’s social security system. In some countries, there can be significant delays in obtaining the certificates. 

The Current Uncertainty

Currently, there is no clear, rules-based answer to the question, when should an A1 Certificate be obtained?  In its absence, a rather unsatisfactory rule of thumb has evolved:

• Business trips of less than 30 days – A1 certificate probably not required;
• Works trips of between 30 days and three months – might be required;
• Working across borders for more than three months – probably required.

The New Regime

The proposed changes will make A1 Certificates mandatory in almost all cases of cross border working. There are only two stated exceptions:

• Business trips defined as temporary activities relating to the business interests of the individual or their employer, excluding the supply of services or of goods. These might include attending meetings, cultural or scientific events, conferences or training events.
• Other activities lasting no more than 3 consecutive days in any 30-day window. This exception does not apply to construction workers.     

The Risks of Non-compliance

There are several risks of failing to get an A1:

• The need for dual social security registrations and payments;
• Misapplications of entitlements to social security benefits;
• Payroll confusion and non-compliance;
• Labour inspections that spot A1 certificate absences, leading to stricter reviews;
• Gaps to benefit entitlements such as sickness, unemployment and healthcare.     

Working in the UK

EU employees whose work includes time in the UK are not directly affected by the proposed changes. Their social security position falls under the UK-EU Trade and Co-operation Agreement, which is a separate regime and is currently unchanged.    

Actions for Employers to Consider

For longer postings, the issue is now clear. An A1 Certificate should be obtained.

For short and very short postings, employers will face a risk-based choice whether to obtain the certificate each time, especially given the possible bureaucratic delays that can occur in obtaining it. However, it should be remembered that EU regulatory scrutiny is on the rise. 

Relevant businesses should review their cross-border EU operations and the need for, and nature of, cross border employee postings. They should then decide how they wish to operate in the new regime. It may, at some point, make more sense to establish a larger, more formal presence in a jurisdiction. 

This is a high-level general update only. Legal advice should be obtained on specific circumstances.