Social Security Schemes
- Do you know where your employees are situated?
- Do you have the relevant documentations for cross-border employees?
Are you a cross-border employee during the transition period?
- During the transition period the EU Reference Rules of Regulation still apply to determine where a cross-border employee should pay social security.
- The “Reference rules of Regulation (EU) 883/2004” coordinates social security schemes throughout Europe.
- Provisions on aggregation of periods, entitlement to and export of social security benefits remain unchanged.
- Read more on the Reference rules of Regulation (EU) 883/2004: https://ec.europa.eu/social/main.jsp?catId=849&langId=en
Are you in a cross-border contract before 31 December 2020 that will continue after 1 January 2021?
- Reference rules of the EU regulation 883/2004 and both the export and aggregation of periods will still apply if:
- The cross-border situation between the EU and the UK began prior to 31 December 2020
- and will continue without an interruption.
- Definitions of “interruptions” vary between each state and the European Commission but could include sickness or extended vacations.
- Belgium – UK worker will benefit from Belgian social security, but if this changes to a UK contract, they will fall under UK social security but still under the provisions of the EU regulation 883/2004.
- If you are an employee who then becomes self-employed (vice versa) you may also be in a situation to continue under EU regulation 883/2004.
- An “interruption” to your cross-border situation may stop the provision of the social security entitlements under the withdrawal agreement.
- Make sure employees in a cross-border situation have proper documentation (apply for an A1 before 31 December 2020, or have all the documents to prove one was already in a cross-border situation before end of transition period)
- Monitor ‘continued situations’ very closely.
Are you entering a cross-border contract after 31 December 2020?
- There are discussions on a multilateral treaty on social security. If no treaty is established, domestic rules will apply to you.
- You could be subject to multiple social security schemes at the same time.
- There will no longer be aggregation of periods.
- You can no longer export benefits, unless domestic legislation allows this.
UK Domestic Rules:
- You can have 52 weeks remaining subject to UK social security for outbound assignments.
- As well as this exemption for inbound assignments. It is uncertain whether this also applies to EU nationals.
- The NIC exemption is now also available to European Economic Area (EAA) nationals, who are coming to work in the UK, but live outside the EEA.
- To qualify for a 52-week National Insurance Contribution (NIC) exemption you must:
- Not be an ordinary resident in the UK.
- Not be ordinarily employed in the UK.
- Be in search of employment primarily based outside of the UK, with a non-UK based employer.
- Be employed for a time in the UK as an employed earner.
- Organizations should review their UK inbound assignees.
- Determine whether some employees can claim back any NIC previously paid.
- Determine whether payroll may should be adjusted.
Belgian Domestic Rules:
- If you work in Belgium for a Belgian employer, you are subject to Belgian social security.
- If a UK employer sends an employee to Belgium (inbound assignment), that employee may apply for the Article .3 exemption.
- Outbound assignments may go to a non-treaty country and still be subject to Belgian social security for 6 months with the possibility to extend this for a further 6-months.
- Alternatively, a voluntary system of overseas social security could be explored.