Social Security Schemes

Does your organization employ cross-border (frontier) workers?  

  • 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.

 

Action Points:

  • 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.