Cross-border telework in the EEA and Switzerland: applicable social security legislation - New Framework Agreement
As a result of the COVID measures, many employees were suddenly no longer able to work at their employer’s premises and were obliged to work from home. To avoid that cross-border workers had to change their social security regime if they work 25 % in their residence state, the European authorities applied ‘no impact’ social security measures which come to an end today 30 June 2023. However, the Administrative Commission has adopted a new Framework Agreement which will enter into force on 1 July 2023. Upon certain conditions cross-border workers will be able to telework up to 49.99 % in their residence state while remaining subject to the social security regime of the Member State where their employer’s registered seat is located.
Regulation 883/2004
The basic European principle (Regulation 883/2004) is that only one social security regime can apply (that of the work state). In the event of simultaneous employment in more than one Member State, the employee is subject to the social security regime of the residence state if he or she works there for at least 25% of the working time. For example, if a cross-border worker works 25% or more from home, he or she will be subject to the social security regime of the residence state.
During and after COVID, measures were taken to neutralize these telework days so that the Member State where the employer’s registered office is located would remain applicable but these measures now come to an end and a more structural solution was needed.
New Framework Agreement
The Administrative Commission has adopted a new Framework Agreement which will facilitate between the signatory states the conclusion of individual derogations and which enters into force on 1 July 2023.
This Framework Agreement applies to employees who would fall under the social security regime of the residence state as a result of habitual cross-border telework in accordance with the 25% rule and who are employed by one or more employers which have their registered seat in only one other signatory state.
Cross-border telework is defined as follows in the Framework Agreement: “an activity which can be pursued from any location and could be performed at the employer’s premises or place of business and:
- is carried out in a Member State or Member States other than the one in which the employer’s premises or the place of business are situation and
- is based on information technology to remain connected to the employer’s or business’s working environment as well as stakeholders/clients in order to fulfil the employee’s tasks assigned by the employer or clients, in case of self-employed persons;”
Under the Framework Agreement, an opt-in system exists whereby employees who habitually perform cross-border telework in their residence state for less than 50% of their total working time and who work at their employer’s registered seat in another Member State for the remainder of their working time will be able to choose to remain under the social security regime of the state of their employer’s registered seat. A request should be submitted by the employer (upon formal or informal agreement between the employer and employee). Such request can be made for a period of maximum 1 to 3 years (depending on the local practices; in Belgium only for 1 year), with possible extensions.
However, several conditions apply:
- Both the employee’s Member State of residence and the Member State of the employer’s registered seat must have signed the Framework Agreement. Up until today the following countries have signed the new Framework Agreement: Belgium, the Netherlands, Luxembourg, Germany, Finland, Norway, Austria, Switzerland, Liechtenstein, the Czech Republic, the Slovak Republic and Portugal.
- It only applies to cross-border telework in the state of residence.
- The employee may not habitually carry out other activities in the state of residence or habitually work in another state than the state of residence or the state of the employer’s registered seat.
- It does not apply to self-employed workers.[1]
In principle, requests can be made retro-actively up to maximum three months. However, by way of exception, the first requests can be submitted up to 30 June 2024 and apply retro-actively up to maximum 12 months (but not before 1 July 2023) provided that social security contributions have been paid in the state of the employer’s registered seat.
Key message
In conclusion, it is advisable to make precise agreements with employees residing in another Member State than the employer’s registered seat on teleworking and to include the necessary provisions in this regard in your Teleworking Policy and the employment contract. In doing so, it is recommended that the employer accurately tracks the number of days the employee (tele)works abroad as well as any other activities the employee performs in addition to it.
[1] Although the self-employed workers are included in the definition of cross-border telework, the conditions for benefiting from the new rule exclude them.