Social Security for business travelers

One of the key important issues for businesses is the question of post Brexit Social Security. We are pursuing a proactive and solution- based approach to this question to help and guide you, we are making social security compliance easy. Further, our Brexit Contingency Clinic was subsequently incorporated to offer, all parties, a sense of certainty surrounding post-Brexit Compliance.

Background:

Social security for business travellers in the EU/EEA and Switzerland is coordinated by an EU regulation. The regulation states that business travellers are generally covered by the social security rules of the country in which they work.

If the company knowingly or unknowingly does not comply with these rules when employees need to work abroad, it becomes a very expensive learning curve. This is partly due to the risk of being met with retroactive demands and potential fines from foreign authorities if the rules are not complied with. The fine in France is just over €3600 per employee, for example.

Several EU countries do not accept that business travellers are simply insured by automatic means in their home country. Member states can and will administer the rules as strictly as they wish, in accordance with current rules and practices. On the basis of an ”estimate”, they may then issue a penality which is to be rigiouslesly defended through a tiresome and often redundant prcess.

Steps can and must be taken now to prepare. The company must be able to predict now, to a very large extent, when and how much an employee will work in the different EU/EEA Member States in the future. This requires increased control over employees’ travel and accommodation activity.

If the company does not comply, Member States have made it clear that they do not wish to issue a certificate (so-called Form A1) in order for the home Member State’s social security rules to apply to business-friendly employees. An A1 for a business traveller considered to be multi-state workers must be approved both in the country of origin and in the host country of work.

In the future, companies will be further challenged by the adoption of new EU rules on how authorities can and should check that international employees are handled properly by the employer. The new rules have been adopted to protect employees working abroad.

Since the summer of 2016, authorities in EU countries have been increasingly focused on by business travellers abroad. This is done in order to protect the rights of these workers in the best possible way.

It is therefore particularly important that companies with business-friendly employees are aware of meeting the authorities’ requirements for documentation of employees’ work patterns in the form of a form A1.

Should employers apply for an A1 certificate for their employees on very short business trips within the European Union (EU) and to Switzerland? This concern is arising because from mid-2019, it will be mandatory to apply for these A1 certificates electronically via payroll accounting. However, notwithstanding the introduction of the electronic application procedure, there is no need to apply for such a certificate for every business trip to the EU or Switzerland.

The form “A1/certificate of coverage” states that an employee is covered under national insurance in the Netherlands. In many countries, this form is obligated to be able to work. The form states that the employee does not have to follow the legislation of the working country, but of a different country. The form states the following:

• Which legislation applies to the employee;
• Why this legislation applies to the employee (on the basis of which legal article);
• The period for which the statement is valid; and
• The place where the employee will work.

Some have online applications, and application questions typically revolve around personal information like name and residential address, date of birth, nationality, employer and job title and trip information like destination, length of stay and previous trips to the destination country.

For more information on post Brexit issues such as Social security or otherwise, please do not hesitate to contact us. In the meantime, we have prepared answers to the following “typical” questions.

Is a business traveller abroad automatically covered by their existing social security?

Usually yes – but not always. It is the employee’s overall situation, such as travel pattern, employer, residence, etc., that determines whether the employee can remain under existing social security during their stay abroad. In the vast majority of cases, an employee who goes abroad will be insured for social security already. However, it is important that the employee can prove that the coverage remains valid during the trip abroad. There is a formal documentation called A1, which is issued by the relavant country authorities on the basis of an electronic or paper application. It is not the A1 form that determines where the employee is insured. The A1 form is only evidence on the authority’s decision on the country in which the employee is social insured and determines where the employee has social rights and where the employee and the employer must pay social security contributions.

How and when should a form A1 be applied for for business travellers?

As a starting point, A1 forms should always be sought for all business travellers abroad (within the EU/EEA) regardless of the duration of each trip. Even if it’s only 1 day.

We often see that companies with a large number of business travellers have an internal policy that describes the context of how business travelers’ social security should be handled. The challenge is to be the first of its with such policy is often to have business trips identified in advance.

With an internal policy, the company is at the forefront of the risk that social security for business travellers entails. Internal policy should therefore also deal with the specific requirements for an A1 form to be provided in the specific countries to which employees travel. At the same time, the policy should take into account how employees’ travel patterns are mapped out in order to address possible and necessary immigration and tax payments.

Is a A1 a guarantee of social security during the journey abroad?

On paper yes, but in practice far from. We see that a number of EU countries themselves are checking whether the forms issued by the issuing authority have been drawn up correctly if there can be doubts about the scope of work and the number of days.

The foreign authority is likely to specifically verify the employee’s work pattern and how the business trips are described in the employment contract. Furthermore, the authorities of some EU countries do not accept A1 forms issued retroactively. We therefore see examples of foreign authorities collecting social contributions from the employee and from the employer, even if there is an A1 form in place.