The impact of teleworking on the applicable social security
Effective 1 January 2022, the neutralisation of telework periods should come to an end. The European coordination rules determining the applicable social security legislation would therefore regain their full effect, possibly impacting the social security status of cross-border employees.
Background
The COVID-19 pandemic had a severe impact on businesses and societies across the globe. Far-reaching measures were taken and as a result teleworking became the new normal – affecting the work pattern and workplace of countless employees and self-employed persons.
It has been generally accepted that changes in working patterns, directly and exclusively linked to the COVID measures and limited to the duration of the exceptional situation, should not entail a change in the applicable social security system. To reach this goal, the EU social security coordination rules have been neutralized.
However, as from 31 December 2021, this neutralisation of telework periods will in principle come to an end and the EU social security coordination rules will have full effect again.
Work from anywhere has never sounded more normal and many employers are implementing or have implemented a new structural telework policy. But employers should be aware of the impact this can have on their workforce – especially on those with a cross-border element. Apart from tax and labour law implications, the social security coverage of the affected workforce can be impacted.
Current covid-19 neutralisation measures
Starting 13 March 2020, the Belgian National Social Security Office (NSSO/ RSZ / ONSS) decided to neutralise all telework by employees linked to the COVID-19 pandemic.
It was argued that changes in work patterns directly and exclusively linked to the COVID measures and limited to the duration of the exceptional situation should not entail a change in the applicable social security system. The NSSO also decided that the employer did not have to fulfil any formalities to benefit from this neutralisation of the telework.
This decision mainly impacted teleworkers, but also secondments which ran longer than foreseen or new hires who could not yet start to work in the intended country and had an impact on an intra-EU level as well as on a global level where third countries were involved.
As an example: A frontier worker who usually worked in Belgium but was living in the Netherlands, could remain subject to Belgian social security even though he/she was working from his home in the Netherlands during the pandemic. The same has been true for Belgian employees performing telework due to COVID-19, who decided to perform their telework from their vacation home abroad.
These favourable measures are currently in place until 31 December 2021 and will in principle not be prolonged after this date.
Situation as from 1 January 2022
Employers allowing continued telework after 31 December 2021 , whether structural or occasional, will have to examine the impact on their workforce.
As a reminder, within the European Union, the general principle is that only one state is competent for social security coverage.
The common starting point is the working state principle whereby an employee pursuing an activity in only one Member State shall be subject to the legislation of that Member State only.
There are two exceptions to the general rule, namely the secondment and simultaneous employment.
When an employee is seconded from the home country to the host country for a limited period of time while performing professional activities for the account of the employer, the home country scheme remains applicable.
When an employee is working in two or more member states and performing at least 25% of the working time in the state of residence, the social security legislation of the state of residence will become applicable. If no substantial part of the activities is performed in the residence state, the social security scheme of the state where the employer is located will be applicable. Please note that in case of multiple employers different rules apply.
For countries outside the EU, one needs to verify if a bilateral social security agreement is concluded between the countries involved and if the bilateral social security agreement foresees coordination rules for the applicable employment situation. When there is no coordination of social security legislation foreseen, this can lead to dual social security coverage or a total lack of coverage.
Different rules apply to cross-border situations between the EU and the UK, through the Trade and Cooperation Agreement or the Withdrawal Agreement.
Solutions
Should these coordination rules lead to an undesirable switch in social security coverage, employers should not despair. Solutions remain available.
When it comes to cross border telework within the EEA and Switzerland, limiting the telework to one day a week (or 20%) can avoid a switch in the applicable social security legislation.
Occasional telework abroad for limited periods of time, not performed in a structural manner, could be covered under the secondment exception.
In case the employee would occasionally telework for a limited period of time in a country with which Belgium has concluded a bilateral social security agreement, a CoC for secondment can be requested. If the employee would on the other hand occasionally telework from a third country with which we have not concluded a bilateral social security agreement, the employee can remain subject to Belgian social security for a period of maximum two times 6 months on the basis of Belgian national social security legislation.
Lastly, but not less important, companies should keep in mind that there might also be tax and employment law consequences when an employee performs telework in another country than that where he normally works. Indeed, depending on the work pattern and contractual set-up, additional formalities and rules in the country of temporary or partial employment will need to be respected.
What to expect next?
Employers should review their affected workforce and the impact this might have on their social security coverage. Policies might be drafted to align employer and employee expatiations and monitor compliance. If you have any questions regarding this subject or would like to discuss the specific situation of your employees, feel free to reach out to the EY specialist you are in contact with or to contact us through the below mentioned contact details.