Coordination of social security systems within the EU - implications of the measures against the spread of COVID-19

The measures taken by the Member States against the spread of COVID-19 have lead to temporary changes in the method of work in a number of business sectors. Bulgarian and foreign employers are called upon to introduce remote working when possible. Significant changes in the model of work could lead to difficulties in the application of the social security legislation for persons who work in the so-called cross-border situations, in particular:

• Persons who are employed on the territory of two or more Member States;
• Persons who are employed in a Member State and who reside in another Member State to which they return, as a rule, daily, or at least once a week(frontier workers)

We would like to point out that the EU Regulations on the coordination of social security systems (Regulations (EC) No 883/2004 and No 987/2009) remain applicable in the current situation. With this regard the A1 form remains the only official document certifying the applicable social security legislation in a cross-border situation and guaranteeing the right of a person to compensation, including health and pension insurance in the country of the applicable legislation.

A positive feature of the A1 certificate is that it has a retroactive effect, i.e. it also applies to past periods of time. In this sense, there is an opportunity for the employers to wait for the end of the emergency situation and to resume normal rhythm of work, and afterwards to analyze whether there are changes in the applicable insurance legislation for their employees and, in accordance with the specific situation, to take the necessary steps for obtaining of an A1 certificate.

In this publication, we shall analyze the effects that the changes in the work patterns could have upon the two groups of employees cited above and what the solution might be:

Persons employed on the territory of two or more Member States

The transition to a remote working regime could have an effect on the applicable social security legislation regarding persons pursuing employment in the territory of two or more Member States. They are usually employed by an employer in State A, they work in State A, but at the same time they also work in the territory of State B. Under normal conditions, the persons pursue a substantial part of their activity in State A and the social security legislation of State A is applicable for the individuals.

 “Substantial part of the activity” pursued in a particular Member State means that a significant amount of all activities of the employee are performed in that State, without necessarily constituting the main part of these activities. For the purposes of determining whether a substantial part of an employee's activity is carried on in a Member State, the working time and remuneration of the person are taken into account.

If a change in the pattern and distribution of work between the two Member States is introduced due to the security measures (e.g. work from home from the territory of one of the Member States), it is necessary to assess where the person carries out a significant part of his activity.

In the event that a significant part of the activity continues to be carried out in the territory of State A, the legislation of the same state will remain applicable to the person and there will be no necessity to apply for a new A1 certificate.

If, given the conditions, the person works only in the territory of State B, the employer in State A could apply for an A1 certificate in accordance with the provision for posted workers in the other Member State. In this way, the legislation of State A will remain applicable regarding the employee, independently of the fact that the work is performed in the territory of State B.

Frontier workers

Changes in the regime of work may also affect the applicable social security legislation for the so-called frontier workers. These are persons who are employed in one Member State (State A) and reside in another Member State (State B) to which they return, as a rule, daily or at least once a week. In the current situation, some of them may switch to a remote working from the country of residence and may not be able to perform activity in the other country where they normally work. As a rule, in this case the social security legislation of State B shall be applicable since the work is performed there. This circumstance would lead to a change in the applicable social security legislation, since before the emergency occurred, the frontier workers were socially insured in State A. In addition to the negative effects for the employee, this change could also lead to additional obligations for his employer, such as to register as an insurer in State B and to organize the declaring and payment of social security contributions in accordance with national legislation of State B.

In this case, it is again advisable to wait for the measures against the spread of COVID-19 to be lifted and to take steps for obtaining of an A1 certificate, which will guarantee and ensure the continued application of State A's social security legislation and shall prevent a break in the length of service. It is again possible to apply for an A1 certificate under the provision for posted workers in the other Member State. This means that the employee will be temporarily posted to his country of residence State B and will remain subject to the social security legislation of State A.

Agreement for exception in the interest of the employee

It is important to note that the Regulations on coordination of social security systems have provided solutions to a variety of work hypotheses. Our main recommendation is to evaluate the effect of the changes in the regime of work on the activity of each person working in a cross-border situation, and to take appropriate action in accordance to the specific situation. If due to the state of emergency, an employee failed to comply with the rules under Art. 11-15 of Regulation (EC) No 883/2004, he could request an exception under Art. 16 of the same Regulation. The procedure for issuing A1 in this case presupposes an agreement between the competent authorities of the Member States concerned to be achieved in order to implement the social security legislation which is in favour of the person.

This material is not exhaustive, but rather has general information nature and does not constitute specific advice or consultation. Should you have questions, do not hesitate to contact us at Tel. + 359 2 9433700, Fax + 359 2 9433707, e-mail: office@afa.bg or at the following address: 1504 Sofia, 38, Oborishte Street.