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BDA AGENDA 9/23 | Topic of the week | May 4, 2023

Since the Covid-19 pandemic at the latest, mobile working has become an integral part of everyday working life for many employees - often from abroad. Restrictions apply under social security law that need to be reviewed in the interests of flexible working arrangements. The framework agreement on cross-border mobile working that has now been adopted by the EU Administrative Commission for the Coordination of Social Security Systems is a first step in this direction.

The Covid-19 pandemic has enormously strengthened the already existing trend towards mobile working. For employees who can basically do their work from anywhere with the help of digital devices, the classic "home office" is often just as much a part of everyday working life as flexible working during a train journey or in a café. The desire to work remotely from abroad, e.g. a few days before or after a vacation or as part of a workation, is also increasingly being expressed to companies by employees.

In terms of social security law, however, cross-border mobile working raises a number of questions, as it must be clarified which social security system applies: that of the country of stay or residence or that of the country of employment? In addition to the "vacation exceptions" already mentioned, the cases of cross-border commuters who regularly commute between their place of work in one Member State and their place of residence in another Member State must also be taken into account.

Applicable social law for cross-border mobile work

According to the relevant Regulation (EC) 883/2004 and the associated Implementing Regulation (EC) 987/2009, the situation is as follows:

• If the cross-border mobile work is performed exclusively from abroad, the social security system of the country of residence applies.
• If the cross-border mobile work is only performed from abroad in exceptional cases (e.g. in the case of "workation"), the social security system of the country of employment continues to apply.

For persons who regularly, but not exclusively, work on a mobile basis across borders, the applicable social security law is determined by the proportion of mobile work:

• If this proportion is below 25 percent, the social security system of the country of employment applies.
• However, if the proportion is over 25 percent, the law of the country of residence applies.

Unbureaucratic interim solution during the Covid-19 pandemic

The Covid-19 pandemic has posed a major challenge to this regulation. Cross-border workers who, like their colleagues and many employees worldwide, wanted to work entirely from home in line with social distancing and hygiene rules would have had to switch from the social security system of their country of employment to the system of their country of residence under the current regulations.

If the law of the country of employment is to continue to apply, Art. 16 of Regulation 883 allows for the possibility of applying for the relevant permits - however, this must be done individually for each person, which leads to a corresponding administrative burden. For this reason, unbureaucratic transitional solutions have been agreed at EU level to enable cross-border mobile working without the restrictions that actually apply.

These exemptions expire at the end of June this year. In order to meet the needs of employees for flexible mobile working and the desire of companies for legal certainty, a follow-up regulation is needed.

From July 2023: simplified procedure for exemptions

Against this background, the EU Administrative Commission for the Coordination of Social Security Systems has drawn up a framework agreement on cross-border mobile working:

If the proportion of cross-border mobile work is between 25 and 50 percent of employment, the member states can agree among themselves to continue to apply the social law of the country of employment.

The core of the agreement is a standardization of the procedure for automatically approving applications for exemptions under Art. 16 of Regulation 883 if certain conditions are met. This does not extend the existing regulations, but merely reduces and speeds up the administrative burden of the application procedure. Upon receipt of the employer's application, the competent institution in the country of employment checks whether the conditions of the framework agreement are met. If this is the case, an A1 certificate is issued and the competent institution in the country of residence is informed electronically. The latter then automatically issues its approval based on the provisions of the framework agreement without carrying out a separate check. Corresponding exemptions should only be granted for a maximum of three years, with the possibility of extending them upon application.

The framework agreement will enter into force on July 1, 2023, provided it is signed by at least two member states. It will only apply in the Member States that sign up to the agreement. It will not apply if only one Member State involved has signed. Member States can join at a later date at any time, as can they withdraw. The framework agreement is valid for five years and is then renewed regularly and automatically for a further five years.

Complete legal certainty only through regulation as part of the 883 revision

Even if the follow-up regulation prevents only the outdated requirements of Regulations 883 and 987 from applying once the transitional solution from the Covid-19 pandemic expires, there is still room for improvement from an employer's perspective. There is a potential threat of an inconsistent approach in the EU internal market, as the framework agreement is not binding for all member states.

In addition, cross-border workers cannot be treated in the same way as colleagues who do not move between their country of residence and country of employment when it comes to "flexible mobile working": the latter can theoretically work from home for the entire working week, while this is not possible for employees resident in other EU countries without an agreement in accordance with the already established rules under Art. 16. Only a regulation as part of the ongoing revision of Regulation (EC) 883/2004 will ensure the necessary binding nature and complete legal certainty for cross-border mobile working.