Following article 16 of Regulation (EC) No. 883/2004 on the coordination of social security systems (The "Regulation"), the EU Administrative Commission for the Coordination of Social Security Systems has drafted a framework agreement on EU cross-border telework, allowing employers and employees to deviate from the rules set out in the Regulation (the "Framework Agreement" or "Agreement"). Countries invited to sign the Framework Agreement include the 27 EU-member states, Norway, Iceland, Liechtenstein, and the United Kingdom. The Agreement will enter into force on 1 July 2023.
The mandatory and strongly recommended measures during the COVID-19 pandemic have resulted in an explosive accrual of telework, which (partially) still persists as a permanent new way of work. The measures that were taken during the pandemic to avoid a change of the competent state for the social security of the worker due to accrued telework apply up to and including 30 June 2023.
Under the Regulation, the physical place of work is a decisive criterion with regard to the applicable social security legislation. The main rule is that an employee is covered by the social security legislation in the state where the employer is established. However, if the employee pursues a substantial part of the work (25% or more of the total working time) in the state of residence, he/she will be covered by the social security legislation in the residence state. If the employee does not reside in the state where the employer is established, teleworking in the residence state may lead to a change in social security legislation.
Article 16 in the Regulation allows for member states and the competent authorities to provide for exemptions by agreements in the interest of certain categories of persons. The Framework Agreement was drafted in order to take account of the changed working patterns. Under the Framework Agreement, the social security legislation in the state where the employer is established will continue to apply where the following requirements are met:
- the employee has one employer or multiple employers where all are registered in the same member state;
- the employee habitually works in the state where the employer is established and telework in their residence state; and
- the employee's teleworking in the state of residence comprises less than 50% of the total working time.
To make use of the Framework Agreement, the employer or employee must file an application for an A1 certificate in the country of the employer. With very few exceptions, a retroactive application for an A1 certificate under the Framework Agreement will be rejected. The A1 certificate will be issued for a maximum duration of three years at a time. Renewals of the A1 certificate must be filed according to the same strict deadlines as the original A1 certificate.
It may be noted that the Framework Agreement only applies where both the residence state and the employment state have signed the Agreement. As of today, the countries that have signed are Austria, Belgium, Czech Republic, Finland, Germany, Liechtenstein, Luxembourg, Netherlands, Norway, Slovakia and Switzerland. Further, six additional counties have committed to sign: Croatia, Estonia, Hungary, Ireland, Lithuania and Malta. As for Denmark and Sweden, it is still discussed whether they will sign the Agreement. It is not clear when the decision will be made. When signing the Framework Agreement on or after 1 July 2023, the Agreement will take effect for the relevant country on the first day of the month following the month of signature.