Is the European Court of Justice opening the door to material employment practice in social security?

January 9, 2020

On 16 July 2020 The Court of Justice of the European Union ruled that international lorry drivers who work in more than one country are covered by social security regime in the member state in which their employer has its registered office. The Court considered the employer to be the entity which actually 1)  exercises authority over the driver, 2) pays the salary of the driver, and 3) was able to dismiss the driver, rather than the entity that holds the employment contract.

The case was referred to the Court of Justice following a of decision of the Dutch Social Insurance Bank (Sociale Verzekeringsbank, SVB) to declare Dutch social insurance regime  applicable to international lorry drivers . The drivers in this case were working for a Dutch company which acted both effectively and materially as the employer but were employed by a Cypriot employer. These drivers carry out their work in more than one EU member state. The European social security rules determines that where employees work in more than two EU member states, they will be liable to pay social security contributions in the state in which the employer has its registered office.

In this particular case, the international lorry drivers were dealing with a Cypriot company, with which a formal employment contract had been concluded, and a Dutch company which acted both effectively and materially as the employer.

The Court of Justice has now ruled that Dutch social security regime is applicable, despite the fact that an employment contract exists with a formal employer in Cyprus.

Our commentary

In this ruling, the Court of Justice established that the drivers did in fact appear to have been personnel of the Dutch transport companies, as a result Dutch social security regime applies to the drivers and their Dutch employer. The Supreme Court is yet to rule on this case following the Court of Justice decision, and therefore a final conclusion still has to be reached.

Businesses that have employees carrying out their work in several EU member states simultaneously, should undertake a review to determine if the applicable social security regime has been established correctly and should closely follow the developments in this area. We expect that several countries will scrutinise existing arrangements where there is potentially more than one employer.

For further information or if you have any queries relating to the content of this communication, please contact us.

CELIA Alliance
CELIA Alliance members are identified here. Members of the CELIA Alliance are each independent law firms and do not practice law jointly with any other member of the CELIA Alliance. “CELIA Alliance” and “CELIA” are not trading names. For more information about the CELIA Alliance click here.

Disclaimer
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this newsletter. For further legal information click here.


Copying
If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.

Category:

CELIA Alliance
CELIA Alliance members are identified here. Members of the CELIA Alliance are each independent law firms and do not practice law jointly with any other member of the CELIA Alliance. “CELIA Alliance” and “CELIA” are not trading names. For more information about the CELIA Alliance click here.

Disclaimer
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this newsletter. For further legal information click here.

Copying
If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.

Leave a Reply

Your email address will not be published. Required fields are marked *