News -

- March 2010

Compensation & Benefits: Revised European social security legislation from 1 May 2010

Revised EU legislation will introduce substantial changes to social security for EU employers not present in the UK and for those individuals who work temporarily outside their home EU member state

The revised EU social security legislation (833/2004) will finally come into force from 1 May 2010, having been put back from 1 March 2010.  The implementation regulation (987/2009) and the regulation which makes amendments to 883/2004 (988/2009) (the “Regulations”) were published in the EU Official Journal on 30 October 2009, confirming the new implementation date.

Main changes

The new Regulations introduce significant new liabilities for EU employers not present in the UK and key changes for employees with employment in more than one EU country.

From implementation, an EU employer will have the same liabilities and obligations as an employer already based in the UK.  Employees who work in more than one EU member state may no longer be able to remain in their home country social security system.

The existing distinction between 3 main groups of employees will remain for the purposes of the European social security legislation:

  • those on a short term assignment,
  • those on longer assignments, and
  • those individuals who work in more than one EU country regularly.

However some of the rules that apply to these categories have been amended:

  • short term assignments will be extended from 12 to up to 24 months,
  • employees working in more than one EU country must undertake a “quantitatively  substantial” part of their employment activities in their home country if they wish to remain its social security scheme.  This means at least 25% of the employee’s work days must be spent there or at least 25% of salary must flow from their employment in their home country,
  • In addition, the special rules applicable to transport workers have been abolished.

Transition period

The current unrevised legislation (1408/71) will continue to apply to third country nationals and to nationals of Norway, Iceland, Lichtenstein and Switzerland.  In addition, existing E101 certificates will remain valid until expiry, unless the employee chooses to be covered by the new rules.

Commentary

Our article dated 30 September 2009 “Substantial changes to EU social security regulations in May 2010 (see link in Resources below) sets out the implications of the changes in further detail.

HM Revenue and Customs has confirmed that, where there are no material changes to circumstances, further periods of social security liability in the individual’s home country under the current legislation will be possible.

This affords an opportunity for employers with individuals employed in more than one EU country to consider structuring these employment arrangements to benefit from the existing, less restrictive, legislation wherever possible.

Resources

Regulation 987/2009 and 988/2009

Substantial changes to EU social security regulations in May 2010

For further information or to discuss the issues raised, please contact Guy Abbiss (Turn on Javascript!), Jim Yuill (Turn on Javascript!) or Bina Gayadien (Turn on Javascript!) on +44 (0) 203 051 5711.