Update 23 june 2022
In addition to our recent update on the end of COVID-19 measures for social security, we note that the responsible Minister stated last week that she intends to extend the measures through to the end of the year. While no official publication has yet been released, the expectation is thus that the measures will be extended through December 31st, 2022. This means that employers and employees will have more time to make necessary adjustments.
For completeness’ sake we note that the statement only relates to the social security measures. The announced end of the tax measures, specifically between the Netherlands and Belgium/Germany are set to end effective July 1st.
In spite of the announced extension of the social security measures, it is important that you review the existing policy for your employees living abroad and adjust it where necessary. If you have any questions or need assistance, please contact our experts. They can assist you at all stages of the process and provide expert advice.
1 june 2022
Attention cross-border workers and employers! On 1 July 2022 the special agreements on social security (EU) will end.
As a result of the coronavirus pandemic, many employees were forced to work from home. If, for example, the employee's home is in a country other than where he/she normally works (usually where the employer is located), the employee would have been covered by social insurance in his/her country of residence as a consequence. In that case, as an employer, you would have been required to register in the employee's country of residence for social security purposes and pay contributions there.
Switching the social security position was recognised as an undesirable consequence within the European Union since it was generally thought that the coronavirus pandemic would be temporary. Once the corona pandemic was finished, employees would go back to the workplace as before the corona pandemic.
To prevent social security switching, at the beginning of the coronavirus pandemic it was agreed at European level that the change of workplace would be temporarily ignored for social security purposes while the coronavirus pandemic lasted. So, for the duration of the coronavirus pandemic, employees remained covered by social insurance in the country where they were insured before the pandemic started.
Since the pandemic and the related restrictions on travelling within the European Union are gradually coming to an end, this agreement will expire on 1 July 2022. From then on, employees must once again be covered by social insurance in the country where they work.
What are the rules as of 1 July 2022?
- If your employees return to work after 1 July 2022, you do not need to take any further action. After all, nothing will change for your employees with respect to their social security. They were and continue to be insured in the same country as before the pandemic.
- However, if your employees do not return to work or return to work on a part-time basis after 1 July 2022, you will need to act. As a rule, the following applies:
If your employees generally work less than 25% of their time (in the case of full-time employment, this is one day per week) from home, in essence, nothing will change. The situation remains as under 1.
If your employees generally work more than one day from home, the situation changes. Your employees will be covered by social insurance in their country of residence.
What does this mean for you and your employees?
For you as an employer, this means that you may be required to register for social security purposes in the country of residence and pay employer contributions in that country.
Changing the social security position could also mean an increase in your costs. After all, in addition to the implementation costs, you also need to take into account rising wage costs due to potentially higher employer contributions in the other country.
Another possible consequence is that the employment legislation and conditions of the country of residence may become applicable. For example, laws governing dismissal, reporting sick and reintegration obligations, annual leave, holiday allowance, legal insurances for e.g. incapacity for work, supplementary pension, etc. Obligations may also arise under collective labour agreements or comparable foreign schemes, including compulsory pensions in your sector.
Your employees may be required to pay employee contributions. This could result, among other things, in a change of their net income (= income after deduction of taxes and social security contributions).
In short, with one month remaining, it is important that you review the existing policy for your employees living abroad and adjust it where necessary. If you have any questions or need assistance, please contact our experts. They can assist you at all stages of the process and provide expert advice.