New proposed social security framework agreement on telework

According to the EU Regulation on social security Nr. 883/2004, the general rule to determine the competent social security State is that the employee is subject to the social security system of the State in which his employer is located. In case of activities in two or more Member States, the employee is subject to the social security system of the State of residence provided the employee works more than 25% in the State of residence. During the Covid-19 crisis, this rule was “temporarily” put on hold since a lot of employees were – at that time – forced to work from home through telework. Today with the introduction of telework in our normal way of working, a long-term solution is needed to guarantee this flexible way of working and to avoid a switch in social security system due to a limited number of teleworking days in another country then the employer State .

Consequently, the Working Group consisting out of 42 experts from 20 different EU Member States, has received a mandate entitling them to draft a clear definition of “telework”, create an uniform framework of the rules applicable to telework and create specific designation rules for a model framework agreement based on article 16 of the EU Regulation Nr. 883/2004. The work of this Working Group has, after some months, now been written down in a summary report to be presented to the Administrative Commission of the EU on 29 March 2023.

Although the legal texts have not yet been published, we would like to share already some of the details (which will be confirmed once the official text will be published).

The current rule in case of simultaneous employment (i.e. working simultaneously in more than one Member State) states that, generally, when an employee works more than 25% in the State of residence, the employee will be subject to the social security system of the State of residence.

The basis for the proposed framework agreement would be based on the “exception” article 16 of the EU Regulation nr. 883/2004 entitling Member States to deviate from the general rule. This agreement would become applicable to employees working for an employer with a seat in a Member State and employees teleworking from their state of residence.

According to this new framework agreement, when an employee works less than 50% of the working time through telework in the State of residence over a period of 12 months, the Member State in which the seat of the employer is situated remains authorized to levy social security contributions. If the 50% teleworking-from-home-threshold would be exceeded, the employee would become subject to the social security system of the state of residence, implying that the employer should register for social security purposes in the state of residence. However, both employer and employee should agree that this framework agreement will be applied for the case in question. Otherwise, the general rules of the EU Regulation nr. 883/2004 will remain appliable.

This new rule for the framework agreement proposed by Working Group will normally take effect as of 1 July 2023 for all the countries that sign this framework agreement. Since this will take place the coming weeks, it will always be required to verify for each Member State combination to verify whether the framework agreement has been agreed.

We will keep you informed on the further progress of this proposed framework agreement once more information becomes available.

In case you have employees teleworking abroad or you are a foreign employer with staff teleworking from another EU member state, please reach out to your Global Mobility advisor.