Regulation 883/2004 is the main instrument dealing with the coordination of the social security systems within the European Economic Area. One of the most important chapters concerns the determination of the applicable social security legislation in cases with a cross-border element. The main rule for economically active people is the “workstate rule”, i.e. the legislation of the country where they perform their activities is applicable. Special rules are provided for short-term assignments and for situations of simultaneous employment.
On 28 June 2012, new rules regarding such simultaneous employment situations will enter into force. The coordination rules will change for the specific category of aircrew members but also for the broad category of employees working for different employers.
The new rules
Until now, persons who work for various employers, located in different Member States, are subject to the legislation of the Member State in which they reside. This automatism will disappear.
The new rules introduce the requirement of performing “substantial activities” (i.e. ≥ 25% of the total working time and/or remuneration) in multiple employer cases. As a result, when working for different employers established in two Member States, of which one is their country of residence, employees will have to perform substantial activities in their home Member State for its legislation to apply. If this is not the case, they will be subject to the legislation of the Member State where the other employer is located. However, if a person works for different employers scattered across two or more Member States, none of which is the country of residence, he/she will still be subject to the legislation of the Member State in which he/she resides.
However, it should be emphasised that the amendments’ impact is mitigated by transitional provisions. A transitory period of maximum 10 years will guarantee a smooth shift towards the new rules. Persons who are impacted will be able to maintain the currently applicable legislation, unless their situation changes or if they voluntarily choose for the application of the new rules.
A clarifying example
Current rules
- Employee
- Works 20% in BE and 80% in NL
- 1 BE employer and 1 NL employer
- Resides in BE
→ Belgian social security (2 empl: residence state rule)
Future rules
- Employee
- Works 20% in BE and 80% in NL
- 1 BE employer and 1 NL employer
- Resides in BE
→ Dutch social security (registered seat rule, as no substantial activities in BE)
Our recommendation
These new rules will have an impact predominantly on persons working for different employers and with a small activity in their Member State of residence. Employers should screen their workforce for people in such situations. Doing so will allow companies to anticipate the upcoming new developments and assess whether the planning should be adapted.
