EU seafarers working outside EU covered by social security scheme of country of residence
The European Court of Justice has confirmed that, when applying the current EU rules for the coordination of social security, a Latvian seafarer who works for a Dutch employer outside European territory on a sea-going vessel that sails under the flag of a third country, is insured in his country of residence.
What does this mean for you as an employer?
This decision is important for all employers based in Europe who employ European employees and employ them outside EU territory. As a result of this ruling, these employees become subject to the social security system of their country of residence. This represents a change from the situation before this judgment, in which this group of employees was covered by the social security scheme of the country where their employer is established (on the basis of case law).
In practice, this change can lead to additional administrative burdens for you as an employer if you employ employees from different EU countries, for example on projects outside the EU, offshore or on sea-going vessels.
In order to determine the exact impact of this ruling, it is important to first make an inventory of which employees will be affected by this change in their social security position. Next, you need to investigate what actions need to be taken in the countries of residence of the employees, so that social security obligations based on this ruling can be met.
In principle, this judgment must be applied as of 8 May 2019 (the date of the judgment). It must be investigated whether current A1 statements can be maintained after this date or whether new A1 statements must be applied for, to prove that these employees are covered by the social security scheme of their country of residence.
Case study
The judgment concerns a Latvian national working for a Dutch employer. He worked for that employer on board of a sea-going vessel that sailed under a non-EU flag (Bahamas) above the German part of the continental shelf of the North Sea. These activities are regarded as activities outside the EU because the vessel sails under the flag of a non-EU country. The question was whether the employee was subject to Dutch national insurance.
Judgment European Court of Justice
The European Court of Justice has ruled that this seafarer has sufficiently close links with the European territory, which means that this situation falls within the scope of EC Regulation 883/2004. According to the settled case law of the European Court of Justice, such connecting factors exist if a citizen of the European Union resides in an EU member state, is recruited by a company established in another EU member state and carries out activities on behalf of that company.
The European Court of Justice then confirms that the residual article (Article 11 par. 3, under e) applies in this situation. This conclusion is based on the grammatical explanation, the context and the objective of the residual article. This article provides, in short, that all persons falling under the scope of EC Regulation 883/2004 to whom other conflict rules do not apply shall be subject to the legislation of the Member State of residence of the person concerned. According to the European Court of Justice, this article is not limited to economically inactive persons referred to in the Explanatory Memorandum, but must be applied in all situations where no conflict rule applies.
This interpretation means that the case law arising from the scope of EC Regulation 1407/81 (Aldewereld and Kik) is no longer applicable. Under this old EC Regulation, the European Court of Justice has ruled in similar cases that the legislation of the Member State where the employer is established, applies. These cases do not fall under the residual article of the old EC Regulation, because this article is more limited and therefore does not apply to Aldewereld and Kik. Consequently, there is not a single conflict rule of the EC Regulation directly applicable to their situation, as a result of which the European Court of Justice has designated the country of the employer for such situations.
The new EC Regulation 883/2004 contains a broader residual article that applies to all persons who are not covered by another conflict rule . The judgments in the Aldewereld and Kik cases will therefore lose their relevance for determining the applicable conflict rule to such situations that arose after 1 May 2010 (the date of entry into force of the new EC Regulation). These judgments will continue to be relevant for determining the scope of the EC Regulation for persons who work outside the EU territory.
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