Social security for EU workers working outside the EU
21/04/21
The European Court of Justice concluded in May 2019 that a Latvian seafarer who works for a Dutch employer outside European territory on a sea-going vessel with the flag of a third country is insured in their country of residence (see also our earlier update). This ruling has far-reaching consequences for Dutch employers who, for example, have employees who work outside Europe on a project basis or on ships that do not have an EU flag. Most employers decided to await further guidance. However, in the meantime, the Dutch authorities no longer issue insurance certificates for employees in this situation and have contacted various employers to take action in the employees' country of residence. For employers who have not yet anticipated this legislation in the hope of a relaxation of the applicable policy, now is the time to take action.
What does this mean for your organisation?
The initial ruling is relevant to all employers based in Europe who employ European workers from another EU country outside EU territory. Until the time of the judgment, these employees were insured in the country where their employer was established. This was practical for the employer and provided workers with social security build-up in a single European social security system. This was changed by the judgment of the European Court of Justice on 8 May 2019. Employees living in the EU who are employed by an employer from another EU country and who work outside EU territory are now insured in their country of residence. This change may lead to additional and unclear administrative burdens and costs for the employer, who is now often obliged to register and pay social security contributions in the country of residence of their employees. For employees who are deployed within and outside the EU, this leads to a very fragmented build-up of social security rights (depending on their deployment, they are insured in the country of residence if they work outside the EU and insured in the country of employment if they work within the EU).
SVB approach
In these situations, the Dutch authorities (Sociale Verzekeringsbank or SVB) are willing to agree on an Article 16 request (mutual agreement procedure). With this Article 16 request, application of the legislation of the country where the employer is established can be requested. The authorities of the country of residence and the country of the employer must both agree to this. In addition, the employee's consent is required before such a request can be made. If the request is successful, the employee can remain covered by the social security scheme in the country where the employer is established. In that case, the employer does not have to take any action to arrange the obligations in the employee's country of residence and the employee can continue to build up social security rights in the country where the employer is established. Especially for employers who have to deal with the deployment of employees from a limited number of EU countries on long-term projects outside the EU, this can be a solution.
Treaty countries
The judgment of the European Court of Justice concerns a situation in which an employee worked outside EU territory, in a country with which the Netherlands did not have a bilateral social security treaty. Currently, a procedure is pending at the Dutch court (“Centrale Raad van Beroep” or Central Board of Appeal) about how this judgment applies when an employee living in the EU is sent by a Dutch employer to a treaty country. In that case, can the rules of the treaty be applied and can a Certificate of Coverage (CoC) be applied for on the basis of which Dutch legislation is applied during the assignment? Or is the employee insured in his state of residence on the basis of the May 2019 judgment?
The Amsterdam District Court has previously concluded that the treaty is applicable. The case is now before the Central Board of Appeal. The outcome of this case is very relevant for Dutch employers who employ employees living in other EU countries who are assigned to countries with which the Netherlands has a treaty for social security. For the time being, we recommend applying for a CoC for employees who live in another EU country and are seconded to a treaty country. For employees who work in a country outside the EU with which the Netherlands does not have a social security treaty, payment of contributions in the country of residence will have to be arranged or an alternative solution will have to be sought.
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