Employ frontier workers? Beware, the temporary work-at-home rule expires!

As of July 1, 2022, the rules temporarily introduced due to Corona regarding the frontier worker working from home will expire. This change may have consequences for the social security system applicable to the cross-border worker and thus for the contributions to be paid. In this blog, Bas Blaauwhof and Pauline Demacker explain the changes and their possible consequences. 

Social security border workers before and during pandemic

Employees can only be insured for social security in one country. In which member state of the European Union contributions must be paid is determined by European designation rules. The cross-border worker, who works and lives in another member state, is in principle insured in his country of employment. However, it frequently happens that employees work in several countries.

With the corona crisis, frontier workers were also increasingly working at home, compulsorily or otherwise. This created risks with regard to social security rules, since frontier workers were working in two countries. After all, frontier workers who perform a substantial part of their work in their country of residence are insured in their country of residence. A substantial part means that the worker works more than 25% of his working hours in his country of residence or earns more than 25% of his salary there. Home working measures would therefore cause a worker to become insured in his country of residence.

To limit this risk, it has been agreed in the European context to determine the social security status of employees in cross-border situations on the basis of the work pattern prior to the corona crisis. Thus, the employee who started working more from home as a result of the corona crisis will not - until June 30, 2022 - face a different applicable social security system.

Social security cross-border workers as of July 1, 2022

As of July 1, 2022, the rules in place before the corona crisis will come back into effect. This means that the employee who performs a substantial part of his work in his country of residence will be subject to the social security system of the country of residence. So the employer who lets his employees work from home is taking a risk. Consider, for example, a Dutch employer whose employee lives in Germany. If that employee works three days a week at home - and thus in Germany - that person performs a substantial part of his work in his country of residence. In that case, the German social security system suddenly becomes applicable.

Effects of other applicable system

When the legislation of the country of residence becomes applicable instead of the legislation of the country of work, there are potentially major consequences. After all, the employee is insured differently for disability, illness, retirement and unemployment. This may impose higher (but also lower) burdens on the employer. In addition, employers experience an increase in administrative burdens, as the foreign system must also be complied with.

Employers must therefore identify how many hours cross-border workers actually work in the country of residence and in the country of work. By having frontier workers work primarily - at least 75% - in the country of work, a shift in the applicable social security system can be avoided. A frontier worker working from home is therefore not desirable. Should it nevertheless come to pass that an employee is covered by a system of another member state, the employer must gain insight into the social security system of the country where social security contributions must be paid. After all, the way in which these contributions must be paid may differ from the way in which this is done in the Netherlands.

Conclusion

It is wise to think carefully about the possible consequences if you allow cross-border workers to work from home. After all, if working from home is a substantial part of the work, the social security system of the cross-border worker's country of residence will apply, with all its consequences. Incidentally, the government has announced that it is exploring solutions for working from home with neighboring countries and the EU. Nothing is known about this at this time.