Post-Brexit: Social security implications for cross-border employee assignments after the end of the transition period and recommended actions for employers
Situation to date
The United Kingdom left the European Union on 31 January 2020. A Withdrawal Agreement was agreed between the UK and the EU, which entered into force on 1 February 2020, and established the terms of the UK’s orderly departure from the EU. The Withdrawal Agreement provides for a transition period, during which the EU Regulations (including social security law) continue to apply in the UK. The transition period ends on 31 December 2020.
Until the end of 2020, all EU social security provisions (Regulation (EC) 883/2004, as well as Regulation (EC) 987/2009) will continue to apply in relation to cross-border (employment) activities between the EU and the UK.
What happens after 31 December 2020
Generally speaking, the mentioned EU Regulations cease to apply as of 1 January 2021. However, the Withdrawal Agreement foresees ‘grandfathering rules’ for certain groups of people (and, in certain circumstances, also their family members), under which EU Regulations will continue to apply after the end of the transition period, if individuals continue to work in cross-border circumstances ‘without interruption’, which affect an EU Member State and the United Kingdom.
It is important to note that the cross-border circumstances must have started before the end of the transition period and continue ‘without interruption’ after the end of the transition period, i.e. after 31 December 2020. Cross-border circumstances in an employment context include e.g.:
- temporary employee assignments from Austria to the UK (or vice-versa)
- deployment of Austrian employees in the UK for activities solely within the UK (or vice-versa)
- ‘multi-state’ activities, i.e. ordinary activities, simultaneously or alternately, both in Austria (and/or other EU Member States) and in the UK.
As the provisions leave some room for interpretation in certain contexts (as in the case of so-called ‘multi-state workers’), and the practical implementation and view of the respective EU Member State and the UK must be considered, assessment must be carried out on case-by-case basis in unclear cases.
With the exception of the groups of people and circumstances covered by the grandfathering rules, the EU Regulations will cease to apply. This means that the relevant national legislation will apply in the event that the current negotiations between the UK and the EU do not lead to a new agreement before 31 December 2020. A double insurance (in the UK and an EU member state (e.g. Austria) might also be possible.
The old bilateral social security agreement between Austria and the UK, which applied before Austria’s accession to the EU, will most likely not enter into force again. Whether a new bilateral agreement will be agreed is currently unclear and seems unlikely too. The UK must therefore be treated as a ‘third country’ (non-EU state) from 1 January 2021 at the latest.
Recommended actions before 31 December 2020
We highly recommend taking precautionary measures before the end of 2020 with regards to cross-border employment activities (assignments or activities in two or more states in relation to the UK):
- Which employees are currently working in the UK or assigned to the UK?
- Do you currently have UK employees on assignment in Austria, or do you have UK employees working in Austria?
- Please check whether current assignments or other forms of cross-border employment can be extended and whether any ‘grandfathering’ rule applies.
- Consider whether any assignments planned for 2021 could be brought forward to 2020 in order to benefit from the ‘grandfathering rule’.
- Are you already able or do you need to renew A1 or S1 certificates?
- Can exemption requests under Article 16 of Regulation (EC) 883/2004 be a solution prior to the end of the transition period, in order to enable continued coverage within the Austrian/British social security systems, even after the end of the transition period?
- Please inform your employees as necessary about any social security consequences or any loss of family support or non-cash benefits under health insurance.
PwC Austria helps employers to
- Benefit and stay up-to-date – through our work in the global PwC network and with the Austrian authorities
- Save time – by checking on your behalf which groups of individuals are covered by grandfathering rules and, together with you, introducing the necessary measures
- Reducing administrative effort – by applying for A1/S1 extensions on your behalf and communicating with the Austrian authorities and, if required, also foreign authorities.
The following article explains which aspects of immigration law need to be taken into account with regard to Brexit (only available in German): https://blog.pwclegal.at/brexit-wie-geht-es-weiter-2/