Reform of EU social security coordination rules on the horizon: is your organisation prepared?

The reform package introduces stricter compliance requirements, closer cooperation between Member States and enhanced enforcement and verification powers for social security authorities. Employers with internationally mobile employees should therefore take the time to assess the potential impact of these changes. The reform is expected to affect how cross-border activities are documented, monitored and administered in practice.

What does this mean for employers

While the fundamental principle that an employee can only be subject to one social security system at a time remains unchanged, the reform introduces several measures that may have a direct impact on international assignments and cross-border employment arrangements.

Before the revised rules become applicable, a number of formal legislative steps still need to be completed, including final approval by the Council of the European Union and publication in the Official Journal of the European Union. Employers should also bear in mind that most substantive changes are expected to apply only 24 months after the revised Regulation enters into force. However, this transition period provides organisations with an opportunity to assess the impact of the changes and adapt their mobility policies where necessary.

The key changes for employers include:

• Stricter requirements for A1 applications. Employers will be required to submit A1 applications before the start of cross-border activities. This places greater emphasis on timely and proactive compliance.
• A new three-month prior affiliation requirement for posted workers. Employees recruited with a view to being posted abroad must generally have been insured in the sending Member State for at least three months before the posting can commence.
• Enhanced enforcement and verification powers for authorities. Social security institutions will have greater powers to review A1 certificates and the underlying facts, challenge their validity and, where necessary, request corrections or withdrawal. Employers can therefore expect increased scrutiny of cross-border employment structures and the supporting documentation.

More consistent application across EU Member States

Closer cooperation between social security institutions is expected to reduce differences in interpretation between Member States. As a result, greater consistency and clarity may emerge in the assessment of A1 applications and other cross-border social security matters.

Increased scrutiny of cross-border working arrangements

As part of broader efforts to combat fraud and abuse, authorities are expected to take a more critical approach towards posting arrangements, multi-state working patterns, remote working structures and other cross-border employment models. Employers should therefore ensure that A1 applications are properly supported and accurately reflect employees’ actual working arrangements and locations.

Further digitalisation

The European Commission continues to modernise cross-border social security administration. Initiatives such as the European Social Security Pass (ESSPASS) are intended to support the further digitalisation of procedures and more efficient data exchange between Member States. As a result, employers may increasingly encounter digital documentation requirements and automated information exchange processes in the future.

Looking ahead: what should employers do now?

Most of the changes will not apply immediately, but the transition period is there to be used, not to be waited out. Organisations with internationally mobile employees would be well advised to:

• review current and planned assignments against the stricter posting requirements, including the new three-month prior affiliation condition;
• assess whether existing A1 application processes are capable of meeting the requirement to file before cross-border activities begin;
• map the implications of the mandatory interruption following a 24-month posting period;
• check that the documentation supporting A1 applications is complete and accurately reflects employees’ actual working patterns;
• anticipate closer controls and increased information exchange between European authorities; and
• prepare for the further digitalisation of cross-border social security administration.

Forvis Mazars view

Although many of the substantive changes will only become applicable after a transition period, employers should not underestimate the impact of this reform. The new rules place greater emphasis on timely A1 compliance, robust support for cross-border employment arrangements and increased transparency towards social security authorities. Arrangements that have been accepted in practice for years may no longer be sustainable once the revised framework applies. The organisations that will come through this reform comfortably are the ones that know today where they stand.

How Forvis Mazars can help: book your baseline assessment

A baseline assessment is a structured review of your internationally mobile population – posted workers, multi-state workers, business travellers and cross-border remote workers – measured against the requirements of the new framework. We map which arrangements are likely to come under pressure, where your current A1 processes fall short of the new filing and documentation standards, and which actions should be taken first. You receive a prioritised action plan set against the implementation timeline, so that your mobility policies and compliance processes are already in order by the time the revised rules take effect.

Would you like to know where your organisation stands? Contact Alexander Rasink or Menno van Dongen to schedule your baseline assessment.