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Cross-border Remote Working

Cross-border Remote Working

Agreement between EU, EEA states & Switzerland defining the applicable social legislation

Following the increased use of remote working caused by the Covid-19 pandemic, provisional measures concerning the determination of applicable social legislations were adopted in March 2020, which have been extended several times.

However, in order to provide legal security (in regard to social law) to employers (as well as employees) who practice cross-border remote working, the Member States of the European Community have been able to find a common and lasting position on this practice.

The framework agreement concluded between European states took effect on July 1st, 2023.

I – Cross-border remote working definition

    1. Definition

A cross-border remote worker is an individual who works remotely from his country of residence, while carrying out part of a professional activity on the premises of an employer established in another country.

For the application of the framework agreement, cross-border remote working is defined (through Article 1 of the agreement) as an activity which can be carried out from any location as well as on the premises of the employer, provided that:

  • It is carried out in one or more EU Member States other than where the employer’s premises are located (or the place of the company’s commercial activity).
  • Relies on information technology to stay connected to the employer or company’s work environment as well as stakeholders (or customers) in order to accomplish the tasks assigned to the employee (or by clients, in the case of self-employed workers).

However, it is specified in the framework agreement that it is not necessary to be connected for 100% of working time.

Such a situation raises the question of what social legislation should be applied: whether the country of residence’s social legislation of the employee or the one from the country where the employer is established.

Therefore, an agreement was required between the different EU States to resolve this matter.

    1. List of signatory countries to the agreement

The Eu countries who joined the agreement as of June 30th, 2023, or having expressed their intentions to sign the agreement, is as followed: Austria, Belgium, Croatia, Czech Republic, Finland, France, Germany, Liechtenstein, Luxembourg, Malta, The Netherlands, Norway, Poland, Portugal, Slovakia, Spain, Sweden, and Switzerland.

Since September 1st,2023, the Framework Agreement has also been joined by Slovenia.

The following countries should, in principle, be joining relatively soon: Estonia, Hungary, Ireland and Lithuania.

On the other hand, the United Kingdom has indicated it will not sign the agreement.

II – The rules defining the country where the employee will be affiliated

    1. General rules defined before the agreement

  • Reminder of affiliation rules under European law: European law provides that people who carry out a professional activity in a Member State of the European Union (EU), the European Economic Area (EEA) or in Switzerland are in principle subject to the social security legislation of the country of employment.

    However, rules are provided for the so-called “multi-active” employees, i.e., employees working for one or more employers in at least two EU or EEA member states, including Switzerland. Multi-active employees are affiliated to the legislation of their country of residence if they carry out a substantial part of their activity there (at least 25% of their working time).
    In the absence of substantial activity in the country of residence (less than 25%), the employee is subject to the legislation of the country where the head office or operational headquarters of the company or employer is located.

    As far as we are concerned, the notion of multi-activity corresponds for example to an employee residing in Belgium, working in Germany for an employer whose head office is in Germany and carrying out part of his activity by remotely working from its Belgian home. In such an example, the volume of remote work carried out at the Belgian home will determine the country in which the employee will be subject to social legislation.

  • Exemption introduced during the covid-19 pandemic: The increased use of remote work from home (wfh: working from home) during this period led the States of the European Union to agree to deviate from the rules and allow remote workers to continue to be covered by the social security of their State of employment without application of the rule of 25% of their working time.

    This exemption, the basis of which was neither legal nor lasting, ended on June 30th, 2023.

    1. The content of the framework agreement

It provides that cross-border remote workers who work less than 50% of their working time in the State of their residence can request to be affiliated to the legislation of the State of the head office or operation.

Thus, this framework agreement allows, on request, employees who do between 25% to 50% of remote work in their country of residence, to come under the legislation of the country of the employer’s headquarters, whereas in principle, from 25% remote working in the country of residence, are subject to the legislation of that country.

The 50% threshold only concerns working time. Therefore, the amount of remuneration should not be taken into account. In other words, the working time in the cross-border teleworker’s State of residence must not exceed 50% (the administration translates this into a maximum threshold of 49.9%).

The administration specifies that the distribution of teleworking periods and face-to-face periods in the reference period of 12 calendar months is not relevant. Thus, the multilateral agreement can apply to workers carrying out their activity at the rate of 2 days of teleworking per week or to those carrying out their teleworking activity for several weeks or several months in a row. What matters is that, over 12 months, teleworking remains less than 50% of working time.

Be aware: the framework agreement can only be applied if the employee usual works’ place is in the country where the employer has its head office or place of business and usually remotely works in its country of residence, without carrying out activities other than those carried out by remote working.

The administration specifies that to ensure the usual practice of teleworking, this organization must have been the subject of a mutual agreement between the employer and the employee, in accordance with French labor law. This agreement can be formalized by one of these means:

  • An amendment to the employment contract
  • A document signed by the worker or employer
  • The production of a collective agreement or employer charter

The calculation of the activity’s proportion carried out in the country of residence is made over a reference period of 12 months, the evaluation is therefore smoothened. It is therefore possible from time to time to exceed 50% without being subject to the legislation of the country of residence. You just need to be below the threshold over the reference period.

Procedure and duration for maintaining the legislation of the country of the head office:
The application of the agreement is made upon request which must be submitted to the competent institution of the Member State where the employer has its registered office.

In practice, the procedure results in the issuance of form A1 allowing the maintenance of social security legislation.

The request must relate to a future period; however, two exceptions are provided:

  • The request may relate to a past period of 3 months, if it does not extend beyond a date prior to July 1st, 2023, and if the contributions were paid in the competent State;
  • The request may concern an earlier period of one year, without it being before July 1st, 2023.

The maintenance of the legislation of the State of the head office can last a maximum of 3 years, from the date of the request, and at the earliest from the date of entry into force of the agreement-frame.

After 3 years, the remote worker must submit a new request.

    1. Scope of the agreement

  • The signatory states: The list of States concerned as well as that of States which have planned to sign the agreement within a short period of time is given above in Chapter I paragraph 2.

    Member States that have not adopted the Framework Agreement by July 1st, 2023, may do so later. Their membership is then valid from the first day of the month following the date of signature of the Framework Agreement.

    The list of signatory States, as well as the competent institutions in each State, can be accessed on the website of the Belgian administration (Belgium has been designated as the State responsible for collecting the support of other States).

    Any signatory State may withdraw from the Framework Agreement at any time, after giving 3 months’ notice.

  • Individuals excluded from the agreement
    The framework agreement does not concern:
    • Individuals who usually carry out an activity other than cross-border remote work in the country of residence.
    • Individuals who usually carry out an activity in a country other than those signatories to the agreement.
    • Self-employed individuals.

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