Worker mobility has increased significantly in recent decades. To encourage the free movement of workers within the EU, individual social security systems are steadily being coordinated at EU level with a view to ensuring that persons moving from one member state to another and from one social security system to another do not lose their benefits. For that purpose, a new regulation (Regulation 883/2004) has been introduced cancelling and replacing the earlier rules (Regulation 1408/71).
The prior regulation still apply to Switzerland
The new regulation has been in effect in the EU since 1 May 2010. Member states have been given a two-year transitional period in which to implement the new system. In Switzerland, the regulation will be enacted once it is ratified by Parliament. The ratification procedure is already underway. The previous regulation will continue to govern the relationships between the Swiss, EEA and EU social security systems until the new legislation comes into effect.
Broader scope of application
The new legislation is broader in scope than that currently in application. For example, it also applies to early retirement. Moreover, the periods during which benefits have been acquired can now be added together to ensure equal treatment within the scope of the regulation.
Extended participation in the social security system
An employee who is temporarily seconded abroad by his employer may now remain covered by the social security system of his home country for up to 24 months. The limit was previously 12 months. Coverage can be extended for a maximum of 5 years altogether subject to the mutual agreement of the member states concerned. However, according to EU Commission recommendations, to qualify, an expatriate must have been employed for at least one month in his home country before his employer sends him abroad.
Strengthening of applicable law
The new regulation also clarifies applicable law for persons with multiple employments. If an employee has several occupations in various member states, he will be covered by the social security system of his home country provided he is also employed there to a “substantial†degree. This means that he must exercise at least 25% of his working capacity there and be paid there accordingly. Persons who are at the same time employed and self-employed must be covered by the social security system of the country in which they work as employees.
The new regulation does away with the existing exceptions and reinforces the principle of uniformity of applicable law. The travelling employees of international shipping companies are subject to the general principles of applicable law. Their special exceptions were rescinded.
Companies should prepare
As the firm Ernst & Young points out, the new rules and regulations may imply certain risks against which companies would be well-advised to prepare. These risks include a lack of familiarity with the new rules and procedures, additional administrative costs and the complexity involved in handling two separate but co-existing sets of rules. Companies can cope with these risks by implementing clear, predefined and centralised procedures.