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The European marketplace is extremely interconnected, so knowing what country an employee owes social security contributions to is a significant concern. Any employer looking to grow their company into the European Union (EU) should understand the laws that affect mobile workers.
This guide will provide a basic overview of A1 certificates — including detailed information about when they’re required and where exceptions to the rules may arise. Before we dive in, here is a list of important terminology that frequently appears in legislation and writing concerning A1 documents:
- Posted workers: Employees sent by their employer to work temporarily in another country. They are different from EU mobile workers because they only remain in the host country for a short period and do not become part of its labor force.
- Home country: An employee’s country of residence. A worker must carry out at least 25 percent of their employment activities within their home country to be considered a member of its social security program.
- Host country: The country an employee is traveling to for work purposes.
- Portable documents: Documents that employees must carry with them at all times when traveling to other countries for work-related purposes. In this case, the A1 certificate is a portable document.
What is an A1 certificate?
Employees typically pay social security contributions in the country where they work, which is often their home country. However, employees working abroad on a temporary basis and those who regularly work in multiple countries should not have to pay contributions to more than one state.
That’s where the A1 certification comes in. It proves that the holder already pays social security contributions to their home country and exempts them from the need to pay in their host country. In countries outside of Europe, an A1 form is also called a certificate of coverage. It is mandatory in all EU and European Economic Area (EEA) countries, including Switzerland.
Remember, A1 certificates are only relevant for social security purposes when moving within the EU. Employees who are abroad for extended periods might benefit from applying for the following forms in addition to the A1:
- S1: Entitles employees to health care in their host country. Posted workers and cross-border commuters benefit most from this form.
- U2: Allows an individual to continue receiving unemployment benefits while searching for work in other countries.
- S2: Permits an employee to receive planned medical treatment in their host country the same way a resident would. Employees may be required to pay a percentage of the upfront cost.
- DA1: Authorizes an employee to receive medical care in their host country in the event of a workplace accident or occupational disease. This form is helpful for employees in high-risk industries like construction or mining.
There are certain situations where other social security forms may be more appropriate.
Who needs an A1 certificate?
Any EU employee who plans to work in an EU member state other than their country of residence needs to complete an A1 certificate application.
Detached workers are individuals who will only work in one country for the duration of their posting. As of February 2021, all EU member states abide by detached worker guidelines, so an ordinary A1 certificate will suffice in most cases. Those who are self-employed also need to have a standard A1 certificate when conducting business activities outside their country of residence, as do civil servants who are working abroad.
Rules can differ from country to country for multistate workers, or thosewho spend at least 5 percent of their working time in a country other than their home country. This varied legislation also applies to truck drivers and other workers who must regularly transit through different countries.
Employees who work in a single member state for a year or more and then move to another member state are not considered multistate workers. Therefore, different rules apply to them. These individuals should obtain regular A1 certificates for each state they will work in unless they plan to change their country of residence.
In general, it’s best to be cautious: Apply for an A1 certificate every time an employee travels between member states for business purposes, even for short trips. For stricter countries, ensure your employees have a physical copy on hand before traveling.
How long are A1 certificates valid?
Most A1 certifications are valid for up to 24 months. However, EU and EEA citizens can obtain a certificate that lasts for up to five years. Longer-lasting certificates come with additional requirements, so those applications will take more time to process. Authorities may also request a written document confirming that the employee still wishes to be insured in his or her home country.
Due to Brexit, the option to apply for an extension on an A1 certificate is no longer available for British citizens. Britain-based companies must limit postings to two years or allow their employees to register under their host country’s social security institution.
The time frame included in the A1 application should span from the start of the posting to its completion. If the posting lasts longer than expected, the employer should apply for an extension as soon as possible. Suppose an employee must take a business trip or attend a meeting on short notice. In that situation, the employer should still apply for an A1 certificate and prepare to send it to the host country’s authorities retroactively.
How do you apply for an A1 certificate?
In most cases, the authority that issues an A1 certificate is the social security institution an employee pays contributions to. Depending on the home country, it could also be their healthcare organization. Employers must verify which entity they should apply to.
Employers are normally responsible for obtaining certificates for employees who will work abroad. This task may fall on human resources departments or travel managers depending on the company’s organizational structure. Either way, the employer must submit an electronic application to the worker’s home social security or healthcare institution and notify the host country of the employee’s posting. The employer should include the following details:
- The employee’s workplace
- Date of arrival
- Duration of the posting
- Contact information
- Additional information that could be relevant
The application process is slightly different for multistate workers. Depending on employment circumstances, it may be more appropriate to apply for a different form. For more accurate information, the employer should check with each of the host countries.
It’s important to remember that lead time, or the time it will take for the entity to process an application and present a certificate, will vary depending on the host country. To stay on the safe side, make sure to apply well in advance of the first workday — preferably as soon as you know an employee will be working abroad.
What are the penalties for A1 certificate noncompliance?
The Posted Workers Directive (PWD), designed in 1996, prevents employers from cutting corners with labor standards. It grants fundamental rights to employees working in EU states other than their home countries. Following a July 2020 amendment, specific countries, including Austria, Switzerland, and France, have become stricter in enforcing A1 certification compliance.
With the recent tightening of A1 policies in certain EU member states, it’s best for workers to be prepared and have a certificate ready before traveling. Some countries are more lenient and will accept a pending A1 form as long as the employee can present it retroactively. Others will enact penalties upon discovering an employee without one.
How do officials manage to find noncompliant individuals? In stricter countries, inspections can occur at border crossings, at the workplace, and sometimes even at business hotels. France and Austria are especially strict in enforcing A1 compliance. These countries require employees to carry their forms with them at all times, even during short trips. When posting employees to these countries, follow all rules as closely as possible to avoid penalties.
Specific penalties for A1 noncompliance vary from country to country, but the most common ones include:
- Fines of up to EUR 10,000
- Being denied entry to work sites
- Getting sent home
- Losing access to trade fairs and events
- Difficulty gaining future employment abroad
Employers often shoulder the burden of these penalties, so it’s best to be diligent when submitting paperwork for any posted workers.
Which country covers social security abroad?
Two factors determine which country covers employees’ social security — their country of residence and their work situation.
The employees’ country of residence is where the employees live. Their work situation refers to their professional circumstances, categorized as employed, self-employed, unemployed, posted abroad, or looking for work. The EU provides additional information for common types of work situations:
- Posted worker: As long as employees have an A1 certificate, they will remain under their home country’s social security program.
- Civil servant: The employee’s home country covers social security and benefits.
- Cross-border commuter: Also known as frontier workers, these employees live in one country but work in another. The employees pay contributions to and receive coverage from the country in which they work. However, they are still able to receive medical treatment in their country of residence. Special rules may apply, so employees should check with their host country to find out what benefits they are entitled to.
- Multistate worker: This term applies to employees working in two-plus countries on a regular basis. The employees can remain covered in their home country as long as they conduct at least 25 percent of their work activities there. For example, a resident of Denmark may work in Sweden for three days each week and stay in Denmark for the other two days. Since the employee spent 40 percent of his or her working time in Denmark, the individual can stay under the country’s social security.
- Self-employed worker: These individuals will need A1 certificates when performing their usual job functions in another country for periods lasting up to 24 months.
If you’re unsure of employees’ circumstances, check with the appropriate authorities in their home and host countries.
How has Brexit affected social security contributions?
Several things have changed concerning international work following the finalization of the Brexit transition period on Dec. 31, 2020.
As of Jan. 1, 2021, UK citizens working in an EU member country under a standard A1 certification can remain under British social security for up to 24 months. However, the ability to extend that period by up to five years is no longer available.
EEA countries and Switzerland are exceptions to this rule. Employers should pay special attention to postings in the following countries:
- Norway: UK citizens working in Norway may remain under British social security for up to 36 months so long as the home country provides a document of confirmation. Employers must apply within four months of an employee’s first workday.
- Liechtenstein: Liechtenstein does not have an existing agreement with the UK, so officials decide coverage on a case-by-case basis.
- Switzerland: British citizens working in Switzerland may remain under British social security for up to 24 months with the condition that they obtain confirmation.
- Iceland: UK citizens working in Iceland may remain under British social security for up to 12 months — they can extend this period for another 12 months providing they obtain confirmation before the year is over.
Rules for multistate workers have remained mostly the same. As long as employees conduct at least 25 percent of their professional activities within the UK, they can still receive coverage from British social security programs. However, some EU member states, like the Netherlands, have changed the benefits that are available to international workers. Make sure to check with the host country beforehand to ensure that your employees can access everything they need.
All EU member states have agreed to maintain the detached worker guidelines for British nationals posted abroad. Workers who have been working abroad since 2020 are still protected under the Withdrawal Agreement.
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