According to information prepared by Deloitte UK in April 2019, the UK government has published practical guidance [1] on the social security contributions position for UK and EU internationally mobile workers if the UK leaves the EU without a deal and actions UK employers would then need to take for UK outbound assignees to the EU.
This follows on from draft legislation published by the Department of Work and Pensions (DWP) in December 2018 on the UK’s proposals to retain EU social security law in the event there is no withdrawal agreement and no future relationship agreement with the EU. This is part of the UK government’s planning for the potential event of a no-deal Brexit outcome.
What does this mean in practice?
Ultimately the guidance mirrors the draft legislative proposals that seek to embed current EU social security coordination rules in UK domestic legislation after the UK’s withdrawal from the EU in the event of a no-deal Brexit outcome.
In summary, the proposed social security position, from a UK perspective, would be as follows post-Brexit:
UK outbound assignees with an A1/E101 certificate in place at UK exit date
- If the end date on the A1/E101 certificate is after 12 April 2019 (or the exit date if later), there may be a double social security charge. There will likely be an ongoing UK liability, and the host country authorities will need to be approached to confirm their position.
- The exception to this is UK or Irish nationals working in Ireland under an A1/E101 certificate where it has been confirmed that the current treatment will continue.
New UK outbound assignees moving post UK exit date
- Individuals assigned from the UK to another EU member state would remain subject to UK social security for at least the first 24 months of their assignment.
- Individuals who fall within the current EU multi-state working rules would remain subject to UK social security if this would have been the case under the current rules.
- A replacement for the existing A1/E101 certificate will be issued for new moves. The existing application form (CA3822) should be used to make applications after the UK has left the EU.
- If the host country has not adopted a reciprocal approach there may be a double social security charge.
UK inbound assignees
- Individuals assigned from an EU member state to the UK generally would be exempt from UK social security for at least the first 24 months of their assignment provided they meet certain conditions.
- Individuals who fall within the current EU multi-state working rules should be exempt from UK social security if this would have been the case under the current rules.
HM Revenue & Customs expect to publish additional information on this after 12 April 2019.
The UK government recognizes that this approach could result in dual social security liabilities and says that it is working to protect UK nationals in the EU in a no-deal scenario by reaching reciprocal arrangements with the EU or individual member states to maintain existing social security coordination arrangements for a transitional period until 31 December 2020. Individuals within the scope of these arrangements would pay social security contributions in one country at a time during this transitional period.
To date, Belgium and Spain have stated that they are prepared to offer reciprocity in these types of scenarios avoiding potential double charges. Cyprus and the Netherlands have confirmed that they are not. Other member states are yet to confirm their official positions.
It appears that the general approach post-Brexit is that existing Bilateral Social Security Agreements between the UK and certain EU/EEA countries would not come back into force to determine an individual’s social security liability and access to benefits. Moves to and from other member states would therefore be regarded as “rest of the world” moves.
No mention is made in the guidance regarding the Citizens’ Rights Agreements the UK has negotiated with Switzerland and the European Economic Area countries (Iceland, Liechtenstein and Norway) in the event of a no-deal Brexit (which include provisions regarding social security contributions coverage).
Comment
The picture remains unclear and employers should consider the following primary areas in a no-deal Brexit scenario:
- Communications: Around the potential impact on employees’ social security position, access to benefits and steps being taken to mitigate this impact;
- Additional costs: Either directly through additional social security costs or the need to compensate staff for reduced access to state benefits; and
- Payroll compliance: Additional complexities owing to the fact that social security contributions may become due in the host location.
All are critical issues from a mobility and talent perspective and employers operating internationally should review and adapt as necessary any contingency plans they have developed for a no-deal Brexit.
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