Why Must I Access and Use This App?
- Social security legal and compliance requirements for your cross border activities
Within the EU/EEA countries it is a legal requirement that all personnel has an approved A1 social security application to certify continued cover in the country of social security – normally the home country – when travelling for business purposes to another country.
This regulation is agreed and issued by the EU and implemented in all EU countries and joined by the EEA countries and Switzerland.
Social Security App is an easy and efficient way to track and trace business travels and to streamline and secure the compliance process of filling out and filing A1 applications.
What is the process and what must I do?
The overall aim of the EU Directive and regulation is to ensure, that the individual will be covered in one country and to determine which. The purpose is to regulate that an individual may continue social security cover (normally in the home country) during periods of work in other countries. Due to the EU Directive for free labour across boarders, an EU-national working in another EU-country is under social security coverage in the visiting country, immidiatly when they set foot on the soil of the work place.
The employer must on the employee’s behalf file an application with the authorities using “form A1”. The responsability for filing an A1 application can be directed to the employee, but the compliance risk remains with the company, so at Relocare we do not recommend this approach.
The form A1 is documentation towards foreign as well as home country authorities that
the individual is covered by social security during the work assignment and
that no contribution will be due from the individual or the employer
What happens if documentation is not available?
Failure to document cover in one country through this process may result in loss of cover for your employee and/or claim for payment of contributions in the country he/she is visiting. The fines may be issued for both you as well as your employee. As level for social security contributions vary between countries, lack of accurate documentation may cause claims up to 20, 30 or even 36% of the salary.
In practice the documentation may be demanded already in order to physically gain access to a work place and failure to present such may result in rejection to enter, fines being issued. Further you will have the risk of claim for payment of actual social security contributions in the work country. If for instance the visiting country is France, the fine is at 3600€ and social security is ~36%
Furthermore, the situation may create uncertainties regarding actual cover and may have impact on the employees rights to receive benefits – during the assignment as well as entitlement upon retirement or in Denmark as well, the option to have unemployment sick benefits.
In order to avoid uncertainties, meet compliance and secure against potential expenses, you can chose to use the process supported by Social Security App and Relocare on your behalf.
Should an A1 be provided under in-correct assumptions, it will not be considered valid and will, consequently, result in similar issues for employee and employer and will not secure cover or prevent against loss of benefits or claim for payments.
No minimum timeframe
There is no lower time limit to determine the need for such documentation. This means that travel to any other country for just one day to perform work on behalf of the employer may require documentation in place before travel is commenced and clearly being relevant and necessary for any longer lasting assignments.
When applied in a correct and timely manner, obtaining of an A1 may in many cases be regarded as a formality, often merely stating that conditions are met to remain covered in the home country.
However, travel pattern and obligations may change over time and will need to be known already at the point of application, just as changes will need to be monitored to support rectifying along the way.
Work in multiple countries
In connection with an actual assignment from one country to another, application for continued home country cover will normally be done for a longer period – in practice up to 2 or 3 years, covering the relevant two countries.
Relocare can help you to determine if your travel is under article 13 in the Directive or if your work falls under article 12 in the Directive.
If an employee, however, is expected to have a perhaps not precisely specified number of work days in other countries during a period – e.g. travelling for work for the home country employer on an ad-hoc basis – it will be possible to apply for home country cover for each of the countries for up to a year at a time.
Social Security App handles all the underlying data and calculations when applying for A1 certificates.
This means that an e.g. Danish resident, responsible for customers in the Baltic region, may apply beforehand for continued Danish cover for all the relevant countries for up a 12 months period. Upon application, a split of physical presence should be estimated. Should this change with presence in one or more countries exceeding the expected – or if other countries become relevant – an amended application should be filed.
What is social security?
The content of the benefits and obligations under social security is defined by each individual county under its domestic legislation. This defines on one hand the rights obtained by the individuals comprised by the cover, on the other the obligations for employer and employee to pay contributions.
In Denmark social security covers i.a. medical treatment, hospitalization, subsidy to dental treatment, child allowance, sickness benefits, public pensions etc. In other countries e.g. un-employment benefit may be part of the public cover just as the level of and access to benefits may vary a lot. This will have to be investigated and defined locally.
In Denmark contributions are mainly covered by the income tax system (plus a few minor specified contributions – mainly to be covered by the employer). In other countries like Sweden, France, Belgium and Holland social security contributions may be a substantial expense for the employer of up to 20 or 30% or even 36% of the gross salary.
Besides the fact that the cover should be documented upon request, it will be necessary for all parties to know and control where the individual is covered as it may prove crucial to be aware of the expense and avoid surprises for the cover and benefits that the individual will be entitled to.
It will be relevant to know where and how the employee will be covered should incidents occur, but it could also prove crucial for the employee should cover change to a different country as he may lose already earned benefits in the home country and may only gain these after a deferred period.
Normally, cover in the home country is being sought for as this will maintain the employee “as is” also during work assignments abroad. But in order to be sure of this continued cover should be applied for as documentation on-going during work assignments abroad, but also to secure benefits in the long run such as public pensions, contents of which may only be acknowledged and relevant many years later.