The imposition of COVID-19 travel restrictions shortly after the UK left the EU means that employers are only now coming up against the complexities of regulatory obligations arising from cross-border working. There are three key areas that are likely to impact firms:
1 EU social security rules
2 Posted worker directive
3 Immigration and work permit requirements
The UK-EU Trade and Cooperation Agreement (TCA) ensures that there should be no dual social security/national insurance contribution liability on the same income. That said, the rules on how long a posted worker can remain within their home country are substantially reduced to a two-year limit, compared to five-plus previously, and they also do not cover territories only in the European Economic Area (EEA): Lichtenstein, Iceland, Norway, or Switzerland, which is neither in the EU or EAA, but is a member of the single market.
Nevertheless, with respect to short term business travel, it appears that obtaining A1 certificates (confirming that liability remains in the home country) remains relatively straight forward.
The greatest unknown is when the application should be made. A rule of thumb historically was that an A1 would only need to be obtained where an individual was working greater than 5% of their time in a second country. That said, more EU countries are now expecting an A1 certificate applied for (and ideally obtained) in advance of an individual working in that country. To avoid falling foul of these expectations, you should take advice on a country-by-country basis on any minor travel required before obtaining an A1 certificate.
While the EU Social Security Protocol is largely uniform across the EU, posted worker directive rules are different for each country – EU directives are basically a framework, which countries can implement as they see fit.
The directive's objective is to provide a core set of rights and rules for a posted worker ensuring minimum labour standards (eg rates of pay/rest breaks etc) and, while short-term business trips can be exempt from the rules, this is not the same for every territory, making the position extremely complicated. Even considering a relatively basic question of whether there is a minimum number of days below which the PWD would not apply, the most appropriate local responses vary significantly. This is clear from a selection of assessments by our colleagues from other Grant Thornton member firms across the EU:
"No, exemptions depend on the reasons for the visit and the duration of the stay."
"To a maximum of 14 days without a break, or 30 days within 12 months the employer does not have to comply with the minimum pay and leave regulations."
"Νο. By way of exception, the requirements regarding minimum wage and minimum paid leave are not applicable to employees who are posted in order to assemble a good supplied by the posting company to the hosting one, provided that further conditions are met such as presence in the host country does not exceed eight days."
"None, from day one there should be the need to file a communication."
With such a varied implementation process, combined with both civil and criminal sanctions, our UK team rely heavily on our strong relationships with local country member firms to navigate the rules. Even when arranging business trips into an EU territory, you should always ensure that all relevant registrations are undertaken.
It's also worth noting that some territories link A1 certificate application to the PWD application, which can be another pitfall – impacting when you need to notify the authorities of any travel.
It's essential that individuals working in the EU have the right to be in that territory and, importantly, undertake the type of work they are doing there. The end of the right of UK nationals to work freely in the EU has caused one of the greatest headaches to UK businesses trying to continue working in member states, with anecdotal evidence of delays in obtaining work permits resulting in lost work and revenue.
Every EU member state also has their own rules and regulations on work permits and as such advice should be taken with respect to each territory separately – often the UK citizens’ immigration process is the same as for any other non-EU national. Key considerations are as follows:
Discussing this with immigration advisors and Grant Thornton teams in Europe, there's no silver bullet for obtaining immigration and work permit approvals. Often, however, there's a requirement for an EU entity to sponsor the worker. There are three potential solutions for this, each of which requires careful analysis:
1 Incorporate an entity in the EU
2 Assign/second the worker to a client in territory
3 Utilise an employer of record
Overcoming these challenges is key for unlocking business opportunities in the EU without opening up the company (or the employee) to potential criminal and civil sanctions.