Issues with the 'Certificate of Coverage': How spontaneous can business trips continue to be in the future?

By Benjamin Karcher, Dr. Kathrin Kruse, Dr. Catharina Klumpp, Thomas Hey

06-2019

In early October 2018 (article here), we reported on the EuGH, Judgement of 6 September 2018 – C-527/16 on the replacement of posted employees under Regulation No (EC) 883/2004.

The 'Certificate of Coverage (A1)' is intended to simplify the free movement of workers guaranteed under European law since 2010, with the aim of avoiding double social security payments. Practical problems, however, result from the unbalanced handling of checks and the administrative effort associated with the Certificate of Coverage throughout Europe. It is hoped that the current situation as regards (spontaneous) business trips, which is particularly prone to problems, will in due course be remedied.

Social security requirements within the EU

Once workers are deployed across borders within the European Union, employers must consider the applicable social security system. In principle, an employee is covered by social insurance in the country in which he or she is working.

Exception in case of posting of workers

However, to avoid changes in the applicability of the social security system, Regulation No. (EC) 883/2004 provides that an employee who pursues an activity in a member state of the European Union on behalf of an employer, and who normally carries out his or her activities there but who is then posted by that employer to another Member State to perform work on that employer’s behalf, shall continue to be subject to the legislation of the first member state. This shall apply, provided that the anticipated duration of such work does not exceed 24 months, and that the employee is not sent to replace another posted individual.

Certificate of Coverage (A1)

At the request of the employee concerned (or the employer), the competent institution of the member state whose legislation is applicable shall provide an attestation that such legislation is applicable and shall indicate, where appropriate, until what date and under what conditions this is the case. This so called Certificate of Coverage (A1) is legally binding throughout Europe.

To simplify the administration process, the application will be online only from 2019 onwards. However the application process will continue to take about two weeks.

Certificates of Coverage can be applied for online. In order to ensure that such documents are recognised abroad, the issuing office will return the automatic certificate as an electronic document. This document will then be able to be printed out and handed over to the employee.

Improved controls in the European Union and restrictions on business trips

However, there are at least two essential practical issues:

There is no minimum time limit for the posting of workers, which means that a Certificate of Coverage has to be applied for in all cases of cross-border worker postings. In addition, posted workers have to carry their certificate with them in order to comply with official checks. An application alone is not sufficient to meet the relevant statutory requirements. If employers want to postpone an assignment abroad or even ask their employees to go on spontaneous business trips, fines may be imposed. Recently, press releases indicate that Austria and France especially have started to carry out more checks on Certificates of Coverage.

Owing to the exchange of data between social security authorities in the European Union, stricter controls are expected in all member states of the European Union in the future.

System overhaul: at the discussion stage

At a European level, an overhaul of the relevant law has already been the subject of discussion between the European Commission and the Council, especially in respect of short-term business trips.

In particular, the separation of business trips from postings, and to what extent a definition of "business trip" may be expected, is still not clear. So far, there has been no final decision on how and when the Regulation will be reformed. A final decision can only be expected after the upcoming European elections.