EU Framework Agreement on cross-border telework enters into force on 1 July 2023
Some EU Member States have signed a framework agreement on cross-border telework. It will enter into force on 1 July 2023. Finland has signed the Agreement. According to the Framework Agreement, an employee habitually working and teleworking in two different EU countries can be insured, under certain conditions, in the country where the statutory seat of their employer is established (instead of in their own country of residence).
According to the Agreement, the employee can telework nearly half of their working time in their country of residence and half of their working time in the country where their employer’s statutory seat is established and still be insured for social security in the country in which the employer’s statutory seat is established. Normally, under the EU Regulations on social security, an employee who does more than 25 per cent of their working time in their country of residence is insured in their country of residence.
The Framework Agreement allows for a deviation from the basic EU Regulation on insuring work done in several EU countries. It means that the employee can do more teleworking in their country of residence and that teleworking does not affect to which country the employer pays the social security contributions.
The Framework Agreement can be applied under certain conditions:
- The Framework Agreement is applied only to employees who move between countries that have signed the Agreement. Finland has signed the Agreement, and around 20 other EU countries have expressed their intent to do the same. It is possible to join the Agreement also after 1 July 2023, so the list of signatory Member States continues to be updated.
- The Framework Agreement applies only to cross-border teleworkers who telework in their country of residence via a digital (IT) link to their employer’s infrastructure and who work for the rest of the time in the country in which their employer’s statutory seat is established.
- The employee must do telework in their country of residence for at least 25 but less than 50 per cent of their total working time. The remaining time, that is, at least 50 per cent of the working time, the employee must work in the country where the statutory seat of their employer is established.
- The employer and the employee must both want to apply the Framework Agreement on cross-border telework and to deviate from the rules of the regularly applied social security legislation.
The Framework Agreement does not affect the insuring of, for example, work done on construction sites or in customers’ premises abroad. In addition, the Agreement does not affect situations in which the employee works in only one EU country. In addition, the Framework Agreement does not apply to officials, self-employed persons or grant recipients.
The employee resides permanently in Germany. The employer is a company with its statutory seat in Finland. The employer and the employee have agreed that the employee must work in Finland for at least 50 per cent of the working time. The rest of the working time, the employee teleworks from their home in Germany, their country of residence.
Since the employee does a considerable part (more than 25%) of their working time in their country of residence, the employee should be covered by the social security legislation of Germany, the employee’s country of residence. Since both Finland and Germany have signed the Framework Agreement on cross-border telework, the employer can apply for an A1 certificate and an exception from Finland based on which the employee’s social security is arranged in Finland. The employee’s consent is required.
The Finnish Centre for Pensions determines which country’s social security applies
The employer applies for an A1 certificate under the Framework Agreement from the social security authority in the country where the employer’s statutory seat is established. In Finland, the application is submitted to the Finnish Centre for Pensions online via its eServices. If the Framework Agreement can be applied to the employee, the Finnish Centre for Pensions will grant the A1 certificate to attest coverage under Finnish social security legislation.
Framework Agreement aims for more flexible telework in Europe
The agreement provides much desired flexibility for cross-border telework in Europe. The agreement is the result of discussions and work carried out within the Ad Hoc working group of the Administrative Commission for the Coordination of Social Security Systems that operates in conjunction with the European Commission. Finland was represented by the Finnish Centre for Pensions and the Ministry of Social Affairs and Health. The current Framework Agreement is temporary, but the future aim is to incorporate a permanent rule on telework into the EU Regulation on social security.