EU: Revision of Regulation 883/2004 on the coordination of social security postponed to the next legislature
Regulation 883/2004 is the most important legal instrument of the EU with regard to social security. It lays down the coordination rules between the member states in order to i.e. prevent posted workers to be covered by more than one social security system. The envisaged revision of this instrument has however, been blocked by the Council and subsequently postponed by the European Parliament.
In March 2019, the EU Commission reached a compromise with the Employment Committee of the Parliament and the EU ministers of work on the revision of Regulation 883/2004. This regulation sets forth the social security coverage coordination rules. In principle, a worker should be covered by the social security provisions of the lex loci laboris (the place of work). However, Articles 12 and 13 of the regulation contain an important exception for posted workers, which allows them to continue falling under the rules of the posting member state. The ratio behind this exception is the simplification (the unity and continuity over coverage) and the promotion of the freedom to provide services. However, this exception will only apply under certain conditions. The exception does not count more than 24 months, the posted worker cannot replace another posted worker, and the posting employer needs to pursue substantial activities in the posting state (no post mail companies), etc.
As such, the rules of Regulation 883/2004 left enough space for interpretation to allow for misuse by certain companies, the Juncker Commission felt it was necessary to revise certain outdated provisions. The compromise of March 2019 would make the conditions for posting employers stricter. By example, a worker can be hired in view of his secondment to another member state, only if he was previously covered by the social security system of the posting member state for at least 3 months. Also, a new posting of the same worker to the same member state would only be possible after an interruption of 2 months. Last, but not least, the definition of the registered office or place of business of the undertaking or employer would become clear with the help of criteria as the revenue in the member state, the amount of services per member state, the place of the general shareholders meeting, the place of the meeting of the board, etc. Such a definition would make it difficult for letterbox companies to claim that their workers should be covered by the social security system of the posting member state, which is often characterised by low social security contributions.
However, the update of the regulation caused for a deep division between the Member States which, at one side, the Western Member States (led by the Netherlands, Belgium, Luxembourg, Germany and Austria), who did not esteem the revision as strong enough to combat social dumping, and at the other side, the Eastern Member states, who are of the opinion that the revision goes too far and would block their companies’ access to the single market. The same divisions became clear in the European Parliament and in a very narrow vote, an amendment was passed by 291 votes against 284 in favour of lifting the revision discussion to the next legislature of the European Parliament. Therefore, it is possible that the next Commission will have to start over with the revision and the EU will have to cope with the same outdated rules of 2004 for some time longer.
This article was provided by the law firm Van Olmen & Wynant, L&E Global’s member firm in Belgium.
For more information about Van Olmen & Wynant, please visit their website at www.vow.be
