organising training and setting up networks on the European Coordination of Social Security Schemes

in the 27 Member StatestrESS

trESS National Seminar Italy

7 May 2010

Towards new rules for the determination of the

legislation applicable ?

Yves JorenstrESS Project Director

Applicable legislation as a fundamental principle of European social security law

• Objective• Choice of lex loci laboris• Fundamental principles behind the conflict rules:

-Neutral character:only avoidance of administrative complications; no principle of favouritism

-Compulsory character:public character of social security; Member States cannot determine extent to which their or another Member States' legislation is applicable

– Exclusive and strong character

Overview of the actual rules -posting provisions (Stefano)-other provisions

Exceptions to the general rule

Working in different countries

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• Normally pursues activities in two states: simultaneously or continuously alternating activities in two states

• Are activities performed in state of residence ? state of residence

• No activities in state of residence state of employer

Activities of employment in 2 or more states

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• Activities for more than one employer in different states ?

state of residence

• Activities for different employers on behalf of employer established in third country and no substantial activities in MS of residence

state of residence

Activities of employment in 2 or more states

What is new ?

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• Activities of employment in 2 or more states:

more detailed description of place of residence in Art. 11 Reg. 987/2009

Description substantial part in Art. 14 § 8 (25%)

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Example• X lives in Italy• X works in France and Italy• if X performs a substantial part of his activities in

state of residence: Italy is competent state• if not: registered office or place of business• what is "substantial part" ? 25%, criterion of remuneration, and/or time working

Activities of employment in 2 or more states

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Example• X works in Belgium and in the Netherlands for UK

employer and German employer• X lives in Italy• one works for different employers in different states• competent state: Italy

Activities of employment in 2 or more states

Only activites of self-employment in different states

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• State of residence in case substantial part of activities are also fulfilled in that state.If not: state of centre of interest (Art. 14 §9 Reg. 2009/884): i.e. notably: fixed and permanent place of business / habitual nature or duration of activities / number of services / intention (previously under Reg. 1408/71: place of residence: from moment part of activities were performed in that state => if not: place of principal business)

• What is substantial part ? (Art. 14§8 Reg. 987/2009)25%; turnover / working time / number of services rendered and / or income

Activities of employment and activities of self-employment

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• Place of employment (no exception anymore, like under Reg. 1408/71 where two legislations could be applicable (Annex VII)).

• ExampleA general manager lives in the Netherlands and works in Belgium (self-employed), in the UK (employed) and in the Netherlands (employed)

competent state: the Netherlands

Some other specific situations

International transport

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• Special rule under old Regulation 1408/71 is abolished

(registered office or place of business, unless if someone worked for branch in another MS (+ that state) or if one worked principally in state of residence (+ that state))

Civil servant + employed and/or self-employed

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• State where one is active as civil servant (administration employing him)(under Regulation 1408/71: state of civil servant in case subject to special scheme (otherwise employed))

Auxiliary staff EC

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• Right of option

place of employment

MS they were last subject to

MS of nationality

Some other special rules abolished

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• Special rule if one was working as civil servant in several states is abolished (old Art. 14sept. Reg. 1408/71: subject to later legislation).

• People working (employed of self-employed) for undertaking which straddles the common frontier of states: registered office / place of business of undertaking

Some other special rules abolished

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• Persons employed by diplomatic mission and consular posts:

state of employment

nationals of accrediting state: right of option

Is there a need for revision?

Need for revision of the conflict rules ? (1)

Three reasons:

a) New migration patterns temporary commuting

intra- and interorganisational move

no integration in state of new place of work

a) European citizenship: Coordination Regulations are not the only way for obtaining social security rights

Need for revision of the conflict rules ? (2)

Three reasons (cont.):

c) Directly relying on EU Treaty: free movement (cf. Hendrix, Petersen, De Cuyper) conformity of national legislation with secondary

legislation does not necessarily imply that it is in conformity with Treaty !

=> Result: proportionality and in concreto evaluation !

Are the conflict rules "EC-resistant" ? (1)

1. Towards a new framework ?

a) What are the objectives of the Regulations ? Who is protected ? free movement: worker

but also employer / social security institution

Are the conflict rules "EC-resistant" ? (2)

2. Towards a new framework ? (cont.)

a) New framework asks for balance of interests interests of different stakeholders

priority for one over the other ?

b) Adaptation of fundamental principles behind the conflict rules: neutral and compulsary character and exclusive and strong effect

Time for a new framework !

"Assessment through balance of interests"

see also Think Tank Report 2009 – Mobility

www.tress-network.org

An example? Intra-group Mobility

Intra-group mobility ?

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• Short term mobility within group of companies ?

• Different options:a) company in A sends person to company in B

Posting ? Often not the case as one is sent by special entity

b) company in A sends person to company in B, but person concludes employment contract with company in BPosting ? Local labour contract is problematic

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c) simultaneous activities in more than one MS(but only employment relationship with one of the companies): MS of residence if substantial activities there

d) Simultaneous activities in more than one MS (but with employment relations with different enterprises in different states):Always MS of residence

need for new rule ? Proposal trESS Think Tank: http://www.tress-network.org/TRESSNEW/

Intra-group mobility ?

The situation of posting

The situation of intra-group mobility

Professional mobility as self-employed

Comparison with labour law

• Regulation 593/2008 of 17 June 2008 on the law applicable to contractual obligations– But: the fact that contract is concluded with a second employer, has

no impact on temporary character Distinction between social security law and labour

• Posting = Directive 96/71 (also intra-group posting) : ”post workers to an establishment or to an undertaking owned by the group in the territory of a Member State, provided there is an employment relationship between the undertaking making the posting and the worker during the period of posting”

contract with second "receiving" employer is not excluded

Balance of interests

• Balance of interests between the different stakeholders: employees, employers and national social security institutions

Place of habitual work of employee

Place where the employer is established ?

Legislative policy

• A simple insertion of a new rule of conflict in Regulation 883/2004 or a complete reorganisation of Title II?

Legislative policy

• New structure envisaged: General framework = lex loci laboris

Derogative rules = posting – IGM – others (artists, researchers?)

Particular provisions = activities in several MS

Part III – PROPOSAL

• "(ba) “group of companies” means a network group of companies or a group with a community-wide dimension with a dominant company that exercises control over other connected companies, as defined under Directive 2009/38 of 6 May 2009 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees;”

Part III – PROPOSAL

• Art. 12 (3): A person who has normally performed work activities in a Member State on behalf of an employer being part of a group of companies and who afterwards exercises successive activities as an employed person in other Member States to the benefit of other employers being part of the same group of companies may choose together with his/her employer to remain subject to the legislation of the Member State where that first employer is established, on condition that the duration of each of the new periods of activities as employed person does not exceed 24 months; that these successive periods are not interrupted by a period of activity on behalf of an employer who does not belong to the group of companies or for a period of inactivity of more than (three) months and not assimilated to a period of activity due to Article 11 (2) and that a labour contract is concluded between the person concerned and each of the successive employers, regardless of the link that the employee might keep with the first employer."

Part III – PROPOSAL

• Start of a career within a company that is part of the group;

• Successive periods of activity within other companies of the group in different MS with a maximum of 2 years each (beyond: general rules would apply unless agreements under Article 16 of Reg. 883/2004)

• The continuation of a career track, as it is requested that the period is not interrupted by any activity for a company outside the group or for a period of inactivity of more than [3] months

Part III – PROPOSAL

• A labour contract concluded with each of the successive employers, while the employee concerned keeps a link with the connected company, regardless how this link looks alike.

• What matters is that the movement takes place within a group strategy.

• Situations without a new work contract usually will be regarded as normal posting under Article 12 (1).