CROSS-BORDER TELEWORK – does the new EU framework agreement meet current labour market needs? And what about the Workation?

NEW EU AGREEMENT

Since the beginning of July this year, a person who performs work remotely from another country may be subject to the social security system of the country in which the employer is based. This facilitation for such employees was introduced by the EU Framework Agreement on the application of Article 16(1) of Regulation (EC) No 883/2004 in cases of habitual cross-border telework (hereinafter, the “Agreement”). This Agreement is a response to the widespread interest of employees towards performing their duties remotely from another country, despite the fact that the employer’s seat is in Poland.

EXISTING RULES

The basic principle of EU social security coordination is that a person is subject to the legislation of only one EU Member State. As stated in Article 13(1)(a) of Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems, a person who normally pursues an activity in two or more Member States shall be subject to the legislation of the Member State of residence if he/she pursues a substantial part of his/her activity in that Member State. If the share of cross-border remote work of the country of residence exceeds 25%, the result is that such a worker is subject to the law of the country in which he/she resides and not to the law of the country in which his/her employer is based and in which the worker works for the rest of his/her employment.

NEW OPPORTUNITIES BASED ON THE AGREEMENT

The current Agreement stipulates that to cross-border teleworking, the social security provisions of the employer’s home Member State will continue to apply, provided that the teleworking rate in the country of residence is less than 50 per cent of all working hours. Hence, it means a significant increase in possible cross-border telework from the country of residence and a change in the limit on total working hours from 25% to 49.99%. Those who meet the conditions of the framework agreement and work remotely up to half of their working hours can provide work in this way without the risk of being covered by a foreign social security system.

WHERE IS THE CATCH?

Taking advantage of the opportunities provided by the Agreement depends on submitting an appropriate application to ZUS (Social Insurance Institution). Such application may be submitted by both the Employee and the Employer.

The literal wording of the Agreement specifies that the applicant should indicate the specific period to which it wishes to apply the provisions of the framework agreement. It would therefore be reasonable for ZUS to verify the condition of 50 per cent working time in the employer’s country for the entire period to which the application relates – that is, overall, without breaking it down into weeks or months. And this is where the title catch comes in.

Unfortunately, according to the official position of ZUS, the condition of 50% working time will be verified on a weekly basis.

WHAT ABOUT THIS WORKATION?

Given the strict interpretation of the provisions of the Agreement by ZUS, it should be concluded that the Agreement does not facilitate employees’ use of one of the most desirable benefits on the remote work market – the so-called Workation. The idea of this benefit is that an employee is free to go to another country, be it for a few weeks, and combine work with rest and travel. However, since ZUS will only allow an employee to make such a trip if his or her working hours abroad in a given week do not exceed 50%, the only workation that can be afforded at the moment is an extended weekend. That’s all well and good, but we are still waiting for a solution that will allow you to close your laptop after work and relax on a beach in Spain for, say, the whole of grey October.

HOW DO WE ASSESS THE AGREEMENT?

The agreement is a step in the right direction. It will make it easier to occasionally combine work and travel abroad, and it will help those who work across borders on a daily basis by increasing their employer-safe remote working time (this is especially true for those living near the border; the phenomenon is most common in the Benelux countries, but also on the Polish-German and German-Dutch borders). For now, however, this is just a step, and we personally hope that it will turn into a march towards greater flexibility and mobility for all employees working remotely within the EU, for example by allowing 50% of working time to be accounted for on an annual basis rather than just on a weekly basis, and by extending the scope of the Agreement to a wider range of workers than those doing cross-border remote work.

Authors:

Katarzyna Hiller LL.M., Attorney at Law

Zuzanna Włoczko, legal assistant