For cross-border workers, new rules regarding their social security affiliation, in the context of teleworking, came into force on 1 July 2023 following the expiry of the transitional period linked to the COVID-19 pandemic.
Two situations of teleworking may occur going forward:
- Applicable to ALL for teleworking of less than 25% of working time – the pre-Covid regulation
The special Covid related temporary regulation coming to an end, the principle rule (exceptions exist) is that social security affiliation of a cross-border worker (employed by a Luxembourg based employer) is in Luxembourg as long as their performance on the territory of their country of residence remains below 25% of their total working time.
This is the case for any type of activity the employee may perform and, as is the case so far, a declaration and request for an A1 needs to be submitted.
2. Applicable to SOME for teleworking of between 25% and less than 50% of working time
A new regulation (the Framework Agreement on the application of Article 16 (1) of Regulation (EC) No. 883/2004 in cases of habitual cross-border telework, hereafter “the Agreement”), which will come into force on 1 July, will allow some cross-border workers to telework up to 49.9% of their total working time whilst maintaining their social security affiliation in Luxembourg, subject to certain conditions and restrictions:
Geographic scope of the Agreement
The Agreement is not imposed on countries, but each country within the EU, the European economic area and Switzerland may opt in by signing the Agreement.
The Agreement can only be applied in situations where both the country of residence of the employee and the country of the statutory seat of the employer have signed the Agreement.
The list of countries having signed as of 28th June 2023 are: Germany, Switzerland, Liechtenstein, Czech Republic, Austria, the Netherlands, Slovakia, Belgium, Luxembourg, Finland, Norway and Portugal.
The official updated list can be found on the Belgian government website.
So far, France has not yet signed the Agreement and therefore it cannot be applied to our French cross-border colleagues.
The definition of Telework
The Agreement defines “cross-border telework” as “an activity which can be pursued from any location and could be performed at the employer’s premises or place of business and : 1. is carried out in a Member State (…) other than the one in which the employer’s premises or the place of business re situated and 2. is based on information technology to remain connected to the employer’s or business’s working environment as well as stakeholders/clients in order to fulfil the employee’s tasks assigned by the employer (…)”
The actual place of performing the telework, as long as it is in the country of residence of the employee, is not restricted. It could be in home office, in a shared office space or anywhere else. The criteria is that the activities could be performed from anywhere, not where they are actually performed.
The definition excludes however activities which would require a specific place of execution such as a client’s premises or a construction site as well as activities not requiring an IT connection such as craftwork.
On the other side, it does include activities such as IT helpdesk and IT on call services, which have been a point of concern for many employers so far.
The possibility to extend teleworking beyond 25% whilst preserving social security affiliation in Luxembourg is hence not equivalent to simply lifting up the current 25% limit to 50%, but there are other conditions – regarding the characteristics of the employer, of the employee and of their activities performed – limiting its application and requiring a case-by-case evaluation for each employee.
Further geographic and activity linked restrictions
Further to the above mentioned conditions of both the country of residence of the employee and the country of the statutory seat of the employer having signed the Agreement and activities of the employee being in line with the Agreement’s definition of telework, the following situations are explicitly excluded from the application of the Agreement:
- If the employee exercises habitually an activity other than as defined as telework in their country of residence
- If the employee exercises habitually any activity in a country other than that of their residence or that of the employer
- If the employee’s employer is a branch of a company whose statutory seat is not in the same country as the branch
The relevance of point c) above is particularly difficult to understand, but it is explicitly excluded in an example published in an explanatory memorandum to the Framework Agreement as follows: “Francis is teleworking from his residence Belgium 40% of his working time and is working 60% in the Netherlands at the premises [branch] of his employer which has its statutory seat in Germany. As Francis works outside of the signatory State where the statutory seat [registered office or place of business] of his employer is situated the Framework Agreement does not apply.” But as such, employees of branches, which is not rare in Luxembourg, are excluded from the application of the Agreement, irrespective of the nature of their activities.
Application of the Agreement requires an individual request for each employee
In principle, requests made on the basis of the telework framework agreement may not relate to a date prior to that of the request. However, a request relating to an earlier period may be made under certain conditions: between 1 July 2023 and 30 June 2024 inclusive, employers will be able to make a declaration going back up to 12 months, but no earlier than 1 July 2023 or the date of entry into force of the telework framework agreement for countries ratifying it after 1 July 2023. Retroactivity will only apply if, throughout the period in question, the employee was already affiliated to Luxembourg social security. Thereafter, from 1 July 2024, the retroactivity of an application is limited to three months only and the condition of affiliation to Luxembourg social security during this period remains.
Requests are to be submitted to the Joint Social Security Centre (CCSS) using the TOKEN (unique access code) that companies have received for this purpose.
Additional points require attention in special cases such as multiple employers and part-time employees. Contact us to if you need to clarify your situation.