A no-deal Brexit is now considered the most likely outcome on 31 October, as politicians on all sides dig their heels in.
Many businesses have been preparing for this possibility at a strategic level for some time, but have yet to focus on the more granular issues such as the impact on their globally mobile employees.
Given the limited time left until the UK must leave the EU, one of the key people issues you should focus on to ensure business as usual post-Brexit is security for those working outside of their country of residence.
Protecting workers' social security
Perhaps by far the biggest issue for UK cross-border workers after 31 October will be the impact on social security. The current rules and legislation rely on EU regulations built around the freedom of movement of people. Leaving the EU with no deal and no transitional agreement in place will have the following implications:
- EU regulations will cease to apply to UK related employees as of 31 October
- Current certificates issued under existing regulations will no longer be considered valid
- It may be necessary to rely on old bilateral agreements
This poses a number of potential problems: the network of old bilateral agreements is limited, generally deals with shorter term assignments and there are lots of grey areas. We already know that some countries (France and Germany) have suggested the old agreements cannot be relied upon. And, while in our opinion there is no legislative basis for this, at the very least this represents an administrative headache, coupled with additional uncertainty and costs for your business and your people.
The UK has already signed a bilateral agreement with Ireland that mirrors the EU regulations and there is some suggestion that other countries may follow suit. In the meantime, there are potential double charges, or gaps in social security contributions and benefit entitlement.
So what can and should you do?
- Understand the current scope of the potential issue. Review your current list of employees with A1 certificates to determine those who may be able to rely on old bilateral agreements and those who cannot, and begin to put in place arrangements to enable a switch to local social security where this may become necessary
- Determine your policy around the potential increase (or decrease) in costs should a switch to host social security become necessary
- Communicate with your employees so they know what you are doing to prevent them from being adversely impacted
For further advice on the impact for your globally mobile employees, please contact our Global Mobility expert Christoph Schmidl.
Further information on the A1-Form can be found in the following article.