Brexit – changes to social security rules for employees

Thu 23 Jan 2020

Now that the UK parliament has passed the EU withdrawal agreement, UK employers should start to consider how they will deal with the additional social security costs and administration that may arise in respect of:-

1. their employees working in the EU, EEA and Switzerland; and
2. the EU, EEA and Swiss nationals it hosts, when the transitional period ends on 31 December 2020.

The transitional period – rules up to 31 December 2020

Under the withdrawal agreement, the existing EU social security regulations will continue to apply to:-

1. UK nationals who are posted from the UK to work in another EU or EEA member state (or Switzerland) for a period of up to 24 months;
2. EU, EEA and Swiss nationals who to work in the UK for a period of up to 24 months; and
3. individuals who work in a EU or EEA member state/states (or Switzerland), and the UK, who were working under these arrangements on, or before 31 December 2020.

Post 31 December 2020

From 1 January 2021, the social security position for the above employees is unclear.

The UK government is likely to try and obtain an agreement with the EU that largely mirrors existing social security regulations.

However, if no agreement is reached, then affected employees and their employers could, potentially be liable to double social security contributions in an EEA/EU member state, and in the UK.

Employer implications

UK employers that:

• have UK employees who will either work in the EU, EEA and Switzerland, or
• host EU, EEA and Swiss nationals from 1 January 2021, should consider the implications of:-

1. double social security costs and whether their existing tax equalisation policies cover this;
2. additional reporting and compliance obligations;
3. the potential loss of employees “home” social and health insurance cover (or coverage differences, i.e. in maternity/paternity, healthcare, disability and unemployment);
4. private medical insurance coverage and NHS surcharge costs; and
5. state pension exportation limitations

How Mazars can help

Mazars’ experts across the UK, EU, EEA and Switzerland can help employers manage these implications by identifying and quantifying any incremental costs, advising on assignment planning and policy changes to help manage costs and assisting with employee communications.  For a further discussion, please get in touch with a member of the Mazars global mobility team.