Employees working on non-EU flagged ships, where are they insured? | Deloitte


Employees working on non-EU flagged ships, where are they insured?

The Supreme Court has asked the CJEU for a definite answer to the place of insurance of an employee who is both a Latvian resident and has the Latvian nationality, but who works outside the EU for a Dutch employer on a non-EU flagged ship.

1 November 2017

Non-EU flagged sea ship

An employee residing in Latvia and with the Latvian nationality was employed by a Dutch employer. He worked outside the EU aboard a Bahama flagged sea ship. The European Regulation 883/2004, which contains the designation rules determining the applicable social security legislation, does not have a specific designation rule for this situation. The general rule is that people are insured in the Member States they work in. Shipping employees are assumed to work in the Member State whose flag a ship flies. In this case it is the Bahama flag, so not an EU Member State.

Kik case

This is the exact same situation as the Kik case, on which the CJEU ruled in 2015. Mr Kik resided in the Netherlands and was employed outside the EU by a Swiss employer, aboard a ship flying the Panamanian flag. In its judgment the CJEU applied what is called the Aldewereld doctrine. According to this doctrine, if people perform work outside the EU that has a sufficiently close link to the EU, this work will be “allocated” to the EU. This occurs if employees reside in an EU Member State and work for an employer with a registered office in the EU.

Important under Regulation 883/2004?

The Kik case judgment, however, was pronounced under the “old” EU regulation 1408/71. The Zeeland-West Brabant District Court was uncertain about whether the Kik judgment would still be significant under the current Regulation 883/2004. This was due to the latter’s “catch-all provision”, according to which people who do not work in EU Member State, are not civil servants, are not paid an unemployment benefit, and have not been drafted for military service, are insured in their country of residence.

This now leaves two possible views:

  1. The line pursued in the Kik case (and in the Aldewereld case before that) likewise applies under Regulation 883/2004 because the catch-all provision does not apply. If it involves an employee, like in this case, who performs work outside the EU but who has sufficient personal and territorial links with the EU, the Regulation does not designate any applicable Member State legislation because a situation like this has not been provided for. Hence, Dutch legislation will be applicable.
  2. The catch-all provision does apply because application of the designation rules leads to Bahama legislation being applicable - but this is not a Member State. According to this approach the Aldewereld and Kik judgments are only significant if a written designation rule does not apply directly. In this case there is such a designation rule: the catch-all provision.

The Supreme Court is unsure as to which view is correct and has brought a request for a preliminary ruling to the CJEU about this. The wait is now for the CJEU’s judgement.

Supreme Court 27 October 2017, no. 17/01041, ECLI:NL:HR:2017:2681

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