Social security post COVID-19
Working from home has become the norm for millions of workers worldwide due to COVID-19. In response, many countries quickly took steps to ease administrative burdens on employers having employees working from home offices abroad.
At the very end of 2021, the EU guidelines of temporary Covid measures for social security applicable until year-end 2021 were prolonged until 30 June 2022. Even after the pandemic, it is likely that businesses will continue to have employees that are working remotely from home offices in other countries. The recent prolongation of the current Covid-practice gives both employers and employees time to plan for a smooth transition into a situation from employee’s home office into the ordinary situation of physical work, under ordinary social security regulation and practice. Even more important, if employees continue to work remotely, performing a risk assessment could be a cost-effective measurement to avoid penalties for non-compliant behavior in the working country.
Below you find an overview of the current legal situation for social security and how the social security legislation is expected to be from July 2022. Read more on the temporary measures and also about the forthcoming situation of social security after the end of Covid-practice.
Temporary regulations – Social security
In accordance with the temporary EU guidelines, employees’ teleworking from home due to the COVID-19 pandemic should not lead to a change in the employee’s social security coverage. As an EEA country, Norway implemented the social security Covid-practice and consequently issued A1 for the relevant cases upon application. The A1 similarly exempts the employer and employee from social security contribution liability in the country of the employee’s home office.
For home office work outside EU/EEA countries, the Norwegian authorities have similarly used the Covid-practice approach towards social security agreement-countries, where certificates of coverage (CoC) are issued upon application. CoC from other countries is also accepted as the basis for exemption.
For instances where employees have worked in countries where no social security agreement applies with Norway (third countries), Norwegian authorities have confirmed Norwegian social security affiliation following national legislation upon individual request. Foreign employees teleworking from Norway due to Covid travel restrictions have in general obtained membership in the Norwegian social security scheme.
Post-pandemic – Social security
Per today, it is expected that the Covid-practice will cease at end of June 2022, which means that social security rights and obligations will be determined on the basis of the ordinary social security rules as applicable prior to the pandemic. According to the main rule of social security, an employee shall be subject to the country where the work is physically performed, regardless of where the employer is located. Since the convenience of telework has changed employees’ travel and work patterns, it is expected that employee populations will continue with teleworking from home in another country also after the pandemic.
Employees’ continued work from home in another country after June 2022 will potentially change the rights and obligations for both employees and employers. Employers will then need to be able to have control over the following:
- Which country’s social security are the employees covered under?
- Does the company pay social security contributions to the correct country?
- Is the social security documented by correct certificates? (NNIS decision, A1 or CoC)
- Do you have control of any changes in the working pattern or working places of your cross-border employees?
- Do you have control of the validity of the at any time given provided insurances?
Within the EU/EEA, letting employees telework for more than 25 % from his/their home country post-pandemic will quickly lead to social security obligations in this country. This will again lead to changes of employee’s right to benefits, but not least that employers become liable for social security contribution in this country, in addition to incurred tax reporting as well as other employment law obligations.
For employees working in countries outside EU/EEA where a social security agreement is in place with Norway, the social security position is based on the location where the work is physically performed. Moreover, the majority of these agreements do not solve the social security position of employees with continuous work in both countries, which requires formal clarification of employees’ social security position.
Employee’s working from countries without a social security agreement with Norway may under certain terms continue their Norwegian social security affiliation following national legislation requests. Even if this is a convenient solution for all parties, note that a continued Norwegian social security may lead to a double contribution liability for both employer and employee.
For employees working for a foreign employer remotely from Norway, teleworking will as a general rule lead to mandatory social security membership in Norway, unless an A1 or CoC is presented and approved by Norwegian authorities.
Take home message - cost and risk control
The convenience of telework from abroad might sound alluring, but employers need to be aware of the consequences of letting their employees work from overseas. In the light of potential changed rights and obligations from June 2022, employers are encouraged to ensure that the formal social security position of the employees also reflects the employee's actual work and social security position. Unidentified cases of teleworking may lead to the payment of social security contributions to the wrong country.
The risks and consequences relating to home country teleworking varies but may in general lead to risks of imposing tax in the working country for both employee and employer company, reporting obligations, changed social security rights as well as various consequences for employment contract terms and the validity of insurances. This demonstrates the importance of identifying and taking the necessary actions to reduce risks and to understand the consequences.