The workplace shift: the challenges for international social security

The Covid-19 pandemic has greatly impacted the way in which we engage with our workplaces over the last two years, with many people adapting to both the challenges and benefits of remote working. With more people than ever working from home, or in a work/home hybrid, there has been a decided shift in our attitudes towards how and where we work, with businesses now focusing on the medium to longer-term implications of their work-from-home protocols.

In this article we focus in more detail on the evolving social security landscape that employers should consider when reviewing their policies to accommodate wider workplace flexibility. Of course, social security should always be considered within the context of the broader compliance challenges that remote working poses for employers e.g. permanent establishment risks, tax, labour law, health and safety, immigration and data security. A recent Deloitte survey indicated that 29% of UK/EU headquartered companies with large UK presence will be looking to allow cross-border remote working going forward1 - so this is clearly a topic that is at the forefront of employers’ minds.

Most organisations have seen increased demand for cross-border remote working from their employees. A global study conducted in late 2020 revealed that 50% of employers have more than 35% of their workforce working away from the usual work location, and 38% of employers have employees working virtually from more than 20 different countries.2

We are also seeing the evolution of new and innovative concepts such as virtual assignments, whereby an individual works for an overseas team but remotely from their home (or a different) location, and hybrid working arrangements which overlay office working with structured home working. Flexible working arrangements are becoming a must-have for any organisations and selling point in attracting new talent, particularly among millennials and Gen Z.

Worldwide ERC, in collaboration with Deloitte, found that 68% of respondents said that they currently have a policy allowing their employees to work remotely from anywhere, while 25% are considering creating such a policy. 53% of the participants said they would not allow employees to work in a location where the organisation does not have a ‘permanent establishment’ or a legal entity, while 36% considered that this should be decided on a case by case basis. This complex landscape suggests that employers are grappling with the challenge of developing a balanced view, considering various factors like the potential costs created by compliance requirements through to the creation of HR policies focused on the retention of talent.

The current guidance from the European commission

The initial guidance coming from the European Commission published in March 20204 focused on the exceptional circumstances forcing individuals to carry out their working activities in EU countries other than the one in which they were employed, as a result of COVID-19 restrictions. The main objective was to allow employers and employees to maintain their existing coverage during temporary cross border displacements of workers. As such, a temporary period spent working back in their home country (EU/EEA/Switzerland plus UK) as a result of COVID-19 should not have impacted employees or the social security compliance requirements applicable to employers (unless a change may have been more beneficial to them).

The position today is that all the European countries, together with the UK have extended their “no-impact” position until at least 31 December 2021. It remains to be seen whether this will be extended further, but given the general easing of travel restrictions, this would seem unlikely.

The risks for employers: temporary displacement or permanent remote working in the face of an epidemic?

Employers are still finding their feet in managing the risks created by increased remote working. From a social security point of view, employers need to react to the shift away from the “exceptional circumstances” (which may afford the flexibility of the EU commission COVID-19 displacement rules described above) to “business as usual” where the basic “pay where you work” principle may apply across the board. Such a shift may trigger considerations for employers generated by a change in the social security legislation applicable to the employee, for example:

  • additional social security contribution costs
  • changes in individual social benefit entitlement
  • new employer compliance obligations in the host jurisdiction: for example, registration, reporting, and payment of local contributions.

Below are a couple of examples of common remote working situations where the social security position may deviate from the one initially anticipated:

Example 1: The leaver

An existing employee relocates from Spain back to the UK to live with their family while working remotely for their Spanish employer; the employer continued to pay contributions via payroll in Spain, but would the employee become subject to the legislation of the UK?

Expected result: Under the principles of ‘pay where you work’, this individual would likely be expected to pay social security in the UK for the period during which they are working remotely.

Actual result: Depending on the specific circumstances, It may be possible and/or more appropriate to review the EU rules around social security coordination, as well as temporary COVID-19 relaxations and the Brexit agreement, to seek approval from the home and/or host authorities that the individual continue to pay in the country of employment (i.e. Spain).

Example 2: The remainer

A new hire with an employment contract in France who continued to work from their home in Norway for a temporary period of time; the employer started to pay contributions in France, but would the employee – and employer - in fact be subject to social contributions in Norway?

Expected result: Under the principles of ‘pay where you work’, this individual would likely be expected to pay social security in Norway.

Actual result: It would again be necessary to look to the EU rules around social security coordination, as well as temporary COVID-19 relaxations, as it may be possible that the individual could commence payment of social security in the country of employment (i.e. France) whilst working their role physically in Norway for a set period of time. They may also look to obtain an A1 certificate to confirm this.

Assess, assess, assess…

Currently we can only rely on the general rules of the existing EU Regulations, Trade and Cooperation agreement, bilateral agreements and/ or domestic legislation to assess the social security position of those employees known to be in a cross-border or international remote worker arrangement.

With remote working, it is unlikely that two cases will be the same - meaning it’s probably necessary to examine every scenario individually. Such assessments might prove complex with a broad range of factors that need to be considered in order to determine the social security position and the impact at an individual and employer level. Personal circumstances, the best interests of the individual, the temporary/permanent nature of the arrangement, or activities pursued in more than one country, are all factors possibly impacting the outcome from a social security perspective. In addition, where legislation does not provide specific guidance to address a non-standard situation, the local authorities’ interpretation may need to be sought. It is also important to also consider the impact on an employee’s access to healthcare/other social benefits as a result of remote work.

As the COVID-19 crisis continues, and beyond, there will no doubt be ongoing challenges for global mobility practitioners. Though difficult to predict, the likely permanent nature of these changes and new ways of working are certain to create an increased need for employers to establish enhanced ways of monitoring and managing their globally mobile populations on an ongoing basis. A failure to do so could result in widespread non-compliance with employer compliance obligations, potentially resulting in increased risk of punitive actions by local authorities which could be costly both in terms of financial penalties and reputation. Any impact on the individual employee themselves may also create legal exposures.

Deloitte is here to help

A decision to implement flexible international remote working models should ideally be accompanied by upgraded policies and processes, underpinned by the appropriate technology that allows employers to effectively track and monitor their workforce and proactively address the related social security (and other) compliance challenges and risks.

Our Social Security Consulting team can help employers navigate the social security landscape and related compliance challenges. We are working with our clients to provide tailored practical and innovative solutions that fit their needs and business priorities. From the initial assessment of the potential risk exposures and costs, to reviews of internal policies, we understand that clients need practical, workable solutions to address specific and often complex situations.

For further support and details, we encourage you to get in contact with our Social Security Consulting team here.

For more information regarding the work our Global Workforce team are doing, please visit


1. Internal Deloitte Survey – Remote work intel update: UK and Europe, 30 March 2021

2. Internal Deloitte Report – Remote work: Setting the right strategy, 3 June 2021

3. Worldwide ERC – Remote work: The road to the future, June 2021

4. European Commission - Guidelines concerning the exercise of the free movement of workers during COVID-19 outbreak, Brussels, 30 March 2020


This article is authored by Ruxandra Popescu, Associate Director and Sophie Moffat, Consultant.

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