UK and Switzerland authorities agree new Social Security Convention

The UK and Swiss authorities have agreed a new bilateral Convention on social security, expected to come into force by the end of 2021. Once passed into law, the Agreement will replace the prior Convention which dated back to February 1968.

The new Convention ensures that individuals who move between the UK and Switzerland for the purposes of work will enjoy greater coordination of social security in respect of certain benefits including access to reciprocal healthcare. Importantly, the Convention also means that cross-border workers and their employers should only be liable to contribute to one country's social security scheme at a time.

The agreement has many parallels with the broader UK-EU Trade and Cooperation Agreement (TCA) which took effect following the UK’s exit from the EU post the end of the transition period on 31 December 2020. Once passed, the provisions within the new rules should ensure that:

  • Individuals sent between the UK and Switzerland by their employer (as well as self-employed persons) for a period not expected to exceed 24 months, should remain subject to the social security legislation of the sending location only and avoid double or split charges to social security in most circumstances.
  • Tie-breaker rules will apply for ‘multistate workers’ much as they do under the current UK-EU TCA and previous EU social security coordination rules EC 883/2004, something which was absent from the 1968 Convention and which led to impractical outcomes such as split liability based on daily presence in each respective country.
  • Eligible individuals are entitled to aggregate contributions periods and have greater access to certain benefits in Switzerland in the UK, including healthcare and state pension.

A key difference between the UK-EU TCA rules and the UK-Swiss Agreement is that the latter contains an exceptional circumstances article that permits both countries to mutually agree that a person may remain subject to only one country’s social security system. This works in much the same way as Article 16 of EU social security coordination rules EC 883/2004.

Deloitte’s view

Whilst the proposed agreement seems more at pace with the modern working world, for example including provisions around multistate working and greater access to benefits, we would remind employers of the importance of reviewing their affected population (both present and future) on a case by case basis to understand how the new legislation may have an impact and actions that may need to be taken around certification, budgeting etc . We understand that the UK and Swiss authorities will look to apply the rules flexibly in order to avoid unintended outcomes with respect to social security, but there are some specific scenarios, for example where an individual’s working pattern spans the UK, Switzerland and another EU Member State, which may fall outside of the scope of the Agreement and so require more in-depth consideration and analysis.

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