Step 3 - The Multi-state Worker
When an employee works in more than one member state, determining which country's social security system applies becomes significantly more complex.
Here's the checklist:
1. Does the work pattern involve simultaneous or alternating work?
An employee is considered to be working simultaneously in multiple member states when they have a regular and predictable work pattern that involves consistently dividing their working time between multiple member states.
Example
An employee who works 4 days per week in member state A and 1 day per week in member state B.
Working in alternation refers to a work record of working across more than one member state on a systematic rotating or recurring basis as part of a regular, uninterrupted employment pattern.
Example
An employee with a cyclical work schedule who works one month in member state A before moving to member state B for work and returns to member state A.
Note: The EU Court of Justice has established that if you work continuously in one country for a year or more, you may no longer qualify as a multi-state worker under the alternation provisions.
2. Does the work pattern meet the 5%-requirement?
The next step is to establish whether the work arrangement meets the threshold to qualify as non-marginal.
To meet this threshold, the 5% requirement must be satisfied: specifically, the work performed in each country must structurally represent at least 5% of the employee's total wages and/or working hours.
Note: increasingly, countries carry out a case-by-case evaluation, considering more factors like the nature of the work (e.g. whether it’s ancillary or core).
3. Does the work pattern meet the 25%-requirement?
The fundamental criterion for determining applicable social security rules is substantial working activities.
If, within the next 12 months, at least 25% of working hours are performed and/or at least 25% of salary is generated in the country of residence, that country's social security laws apply.
If not, the employee is subject to social security in the country where the registered office or place of business of the undertaking or employer is situated.
Elaboration
Working in alternation - Assessment
When assessing activities carried out over successive periods, both the anticipated duration of the activity and the nature of the employment are crucial. While the frequency of alternation isn't relevant, some regularity in the activity is required. For this assessment, it is essential to determine whether periods of work in several member states will occur with a certain regularity over the next 12 calendar months. The description of the work's nature, as outlined in the employment contract(s), is particularly important for this assessment.
Case Studies
The 5% Criterion
Heinrich Schwarz is employed by Edelweiss GmbH in Germany and works in Belgium for 1 day per month. Assuming there are 20 workdays a month, that would be 5%. In this case, the employee is working in different member states at the same time.
Caution
Salary split
In the event of a salary split, the employee is on the payroll of multiple organizations. A formal salary split would be defined as such if they are based on formal employment agreements; in that case, there are multiple formal employers.