CJEU: new interpretation of EU social security regulations
The Court of Justice of the European Union (CJEU) ruled in a case concerning a social security system applicable to seamen. The judgement may affect determining the applicable social security rules for workers resident in the EU but working outside the EU, with their employers being companies established in the EU.
The CJEU recently dealt with the question of which social security legislation applied to a seaman, a Latvian national residing in Latvia employed as a steward by a company established in the Netherlands and working on board a vessel flying the flag of Bahamas, but at the time located in the German part of the North Sea continental shelf (C-631/17 of 8 May 2019).
The CJEU ruled that the relevant country in terms of social security is the country of the seaman’s residence. Although in the case in question the court dealt with the specific situation of seamen, the ruling is likely to affect the determination of applicable social security systems for cross-border workers of other professions as well.
Up to now, the interpretations of social security regulations (old Regulation No.1408/71, on the application of social security schemes to employed persons) and existing case law indicated that the country relevant for determining the applicable social security system for the above described persons was the country where the employer was established. Yet, in the above judgment, the CJEU concluded that such an interpretation was at variance with new Regulation No. 883/2004, on the coordination of social security systems.
According to the CJEU, an employee resident in the EU who is employed by an employer established in the EU and working outside the EU should be subject to social security regulations of the country of his or her residence. This means that employers may be obliged to register for social security purposes in the country of their employees’ residence if different from the country where the employer is established. This is a substantial change from the current interpretation of rules coordinating social security systems: up to now, employers were paying social security premiums for these employees in the employers’ country of establishment. The new interpretation may be more demanding for the employers in terms of administration.