Latest developments at EU level concerning social security coordination

trESS seminar Rome30 May 2012

Rob CornelissenMagdalena Ciesielska

LATEST DEVELOMENTS IN EU LEGISLATION

•2010 Commission proposal to modify Reg 883/2004 and 987/2009

•First importance of proposal: legal basis for changing the rules. First time that coordination rules are changed after entry into force of Lisbon Treaty on 1 December 2009

Situation before Lisbon Treaty

•Two legal bases:• Art 42 EC for employed persons and their dependents

(family members and survivors): co-decision Council and Parliament. Unanimity in Council required

• Art 308 EC for all other persons covered by Reg (self-employed, students, non-active people). Council legislator. Unanimity in Council required

Situation under Lisbon Treaty

•Art 48 TFEU: legal basis for employed and self-employed persons and their dependents. Co-decision Council and Parliament. Qualified majority in Council (with a brake system)•Art 21 (3) TFEU: competence for all EU citizens not covered by Art 48 TFEU. Council is legislator. Unanimity in Council required.

2010 Commission proposal based on Art 48 TFEU only

•Court: dual legal basis is excluded if one Treaty provision requires ordinary legislative procedure, whereas the other requires Council to act unanimously. In that case: determine appropriate legal basis in light of general scope of Treaty•Commission: Art 48 TFEU is adequate and sufficient legal basis

Why is Art 48 TFEU adequate and sufficient legal basis?

•Overwhelming majority of EU citizens covered by Art 48 TFEU:

• Wide meaning of "employed" and "self-employed"• Art 48 TFEU covers also retired "employed" and "self-

employed"• Art 48 TFEU covers also family members and

survivors of "employed" and "self-employed"•Khalil judgment: inclusion of refugees (a "very restricted category of persons") in scope of Reg based on Art 51 EC valid

Council and Parliament agree with Commission

•Commission proposal, based on Art 48 TFEU, adopted on 23 May 2012 (entry into force: 20 days after publication)•Art 48 TFEU is adequate and sufficient legal basis for future EU social security coordination legislation

Changes on content in BR (=Basic Regulation: Reg 883)

1. Posted workers•Minor change in Art 12 BR•One of conditions for posting under current Art 12 BR: "that he/she is not sent to replace another person"•New version of Art 12: "that he/she is not sent to replace another posted person"•New wording reflects better purpose of provision: to prevent successive posting of employees

2. Aircrew members

•Current rules of Title II BR: no specific provisions for specific categories of people•New Art 11 (5) BR: "An activity as an aircrew member performing air passenger or freight services shall be deemed as an activity pursued in the Member State where the home base as defined in Annex III to Council Regulation (EEC) No 3922/91 is located"

Aircrew members

•Notion of "home base" for flying personnel is well defined in existing EU law. Each aircraft has duty to nominate a home base for each aircrew member•Home base: place from which aircrew member habitually carries out work in performance of his/her contract

Aircrew members

•"Home base" is closely linked to actual place of work of person concerned and the lex loci laboris principle•Constitutes a more suitable element for determination of applicable legislation than "registered office" or "place of business" of employer

3. Change of rules for working in two or more MS

•Current Art 13 BR: if person normally works in two or more MS for one employer, person is subject to legislation of residence only if he/she pursues "substantial part of activities" there. •Current Art 13 BR: if person normally works in two or more MS for two or more employers situated in different MS, person is subject to MS of residence, even when no "substantial part of activities" there

Change of rules for working in two or more MS

•Art 13 BR as amended: person normally working in two or more MS is subject to legislation of MS of residence only if he/she pursues "substantial part of activities" there, regardless if person has one or various employers

Change of rules for working in two or more MS

•If no substantial activities in MS of residence:• MS in which registered office is situated if person is

employed by one employer or by two or more employers who have registered office in a single MS only; or

• MS in which registered office is situated outside MS of residence if he/she is employed by two or more employers which have registered office in two MS, one of them is MS of residence; or

• MS of residence if he/she is employed by two or more employers and at least two of them have registered office in different MS other than MS of residence

Change of rules for working in two or more MS: marginal activities

•Current Art 14 (5) IR: a person pursuing "activities of marginal extent" in one MS and also working for same employer in another MS is NOT covered by Art 13 BR. (Idea: prevent abuse). Such person is, for purpose of determining applicable legislation, treated as working in one MS•Art 14(5) and 14(5a) IR amended: same principle applies for person pursuing main activity in one MS for one employer and another "activity of marginal extent" in another MS for another employer

Marginal activities

•No definition in Regulations of notion "marginal activities"•Pratical Guide on applicable legislation: activities that are permanent but insignificant in terms of time and economic return. As an indicator,activities less than 5% of worker's regular working time and/or less than 5% of overall remuneration are marginal activities. Also nature of activities can be indicator.•Not always easy to implement

Working in two or more MS. Clarification of notion"registered office" or "place of business"

•New Art 14 (5a) IR (= Implementing Regulation= Regulation 987/2009): for purpose of application of Title II BR the notion "registered office or place of business" refers to place where the essential decisions of the undertaking are adopted and where the functions of its central administration are carried out

4. Unemployment benefits for cross border self-employed

•New Art 65a BR: solution for formerly self-employed frontier workers who were covered in MS of last activity, but whose MS of residence does not have any unemployment benefit scheme for self-employed

5. Transitional provision concerning applicable legislation

•If, as a result of the new Regulation, a person is subject to the legislation of a MS other than the one determined in accordance with the old rules, the old rules continue to apply (for a maximum of 10 years) as long as relevant situation remains unchanged, unless person concerned requests the immediate application of the new rules

EEA and Switzerland

•EEA Joint Committee Decision No 76/2011• adopted on 1 July 2011 (OJ L 262, 6.10.2011, p.

33)• not yet entered into force (pending approval by IS

parliament) – possibly on 1 June 2012• Regulations (EEC) Nos 1408/71 and 574/72 still

apply in relation to IS, LI and NO•EC-CH Joint Committee Decision No 1/2012

• OJ L 103, 13.4.2012, p. 51• Regulations (EC) Nos 883/2004 and 987/2009

apply in relation to Switzerland since 1 April 2012

CASE-LAW

•Opinion of the AG of 3 May 2012 in case C- 115/11 Format (pending before the Court)

The concept of a "person normally employed in the territory of two and more Member States"

ADMINISTRATIVE COMMISSION

1. Practical Guide on applicable legislation• Replaces the "Posting Guide" (chapter on applicable

legislation when working in two or more Member States)• Working instrument to assist institutions, employers and

citizens in the area of determining the applicable social security legislation

• An update is scheduled for the 2nd half of 2012• Available on the Commission's website:

http://ec.europa.eu/social/main.jsp?catId=851&langId=it

ADMINISTRATIVE COMMISSION

2. Current discussions:

• Interpretation of the term "posted person sent to replace another posted person" (Art 12(1) BR)

Practical examples: • slaughter house• Alpes resorts

• Applicable legislation in case of parental leave

EXTERNAL DIMENSION

Communication on the External Dimension of EU Social Security Coordination (COM(2012)• sets out ways in which the EU rules currently impact on

social security coordination with third countries• describes existing components of common EU approach

to social security coordination with third countries• calls for strengthening cooperation between Member

States to achieve a more coherent approach to social security coordination with third countries

REVISION OF COORDINATION REGULATIONS• Scope:

- coordination of long-term care benefits (LTC)- coordination of unemployment benefits

• Planning- 2009-2011 Evaluation - 2012-2013 Impact assessment - 2014 Proposal from the Commission

Thank you very much for your attention!

Questions??