Remote work is becoming increasingly common, with the ongoing pandemic situation contributing to this trend. However, many employers are unaware of where their employees are actually performing their work or the additional obligations that arise from remote work conducted from abroad.

This article, divided into three parts, discusses the consequences of remote work performed from EU Member States, the European Economic Area (EEA), Switzerland and the United Kingdom, with the note that the consequences of working from the UK may change from 2021 onward.

Place of Work

When issuing a remote work directive or granting permission for remote work, an employer should specify the location where the work will be performed. However, this location does not have to be the employee’s home or apartment.

Many employers automatically assume that their employees will work from their place of residence, but practice shows that some employers are unaware of where remote work is actually taking place.

If the work is being performed within Poland, it does not trigger any additional obligations regarding social insurance. If the work is being done outside of Poland, the employer’s and employee’s obligations are governed by the regulations of the country where the work is being performed. Not knowing where the work is being performed may lead to overdue contributions to foreign social insurance authorities, exposing the employer to penalties and the employee to a lack of benefits.

Coordination of Social Security Systems

According to the regulations on the coordination of social security systems, an insured person is subject to the legislation of only one Member State, even if they perform work in more than one Member State. The determination of the applicable legislation follows the lex loci laboris rule, meaning the place of work.

This means that, in principle, the insured person is subject to the social security system of the country in which they perform their work.

However, the regulations do not answer the question of how long performing work in another Member State will create a social security obligation in that state. Therefore, even short-term remote work in another state may result in consequences under the social security regulations of that country. In such cases, the employer should stop paying contributions to the Polish Social Insurance Institution (ZUS) and register in the social insurance system of another Member State. Under certain conditions, the employee may assume the obligations toward the social security system of another Member State.

Delegation

A posted worker is an employee working in a Member State for an employer that normally operates in that state, who is sent by that employer to perform work on its behalf in another Member State. The period of being posted to work abroad should not exceed 24 months, and the worker cannot be posted to replace another posted worker.

Remote work cannot be classified as delegation unless the employer has specified in the remote work directive that the location of work is in a Member State other than Poland. Therefore, as a general rule, an employee performing remote work in another Member State should not receive an A1 certificate in the manner provided for posted workers (i.e. based on Article 12 of Regulation 883/2004).

„Multi-State” Worker

When applied to a person normally working in two or more Member States, the lex loci laboris rule does not allow for the determination of one applicable legislation.

For such a worker, the applicable legislation is first determined based on the worker’s place of residence, provided that a significant portion of their work, defined as at least 25% of their working time, or work for which they receive at least 25% of their salary, is performed in that Member State.

However, a worker performing remote work from abroad is typically not considered a „multi-state” worker, as remote work from another Member State is usually exceptional and temporary in nature. It should be assumed that such an employee should not receive an A1 certificate under the provisions of Article 13 of Regulation 883/2004.

Exceptional Agreement

Article 16 of Regulation 883/2004 provides for an exceptional procedure whereby the competent authorities of two or more Member States can enter into an agreement regarding the legislation that will apply to a given person or group of people, if it is in their interest.

Such an agreement may also apply to employees working remotely from another country who are not posted workers or „multi-state” workers.

To obtain an A1 certificate based on an exceptional agreement, a request for the agreement (form US-36) must be submitted to the ZUS branch in Kielce. This branch will then request the approval of the competent authority in another Member State. Once approval is obtained, a request for an A1 certificate (form US-34) must be submitted to the ZUS branch appropriate for the applicant’s registered office. This request must be accompanied by a letter confirming that the foreign institution has agreed to enter into the exceptional agreement.

What if an Employee Does Not Have an A1 Certificate?

A failure to obtain an A1 certificate and a failure to pay contributions to the social security system of the country where the work is performed results in the employee being considered uninsured in that country. They will not be entitled to social security benefits or public healthcare in that country. Therefore, if the A1 certificate is not issued, the employee will be responsible for their own medical expenses in the country where they are performing remote work and may have a claim against the employer for the reimbursement of these costs.