Cross-border telework: further countries sign European Framework Agreement

What does the telework agreement offer – and for whom?

If the work is performed in two countries, they can decide on the applicable social security law based on the telework agreement. If a corresponding application is submitted and certain requirements are met, the approval procedure is simplified as the authorities dispense with the usual discretionary decisions. For employers and their employees performing cross-border telework, it may make sense to submit a corresponding application with regard to, for example, the handling of reporting and payment obligations as well as the amount of contributions and the entitlement to benefits. The EU member states, the EEA states (Iceland, Liechtenstein and Norway) and Switzerland can join the Framework Agreement by signing it.

These countries have recently signed the telework agreement:

• Ireland - effective from June 1, 2024,
• Lithuania - effective from May 1, 2024, and
• Italy - effective from January 1, 2024.

Other countries in which the telework agreement applies:

With effect from July 1, 2023

• Germany, Austria, Belgium, Croatia, Czech Republic, Finland, France, Liechtenstein, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland, and
• Slovenia – effective from September 1, 2023.

When is a choice of social security law possible?

Regulation (EC) No. 883/2004 regulates the applicable social security law in the case of cross-border work and thus also that only the social security law of one country applies uniformly. The physical place of work is generally decisive for the application of social security law. If work is performed for a longer period of time, for example at least 25%, not in the country of the employer’s registered office, but in the employee’s country of residence, the applicable social security law may change in favor of the country of residence.

• The Framework Agreement provides the basis for ensuring that, in such cases, the social security law of the Member State in which the employer is based can still apply, particularly in the case of teleworking activities.

This is intended to take account of the increasing flexibility and structuring of employment relationships, irrespective of the place of work at the employer’s registered office.

What basic requirements must be met?

• The agreement covers teleworking activities that are usually also performed outside the employer’s premises, for example, in the home office.
• Consequently, the cross-border activity is performed in only two states – in the state in which the employer has its registered office and in the employee’s country of residence.
• Electronic information and communication systems are used for teleworking.
• The scope of telework in the country of residence is between 25 % and 49.99 % of total work.

Good to know:

• The Framework Agreement does not apply to self-employed persons.
• The provisions do not apply if the activities are regularly performed in further countries in addition to the employee’s country of residence and the country of the employer’s registered office.
• As things stand, the United Kingdom is not going to join the Framework Agreement.

What needs to be done now and how can Baker Tilly support you?

Baker Tilly will be happy to assist you in assessing and implementing possible issues in relation to the telework agreement. This concerns, for example, questions as to which cross-border activities require an examination of the choice of applicable social security law or how the application process is to be carried out, which deadlines may need to be observed and how the individual structure of the activity is to be assessed.