The United Kingdom left the EU on 1 February 2020. Until 31 December 2020, there is a transition period during which EU law continues to apply to the UK. From 1 January 2021, the UK will be regarded as a non-EU country. Things like social security systems, which are currently co-ordinated within the EU, will change. But how?
Until the new year, the rules on social security affiliation apply as if the UK were still an EU country. The main rule within the EU states that an employee must be registered for social security in the country where they work, even if there is room for exceptions to this rule. However, the country whose social security system the employee belongs to is always the country where social security contributions are to be paid. Without the right certificate in place, there is a risk that social security contributions will need to be paid in more than one country.
What happens from 1 January 2021?
When EU regulations cease to apply to the UK, a social security convention between Sweden and the UK will need to be reviewed. Alternatively, the national legislation in each country will apply.
Sweden and the UK have had a bilateral social security agreement in place since 1988. However, this has not applied for several years as EU regulations have applied instead. The change will probably mean that an employee can only remain in the home country’s social security system for a maximum of 12 months, which is much shorter than if they were posted to a country within the EU. It is as yet unclear whether the existing convention will apply, but we need to be ready for any changes.
Ensure the correct certificate is in place and pay social security contributions
Regardless of what is ultimately decided, it’s important that employers ensure that employees posted abroad have the right certificate and that social security contributions are paid based on the information in these certificates.
Azets is continuing to monitor developments in respect of the UK’s withdrawal agreement in order to keep our clients informed. Do you have any questions about regulations and salary issues relating to employees posted in or outside of Sweden? Would you like advice or practical help? Feel free to contact us at Azets!