Social Security Coordination in Digital Economy

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Sep 17, 2017

In a recent ruling [X v Staatssecretaris van Finaciën (C–570/15)], the European Court of Justice held on the determination of the legislation applicable for social security.

The case concerns a Dutch national, residing in Belgium and employed in the Netherlands as an account manager and manager of telecommunication relations for a company established in the latter country. In 2009, he worked in Belgium approximatively 6.5% of the total working time, mainly from home (processing e-mails, making and dispatching offers) and visiting clients. The activates in Belgium were neither referred to in the employment contract and nor carried out according to a set pattern.

The question referred to the ECJ focuses on the applicable legislation for social security, notably whether the work activities should be regarded as carried out in the Netherlands only, either in both countries. In the former case, the Netherlands legislation would have been applicable, in the letter, the legislation in Belgium.

Not surprisingly, adopting a strict interpretation of Regulation No 1408/71 and referring to settled case law of the Court, the ECJ held that the Dutch national cannot be considered to be normally employed in the territory of two Member States.

In the actual context (i.e. considering the system of conflict rules laid down by Regulation 883/2004 and its implementing Regulation 987/2009 both as amended), the case at issue has no further relevance.

It is however interesting to note the observation made by Advocate General Szpunar, in its opinion delivered on 8 March 2017:

I observe that it is one of the advantages – or, for some people, a curse – of the digital economy, that an employee may be asked or allowed to accomplish a part of his office tasks while away from the office, possibly, by working from home.

The particularity of such a working arrangement lies in the fact that it potentially undermines the concept of a particular place of employment, as a relevant factor for determining the Member State which has the closest link to the employment relationship. A person can do telework on her computer or telephone at home or while travelling and such mode of working can amount to a significant part of employment activity. The Court will have in the future to decide how this circumstance should be taken into account for the purposes of determining the applicable social security legislation”

Reading in context Article 14.7 Regulation 987/2009, and the settled case law of the ECJ , inter alia, the judgment in X v Staatssecretaris van Financier (upholds the importance of an arrangement having been agreed with the employer in advance), it can be alleged that where a significant part of  activities is  carried out  in the country of residence (from home but not only), not according to a set pattern and where the employment contract did not contain any arrangement, the legislation of the country of employment is deemed applicable?

It must be recalled that as laid down by Directive 2003/88/EC “working time shall mean any period during which the worker is working at the employer’s disposal and carrying out his activity or duties, in accordance with national law/and or practice.”

Finally, the observation made by Advocate General Szpunar can be considered in the overriding context of (e.g.) managers asked to accomplish a part of their tasks by working from home or while traveling, according to an irregular pattern. Such requirements are inherent to the position. (see in context C‑425/93, EU:C:1995:37).

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Tanel Feldman

Managing Partner, Immigration Law Associates

Corporate Immigration Law/Employment Law/Social Security Law/European Law

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