European Commission

The rules on applicable legislation under Regulation

883/2004Helsinki, 29 September 2010

Rob Cornelissen

European Commission

Principles

• Building on 50 years of EU coordination: most case-law under Reg 1408/71 still relevant

• Objective: avoid conflicts of law, both negative and positive conflicts

• Therefore, rules have both mandatory and exclusive effect

• Bosmann judgment (2008): coordination provisions must be interpreted in light of objective of Art 42 EC. Exclusive effect?

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General comments

• Simplification of the rules

• Less exceptions to general rules (e.g. employed in MS A and self-employed in MS B)

• No special rules for specific categories of workers (e.g.transport workers)

• Principle of « unicity » of applicable legislation maintained and even reinforced

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General rules

• Economically active people: lex loci laboris

• Non economically active people: MS of residence (Art 11 (3) ( e) BR

• Definition of categories of people who are active and who are not: Art 11(2) BR

• Art 11 IR: elements for determining « residence » (in line with Di Paolo judgment)

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Special rules

• Posting: Art 12 BR• Reminder: purpose of posting: « promote

freedom to provide services for the benefits of undertakings. It is aimed at overcoming obstacles likely to impede freedom of movement of workers and also at encouraging economic interpenetration whilst avoiding administrative complications in particular for workers and undertakings »(Fitzwilliam judgement point 28)

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Posting

• Posting must be temporary: maximum of 24 months (old Reg 1408: 1 year which can be prolonged with another year)

• No replacement of another person• Includes persons recruited with the aim of being

posted to another MS (Manpower judgment) on condition that persons were already subject to legislation of MS where employer is established : Art 14 (1) IR: continuity

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Posting

Employer must « normally carry out its activities » in MS of establishement: it must perform there « substantial activities »: Art 14 (2) IR (Plum judgment)

Decision A2 Adm Com: further clarifications

Decision A1: dialogue and reconciliation procedure

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Procedure posting

• Employer must inform competent institution: Art 15 (1) IR

• Institution makes « without delay » information concerning applicable legislation available to institution of other MS: Art 15 (1) IR

• Portable document A1: Art 19 (2) IR

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Self-posting

• New elements:– maximum of 24 months (Reg 1408/71: 1 year

to be prolonged with 1 year)– Activity in other MS must be « similar »– Art 14 (4) IR: criterion for being « similar »:

actual nature of activity

• Decision A2: further clarifications

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Activities in 2 or more MS: Art 13 BR

• For employed persons this provision covers:– More employment contracts are in force at the same

time (art 14 (5) (a) IR. Nature of second or third activity irrelevant. Also activities restricted to very short period in another MS are covered (in line with case-law: Football Club d’Andlau judgement)

– One employment contract performed in 2 or more MS: Art 14 (5) (b) IR. Not relevant how often alternation of activities takes place: some hours a week (Calle Grenzshop judgment) or alternation after months (Hakenberg judgment). However, activities of marginal extent excluded (to avoid abuse)

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Activities in 2 or more MS: Art 13 BR

• Person who normally pursues activity in 2 or more MS as an employed person is subject to legislation of MS of– residence if working for various employers– residence if working for 1 employer and pusrsues

« substantial activities » there– Establishment of employer if working for 1 employer

and not pursuing « substantial activities » in MS of residence. If employer is established outside EU: MS of residence: Art 14 (11) IR

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Activities in 2 or more MS: Art 13 BR

• « Substantial part » means: quantitatively substantial part. Indicative criteria: working time and remuneration. Share of less than 25 %: presumption: no « substantial part »: Art 14 (8) IR

• When assessing these criteria: assume future situation for next 12 months (Art 14 (10) IR

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Activities in 2 or more MS: Art 13 BR

• Person pursuing activities in 2 or more MS as self-employed is subject to legislation of MS of– residence if pursuing « substantial part » there– if he does not pursue there « substantial part »: centre

of interest– for determining « centre of interest »: all aspects must

be taken into, account: place of business, habitual nature or duration of activities, number of services rendered and intention as revealed by circumstances

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Drawing the line between Art 12 and 13 BR

• How to distinguish between posted workers and « persons who normally pursue activities in 2 or more MS »?

• Art 14 (7) IR: duration of activity is decisive: is it permanent or of an ad hoc nature? All relevant facts should be assessed, including place of work as defined in contract

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Procedure for applying Article 13 BR: Art 16 IR

• Person concerned must inform institution MS of residence that he/she works in 2 or more MS

• This institution determines provisionally applicable legislation and informs institutions of other MS concerned

• Provisional determination becomes definitive within 2 months, unless:– Common agreement has been reached between all institutions,

(in cases of uncertainty) – One of the other institutions informs that it has different view

• If difference of views: Art 6 IR applies• If person concerned does not comply with obligation to

inform institution MS of residence, this institution takes initiative for applying Art 16 IR

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Provisional application of legislation: Art 6 IR

• Objective: dispute settlement in cases of differences of views

• Cascade of competences:1. If work is performed in only 1 MS: that MS

2. If work is performed in 2 or more MS: MS of residence if part of work is performed there

3. In other cases: MS the application of which was first requested

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Provisional application of legislation

• Current wording of provision not entirely clear: proposal miscellaneous amendments 2010

• If no agreement between MS: matter may be brought before Administrative Commission

• Decision A1: dialogue and reconciliation procedure

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Provisional granting of benefits

• Objective: dispute settlement in cases of differences of view

• Person concerned is entitled, on a provisional basis, to benefits provided by:– institution of MS of residence– if person does not reside in one of MS

concerned: institution of MS to which request was first submitted

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Provisional granting of benefits (continuation)

• If no agreement between MS: matter may be brought before Adm Comm

• Situation after final settlement: competent institution applies its legislation retroactively, as if difference of view had not existed

• If necessary, institutions involved settle financial situation of person concerned concerning contributions and benefits in cash, in accordance with Title IV chapter III IR

• Benefits in kind granted provisionally must be reimbursed by now competent institution, in accordance with Title IV IR

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Art 16 BR: a flexible article

• Two or more MS may by common agreement provide for exceptions to rules on applicable legislation

• Same as Art 17 Reg 1408• Court (Brusse judgement): MS enjoy wide powers of

discretion to use this Article• Condition: must be « in interest of certain persons or

categories of persons »• Question: which criteria to apply? No case-law. No

clarification in IR.• Court: Art 16 agreement can have retroactive effect

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Cooperation between institutions

• The relevant institutions communicate to the competent institution of the competent MS the necessary information required to establish the contributions which the person and his employer(s) are liable to pay under that legislation: Art 20 (1) IR

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Obligations of employer

• Employer who has business in a MS other than the competent MS shall fulfil all obligations laid down by applicable legislation (pay contributions!) as if he had place of business in competent MS: Art 21 (1) IR

• Such employer and worker may agree that latter may fulfil employer’s obligations on its behalf concerning payment of contributions « without prejudice to employer’s underlying obligations » (Art 21 (2) IR

• Reminder: IR contains detailed provisions concerning recovery of contributions. New IR has reinforced postion of MS to collect contributions due (Articles 71-86 IR)

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Transition from Reg 1408 to Reg 883/2004

• If, as a result of the new rules, a person is subject to legislation of a MS other than that determined under Reg 1408, the legislation determined under Reg 1408 shall continue to apply for a maximum of 10 years « as long as the relevant situation remains unchanged »: art 87 (8) BR

• What is « change of relevant situation »? Adm Comm April 2010: after 1 May 2010 one of the decisive ctriteria/elements for the determination of applicable legislation under Title II of Reg 1408 changed and this change would lead to the result that person concerned would be subject to legislation of a MS other than that lastly determined in accordance with title II of Reg 1408

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Transition form Reg 1408 to Reg 883/2004 (continuation)

• New rules of Reg 883 will apply immediately if person concerned requests that he/she be subject to the legislation determined under the new rules

• Request should be made to competent institution of MS whose legislation is applicable under the new rules

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Looking ahead

• Do new rules meet today’s requirements?• Commission Communication 2007 (Job

Mobility Action Plan) on « changed patterns of mobility »

• Commission Communication announced for 2011 on highly mobile workers to elaborate guidelines for implementation of current rules and explore possible adjustments of the rules themselves