Germany’s social insurance system is preparing for various exit scenarios, and has published information for insured persons, employers, workers and service providers.

Political dilemma

On 15 January 2019, the UK’s House of Representatives rejected the Brexit agreement negotiated with the European Union by a large majority. This was preceded by the referendum in June 2016, in which a small majority of UK citizens voted in favour of the UK leaving the EU, and the UK formally invoking Article 50 on 29 March 2017. UK politicians are yet to find a new solution to the Brexit dilemma, as we reported earlier (UK: Will there be cross-party agreement?).

The various branches of Germany’s social insurance system have published information on the various scenarios.

Withdrawal agreement

In the event of the withdrawal agreement being accepted, the Regulations on the coordination of social security systems, namely Regulations (EC) No 883/2004, (EC) No 987/2009 and (EC) No 859/2003, together with (EEC) No 1408/71 would continue to apply for a transitional period until 31 December 2020; after this, new regulations would have to be negotiated. Following the British Parliament’s rejection of the withdrawal agreement, this option will only be considered through renegotiation and resubmission to the parliaments in London and Brussels.

No-Deal Brexit

In the event of a no-deal Brexit, the German-British Social Security Agreement of 20 April 1960 between the Federal Republic of Germany and the United Kingdom might be applicable once more from 30 March 2019, because the aforementioned regulations will cease to apply to the United Kingdom from that date. This agreement is not as comprehensive as the regulations mentioned above. For example, it does not cover unemployment and long-term care insurance.

In the event of a no-deal-Brexit, the Federal Government has submitted a draft ‘Act on transitional arrangements in the areas of employment, education, health, social affairs and citizenship following the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union’ (BrexitSozSichÜG). The relevant parliamentary procedure could be completed before 29 March 2019, with the result that, following a no-deal exit from the EU, there will be a transitional period of legal certainty in terms of insurance status and benefit entitlements for all branches of insurance.

The draft Act states, for example, that pensions which commenced prior to Brexit will continue to be paid at their current level and British insurance periods will continue to be taken into account when determining pension entitlements. However, the regulations do not apply to persons who take up employment in the UK or Germany after Brexit.

Extend the deadline

Extending the deadline for the withdrawal on 29 March 2019 would only be possible with the approval of the 27 remaining EU Member States and for compelling reasons, such as a second referendum or a new general election.

No Brexit

Finally, the United Kingdom could decide to unilaterally cancel its Article 50 letter and stay in the European Union without the consent of the other Member States (No Brexit), unless a withdrawal agreement has already entered into force by then. This was decided by the European Court of Justice on 10 December 2018 in its judgment C-621/18. However, this is currently not on the cards because there is not enough political backing for it.

More detailed information on Brexit and Germany’s social insurance system is available here:

Statutory Health and Long-Term Care Insurance (German only):

https://www.dvka.de/de/informationen/brexit/brexit.html

Statutory Pension Insurance (German only): https://www.deutsche-rentenversicherung.de/Allgemein/de/Inhalt/0_Home/meldungen/2019_01_18_brexit_grossbritannien.html

Statutory Accident Insurance: https://dguv.de/en/international/news/2019/20190118_brexit/index.jsp