The problems with the A1 Certificate are part of everyday cross-border life, but policy-makers are not making much progress.

UM – 02/2020

The revisions to Regulation (EC) No. 883/2004 on the coordination of social security systems and Regulation (EC) No. 987/2009 on its implementation have brought policymakers in Brussels to a standstill. Recent trilogues have been cancelled due to a lack of feasible proposals for discussion. The biggest hurdle between parliament and council is a simple document that, up until now, has received little attention – the A1 Certificate. This document provides proof that a person working in another Member State is subject to the law of their home country and therefore does not need to make social security contributions in the Member State abroad. Further information is available on the DRV website (German only).

Checks and fines that several Member States have been imposing for some time have unfortunately resulted in the A1 Certificate becoming well-known for the wrong reasons. The issuing authorities – in Germany, the health insurance, the German Liaison Office for Health Insurance Abroad and the German Pension Insurance – have been bombarded with applications from employers who want to send their workers abroad.

The European Representation of the German Social Insurance invited policy experts from Brussels to get a first-hand feel for the problems in administrative practice and to discuss possible solutions during an expert discussion on February 7. The results of the informal policy discussion showed that there are three points which are particularly controversial with regard to the revision of the coordination Regulation:

1. As expected, first and foremost is the A1 certificate. There must be exceptions for business trips. However, the term ‘business trip’ is too vague and must be fleshed out. There are differing opinions of how to do this. Whereas some (for example, the European Parliament’s rapporteur or the trade unions) are for a qualitative description of the exceptions, others (including German ministries and employers’ organisations) find it more practical to define the exceptions in terms of time. Suggestions range from 7 to 30 days.

2. If a company carries out business activities in two or more Member States, a number of factors must be taken into account when determining its registered office or place of business, such as turnover or employees’ working hours in each Member State. The designation is intended to be part of an overall assessment. However, the criterion of ‘working time in each Member State in which the activity is performed’ is a controversial point of discussion in the context of the revision. Problems include a fragmented insurance history of workers and the difficulty in keeping track of this. Due to methodological difficulties, there has recently been an increase in the number of people calling for the working time criterion to be done away with entirely when determining the registered office or branch.

3. In terms of unemployment benefits for cross-border workers, discussions have revolved around minimum periods in the country of employment in order to be entitled to unemployment benefits. Initially, 15 months were proposed. In addition, the principle of ‘lex loci laboris’ should also apply to cross-border workers to fulfil the law of the country of employment and the obligation for job-seekers to make themselves available on the labour market  from which the unemployment benefit is drawn, regardless of their place of residence. In the end, a compromise was reached in the Council, which provided for the following:

  • a minimum period of time in the unemployment insurance system between three and six months,
  • no derogations for cross-border workers when exporting unemployment insurance benefits,
  • cross-border workers should also be subject to the same conditions during unemployment as national workers.

Background: Although the obligation to apply for and carry an A1 certificate is applicable European law, it has been applied leniently in practice. Previously, even the German Federal Ministry of Labour and Social Affairs (BMAS) had stated that the A1 certificate can be applied for retrospectively if necessary, for short-term or short-term business trips. For some time now, however, various Member States, such as France and Austria, have been increasingly checking that cross-border workers possess an A1 certificate. The change in administrative practice is due to new national regulations to combat illegal employment and wage dumping in these countries. They stipulate that it is mandatory to apply for an A1 certificate before starting a posted activity in these countries. If the document cannot be produced during an inspection, fines may result. Therefore, the BMAS now recommends that cross-border workers always apply for an A1 certificate in advance.