Text: Terhi Friman, published in Finland Bridge -magazine 3/2023.
Seventeen European countries have signed a new agreement on cross-border telework that took effect on July 1, 2023. Under certain conditions, an employee working remotely or in-person in two European countries is eligible for social security insurance in their employer’s home country instead of in their own country of residence.
Marjaana Lundqvist, a senior adviser at the Finnish Center for Pensions (FCP), says that there has been great interest in the opportunities offered by the new agreement. Normal EU social security provisions restrict teleworking in the worker’s country of residence, so the new agreement has been hailed as a welcome reform. Since the pandemic, remote work has increased everywhere, and many people do not want to return to entirely on-site work.
“Under the new agreement, teleworking in one’s country of residence can account for a minimum of 25% and a maximum of 49.99% of one’s working time. Previously, teleworking was only possible for 25% of working hours, in practice one day a week. The agreement brings flexibility to working life,” Lundqvist says.
Especially in Central Europe, workers often commute across national borders. The need to draw up an agreement stemmed from the needs of European countries such as Belgium and the Netherlands. For example, parents with a family living in Germany can work at an employer’s office in neighboring Austria and now also more flexibly from home as well.
So far 17 countries have joined the agreement, including non-EU states Liechtenstein, Norway and Switzerland. Each EU country can decide whether to join the agreement, so others, including Italy, remain outside the agreement.
“In Finland, remote work agreements are important, especially in northern parts of the country, when people may work domestically as well as across the border in Sweden or Norway, for example,” says Marjaana Lundqvist, senior adviser at the Finnish Center for Pensions (FCP).
Remote work agreements especially important in northern Finland
In Finland, remote work agreements are important, especially in northern parts of the country, when people may work domestically as well as across the border in Sweden or Norway.
As the name implies, the telework agreement specifically applies to remote work. For example, if a doctor or nurse works for a private clinic in Norway and works remotely in Norway from their home in Finland, they may be covered by the agreement. If, on the other hand, they work in both countries at a workplace, such as a hospital, they cannot be covered by a telework contract.
The agreement is best suited for those in expert positions and office workers, who can in effect work regardless of time and place. The agreement is not suitable, for example, for building or road construction work, where the employee must be in a certain place at a certain time.
The agreement also does not apply to entrepreneurs, grant recipients or officials. Their social security coverage for remote work is still determined by the EU’s normal social insurance rules, just like all others who are not covered by the new agreement.
Agreement extends beyond teleworkers
The telework agreement also does not apply to persons who telework from home full-time, even if the employer is abroad. If, for example, an employee on the payroll of a Swiss employer moves to Finland and no longer works at all at their former workplace in Switzerland, they are not covered by this agreement. Such a person would be insured in Finland, where all their work is physically done.
Lundqvist took part in negotiating the agreement, which was wrapped up quickly, within six months. She describes the agreement as a great achievement. Issues that initially seemed impossible were resolved when the necessary will and alternatives were found.
A telework contract provides an opportunity to deviate from the insurance provision of the employee’s country of residence. Based on a telework agreement, the worker and employer may apply for an exemption from the social security legislation of the employer’s domicile.
However, both the employee and the employer must agree to deviate from the normal provisions for applying a telework contract and the normally applicable social security legislation.
A1 certificates from the FCP
If you work abroad or in several EU or EEA countries, you must always apply for an A1 certificate.
If you work in an EU country, you can only be covered by social security in one country. With an A1 certificate, the employee can prove which country’s social security covers them. The worker pays statutory insurance contributions and receives all benefits in this country.
Each employer must apply for a telework agreement in their home country. In Finland, employers should apply for certificates electronically via the FCP website. Employers based in other EU member states must apply for A1 certificates in their own countries.
Based on an A1 certificate issued by the FCP, the employee will also receive a European Health Insurance Card from the Social Insurance Institution of Finland (Kela). The processing time for an A1 certificate is approximately one month.
The new teleworking agreement and EU social security provisions apply only to social security, not matters relating to occupational safety and health. Tax matters are also excluded from this agreement. You can ask about tax matters from the Tax Administration.
Read also: TAXATION OF TELEWORK IN THE EU – Suomi-Seura