Since the coronavirus crisis, working from home has become much more common. However, if the employee’s home is not in the Netherlands, working from home may mean that they need to be insured in their country of residence.
Insurance obligation
Within the European Union, the country in which a person is covered by social security is determined by Regulation 883/2004. The general rule for people in paid employment is that they are insured in their country of residence, provided they carry out a substantial part of their work there. Under this scheme, ‘substantial’ is defined as 25% or more. Employees who do not work substantially in their country of residence are insured in the country where their employer is based.
Under these rules, someone who, for example, lives in Germany and works four days a week as an employee for a Dutch employer is insured in the Netherlands. If this employee works from home for one day one week and two days the next, they are carrying out their work for 25% or more in the country where they live, with the result that they are insured in Germany.
Corona
During the coronavirus pandemic, working from home became so routine for many employees that the 25% threshold was exceeded. As it was not desirable for this to result in a change to the obligation to be insured under the social security schemes, European agreements were reached stipulating that working from home has no impact on the obligation to be insured. These agreements remain in force until 1 July 2023.
Framework agreement
The aim is to expand the options for working from home for employees living in another country, without this affecting their compulsory insurance status, with effect from 1 July 2023. 25% will then be replaced by 50%, allowing employees to work from home for up to half of their working hours.
For employees who work from home for more than 25% but no more than 50%, a request would then need to be submitted to the Social Insurance Bank (SVB). The Netherlands is still investigating whether the SVB will be able to process the expected high volume of applications. It is therefore not yet known whether the relaxation of the rules will come into force on 1 July 2023.
Employers would be well advised to take the rules on compulsory insurance into account in their policies on working from home. Otherwise, they run the risk of being faced with the obligation to pay contributions abroad via a German or Belgian payroll administration by enthusiastic cross-border workers who are working from home.