European Union: Revision Of Social Security Coordination Rules: The Proposal Of The EU Commission

Last Updated: 10 March 2017
Article by Angela Bruno

Background

EU legislation provides rules to coordinate national social security systems and ensure social security protection when EU citizens move within Europe. In particular, EU legislation provides for the coordination of social security systems to determine which system a mobile EU citizen is subject to and prevents EU Member States from leaving said mobile EU citizen without social protection, or having double coverage in a cross-border situation.

Each Member State is free to determine the features of its own social security system, including which benefits are provided, the conditions for eligibility, how these benefits are calculated and what contributions should be paid, provided that such features comply with EU principles, such as that of equal treatment and non-discrimination.

In this context, Member States are free to monitor developments regarding the payment of those benefits, including to citizens residing in other Member States. The Administrative Commission for the Coordination of Social Security Systems plays a particular role to exchange such information.

Proposed main amendments

In December 2016, the EU Commission presented a proposal aimed at implementing the process of modernisation of the EU law on social security coordination set out in Regulations (EC) 883/2004 and 987/2009 ("the Regulations"). The EU Commission intends to further facilitate the exercise of citizens' rights while ensuring legal clarity, a fair and equitable distribution of the financial burden among the Member States and it aims to promote the benefits of administrative simplicity and enforceability of the rules.

Firstly, based on case law of the European Court of Justice ("the Court of Justice"), the proposal clarifies that Member States may decide not to grant social benefits – which tend to relate to particular needs that do not fall within the category of social security benefits which seek to cover certain types of social risks, such as those relating to sickness, invalidity, old age, unemployment, and maternity or paternity and mobile economically inactive citizens, i.e. individuals who are not working nor actively looking for a job, and do not have the legal right of residence. Economically inactive citizens have a legal right of residence only when they have means of subsistence and comprehensive health coverage.

The revision aims at establishing a coherent regime for the coordination of long-term care benefits, i.e. social security benefits relating to assistance with a person's daily activities in case of old-age, illness, disability or impairment and are currently dealt with under the sickness chapter of Regulation (EC) 883/2004. According to the EU Commission's proposal, the Regulations shall be amended in order to introduce a separate chapter on social security benefits, as well as a definition and a list of those benefits.

In the area of unemployment benefits, among other things, the minimum period for export of unemployment benefits outside the residence country would be prolonged from the current 3 months to at least 6 months. This should provide workers with a better chance of finding work in another country. Moreover, unemployment benefits of frontier workers (i.e. who live in one country, work in another and return home at least once a week) would be paid by the country where they have worked for the last 12 months. Under the current rules, frontier workers have to claim benefits in their residence state, despite not having paid contributions there. Additionally, when assessing whether an unemployed mobile worker qualifies for unemployment benefits, a Member State will only have to take into account periods of insurance in other Member States if the person concerned has worked in that Member State for at least 3 months. In other cases, the former State of work will be responsible for paying those benefits.

Furthermore, the EU Commission proposes to strengthen the administrative rules on social security coordination for posted workers. The EU Commission has set its sights on making sure/ensuring that national authorities have the right tools to verify the social security status of such workers and sets clearer procedures for cooperation between Member State authorities to address potentially unfair practices or abuse.

With respect to family benefits, under current rules, parental leave allowances are treated as benefits for the entire family and subject to anti-overlapping rules. This prevents two Member States from paying social security benefits for the same purpose in respect of the same period. With the proposal, parental leave allowances will be treated as the parent's individual right and Member States will have the option to pay them in full to both working parents. Therefore, those Member States which are encouraging the sharing of parental responsibilities will be able to remove potential financial disincentives for parents who both take parental leave during the same period.

Next steps

The Commission's proposal has been passed on to the European Parliament and EU Member States for discussion. Once they reach an agreement, the amendments below will be enforceable in all Member States on the first day following that of its publication in the Official Journal of the European Union.

Transitional protection will be provided to EU citizens already in receipt of unemployment benefits prior to the changes introduced by the new provisions.

Current rules remain in place until entry into force of the new ones.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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