New EU regulations on cross-border remote work

As of 1st July 2023, the EU Framework Agreement governing social security for employees engaged in cross-border telework (remote work) entered into force. According to the preamble, it responds to the flexibilization and digitization of the labour market, as well as the rise in popularity of cross-border telework (remote work) since the COVID-19 pandemic. The agreement is relevant to foreign commuters who regularly work remotely in their country of residence. Until now, as a rule, the place of social security coverage has always been the place of work.

Cross-border remote work, or, according to the wording of the Agreement, telework, under the Framework Agreement means work performed from the employee's country of residence while maintaining a digital connection to the environment of an employer whose registered office or place of business is located in another country that is a signatory to the Agreement.

Problematic remote work from abroad – how has it been so far?

Until now, as a general rule, an employees who habitually performed work in two or more EU member states was subject to the legislation of the member state in which they resided if theyperformed a substantial part of the work in that state. Thus, this did not necessarily have to be the employer's state of residence. The Framework Agreement of 1st July 2023 introduced a change in this regard.

According to its content, people performing cross-border remote work may be subject to the social security legislation of their employer's member state if the following conditions are met:

• the employee is employed by an employer in a member state other than their member state of residence;

• both member states have signed the agreement,

• working time in the member state of residence is less than 50%, but a minimum of 25%;

• the employee normally works in two locations: in the member state where the employer's registered office is located and performs remote work in the member state of residence.

It is mandatory for the employee to have an A1 certificate, which confirms the application of the legislation applicable to the employer's registered office.

The Polish Social Security Institution is changing its approach

Alongside the entry into force of the new EU regulations on cross-border remote work, the Social Security Institution is also changing its approach and confirming that in the case of employees performing remote work from the territory of another member state, these individuals do not have to change their social security institution and, once the conditions are met, can be subject to Polish legislation, under the provisions on posting. For an employee to remain under Polish Social Security, the remote work they perform in another member state:

• must be limited in time;

• must not be part of the employee's usual work pattern (normal mode of work);

• must be the result of an arrangement between them and the employer.

In addition to the adoption of the EU Framework Agreement, the source of the change in the Social Security Institution's approach can be traced to the most recent guidance from the Administrative Commission for the Coordination of Social Security Systems (mark AC 137/23) on determining which social security system is appropriate when working remotely from another member state.

So far, obtaining an A1 certificate, confirming subjection to the Polish social security system, in the case of employees working from abroad has been a considerable challenge. Often it was necessary to submit individual applications to two insurance institutions, which resulted in a discretionary decision, determining under which insurance system a given employee would be subject to. As a result, therefore, employers rarely agreed to allow remote work from abroad.

The current position of the Polish Social Insurance Institution (ZUS) indicates that once all the criteria for posting are met, remote work from the territory of another member state will be covered by the regulation of Article 12 of Regulation (EC) No. 883/2004 of the European Parliament and of the Council, and on this basis obtain an A1 certificate for the employee. 

Do employers gain from this? Foreign workation as an attractive benefit

The changes in the Polish Social Security Institution’s (ZUS) approach will be felt by both employees and employers themselves. Leaving aside the technical issues alone and the simplification of obtaining A1 certificates, it will now be much easier for employers to offer the benefit of foreign workation, which will translate into the attractiveness of their job offer, attracting new employees, as well as retaining experienced professionals with them. In view of current labour market trends, where remote work and flexibility seem to play first fiddle, and employers are competing for good specialists, this change seems to be very much to their advantage. On the other hand, employees themselves will gain easier access to perform work from another EU country and reconcile, for example, professional and private responsibilities.