COVID-19 and validity of A1 Models for posted and multistate workers

Prepared by Blerta Bojaxhi, Davide Poli, Paolo Lucarini, Marzio Scaglioni

As known, the health emergency linked to the COVID-19 pandemic has caused severe restrictions on the free movement of people and, among them, to the mobile workers.

In this context, limitations on movements of people could have very significant impacts for companies operating cross border. There are many aspects to consider for Employers of mobile workforces, like tax implication already covered in a previous Newsalert and social security implications.

EU Social security implications – COVID-19

At EU Level, the European Commission released a guide that describes certain scenarios that might generate social security issues due to workers being displaced unexpectedly for a period of time in another country due to COVID-19. Please also see our previously released Newsalert published on April 6th, 2020 that supports the reading of the aforementioned guide.

With reference to Italy, INPS, with the Message n.1633 of April 15, 2020, realized the clarifications – aimed at allowing the payment of social security contributions in the State of Origin – provided by the Ministry of Labor and social policies regarding the validity of the A1 forms already issued by the Institutions belonging to the Economic Area of the European Union pursuant to Articles 11, 12 and 13 of Regulation (EC) no. 883/2004.

Validity of the A1 Form for workers on secondment or transnational travel (art.12 EC Reg. 883/2004)

First of all, it should be recalled that at European level social security law is governed by the territorial principle on the basis of which social security contributions have to be paid to the State where the working activity is actually carried out (art. 11 EC regulation n. 883/2004).

However, for workers hired in a member State of the European Union who temporarily work in another member State, the social security system of that State (“State of origin “) may continue to apply when certain conditions are met (Article 12 of EC Regulation No. 883/2004).

This applies to both “secondments” and “business trip”, provided that the employer requests in advance to the competent Social Security Authority to issue the social security coverage certificate, so called Form A1. The A1 Form allows the displaced worker to remain insured for social security purposes in the European State of origin, generally it has a duration of 24 months, which can be extended up to 5 years (art. EC Reg. 883/2004).

With reference to these specific cases and in order to facilitate the social security protection of international mobile workers, INPS clarified that the validity of the A1 Forms – issued by the institutions belonging to the European Economic Area pursuant to Articles 11 and 12 of Regulation (EC) no. 883/2004 – expiring in the period between 31 January – 31 July 2020, in the event that the posted worker was forced to remain in the host country, must be considered extended until the end of the state of emergency, set on 31 July 2020. 

The provision above will only apply if the posted worker is forced to remain in the host country for reasons connected to COVID-19 emergency. On the contrary, if the stay in the host State is extended for other reasons, and not linked to the current pandemic situation, it will be necessary to apply for the extension of the current A1 Form, still valid but expiring.

Validity of the A1 Multistate Forms (art.13 EC Reg. 883/2004)

Specific clarifications have been provided also with reference to the validity of A1 certification issued based on article 13 of Regulation (EC) no. 883/2004 (so called “A1 Multistate”).

For workers who work in two or more states, article 13 of regulation (EC) no. 883/2004 identifies the criteria for determining the applicable legislation on the basis of the concept of “prevailing activity”, taking on particular importance the evaluation of the activity carried out in the country of residence, which must be at least equal to 25% of the overall work activity carried out.

However, due to the measures to limit cross-border mobility, these workers may have been forced to remain in the foreign state, being unable to return to the state of residence. This circumstance, in general, could lead to a change in the parameters for assessing work activity, with the consequent implication of the social security affiliation.

Just to remedy this eventuality, in the aforementioned message INPS stated that the A1 Multistate certificates – issued by the institutions belonging to the European Economic Area according  Article 13 of Regulation (EC) no. 883/2004 – before COVID-19 emergency, must be considered valid regardless of the changes in the percentage threshold of the overall work activity carried out due to the aforementioned restrictions on mobility.

Again, also with reference to this scenario, INPS linked the validity of the A1 Multistate certificates (issued but expiring) to the COVID-19 emergency, which leads to conclude that the validity of these A1 certificates are automatically considered extended only in the event that the changes in the percentage thresholds occurred as a consequence of the pandemic status.

Obligations deriving from Directive 2014/67 / EU (empowered in Italy by Legislative Decree no. 136/2016)

Last, we would like to point out that the provisions described in the Message published by INPS, mentioned above, does not in any case concern the administrative obligations as per article 10 and following, of the Italian Legislative Decree no. 136/2016 (transposing EU Directive 67/2014), like the communication of start of assignment and/or additional communication to update the authorities about new assignment terms (i.e. assignment end date).   

At this stage, the absence of specific indications by European Community and local authorities   seems to point towards the persistence of these obligations also in the current COVID-19 emergency scenario.

Consequently, if an Italian assignment, which was going to end during these period,  continues due to the limitations on free movement adopted as a consequence of the COVID-19 emergency, for mere administrative purposes, the seconding company is required to communicate this extension to the Ministry of Labor,  in compliance with the actual regulation.

Let’s Talk

For a deeper discussion, please contact:

Paolo Lucarini

PwC TLS Avvocati e Commercialisti

Partner – Global Mobility

Marzio Scaglioni 

PwC TLS Avvocati e Commercialisti

Director – Payroll/Direttiva

Blerta Bojaxhi

PwC TLS Avvocati e Commercialisti

Manager – Global Mobility