Social Security Coverage For Long-Term Secondments
In a previous article, we informed you about the social security coverage for employees who are or will be seconded to the Netherlands from abroad – or seconded from the Netherlands to another country – and the importance of having an A1 statement or a Certificate of Coverage in place. Under certain conditions, an employee can continue to be covered by the home country’s social security system during an assignment.
In short, an A1 statement or Certificate of Coverage is a statement from the Social Security Agency of the home country confirming which social security rules apply.
In practice, we receive many questions about social security coverage and the A1 statement or Certificates of Coverage in the situation where employees are or will be seconded for a period of at least 2 years (long-term secondments). In this article, we would like to shed some light on this topic.
In general, an A1 statement or Certificate of Coverage can remain valid for a maximum period of five years. After the five-year period, you or your employee must switch to the host country’s social security system. This could be the case when, for example, the secondment is prolonged indefinitely or the employer and employee at one point decide to transfer the employee to a local contract in the host country. Basically, as soon as the label secondment ceases to exist, the A1 Certificate or Certificate of Coverage is no longer valid.
A request for an A1 statement or Certificate of Coverage has to be done for the full expected period of the assignment. This means that for secondments that are anticipated to last three years, for instance, you also need to request the A1 statement or a Certificate of Coverage for the period of three years. This period can be extended if the assignment is (unexpectedly) prolonged and takes longer than originally planned. This extension can in principle not be longer than 24 months in this example though, since the period during which it is still possible to be covered by the home country’s social security system is in principle maximum five years. If the assignment is not extended beyond three years, the A1 statement or Certificate of Coverage will expire after the period of three years.
Secondments Longer Than Two Years
For secondments that will last longer than two years, the following aspect may be taken into consideration. If a statement is applied for in case of an assignment with an anticipated duration of two years, the state in which you apply for the A1 statement or a Certificate of Coverage can generally grant this certificate one-sidedly (meaning without consulting the other concerned state).
For secondments over two years, both states (home and host country) first have to discuss and mutually reach an agreement regarding the state in which you or your employee shall be subject to social security legislation before granting the certificate. This can be quite a time-consuming process. The latter also applies when you request for an extension of an already granted A1 statement or Certificate of Coverage beyond the two-year period.
Knowing that applying for an A1 statement or Certificate of Coverage in case of long term secondments (longer than two years or extension after two years) can be quite time-consuming in comparison to short term secondments, it may be relevant to consider the length of the secondment when relocating employees on secondment and when drafting the secondment agreement.
A1 Statement/Certificate of Coverage Extension After Five Years
In extraordinary and unforeseen circumstances an employer and employee might need to extend the secondment for a short period of time after the five-year period. For example, if the project by exception is taking longer than expected (not indefinitely). In this case, an extension request of the A1 statement or Certificate of Coverage for the maximum period of one year (up to six years in total) may be applied for. This exceptional extension is again subject to a mutual agreement between the home and host states involved. In addition, the extraordinary and unforeseen circumstances of this extension and the necessity of the employee being required for the finalization of the project or work in the host country needs to be explicitly demonstrated using proof.
To sum up, in principle the period which an A1 statement or Certificate of Coverage is applied for must match the anticipated period of the secondment, after which an extension might be possible.
If you have any questions regarding your or your employee’s social security position during your assignment, please feel free to contact our global mobility services experts.