Social Security in Europe

The social security systems in Europe were initially coordinated with regard to 'migrant workers' and certain persons who are treated as migrant workers. The scope of this coordination was then progressively expanded to include self-employed persons, civil servants, students and nationals of third countries. Regulation (EC) 883/2004 now covers all economically non-active persons as well. As a result this regulation serves to foster the mobility of all citizens, regardless of their employment status. It applies to all citizens of the Member States of the EU and the EEA, to all citizens of Switzerland and to third-country nationals within the framework of Regulation (EU) 1231/2010. The earlier Regulation (EEC) 1408/71 will continue to apply in relation to the EEA and Switzerland until the relevant agreements have been amended.

The provisions concern in particular:

• Persons who are or were employed in more than one Member State and
• Persons who reside or temporarily stay in a Member State other than the competent Member State.

Persons who exercise their right of free movement in the European Union are not to suffer any undue disadvantages in social security matters as a result of their mobility. For this reason binding rules have been established at European level to ensure that the right to free movement ‒ being one of the fundamental freedoms of the European Union ‒ is flanked by the coordination of social security systems. EU law on the coordination of social security systems contains the following principles:

• Prohibition of any differentiation based on nationality: This means that no one may be treated worse due to their nationality. The principle of equal treatment also means that persons who make use of their right of free movement are not to be disadvantaged or given preferential treatment because of this.
• Preservation of acquired rights: Entitlements that have been acquired through the payment of contributions are not lost when the individual takes up employment in another Member State. Periods of insurance coverage which were completed in several Member States are added together.
• Cash benefits (in particular: pensions) are to be exported in full to the other Member States. This does not however apply to benefits ‒ such as basic income support that is provided in old age or in the event of reduced earning capacity ‒ that are closely linked to the economic and social conditions in the individual Member State.
• In the area of health insurance, insured persons (in particular: tourists) who are temporarily staying in a State that is not competent for their health insurance will receive benefits in kind which become necessary on medical grounds, taking into account the nature of the benefits and the expected length of their stay. Such persons must present their European Health Insurance Card as proof of entitlement. Pensioners who reside in a State other than the competent State receive all benefits in kind as if they were insured in that other State.

The Regulation also lays down which legal provisions in the social insurance field are to be applied in matters with a cross-border dimension. Generally speaking, everyone is subject to the legislation of only one Member State. This is usually the Member State in which the individual is employed or self-employed. In the case of postings or a special agreement, the legal provisions of the sending state apply as an exception under certain conditions. In the event that an individual usually works in two or more Member States, the legislation of that person's country of residence applies when the individual performs at least 25% of their working hours in that country. When this is not the case, the legislation in the country in which the company or employer has its headquarters is applicable. The laws of the country of residence also apply when the individual is not gainfully employed.

Seasonal workers who are employed in their country of residence continue to be subject to the laws and regulations of their country of residence when they are only seasonally employed in Germany. The laws of the country of residence also govern whether contributions for seasonal employment in Germany are to be made to social insurance in the respective country of residence and the amount of such contributions.

In March 2005 the German government set up a task force to combat abuse of the freedom to provide services and the freedom of establishment. This was done the aim of ensuring compliance with the conditions stipulated by the European Union for the posting of workers in accordance with regulations. Thus, providers of cross-border services may not be letter-box companies that do not pursue any business activities where the company is located but function merely as recruitment offices.

Useful links:

• http://ec.europa.eu/social/
• www.dvka.de/oeffentlicheSeiten/Fremdsprachen/Englisch.htm
• German statutory pension insurance scheme - Deutsche Rentenversicherung
• Federal Employment Agency on unemployment insurance (in German) and family benefits
• German Liaison Agency Health Insurance - International  for statutory occupational accident insurance