The new convention on social security coordination between Switzerland and UK is expected to enter into force provisionally from 1st of November 2021.
The provisions will become definitive as soon as both parliaments have approved them.
But what does this mean for the people concerned and for employers in Switzerland?
Situation until 31.12.2020
Until 31.12.2020, the provisions of the Switzerland-EU Regulation still applied despite Brexit. These were valid for Swiss or EU citizens including citizens of the UK and the corresponding situations in the EU or the UK and Switzerland. This Ordinance 883/2004 regulates the aspects of the correct social security subordination and the benefits to be received from the various branches of social security.
For employers, the focus was and still is on the specific question in which country an employee’s social insurance has to be processed and taken into account in the payroll. The principle that compulsory social security contributions have to be settled in only one country, even in cross-border situations, has still not been fully applied everywhere. This repeatedly leads to unpleasant situations for employers and the persons concerned.
For other nationalities or countries, it has always been necessary to check whether other social security agreements could be applied. This will still be necessary in the future.
Situation since 1.1.2021
Comprehensive regulations with the EU and Switzerland deal with situations that were already valid before 1.1.2021 and last beyond this date. In this case, the provisions should continue to apply as long as there is no interruption or the confirmed validity does not expire (e.g. end of a posting) or a new situation arises. This is to ensure that there is no abrupt change in the social security status and that acquired rights for social security benefits continue to apply.
The Agreement on Trade and Cooperation between the European Union and the European Atomic Energy Community, on the one hand, and the United Kingdom of Great Britain and Northern Ireland, on the other, entered into force provisionally on 1.1.2021 and definitively on 1.5.2021. This includes the area of the Protocol on the Coordination of Social Security. Especially in the area of social security coordination, the provisions were transposed in the same manner as Regulation 883/2004. The only issue was that this was not applicable to situations with Switzerland (because Switzerland is not member of the EU).
Therefore, for new situations from 1.1.2021 with regard to Switzerland and the UK, the social security agreement betweeen CH and UK valid since 01.04.1969 had to be consulted. If, for example, it was envisaged that an employed person would work both in the UK and in Switzerland, social security had to be settled in each state on a pro rata basis.
Situation presumably applicable as of 1.11.2021
On 29.9.2021, the FSIO (Federal Social Insurance Office) published the draft agreement on the coordination of social security between the Swiss Confederation and the United Kingdom of Great Britain and Northern Ireland. The intention is to apply the agreement provisionally from 1.11.2021 if the competent UK authorities agree.
Those who are familiar with the provisions of the applicable law from Ordinance 883/2004 can discover many parallels in the new provisions. For example, the principle of social security subordination in only one state is reintroduced, as are the provisions on secondments and the article on exemptions.
For the purpose of determining the applicable law, the personal scope of the Agreement shall include, in addition to the nationals of the United Kingdom, Switzerland, stateless persons and refugees, nationals of a Member State of the European Union if the laws of either or both of them apply or have applied in Switzerland or UK respectively. Equally, family members and survivors are included. There are differences with regard to the rules for benefits between Switzerland and the UK in terms of personal area of application.
With this agreement, many gaps that arose in the area of coordination with the former EU-Switzerland solution before Brexit are expected to be closed. Nevertheless, the correct application of the provisions takes on a new complexity because several regulations have to be consulted: Regulation 883/2004 applicable in relation to the EU and Switzerland, the regulation concluded between the EU and the UK since 1.1.2021, the transitional provisions of situations prior to 1.1.2021 EU UK, Switzerland UK and the presumably new provisions between Switzerland and the UK (and depending on the situation also other social security agreements).
Companies will also have to deal with the question of which forms and documents are valid until when. A transition period is foreseen during which all issued forms and documents will continue to be used in the formats that were in operation immediately before the period of entry into force. It is clear that all forms and documents issued before and during this transitional period will remain valid until they expire or are cancelled.
Information on upcoming seminars and consulting services
General information on news 2021 and 2022 for employers in the area of taxes (wage statement and withholding taxes), social insurances, labour law, authorisation law etc. will be provided on 3.12.2021 in German. Register now at https://www.zulaufgmbh.ch/kurse/webinar-aktualitaeten-zum-jahreswechsel-2021-2022/.
Training in the area of cross-border social security regulations for HR and Payroll in German: https://www.zulaufgmbh.ch/veranstaltungen-workshops/ and in English: https://www.zulaufgmbh.ch/en/events-and-workshops/ .
I will also be happy to assist you with current cases https://www.zulaufgmbh.ch/en/consulting/further-topics/social-security/