Worker mobility: Social Security obligations

When a company posts a worker to another country, one of the key aspects to consider is the applicable Social Security regime during the posting period. The general rule establishes that contributions must be made in the country where the services are provided, following the principle of territoriality (lex loci laboris). However, there are various exceptions to this rule, depending on the existence of international agreements and the specific regulations of each country.

 

 

We will analyze in detail the Social Security obligations for posted workers, distinguishing the different scenarios according to the destination. Additionally, we will address the recent Order ISM 835/2023, which expands the protection of posted workers, ensuring their access to future benefits.

 

Where should a posted worker contribute?

Regarding the applicable Social Security for a posting, the first important point is to define in which state the contributions should be made. Based on the principle of territoriality (lex loci laboris), the general rule in international Social Security is that contributions are made in the place where the services are provided. However, there are different exceptions to this general rule depending on the regime applicable in the destination country:

• International mobility to European Union countries, the European Economic Area, and Switzerland.
• International mobility to non-EU countries with a bilateral Social Security agreement.
• International mobility to non-EU countries without a bilateral Social Security agreement.

The scenarios depending on the worker’s destination are diverse. Let’s look at these exceptions in detail:

Posting within the EU, EEA, and Switzerland

The first exception would be the scenario of postings within the European Union through Regulation 883/2004 with the corresponding issuance of the A1 form or “Certificate of applicable legislation” (in Spain, it is issued by the General Treasury of Social Security). Within this first case, there are three situations in which the legislation of the country of origin or residence will apply:

• In temporary postings under Article 12 of the Regulation (with a maximum duration of 24 months)
• In case of providing services in more than one member state, as indicated in Article 13 of the Regulation (this is the recognized figure of the Multi-State worker). However, for the Social Security of their state of residence to apply, they must carry out at least 25% of their activity in that country.
• The third exception to the general rule would be in case there are bilateral agreements mentioned in Article 16 of the Regulation.

Posting to countries with specific agreements with Spain

The second exception to the principle of territoriality would apply in cases where Spain has signed bilateral Social Security agreements with the destination country, specifying both the initial duration and possible extensions. In this case, a coverage certificate from the country of origin would need to be issued.

Moreover, it is important to highlight that most agreements do not guarantee healthcare assistance in the destination, so a private health insurance would be necessary to cover contingencies not covered by the certificate from the country of origin.

Options in the absence of international agreements

The third exception to the general rule of the principle of territoriality would be the situation of posting to countries with which Spain has not signed an international instrument on Social Security. In this third case, the company can choose between two alternatives:

• Double contribution: They can choose to maintain contributions in Spain and contribute simultaneously in the destination country.
• Or they can choose to unregister from the Spanish Social Security and contribute only in the destination country (following the lex loci laboris principle).

 

Order ISM 835/2023 for posted workers

The main objective of Order ISM 835/2023, which came into effect in November 2023, is to ensure access to future benefits for all posted workers during this period. Specifically, this is the regulation that governs the situation assimilated to registration in the Social Security system for workers posted abroad by companies carrying out activities in Spanish territory.

As stated in the Order, there are four situations in which posted workers can continue contributing to the Spanish Social Security:

1. Postings of a worker to a country where no international coordination instrument for Social Security systems applies (India, Qatar, or Saudi Arabia are examples).
2. Postings where, even if an international instrument applies, the person is not included within its subjective scope (Mexico or Chile are examples).

In these two cases, workers will be considered to be in a situation assimilated to registration in the Social Security regime they were assigned to, continuing the obligation to contribute, both by the company and the posted workers, while they remain in the destination country and the employment relationship continues.

3. Postings where an international instrument applies, once the maximum duration period is exhausted, including any extensions authorized, if these are provided in the respective international instrument (for example, the United States, with a maximum of 7 years including extensions).
4. Postings where, even if an international instrument applies, it does not foresee the figure of worker postings by their companies to the territory of the other party.

In these cases, the posted persons may voluntarily remain subject to Spanish legislation, even after the maximum posting period specified in the respective international instrument has been exhausted, in order to acquire entitlement to the corresponding benefits (including contributory retirement benefits).

✅​ If you need advisory and management services for international mobility, get in contact with our professionals at Adlanter.