If you are an employer who sends employees to work in the EU, EEA, or Switzerland, or you employ employees from one of those countries, please read below on how to prepare for the UK’s transition out of the EU from the 31st December 2020.
Employees starting work in the EU, EEA or Switzerland before 1 January 2021
Current European social security coordination rules will be used to work out which country’s social security scheme you and your employee will have to pay contributions to. This covers the UK based employees who will start working in one or more of the EU, EEA countries, and Switzerland before 1st January 2021, and those from the UK, EU, and EEA/Switzerland working in one or more of those countries before January 2021.
Applying for a PDA1 or E101 certificate for a period that starts before 1st January 2021
Provisions in the Withdrawal Agreement ensure that the current EU social security coordination rules will continue to apply after 31st December 2020 to certain individuals, whether a future relationship agreement between the UK and the EU on social security coordination is agreed upon or not.
Employers and individuals should continue to apply for PDA1s and E101s as normal if they are to start working before 1st January 2021 in a situation involving the UK and one or more of the EEA countries and Switzerland.
If you want to apply for a PDA1 or E101 use one of the following application forms: –
- CA3822 – Use this if you are sending an employee to work in another country within the EEA.
- CA8421 – Use this if your employee works in two or more of any of the UK, EU, EEA countries, or Switzerland.
When working in an EU, EEA or Switzerland, the PDA1 or E101 can be used as evidence that HMRC has applied EU social security coordination rules and has determined that UK National Insurance (NI) contributions are due.
If HMRC has issued a PDA1/E101 that started before 1st January 2021, you and your employee will pay UK NI Contributions for the period stated on the document. However, please see the “Right to work in the EU, EEA, and Switzerland after the 31st December 2020” further down in the article if the certificate has an end date after 31st December 2020.
Employees starting work in the EU, EEA or Switzerland after 1st January 2021
The Withdrawal Agreement sets out the terms of the UK’s withdrawal from the EU and provides for a deal on citizens’ rights in Part 2.
- Part 2 of the EEA EFTA Separation Agreement
- Part 3 of the Swiss Citizens’ Rights Agreement
Applying for a PDA1 or E101 certificate for a period that starts after 1st January 2021
Employers and individuals should continue to apply to HMRC for PDA1s and E101s as normal for employees who are to start working after 31 December 2020 in a situation involving the UK and one or more of the EEA countries and Switzerland. For example, an employee you send to work temporarily in France.
Whilst negotiations are ongoing, HMRC will only be able to process applications for PDA1s or E101s for employees in scope of the Withdrawal Agreement, one of the related agreements with EFTA countries and Switzerland.
Further guidance will be issued in due course.
Workers from the EU, EEA, and Switzerland coming to the UK
If you employ a person from the EU, EEA, or Switzerland before 1 January 2021 and they have a PDA1 which shows they are subject to an EEA country or Swiss legislation, you and they will not have to pay UK National Insurance (NI) for the period stated on the PDA1, even if it ends after 31 December 2020, so long as their situation remains unchanged. If they have a PDA1 which shows they are subject to UK legislation, you and they will have to pay UK NI.
If the employee is an EU, EEA, or Swiss national and they haven’t applied for settled or pre-settled status, they should consider registering with the EU Settlement Scheme by 30 June 2021.
If you employ an individual from the EU, EEA, or Switzerland who does not have a PDA1 and they work in two or more of any of the UK, EU, EEA, or Switzerland, you or the employee should apply for a PDA1 to the social security institution of the country where they reside.
Normally, you don’t need a PDA1 if an employee from the EU, EEA, or Switzerland only works for you in the UK because they will be liable to pay UK National Insurance.
Right to work in the EU, EEA, and Switzerland after 31st December 2020
For periods after 31 December 2020, employees should check the immigration rules in the country that they will be working in. Although Part 2 of the Withdrawal Agreement protects social security coordination rights for certain UK and EU citizens, it does not protect the right to work in countries they are not resident in unless they are a UK national with rights as a frontier worker by 31 December 2020. A frontier worker is a person who resides in either the UK or the EU, EEA, or Switzerland who works in one or more of those countries but not the one they reside. So, this could affect individuals resident in the UK who work in the EU, EEA, or Switzerland.
The UK’s social security agreement with the Republic of Ireland
The UK has reached a reciprocal agreement with Ireland which ensures that social security coordination continues after 31 December 2020 when considering moves by UK or Irish nationals between the UK and Ireland. The UK and Ireland have ensured that social security coordination continues on the same terms that are currently in place.
More information on this can be found HERE.
UK’s future relationship with the EU
The Government has been clear that there will be changes to future social security coordination arrangements for those individuals not in the scope of the Withdrawal Agreement and the related agreements with EEA EFTA countries and Switzerland. The Government continues to work with the EU to establish practical and reciprocal provisions on social security coordination which includes preventing dual concurrent social security contribution liabilities. The UK Government published a mandate on 27 February outlining the UK’s approach to negotiations on the future relationship with the EU after 31 December 2020.