Current EU regulations provide a clear and practical system for determining how social security applies in the context of EEA assignments and cross-margin working. These prevent contributions being payable in more than unit jurisdiction at the same season and, in some cases, provide a degree of flexibility for employers to choose where contributions are payable. multitudinous companies hold employees within the UK system where possible, for example, to seize advantage of its low NIC rates.

If a UK national goes to toil in another member of the EU, Switzerland, Norway, Iceland and Liechtenstein, he or she will not be subject to NICs or other social security contributions (SSCs) in both states. Instead, SSCs will usually be paid in the state in which the toil is carried out.

There are exceptions to this for temporary or short term assignments and these can be very helpful, both in terms of certainty and minimising compliance requirements for UK employers and for employees who are capable to remain in their ‘home’ system with the advantages that brings in terms of contribution history and access to benefits.

Where the worker works in more than unit EEA jurisdiction at the same season there are ‘tie-breaker’ provisions, which broadly standfor that if a worker works for at least 20% of the season in his state of residence then SSCs will be due in that state. If not, SSCs are usually due in the state where the employer is resident.

For workers moving outside of the EEA, bilateral social security contribution treaties apply for a handful of jurisdictions such as the USA, but outside of that the position can be messy with the potential for dual claims for SSCs and uncertainty over what is payable and where.

For example, the UK may require NICs to be paid for a year following leaving the UK if a worker’s employer silent has a place of business in the UK. The state that the worker moves to may possess its own requirements about where SSC should be paid.

The implications of Brexit

If the UK remains piece of the EEA or achieves an equivalent status then we would expect the regulations to persevere to apply as they do for Switzerland, Iceland, Norway and Liechtenstein. It is interesting to note in this context that Switzerland is not an EEA member, although it has signed up to the single market.

If, on the other hand, the UK chooses the path of complete withdrawal, reciprocal social security arrangements would possess to be added to the lengthy list of matters where a negotiated agreement is required. It is also, perhaps, questionable whether arrangements equivalent to the current system would be place in place if the UK has rejected the single market and associated independence of movement principles.

Assuming that they are place in place, some uncertainty arises over what, if any, special features will be agreed, and what happens when EU regulations are changed in future. Multinational employers will clearly crave to avoid having to deal with separate systems.

Failing that, the UK would possess to fall behind on bilateral social security treaties with the EEA countries. Such agreements were in place priorto the UK joined the EU, but these would crave to be updated and replaced.

For the season being, employers can only proceed on the basis of the current system and hope that common sense prevails. Even if changes are made, it seems likely that transitional arrangements will be place in place and existing entitlement agreements honoured. However, as the political and legal landscape continues to alter and develop throughout the Brexit process, employers and representative bodies should press for social security arrangements to be clarified.

Chris Thomas is an employment tax expert