New UK/Swiss social security agreement – a timely clarification
What is the issue?
From 1 November 2021, a new UK/Swiss social security agreement provisionally applies to determine whether an employee is subject to either UK, or Swiss social security legislation when they work in one, or both of these states (see new agreement).
Prior to this date, these employees liability to social security in the UK and Switzerland was determined by either:-
- EU regulations and the transitional agreement if the employee’s UK/Swiss working arrangement had commenced pre 1 January 2021 (see EU regulations and Transitional agreement); or
- The 1968 agreement between the two countries (see Old agreement) if the employee’s UK/Swiss working arrangement had commenced on, or after 1 January 2021
The old agreement contained a provision to cover detached/posted workers (see below), but did not contain a provision covering multistate workers, i.e. employees who normally work in both the UK and Switzerland.
Additionally, it did not cover those individuals who were neither a national of the UK, nor a national of Switzerland.
This created ambiguity, and a risk that employees who had a UK/Swiss working arrangement starting 1 January 2021 could be subject to both UK and Swiss social security contributions on their earnings. Please refer to our blog UK/Swiss rules from 1 January 21.
The new agreement
Under the new agreement, the general rule is that for all UK/Swiss working arrangements that commence on or after 1 November 2021, employees who have been subject to either UK or Swiss social security contributions in the past will either pay UK, or Swiss social security contributions on their earnings.
Additionally, for UK, Swiss and EU nationals, the agreement generally provides these employees and their immediate families with the same access to social security benefits and pensions in both states.
The provisions on social security coverage under the new agreement broadly mirror EU regulations:-
- You pay social security contributions in the country you work in, unless you are a detached worker, multistate worker or qualify for an exception
- Detached workers (employees posted/assigned by an employer from the UK/Switzerland to work in Switzerland/the UK for up to 24 months), will pay social security contributions in the country they have been posted from
- Multistate workers will pay social security contributions in the country they are habitually resident in if they undertake 25% or more of their work in that country. If that condition, is not met then they will generally pay social security contributions in the country where their employer’s place of business is
There are still some unique scenarios where an employee could be subject to social security contributions in both states. Therefore, when assessing each case, the agreement should be analysed carefully.
Conclusions
The new agreement provides clarity on the social security position for employees with UK/Swiss working arrangements, and removes most of the ambiguities created by the application of the 1968 agreement to the type of working relationships that exist in today’s world.
How Mazars can help?
We work closely with our Swiss colleagues to advise on the social security position for employees with UK/Swiss working arrangements, and have successfully obtained certificates of coverage to ensure employees pay social security contributions in one country only.
Get in touch
For further information please get in touch with a member of the Mazars UK global mobility team
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