Brexit: impact on Social Security contributions for IME’s and their employers

26 July 2016

Since the 23 June 2016 we’ve seen significant coverage over the implications of Brexit on the international movement of workers and the impact of this for various UK trades. However much less has been said about the Social Security contributions that internationally mobile employees (“IMEs”) and employers of IME’s will have to pay after Brexit.

Currently, the UK is part of the EU social security contributions system.  Various EU regulations which the UK has integrated into its legislation mean that UK people who work in another member state only need to pay social security contributions to the EU state they’re working in. Also, if they’re working in several EU states at once, the EU rules ensure they only pay social security contributions to one state on their earnings.

Once the UK leaves the EU (which will be two years after the UK triggers Article 50) unless by then agreement has been reached for the UK to remain part of the EU Social Security regulations or the UK has separately negotiated Social Security agreements with each of the other 27 remaining EU states, UK workers may well be liable to double social security contributions on their earnings in both the UK and the EU member state in which they are working. This would not only impact on UK citizens working outside the UK but also on overseas EU nationals working in the UK.

There will be other consequences too if the UK hasn’t by then agreed to remain part of the EU Social Security Regulations or negotiated a new network of agreements with other EU states:

  • UK nationals working in an EU state may face restrictions on accessing that state’s healthcare system;
  • Equally EU nationals working in the UK may face restrictions in accessing the NHS; and
  • periods of contributions to other EU state’s social security system may not be taken into account when determining an employee’s entitlement to state benefits in the UK.

Brexit may well result in the negotiation of a network of social security agreements individually tailored to each state that are better than the one-size-fits-all solution of the current EU regulations that we have now.  But if, with all the other trade and other agreements that need to be negotiated between now and the date the UK leaves the EU, not enough time is devoted to putting in place a comprehensive set of SS agreements with all the other 27 states, on “Brexit Day” internationally mobile workers between the UK and the EU will face serious problems with their social security liabilities and the benefits those contributions “purchase”.  

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If you have any immediate questions please contact your local office or send enquiry as we are interested in discussing this with you.

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