By 511 votes to 87, with 61 abstentions, the European Parliament has given its final approval to the revision of Regulation 883/2004 coordinating the social security systems of the Member States. This reform had already been approved by the European Council on 29 June. The text, on which negotiations began in 2016, aims to adapt the rules applicable to the approximately 16 million Europeans living or working in another Member State. The aim is twofold: to clarify the rules applicable to mobile workers whilst strengthening cooperation between national administrations in order to limit fraud and errors, in particular through a faster exchange of information between social security bodies.
A major change for cross-border workers
For Luxembourg, the most significant provision concerns unemployment benefits for cross-border workers. Until now, when a cross-border worker lost their job entirely, benefits were paid by their country of residence, even if contributions had been paid in the country of employment. The new regulation reverses this principle in a large number of situations. Where an employee has worked or been insured for at least 22 consecutive weeks in their country of employment, it is that country which will be responsible for paying unemployment benefits. For Luxembourg, which employs more than 230,000 cross-border workers, this development represents a major structural change.
CSV MEP Martine Kemp welcomed the adoption of a reform which represents “a significant step forward for workers’ rights and legal certainty”. She also highlighted the significant administrative and financial challenges that the legislation will pose for the Luxembourg public authorities. “The transfer of responsibility for social security contributions to the country of employment, as well as the extension of the export of benefits, will have significant consequences for our administration and our budget.”
Whilst the Grand Duchy was unable to block this reform, it did succeed in securing an exceptional transitional period. Following the two-year period usually allowed between the publication of the regulation and its entry into force, Luxembourg will benefit from an additional three-year period, which may be extended by a further two years. In practical terms, the unemployment reform may not come into full effect in Luxembourg until between 2028 and 2033.
Phased implementation
This timeframe should enable the Employment Development Agency (Adem) to adapt its procedures, IT systems and data exchanges with the authorities in neighbouring countries.
The OGBL-LCGB trade union federation welcomes “a positive development”, whilst emphasising that many issues remain unresolved. The union emphasises “the need to avoid any situation in which cross-border workers might be excluded or disadvantaged as a result of transitional provisions, differing application criteria or restrictive administrative interpretations”.
The two trade unions also emphasised that the issue of unemployment amongst cross-border workers cannot be reduced to its financial dimension alone. “It must be addressed holistically, taking full account of the social aspects and the support needs of those affected. The potential social consequences of this reform must be examined closely, particularly with regard to social security, family benefits, access to the CNS, checks, as well as any potential sanctions and rights of appeal. Furthermore, when a worker loses their job, issues relating to personalised support, assistance in finding new employment, access to training and professional reintegration are just as essential as the payment of unemployment benefits.”
The trade unions emphasise that the seven-year transition period that has been secured “must under no circumstances be used as a pretext to delay its implementation”. The OGBL and the LCGB believe it is essential to begin the necessary discussions without delay and to make the required adjustments in order to ensure effective implementation that protects cross-border workers.
Modernised coordination
Beyond unemployment, the regulation updates several areas of European social security law. For the first time, the text introduces a common definition of long-term care benefits in order to provide greater legal certainty for people in need of care and their carers. It also clarifies the rules on family benefits by distinguishing between allowances intended to compensate for a reduction in working hours to care for a child and other family benefits.
With regard to posted workers, new safeguards are being introduced to combat abuse. In particular, employees must have been registered with their home country’s social security scheme for at least three months prior to their posting. A requirement for prior notification also becomes the norm, with a few exceptions. Finally, the text sets out the criteria for determining which social security scheme applies to people working in several Member States.
