On 6 September 2018 in the Alpenrind case (C-527/16) the European Court of Justice confirmed its position that A1 certificates stating which social security regime applies to posted workers will be valid except in cases of fraud. The Court also held that a worker seconded to replace another seconded worker cannot remain subject to the social security regime of the sending state, even if they are seconded by a different employer.

Background

Alpenrind operates an abattoir and in 2007 entered into a contract with the Hungarian company Martin-Meat who posted workers to Alpenrind to cut and pack meat. However, during the relevant period, from 1 February 2012 to 13 December 2013 Martin-Meat left the meat cutting business and Alpenrind worked with workers posted from Martimplex, another Hungarian company, which employed over 250 employees. For many of those employees, the Austrian social security institution (GKK) issued a non-legally binding certificate stating that as the posted workers were economically and personally dependent and paid for the work they did in Austria, they were covered by Austrian compulsory insurance under Article 4 of the Austrian General Social Security Act.

Despite the existence of these certificates, the Hungarian social security institution issued A1 certificates for all 250 employees (some with retroactive effect), attesting that the Hungarian social security system applied to them. The Austrian Federal Administrative Court repealed the compulsory insurance documents issued by GKK, declaring they could not bind employees with an A1 certificate from another Member State to their own social security system.

Legal basis

Art 5 of EU Regulation 987/2009 states that documents and supporting evidence issued in a Member State shall be accepted by the institutions of the other Member States as long as the documents have not been declared void by the Member State in which they have been issued.

The decision

Appealing to the Austrian Upper Administrative Court, the Salzburg Regional Health Insurance Fund and the Austrian Government denied A1 certificates had an absolute binding effect. They claimed that as the workers were posted to Austria they should also be subject to the Austrian social security system and that by refusing to withdraw the A1 documents the Hungarian social security institution was in breach of Art 4 (3) of the Treaty on European Union (TEU), which secures cooperation between Member States.

The Austrian Upper Administrative Court submitted a request for a preliminary ruling to the European Court of Justice, asking for clarification on the possible binding effects of the A1 certificate, and especially their authority to rule on this matter at all.

Taking into account its previous decisions, such as A Rosa Flussschif (27 April 2017, C-260/15), the European Court of Justice held that even if an A1 certificate was incorrectly issued (and should therefore be withdrawn), it is binding pending further notice for both the social security institutions and the courts of the Member States in which the posted worker’s activity is carried out. This can also apply with retroactive effect. The only exceptions to this rule are cases of fraud or abuse.

The European Court of Justice also answered the Austrian Upper Administrative Court’s question regarding Article 12 of EU Regulation 883/2004, which establishes the principle that a posted worker who is replacing another posted worker cannot remain subject to the social security system of the Member State in which his employer carries on its activities. The European Court of Justice held that this principle applies to posted workers from the same employer as well as to workers who were not posted by the same employer.

Conclusion

In a nutshell, although posted workers should be covered by the social security system of their regular place of work, the authorities of that Member State cannot declare a wrongfully issued A1 certificate invalid, except in cases of fraud or abuse. The European Court of Justice has therefore increased the scope for taking action against organisations who officially register in a Member State with a low standard of social security cover in order to send their employees to countries with a high level of social security cover.

At the same time the European Court of Justice accepts a low level of social security cover for posted workers can be legal as long as the sending company is not a sham company. By following its previous decisions the European Court of Justice has demonstrated that it trusts in the cooperation between the social security authorities of Member States. On the other hand, it has limited the scope for contesting incorrectly issued insurance documents.