Global social security

When should you think about social security risk or mobility impact on benefits?

Growing your business often means moving employees between countries – and that means fulfilling local social security obligations. In an environment where regulations change continuously and scrutiny from the authorities is on the rise, it’s becoming harder to get it right.

Managing social security risk

Social security compliance is about much more than simply getting a Certificate of Coverage (CoC) or A1, although demonstrating robust processes and record-keeping around this is certainly important with increased scrutiny from social security authorities. Contributions need to be paid in the right location and on the right compensation base, which is not necessarily the same as the compensation base for tax.

Solution

A social security risk review can highlight your areas of risk and form a platform to create robust policy and governance processes to manage social security issues for mobile employees. There is also the opportunity to substantially reduce costs of your mobility programme by comparing home and host insurance costs and benefits.

Non-compliance creates a number of risks

Social security is a substantial employer cost (and is often a higher cost to employers than corporate tax), and penalties/interest for failure can be correspondingly high.

An increasing number of countries require employees to have evidence of their social security status in order to enter the country and/or work and there are live examples of workers being turned away and employers being penalised in the absence of such evidence.

Failure to maintain contributions in the correct location and calculated on the correct remuneration may jeopardise an employee’s entitlement to social security benefits (such as healthcare, unemployment allowances, state pension accrual, etc.).

Meeting tax and social security obligations is increasingly seen as part of being a good corporate citizen, and may form part of an employer’s duty of care towards its employees.

A full risk review would involve six steps

Define population

Looking at risk factors such as volume, country combinations and audit history, type of mobile employee (e.g. commuters, business travelers, permanent transfers).

View more

Check current position

Has the treatment applied so far been compliant? Have bilateral or multilateral social security agreements been used correctly and the appropriate paperwork (A1s, CoC,s etc.) obtained?

View more

Health of the payroll

Liabilities can exist in the home, host, both or neither, sometimes even with a Certificate of Coverage. We confirm if contributions have been paid in the correct country and on the correct remuneration.

View more

Take remedial action

Insight is gained during the review and used to address immediate areas of risk and non-compliance.

View more

Governance, policy, process

Long term sustainable solutions to be are built into the mobility programme, such as clarity of ownership for social security compliance, policy enhancement, robust processes and innovative alternatives.

View more

Consider cost reduction

Insight is gained during the review and used to identify opportunities to reduce social security costs through intelligent strategies.

View more

Mobility Impact on Benefits

Mobility is becoming the new normal. Employees may regularly find themselves contributing into another social security system, either in addition to their usual home contributions or instead. They may lose or gain entitlement to state benefits such as health care, family allowances, disability support, unemployment and retirement pensions. Therefore, mobility may still have an impact long after someone has returned to their home country. Employees may see it as their employer’s responsibility to do everything possible to reduce this impact, and failure can result in dispute, reputational damage or even employee litigation.

Solution

This impact to state benefits is something that can be mitigated or eliminated with the right approach. This might involve reviewing and implementing a social security policy which is fit for purpose, setting employee expectations from the beginning, taking timely action to minimise any loss and considering any voluntary or private alternatives to compensate for gaps in an employee’s contributions record.

Global social security for globally mobile employees

Capabilities

  • Submission of Certificate of Coverage /A1 applications in more than 100 countries per annum
  • Non-agreement move analysis and notification service
  • Proven risk review methodology for agreement and non-agreement moves
  • Global payroll compliance review
  • Process design and implementation
  • Management of business traveller compliance programmes

Contact us

Martin Muhleder

Partner, PwC United Kingdom

Tel: +44 (0)20 7213 3311

Laura Hutton

Director - Global Social Security Centre of Excellence, PwC United Kingdom

Tel: +44 (0)20 7804 9427

Follow us