4.8.4. Social security for migrant workers
Articles 42 and 308 (51 and 235) EC.
An important principle and objective in the Treaty of Rome is the removal of obstacles to freedom of movement between Member States for people (* 3.2.2). To achieve this objective it is necessary to adopt social security measures which prevent people who work and reside in a Member State other than their own from losing some or all of their social security rights when they exercise their right to freedom of movement.
In 1958, the Council issued two regulations on social security of migrant workers which were subsequently superseded by Regulation 1408/71, supplemented by implementing Regulation 574/72. Nationals from Iceland, Liechtenstein and Norway are also covered via the European Economic Area (EEA) Agreement.
1. Main characteristics of the legislation
The sole purpose of these Regulations is to coordinate the Member States' social security legislation and not to harmonize their social security schemes. This means that the Member States' very different social security schemes offer a wide variety of rights to workers and the self-employed, including levels of benefit. Coordination of the Member States' legislation means that bridges are being built between the various national rules.
b. The "competent" State
Regulation 1408/71 lays down rules (Title II of the Regulation) which determine which country's legislation applies in the event of a conflict between the laws of two or more Member States. The principle is that a person is subject to only one country's legislation which, as a rule, is that of the Member State in which he or she is employed or self-employed. The State of employment is thus the 'competent State' and the rights of the worker/self-employed person to social security benefits are decided by that State.
c. Main principles
Regulation 1408/71 is also based on a number of general principles which the 'competent State' must take into account in deciding whether a migrant worker or self-employed person is entitled to social security benefits. There are four main principles:
- Equal treatment. Workers and self-employed persons from other Member States must have the same rights as the competent State's own nationals. In other words, a Member State may not confine social security benefits to its own nationals. The right to equal treatment applies unconditionally to any worker or self-employed person from another Member State having resided for a certain period of time.
- Aggregation. This principle has a bearing on situations in which national legislation requires a worker to have been insured or employed for a certain period of time, for example, before he is entitled to certain benefits, e.g. sickness, invalidity, old age, death and unemployment benefits. The aggregation principle means that the competent Member State must take account of periods of insurance and employment completed under another Member State's legislation in deciding whether a worker satisfies the requirement regarding the duration of the period of insurance or employment. As regards the right to membership of unemployment or sickness funds, for example, application of this principle means that the person can be transferred directly from a fund in one Member State to a fund in another Member State.
- Prevention of overlapping of benefits. This principle is intended to prevent anyone obtaining special advantages as a result of exercising the right to freedom of movement. Contributing to social security systems in two or more Member States during the same periods of insurance does not confer the right to several benefits of the same kind. (see also family benefits, section 4.c below).
- Exportability. This principle means that social security benefits can be paid throughout the Union (Art. 10(1)) and prohibits Member States from reserving the payment of benefits to people resident in the country, but it does not apply to all social security benefits. There are special rules for the unemployed, for example see Article 69 (point 4.b. below).
Different rights apply to exporting cash benefits (e.g. sickness benefit or pensions) and benefits in kind (e.g. medical assistance). As a rule, benefits in kind are governed by the rules of the country in which the person entitled to them resides or stays. If the 'competent state' is not the state of residence, the 'competent state' must reimburse the institution in the state of residence or stay its expenditure on benefits in kind.
2. Persons covered
- Originally, Regulation 1408/71 only covered workers but with effect from 1 July 1982 its scope was extended to cover the self-employed too (see Regulation 1390/81). The Regulation also covers members of workers' and self-employed persons' families and their dependents, as well as stateless persons and refugees [see Article 2(1)].
- By Council Regulation 1606/98 of 29 June 1998 the Council extended the scope of Regulation 1408/71 in order to set civil servants on equal basis with general statutory pension rights prevailing in the Member States.
- Regulation 307/1999 of 8 February 1999 extended the scope of the Regulation to include all insured persons, particularly students and others not in gainful employment.
- As a rule, the provisions of the Regulation cannot be invoked by nationals of third countries working in the Union. After pressure from the EP the Commission, in 1997, presented a proposal for a Regulation amending Regulation 1408/71 as regards its extension to nationals of third countries (COM(97)0561). This proposal has not yet been adopted by the Council.
3. Benefits covered
Article 4(1) of Regulation 1408/71 lists the social security benefits covered by the Regulation and in doing so the provisions which seek to prevent migrant workers and self-employed persons suffering losses because they work or have worked in one or more Member States.
- sickness and maternity benefits;
- invalidity benefits, including those intended for the maintenance or improvement of earning capacity;
- old-age benefits;
- survivors benefits;
- benefits in respect of accidents at work and occupational diseases;
- unemployment benefits;
- family benefits.
Pre-retirement benefit schemes do not fall within the scope of the regulation, although the Commission has submitted a proposal (COM(95)0735) that they should. According to Regulation 1408/71, insured persons resident in another Member State for a short period may avail themselves of emergency medical services there. Where non-emergency services are concerned, the relevant insurance fund must first give its approval. Two judgements by the Court of Justice, the Decker (C-120/95) and Kohll (C-158/96) cases suggest that all insured persons might in the future be able to obtain medical treatment or medical products anywhere in the Union, provided that this did not result in an excessive rise in costs.
4. Rules applying to the various categories of benefits
Title III of the regulation contains detailed rules governing the various categories of benefits. Here we look at pension benefits (chapter 3), unemployment benefit (chapter 6) and child and family benefits (chapter 7).
a. Pension benefits
If an employed or self-employed person has been subject to the legislation of two or more Member States, the regulation's special rules apply for the calculation of the pension. Such a person receives a proportional pension from each of the states in which he was insured for at least one year, e.g. from states A and B. The national rules of state A apply to the payment of that part of the pension and in the country in question. Likewise with the payment of pension by state B. Retirement age does not therefore need to be the same in both countries. If the retirement age in state A is 67 and in state B 60, the person must wait until he has reached the age of 67 before receiving his pension from state A. If the period of insurance completed in state B is not of sufficient duration to give entitlement to a pension in that country, the regulation provides that periods of insurance completed in other countries, in this case in state A, should be taken into account (the aggregation principle). The rules in the regulation for calculating the amount of pension to be paid by each of the states in which the person concerned was insured are extremely technical and are based on a principle that each of the countries pays a proportional pension benefit. On 29 June 1998, the Council adopted Directive 98/49/EC on safeguarding the supplementary pension rights of employed and self-employed persons moving within the European Community. The aim of this Directive is to protect the rights of members of supplementary pension schemes who move from one Member State to another, thereby contributing to the removal of obstacles to the free movement of employed and self-employed workers within the Community.
b. Unemployment benefit
Article 69 of the regulation lays down special conditions under which unemployed persons may go to another Member State to seek work while retaining their right to unemployment benefits under the legislation of their home country. Article 69 states that unemployment benefits can be 'exported' to another Member State for a maximum period of three months and provided that certain other conditions are satisfied. The Commission has submitted a proposal (COM(95)0734 final) under which entitlement to unemployment benefits may be retained under certain conditions for a period beyond the present three months when an unemployed person goes to another Member State to seek work. This proposal is pending before the Council.
c. Child and family benefits
As a rule, family benefits are paid under the rules applying in the Member State in which the employed or self-employed person works. Even if the family/children live in another Member State, the benefit must be paid as if they were resident in the state of employment, i.e. in the 'competent state'. This does not apply, however, if family benefits are also payable under the legislation of the Member State in which the members of the family live.
5. Future outlook
Since 1971 the regulation 1408/71 has been amended on numerous occasions in order to take into account developments at Community level, changes in legislation at national level and interpretation of the Court of Justice. Regulation 1408/71 is today a very complicated piece of legislation. The Commission presented its proposal for a fundamental reform of the whole legislative system at the end of 1998 (COM(98)0779). The main elements of the proposal are:
- The proposed regulation will apply to all persons who are or have been covered by the social security legislation of any of the Member States. The proposal uses the term "persons", which means that the revised system will cover persons who are not part of the "active" population such as students and third-country nationals.
- The proposal applies to all the classic branches of social security, as defined by ILO Convention N 102. As the new list is not as exhaustive as the old the Community provisions can be applied to any new form of benefit which may arrive, such as pre-retirement benefits.
- The proposal provides detailed rules which determine in every situation which country's legislation applies based on two principles:
- the insured person is subject to the legislation of only one Member State at a time,
- the insured person is insured in the Member State where he/she pursues a professional activity. In the case of insured persons who do not pursue a professional activity the applicable law is that of the state of residence.
The Amsterdam Treaty changed the decision making procedure as regards social security for migrant workers. This means that the co-decision procedure is used but with unanimity in Council.
ROLE OF THE EUROPEAN PARLIAMENT
The EP has always shown a great interest in the problems encountered by migrant workers and the self-employed working in another Member State and has adopted various resolutions in an attempt to improve their conditions. The EP regrets that there are still obstacles to full freedom of movement and calls on the Council to adopt the pending proposals such as bringing early retirement pensions within the scope of Regulation 1408/71, extending the right of unemployed persons to receive unemployment benefit in another Member State and extend the scope of Regulation 1408/71 to include all insured persons. The EP wants to improve the situation of frontier workers especially as regards their social security and taxation (Resolution of 25 May 1998). The EP calls for a specific status for trainees, volunteers and apprentices, which provides for their inclusion in the scope of Regulation 1408/71.