Long-term Posting of Persons in the EU - Changes in LC and SSC

About a year ago I wrote an article about INSURANCES OF POSTED WORKERS WITH A1 IN THE EU for long-term posting of individuals in the EU. Recently, changes in the LC and SSC were voted, which undoubtedly create some issues. The solution lies in the correct application of the norms that regulate the long-term posting of persons in the EU. The new changes introduce a different regime under which long-term posting of persons in the EU and the Swiss Confederation will be treated. It is good to keep these changes in mind. For individuals who are in a current state (already posted), I advise employers to adjust the posting relationships in accordance with the new provisions. The reason for this is that the changes cover not only future but also ongoing postings, regardless of how long remains until the end of the current long-term posting.

Changes in the Labor Code (LC)

According to the previous version of the Labor Code (LC)

When you want to apply for long-term posting of persons in the EU, you need to be aware of the regulatory framework and potential issues. There are changes in the Labor Code (LC). Article 121 of the LC has been changed, with paragraphs 3, 4, and 5 being removed. According to the previous version of the Labor Code (LC), conditions were introduced that the employer had to fulfill concerning the workers. These conditions were not described in detail and in general allowed the employer to choose whether to apply the minimum wage in the host country or apply the maximum threshold here. Additionally, the employer could appoint for long-term posting of persons in the EU for part-time work. Here is an overview of the repealed provisions:

Quote 1:

(3) (New - SG, issue 15 of 2010, effective from 28.08.2010) When the term of posting within the provision of services in another member state of the European Union, another state party to the Agreement on the European Economic Area, or in the Swiss Confederation is longer than 30 calendar days, the parties shall agree for the duration of the posting at least the same minimum working conditions as are established for workers and employees performing the same or similar work in the host country. The conditions on which the parties should agree are established by an act of the Council of Ministers.

Quote 2

(4) (New - SG, issue 7 of 2012) In cases of posting of workers and employees, sent by an enterprise providing temporary work, within the provision of services in another member state of the European Union, another state party to the Agreement on the European Economic Area, or in the Swiss Confederation, the parties shall agree for the duration of the posting at least the same minimum working conditions as are established for workers and employees performing the same or similar work in the host country.

Quote 3:

(5) (New - SG, issue 82 of 2011, previous paragraph 4, amended - SG, issue 7 of 2012) The remuneration conditions in the host state in the cases under paragraphs 3 and 4 do not include payment of travel, daily, and accommodation expenses under Bulgarian legislation.

The new version of LC

According to the new version of LC, a change has been introduced in the mode for long-term posting of persons in the EU. The cited conditions do not fall within the scope of article 121. According to the new version of LC, a new article 121a has been introduced. According to it, the conditions for long-term posting of persons in the EU are regulated more detailed and differently. To resolve the issue in the best way, it is good to be aware.

How to interpret it.

First, according to paragraphs 4 and 5 of article 121a, LC, long-term posting of persons in the EU should not place them in a less favorable position compared to workers in the host country performing the same or similar work. Second, posted workers should not be placed in a less favorable position compared to workers here (respectively the opposite). Therefore, the non-discriminatory policies of the EU will now be considered by the NRA when issuing A1 certificates for long-term posting of persons in the EU in two aspects.

Aspects:

The aspects will cover not only from the point of view of:

1. "Bulgarians with foreigners," but also in the hypothesis of comparison between
2. "Bulgarians posted and Bulgarians remaining to work with the same employer here."

Conclusion:

If a group of Bulgarians is "privileged" based on the occurrence of a posting relationship for long-term posting of persons in the EU, this will contradict the new version of LC, article 121a, paragraph 5. Therefore, it will be treated as a reason for refusal to issue A1 certificates for long-term posting of persons in the EU.

Changes in the Social Security Code (SSC)

In parallel with worker-employer relations for long-term posting of persons in the EU, the relations between insurer - insured must also be examined in detail. They are determined by changes in the Social Security Code (SSC). Article 6a of SSC has been changed. With paragraph 1 of article 6a of SSC, a sequence is introduced when determining social security contributions when a reason arises for long-term posting of persons in the EU. In the presence of minimum hourly rates for the specific position, according to article 6a of SSC, paragraph 1, the hourly rates are taken into account. If there are none, the base is the minimum wage for the host country for that profession, however.

What to watch for when requesting an A1 certificate for long-term posting of persons in the EU?

It is good to be careful here. In our country, the minimum wage (MW) for specific positions is determined in the NCPR by codes and professions, as well as by professional directions (NAICS). But we do not apply them. When a hypothetical situation of long-term posting of persons in the EU arises, for which the issuance of an A1 certificate for posting up to 24 months of individuals is requested, we have a cross-border relationship with an international element, i.e., our domestic law (article 6a of SSC) refers us to the internal substantive law of the state where the long-term posting of persons in the EU will take place and for which the issuance of an A1 certificate will be requested. This means that in addition to applying foreign law, we must know it and apply it correctly.

Role of collective labor agreements (CLA)

In many EU states, these issues (related to worker-employer relations in long-term posting of persons in the EU and the amount of payment) are regulated through collective labor agreements (CLA). The clear conclusion is that if there are collective labor agreements CLA, you apply them. If not, you apply the MW for the specific host country where the long-term posting of persons in the EU will occur and for which the issuance of an A1 certificate will be requested.

CLA or MW?

What is good to remember:

• CLA will have precedence over MW,
• because article 6a of SSC introduces an order for applying the grounds for determining the gross wage for calculating deductions under SSC.

Therefore, if there is a CLA present, and you apply MW, you will be in violation of article 6a, paragraph 1 of SSC, which introduces order and hierarchy in the grounds.

Partial information about CLA can be found on the website of the Executive Agency General Labor Inspectorate. However, this information should not lull you, as the exchange of information between countries regarding long-term posting of persons in the EU sometimes takes place with significant delays.

I strongly recommend, before posting a person long-term, to make an inquiry to the social services in the host country and request the relevant CLA or other sources of information on minimum rates, then apply them.

And for more security

You can take a second preventive step. Ask in writing with an outgoing number from the IA GLI for an opinion on whether you should apply this particular CLA or another or apply MW. Then apply the opinion. This ensures you in case of a check. You will not find yourself in a situation where you have not exactly complied with the letter of the law (LC or SSC). Generally, the competent authority to "collect" the accrued contributions for taxes and insurance to the budget is NRA. IA GLI monitors the correct application of labor and social security legislation (in this specific case SSC and LC for long-term posting of persons in the EU, for which an A1 certificate will be requested).

The same inquiry can be directed to the Methodology Department at NRA in Sofia at Dondukov Blvd 52.

The possible risk

The possible risk with long-term posting of persons in the EU is a lack of synchronization between institutions. For example, according to IA GLI requirements, you may apply hourly rates under CLA with a 35-hour workweek, while NRA may require MW with a 40-hour workweek. In the described case, there are differences in determining the gross salary. And as we know, it serves as a basis for determining contributions under the Social Security Code and according to the Income Taxes on Natural Persons Act. In the described hypothesis, the following possible risk is present. If you have declared and accrued less than the competent authorities consider you should accrue (and pay), they will demand it with interest for delay. Meanwhile, the risk in this situation is for your company to gain a reputation as an irregular or incorrect payer to the budget. As we know, this often creates problems in communication with the administrative apparatus.

I hope the information has been useful!