The legislation on which international Social Security is structured has a basic rule linked to the principle of territoriality, which establishes that, in general, the working person will be subject to the labor legislation of the country in which they are effectively providing their work. As a consequence, they will also contribute to the Social Security of that country of residence.
When faced with this general rule of territoriality, we find two exceptions: posting and Multi-State Workers.
The posting of workers
Both the European regulation for the coordination of social security systems, as well as bilateral agreements, define posting as the scenario in which a worker is posted by an employer with a certain objective/mission and for a limited period of time. In other words, a posted worker will be a person who is going for a limited period of time to carry out a function in another country.
In this first scenario, international Social Security legislation frequently allows that person to maintain their link with Spanish Social Security. Do you want to know more information about how to contribute in Spain while working abroad? Click here, and we will explain in more detail.
This is a situation in which a worker is simultaneously working in two or more states, such as commuters, those employees who regularly travel a few days a week to another country to provide services.
In this case, the regulation establishes that, despite working in another country, the worker may maintain their link with the Spanish Social Security in two cases:
- When residing in Spain, you work more than 25% of your working day in Spain (at least one and a half days a week).
- When you are a person who does not reside in Spain on weekends, but does not work that 25% in your country of residence.
Outside of these two exceptions (posting and Multi-State Workers), we will generally be talking about expatriation, which is the situation where the worker is withdrawn from the Spanish Social Security system due to having registered in the destination country.
With the current health crisis situation due to COVID-19, the following question arises: What happens with international teleworking? If an employee returns to their country to telework, is it considered to be a posting or expatriation?
International teleworking: posting or expatriation?
Let us take the case of an Irish worker who, due to the teleworking situation, decides in March to return to Ireland to work from there. If they are not going to Ireland to carry out a specific job mission for their Spanish company, it cannot be considered a posting, but rather an expatriation, a situation that would affect both the Irish worker and the employer:
- The Irish worker would be bound by Irish labor law and;
- this would necessarily mean the employer/company opening a workplace in Ireland.
There are different alternatives for managing an international teleworker:
- Register the company in the country of destination through a representative office. This is a delicate situation and, in most cases, requires international corporate tax advice.
- An alternative is Employer of Record: when the legislation of the country where the teleworking is taking place allows the formal employer to be different from the real employer. This option is illegal in Spain, but in countries like the United States or Australia it is allowed.
When it comes to posting a worker, our experts in international mobility advise taking into account a global approach to all the aspects that are going to interact and happen together.