When European corporate travel resumes once coronavirus restrictions are lifted, companies will find an onslaught of increased regulation in the region has made organising business trips a lot more complicated and expensive than it used, or arguably needs, to be.
One source of red tape will be the need for work permits and other post-Brexit authorisations for travel between the European Union and its former member state the United Kingdom. The other is all of the EU’s making. The bloc has tightened its requirement for EU and non-EU travellers alike to obtain A1 social security certificates and, in some cases, file Posted Worker notification before undertaking work trips.
A1 certificates prove that a person entering the EU or the European Free Trade Association countries of Iceland, Liechtenstein, Norway or Switzerland (collectively and informally known as EU+) is subject to social security legislation in their own country and does not have to pay social security contributions in the country they are visiting.
A1 certificates have been around for a decade but were largely ignored, leading the EU to introduce stricter controls and fines for non-compliance in 2019. Today, “each and every business trip that one of your employees is doing when being employed in the EU or EFTA countries, you have to have an A1 registration certificate,” said Oliver Meinicke, a member of the presidential committee of German travel management association VDR during a GBTA Academy webinar last month.
The Posted Workers Directive (PWD) aims to ensure that people from one EU+ country (and in some cases from anywhere in the world) who work in another EU+ country receive the same employee pay and conditions as colleagues based in the country they are visiting.
“PWD is a bit more restrictive [in application] than A1s,” said Carlijn Langeveld, EMEA senior strategic advisor for immigration specialist Newland Chase, during the same webinar. “An A1 whenever you have reason to travel for business is applicable. PWD is applicable whenever you are delivering some kind of service – any type of productive work to a client.”
PWD was also routinely ignored after its introduction in 1996 but revisions which became effective in 2020 have given it far more teeth. Companies assigning workers to projects in other countries must now send notification of the posting, keep detailed records of the posting (including employment contract, proof of salary payment and a note of hours worked), and appoint an internal contact person.
To add to the complexity, each country has enacted the directive slightly differently in its national legislation, and the nuances have to be understood for each one of them. For example, no posted worker notification is required for postings to Spain of eight days or fewer.
Both A1 certificates and posted worker notifications present an almighty headache for employers, with the prospect of either non-compliance or compliance unpalatable in different ways. VDR estimates that 40-60 per cent of its small and medium buyer members have not yet implemented processes for obtaining A1 certificates, a figure that falls to an estimated 5-15 per cent for larger members.
Some countries, most notably Austria and France, have started checking business visitors assiduously for A1 certificates, mainly at land border controls. But most EU member states waive the requirement for travellers to carry a portable A1 document for business trips of up to a week, and therefore the temptation to ignore the issue is significant.
In principle, however, a certificate should always be applied for, and Meinicke said he would never recommend avoiding this obligation. Similarly, Langeveld argued in the webinar that PWD requirements must be observed. “It’s really important to understand there is increased scrutiny,” she said. “There has been an increase in inspections and it is expected there is going to be a further increase due to [the establishment in October 2019 of] the European Labour Authority.”
Fines for non-compliance, Langeveld said, can run to six figures, and there are severe reputational risks too, including name-and-shame lists and the potential of companies being denied operating permits.
On the other hand, attempting to comply could delay work trips taking place and is hugely expensive. During the webinar, Meinicke estimated that just to handle A1 applications could require a company with a medium-sized travel programme to hire one or two additional full-time employees. Using a third-party service costs an estimated €20-€40 per application. Posted worker rules are so complicated that handling notifications in-house was not recommended by Meinicke and Langeveld.
Whether engaging a third party or not, issues to consider when managing A1 and PWD include processing of personal data, maintaining human resources data feeds, adjustments to travel policy, supply of travel data and negotiating a processing fee with third-party providers. Other internal stakeholders that need to be involved include workers’ councils, accounts, procurement, IT, HR, data security and global mobility.
There are good intentions behind both A1 certificates and PWD, which are intended to prevent exploitation of workers and social dumping whereby labour is shipped in from a lower-earning part of the EU to a higher-earning one to undercut local employees. However, the vast majority of these abuses occur in a relatively small number of sectors, such as the building trade.
VDR believes routine business travel has been not only unfairly but also unnecessarily caught up in the bureaucracy. “Why should a business traveller file for an A1 certificate every time they go on a simple business journey abroad?” asked Meinicke. “This cannot be the original intention in our opinion and it is putting a heavy burden on all the companies that are affected.”
Along with the Global Business Travel Association, VDR has been lobbying Brussels to exempt business trips, and has supplied a definition which it estimates would remove 95 per cent of its members’ business trips from the scope of A1.
VDR had high hopes of making progress with its campaign when Germany held the presidency of the European parliament from July to December last year, but this did not materialise. “We are counting now on the Portuguese presidency but don’t expect a quick solution,” said Meinicke.