News

2019. 03. 01

The consequences of Brexit: The position of Lithuania in the field of social insurance becomes clearer

Although the planned withdrawal of the United Kingdom of Great Britain and Northern Ireland (hereinafter - UK ) from the EU is threateningly approaching, it is not yet clear what the social security status of workers posted to Lithuania from UK and vice versa will be after Brexit. Especially if there will be a "hard" Brexit; and it will happen as planned on 29 March 2019 (information on possible postponement of Brexit until June is publicly discussed at the moment).

And there is a lot of questions. For example, in the case of Brexit, will the A1 certificates, issued to workers posted in UK prior to Brexit expire / be partially valid / be fully valid? Will the Social insurance Foreign benefits payment service issue A1 certificates for working/business trips continuing during Brexit or completed prior to Brexit, if they will be requested after Brexit? What position will the UK authorities take after the Brexit in regard of A1 certificates? Will the Social insurance Foreign benefits payment service issue any certificates on the application of Lithuanian social security legislation to workers posted to UK after Brexit, if necessary? All in all, what will be the position of the UK authorities on post-Brexit workers, posted from Lithuania to the UK, when Lithuania and UK have no bilateral agreement on social security coordination?

In recent days, draft amendments to social insurance laws have been registered, which can at least show the direction of Lithuania's position regarding the question of social insurance if “hard” Brexit happens.

For example, the state social insurance Law article 11 amendment project, registered on 26 February 2019, provides that in the case of Brexit, Lithuanian social insurance contributions would not be calculated according to the salary for workers, who were posted form UK to Lithuania prior to Brexit and which, according to the EU regulations of that time, were subject to UK social insurance law; Lithuanian social insurance contributions would not be calculated for them until the end of their foreign posting term in Lithuania The same would apply to health insurance contributions (Article 17, part 2 of the Law on social insurance).

If this amendment to the law is adopted (apparently the Parliament (Seimas) would have to adopt it as a matter of urgency), the regulation will come into force after the UK has left the EU.

The health insurance article 6 amendment project, registered on 20 February 2019, regulates other cases, related to Brexit, i.e. determines that:

-          UK citizens and their family members [it is likely that the concept of "family members" will be further refined as a result of the drafting of the law] who had been granted the right to reside in Lithuania  would be covered by compulsory health insurance until the date of expiry of the right to reside in the Republic of Lithuania    In Lithuania [Ministry of Interior proposes to clarify that individuals would be considered as insured until they are legally reside in Lithuania];

-          Citizens of the Republic of Lithuania and Permanent Residents of the Republic of Lithuania - Citizens of other States and Stateless Persons , who, before the date of Brexit, started studies at UK higher education institutions according to the study programs with permanent form of studies, would continue to be insured by the state of Lithuania until the date of the end of these studies , but not beyond 31 August 2021 [there are suggestions to set a deadline of 4 years after Brexit].

These pending amendments make up the limit of clarity in regard to Brexit, there is also no comment on the possible consequences of Brexit from the Social insurance fund. It is to be hoped that, as the date of Brexit is approaching, the amount of clarifying information will increase.

Until now, UK, like other EU member states, has been subject to EU regulations on the coordination of social security schemes, which inter alia, provided that social security law should apply to cases of posting of workers abroad. Following the "hard" Brexit, these regulations may expire with respect to UK and there will be a vacuum in the field of social insurance between Lithuania and the UK: Lithuania and the UK do not yet have a bilateral agreement on social security coordination, so each state would regulate the same relationships with only its national legislation.

According to the provisions of the Law on Social Insurance and Law on Health Insurance currently in legal force in the Republic of Lithuania, after leaving the EU in a "hard" way and without any special provisions of the law on Brexit, employees posted from Lithuania to the UK would continue to be insured with social insurance in Lithuania as persons working under employment contracts in Lithuania.

 

Attorney Ingrida Steponavičienė, Head of the ILAW Tax Law group