BREXIT - Social security implications in Switzerland 

Implications on social security regime for cross-border employment situations between Switzerland and UK

When the UK left the EU on 31 January 2020, a withdrawal agreement was signed between the EU and the UK. This agreement provided for a transitional period until 31 December 2020 during which the UK continued to apply the EU Regulations on the coordination of social security systems and the Agreement on the Free Movement of Persons in relation to Switzerland. During this transitional period, Regulations (EC) No 883/2004 and (EC) No 987/2009 remained applicable, without any change between Switzerland and the United Kingdom.

We are now in the situation where the withdrawal agreement with the EU expires in a couple of days and there will be no separate agreement (yet) between the UK and Switzerland on how to govern the coordination of the social security systems as of 1 January 2021. According the most recent communication, the new rules are currently being defined and the authorities will provide information in ‘due time’.

What does this mean for UK-Swiss cross-border situations from a social security perspective as of 1 January 2021?

Applicable agreements between Switzerland and the UK

The following agreements will now govern cross-border social security situations between Switzerland and the UK:

1. Agreement on the Free Movement of Persons (FMOPA) – Agreement on the Rights of Citizens in the field of Social Security

To regulate the exit of the UK from the FMOPA and to guarantee the rights that insured persons have acquired under the FMOPA, an agreement on citizens' rights has been concluded between Switzerland and the UK. This agreement is applicable from 1 January 2021. It maintains the rights arising from the social security coordination of the FMOPA for persons who were subject to the FMOPA before 1 January 2021. This agreement has been supplemented by a decision of the Swiss-EU Joint Committee of the FMOPA, which extends the protection of rights to EU nationals and cross-border situations involving the EU.

More information about this Agreement on the Rights of Citizens is available on the website of Swiss federal authorities.

2. Bilateral Swiss-UK social security agreement of 1969

The ‘old’ bilateral social security agreement signed between Switzerland and the UK on 21 February 1968 and entered into force on1 April 1969, has always remained applicable. Unlike the bilateral social security agreements signed between the EU states, the EU regulations did not cancel the agreements which Switzerland had in place.

Consequently, the Swiss authorities have officially confirmed on 17 December 2020 that – due to the lack of a new agreement – the old bilateral agreement between Switzerland and the United Kingdom of 1969 will be applied as of 1 January 2021, until the future coordination regime can come into force.

This agreement will be applicable for all cross-border social security situations which start after 31 December 2020.

Practical implications

1. Persons who are currently in a cross-border situation between Switzerland and the UK

The Agreement on the Rights of Citizens is ensuring that the persons covered by the FMOPA are protected and the respective EU Regulations will continue to apply for the following categories:

  • Nationals of Switzerland and EU states residing and working in the UK on 31.12.2020
  • British nationals who live and work in Switzerland on 31.12.2020
  • Nationals of Switzerland and EU states residing in Switzerland and working in the UK on 31.12.2020
  • Nationals of the UK and EU states residing in the UK and working in Switzerland on the 31.12.2020

For these persons, nothing changes as long as they are in a cross-border situation, i.e. as long as there is a connection to both states with regard to the nationality, activity or residence. Cross-border situations in which there is also a link with EU states are also protected, this covers situations other than those mentioned above.

The EU Regulations will also continue to apply to certain persons who are not or no longer in a cross-border situation if they have the right to work or reside in the other country. These are, for example, Swiss nationals who continue working in the UK at the end of their assignment or those who give up their employment in the UK and continue to reside there.

Concretely this means the following concerning cross-border situations which started before 1 January 2021:

  • The same country remains competent for social security, collects contributions, and provides benefits without discrimination.
  • A1 forms concerning the applicable social security legislation for assignments started before 1 January 2021 remain valid for the duration of the cross-border situation or until the expiry date indicated on the document.

2. Persons who are planning to start working in a new cross-border situation after 31 December 2020

The Swiss-UK bilateral social security agreement of 1969 will be applicable for Swiss and UK nationals who start a cross-border employment as of 1 January 2021.

This agreement covers the assignment (posting / secondment) situation up to a duration of 24 months, also for 3rd country nationals. It should be possible to request and obtain Certificates of Coverage for assignments starting as of 1 January 2021.

The agreement however does not cover the ‘multi-state worker’ situation, i.e. persons who are working simultaneously in two or more countries for one of more employers. Based on the provisions of the agreement and the respective Swiss and UK domestic social security legislations, it will be possible that individuals will risk having to contribute to the social security regimes of both countries in such multi-state working situation.

Important is also that persons not having the Swiss or UK nationality are not covered by the bilateral agreement, except for the assignment situation.

What is next

Currently, it is unclear how long it will take before a new agreement on the coordination of the social security regimes between Switzerland and the UK is signed. It is also unclear if this new agreement, when signed, will be applied retro-actively to any new assignments or cross-border worker situations as of 1 January 2021.

We will continue to stay in close contact with the Swiss authorities and provide updates as soon as there are any further developments or clarification can be provided.

Our recommendations

  • For persons currently already on assignment or in a multi-state working situation, we recommend ensuring that the A1 is applied for before 31 December 2020.
  • For those only starting the assignment or cross-border working situation as of 1 January 2021, it needs to be carefully reviewed how the bilateral social security agreement must be applied and what the consequences are for the individual and the employer, from a contributions and benefits perspective. We recommend seeking professional specialist advice in such situations.

Other articles that may be of interest...

Introduction of the Economic Employer principle in Switzerland

Introduction of the Economic Employer principle in Switzerland

Together with the new source tax regulations, the Circular Letter 45 issued by the Federal Tax Administration came into force on 1 January 2021, which focuses on the harmonisation of the withholding tax collection process as well as the introduction of the economic employer principle across Switzerland.

Read More
Operating in a country different from the headquarters location

Operating in a country different from the headquarters location

What are the considerations and potential pitfalls as the employer?

Read More
Switzerland - UK: New social security treaty approved by Swiss Federal Council.

Switzerland - UK: New social security treaty approved by Swiss Federal Council.

On 11 August 2021, the Federal Council approved the new bilateral social security treaty between Switzerland and the UK which will ensure the coordination of social security between the two countries after Brexit.

Read More
Entering the Swiss market as a foreign company in a compliant manner

Entering the Swiss market as a foreign company in a compliant manner

When a foreign company enters the Swiss market, various matters must be observed to be compliant in Switzerland. As an employer, it is important that all Swiss employer obligations are met, and the Swiss labor law is adhered to.

Read More

Whether you need payroll, social security, tax or global mobility support, we are the perfect partner. Our extensive experience in all areas and our hands-on approach ensure that you and your employees get what you need.

Get in touch with us and let’s talk about what we can do to make sure you and your employees are compliant!

Contact us