Remote Work Abroad

Security, Employment Contracts : An Unclear Legal Framework

Remote work abroad remains poorly regulated, though the European Union has begun establishing a framework since July 1, 2023. Working abroad is not limited to remote work—certain situations fall under categories such as secondment or expatriation, impacting employment contracts and employees' social security coverage.

Cross-Border Remote Work

Under Regulation (EC) No 883/2004 (April 29, 2004), an employee working in two or more EU member states is subject to the social security legislation of their country of residence if they work at least 25% of their time there. If they work less than 25% in their residence country, the employer’s country’s social security laws apply.

Example:

• A French company employee living in Germany and working <25% of their time in Germany (remotely or otherwise) remains under French social security.

• If they work >25% in Germany, German social security applies.

A new agreement (July 1, 2023) allows exclusively remote workers to remain under their employer’s social security system—provided they work remotely no more than 49.9% of their time.

Taxation, however, is not harmonized. Salaries may be taxed in both the employer’s and employee’s residence country, creating potential fiscal obligations for employers.

Occasional vs. Permanent Remote Work: Secondment or Expatriation?

• Expatriation : Mandatory enrollment in the host country’s social security system. The employee no longer has a French contract but is hired by the foreign entity.
• Secondment : The employee retains their French contract and social security coverage, but assignments are time-limited (1–5 years, depending on EU/non-EU location).

Key Question :
If an employee works a few days per week from a foreign residence or 100% remotely abroad, is it remote work, secondment, or expatriation? The lines remain blurred, requiring careful legal assessment.

Challenges in Social Security Coverage

The principle of territoriality states that employees must belong to the social security system of the country where they work. Expats must integrate into their host country’s system indefinitely, unless covered by international agreements.

Exceptions to Territoriality

• Upon leaving France, social security coverage typically ends, requiring surrender of the Carte Vitale.

• Expats may opt for voluntary coverage (e.g., through Caisse des Français à l’Étranger (CFE) or France Travail International) to maintain rights upon return.

This complexity often necessitates specialists in international mobility and insurance brokers to ensure compliant coverage

The Critical Role of Insurance Brokers

Remote work abroad—whether occasional or permanent—creates ambiguity in legal status and social protection. Misclassification can lead to gaps in coverage or legal risks.

Recent Case:
A Paris labor court ruled that failure to disclose remote work abroad constituted gross misconduct, resulting in termination.

Insurance brokers play a vital role in :

• Navigating regulations to tailor solutions.
• Ensuring liability coverage for employers and protection for employees.
• Offering policy extensions for cross-border remote work.

The ROEDERER Group provides expertise in these nuanced areas, helping businesses and employees mitigate risks effectively.

Key Takeaways

1. Legal Clarity: EU rules are evolving—monitor thresholds (25%/49.9%) for social security applicability.
2. Tax Compliance: Assess dual-taxation risks for employers and employees.
3. Insurance Solutions: Work with brokers to adapt policies for cross-border remote work.

By addressing these challenges proactively, businesses can harness global talent while minimizing legal and financial exposures.