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17 July 2020 / article

Is the European Court of Justice opening the door to material employment practice in social security?

On 16 July 2020 The Court of Justice of the European Union ruled that international lorry drivers are covered by social insurance in the member state in which the company has its registered office, which: 1) actually exercises authority over the driver, 2) actually pays the wage costs of the driver, and 3) is actually entitled to dismiss the driver.

The proceedings at the Court of Justice are the consequence of decisions of the Dutch Social Insurance Bank (Sociaal Verzekeringsbank, SVB) to declare Dutch social insurance laws applicable to international lorry drivers. These drivers carry out their work in more than one EU member state.

In that case, the European rules on the coordination of social security designate the social insurance laws of the member state in which the employer has its registered office.

In this particular case, the international lorry drivers were dealing with a Cypriot company, with which a formal employment contract had been concluded, and a Dutch company which acted both effectively and materially as the employer.

The Court of Justice has now ruled that Dutch social insurance laws are applicable, despite the fact that an employment contract exists with a formal employer in Cyprus.

Our commentary

In this ruling, the Court of Justice established that the drivers did in fact appear to have been members of personnel of the Dutch transport companies, as a result of which Dutch social insurance laws appear to apply to them. The Supreme Court is yet to rule on this, and so a final conclusion still has to be reached.

For businesses who have to deal with employees carrying out their work in several EU member states simultaneously, we advise verifying that the applicable social insurance laws have been established correctly and closely following developments in this area. This will make it possible to limit the risks regarding the lawfulness of social insurance premiums paid and the social security protection of employees.

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