Brexit and Switzerland: The 'mind the gap' agreement on social security
David Wigersma and Tabea Nyfeler of Deloitte Switzerland discuss what a possible ‘no-deal’ Brexit may mean for British-Swiss relations.
As the legal ramifications of Brexit continue to be finalised, Switzerland and the UK have been working together on a soft landing solution to avoid major disruption to their relations in the case of a ‘no deal’ scenario.
On October 31, it was announced that a new agreement between Switzerland and the UK has been signed. This transitional agreement (as part of the Swiss “mind-the-gap” strategy) covers the ‘no deal’ scenario and shall ensure that the rules of the agreement on the free movement of persons in the area of social security can continue to be applied until December 31 2020.
This means that the rules on coordination will continue to apply to Swiss and UK citizens and also to other EU nationals working in Switzerland or the UK. The agreement will therefore close the gap until new final rules come into force between Switzerland and the UK.
Earlier, in December 2018, Switzerland and the UK negotiated an agreement on citizens’ rights including on the protection of acquired rights in the area of social security. This meant that if an individual became subject to Swiss social security legislation before January 31 2020, there would be continued A1 coverage (also after January 31), as long as their employment conditions and work pattern did not change significantly.
The new agreement is more encompassing compared to the agreement of December 2018 as it ensures the application of the agreement on the free movement of persons and therefore includes all EU nationals. This means that even if an individual becomes subject to Swiss social security after January 31 2020, an A1 could still be applied for.
Main areas to be considered in a ‘no deal’ Brexit scenario:
1. Communications: connecting with employees around the potential impact on their social security position, access to benefits, and steps being taken to mitigate this impact
2. Additional costs: quantifying potential additional costs either directly through additional social security costs, or the need to compensate staff for reduced access to state benefits;
3. Payroll compliance: working with your payroll teams in home and host countries to ensure that systems have the ability to deal with dual contribution situations and the necessary data flows are in place to enable them to perform the appropriate calculations and filings; and
4. Policy approach: determining the level of support you are prepared to offer employees to mitigate the impact of potential additional employee social security costs, or the need to compensate staff for reduced access to state benefits (e.g. family benefits).
All of the areas are critical issues from a mobility and talent perspective and while it is still too early to implement any policy or procedural changes due to the fluid political situation, it can be strongly recommended that employers operating internationally should adapt any contingency plans that they have developed for a ‘no deal’ Brexit.
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