The Swiss Federal Council approved a new social security agreement between Switzerland and the UK on August 11 2021. This new agreement is important for ensuring and simplifying the coordination of social security systems of both states due to the UK's withdrawal from the EU.
The agreement will fully enter into force once accepted by the Swiss and UK Parliaments.
One important aspect of the new agreement is the avoidance of split contribution payments for employees working both in the UK and Switzerland. Nevertheless, multistate worker scenarios and set-ups involving an EU country in addition to Switzerland and the UK should be reviewed closely as a split of social security contributions might still be necessary in such cases.
The new agreement grants insured individuals largely equal treatment and easier access to social security benefits. It avoids over-insurance as well as insurance gaps for individuals having touchpoints with both countries’ social security systems. In addition to that, temporary deployments of individuals from one into the other state is facilitated.
This new bilateral agreement largely corresponds to the coordination of social security systems in the new trade and cooperation agreement the UK concluded with the EU and is based on the principles of EU social security affiliation coordination rules, which Switzerland applies under the Agreement on the Free Movement of Persons (FMPA).
Despite establishment of the new bilateral agreement between the UK and Switzerland as well as the new trade and cooperation agreement between the UK and the EU, certain set-ups should be reviewed thoroughly from a social security perspective.
It is important to note that Switzerland does not apply EU social security affiliation coordination rules based on the Fundamental Regulation (EC) No 883/2004 to third country nationals in multistate worker set-ups respectively on assignments between EU countries and Switzerland.
Despite establishing the new bilateral agreement between Switzerland and the UK, for these cases the review of the bilateral agreement between Switzerland and the specific EU countries remains necessary.
If the bilateral agreement of Switzerland and the EU countries in question does not cover third country nationals, the allocation and splitting of social security contributions might nevertheless be unavoidable irrespective of this new agreement.
Deloitte's view
The new bilateral social security agreement between Switzerland and the UK is welcome news. However, it is still recommended to review scenarios involving UK nationals moving between Switzerland and EU countries. In such cases a split of social security contributions might still be necessary.
David Wigersma
Partner, Deloitte Switzerland
Tabea Nyfeler
Senior manager, Deloitte Switzerland
