Polish employers sending workers on foreign business trips more and more often have legitimate doubts whether they should apply for an A1 certificate for such staff. This is a document required in the case of posting of workers, confirming that they are covered by the social security legislation of the given jurisdiction. The problem mainly involves how to understand the notion of “posting” as used in European rules for coordination of social security systems, which govern the issuance of A1 certificates.
Additional complications arise in Poland due to the lack of a clear resolution to the debate over the connection between a “business trip” under the Polish Civil Code and “posting” under the Posting of Workers Directive (Directive 96/71/EC of 16 December 1996 concerning the posting of workers in the framework of the provision of services). These notions are unclear and overlapping. This debate has raged since the directive entered into force with respect to Poland.
This is a vital issue, as under the current line of rulings from the Supreme Court of Poland, as long as an A1 certificate is in effect, a finding that the employee indicated in the certificate is on a business trip during the period is excluded. This in turn excludes the possibility of claiming the exemptions under tax and social security law for per diem and other amounts payable during business trips.
Rules for issuance of A1 certificates for posted workers
According to Art. 12(1) of Regulation (EC) 883/2004 on the coordination of social security systems, “A person who pursues an activity as an employed person in a Member State on behalf of an employer which normally carries out its activities there and who is posted by that employer to another Member State to perform work on that employer’s behalf shall continue to be subject to the legislation of the first Member State, provided that the anticipated duration of such work does not exceed 24 months and that he/she is not sent to replace another posted person.” An employer posting a worker is required to apply for an A1 certificate under the rules set forth in Regulation (EC) 987/2009 laying down the procedure for implementing Regulation (EC) 883/2004.
Art. 12 of Regulation 883/2004 is an exception to the rule that a person performing gainful employment in a member state is subject to the social security legislation of that member state. In turn, under Art. 11 of Regulation 883/2004, persons covered by the regulation shall be subject to the legislation of a single member state only.
Posting and business travel
Regulations 883/2004 and 987/2009 contain no definition of “posting” or cross-references to other laws in this respect.
Under Directive 96/71/EC, however, “posting” occurs when an employer sends an employee to work temporarily in the territory of another member state:
- In connection with performance of a contract between the employer and an entity doing business in the territory of the other member state;
- At a branch or establishment belonging to the employer’s group of enterprises, doing business in the territory of the other member state; or
- As a temporary employment agency.
A comparable understanding of “posting” (delegowanie) is included in the Polish Act on Posting of Workers in the Framework of Provision of Services of 10 June 2016, implementing Directive 96/71/EC into the Polish legal system.
The notion of a “business trip” is not defined at the EU level. But under Polish law, under Art. 775 of the Labour Code a business trip means performing official tasks at the employer’s instruction away from the location where the employer has its registered office, or away from the employee’s regular place of employment. Under the predominant view in the decisions interpreting this provision, an excursion may be regarded as a business trip if it is incidental, temporary and brief (e.g. Supreme Court of Poland resolution of 19 November 2009, case no. II PZP 11/08; and judgment of 11 January 2013, case no. II UK 157/12).
Considering the aim of Art. 12 of Regulation 883/2004 and its current wording, it would be reasonable to recognise that “posting” has a different scope there than “posting” within the meaning of Directive 96/71/EC. This notion under the regulation could cover any instance where an employee is sent to another member state with the purpose of performing work for the employer, including a foreign business trip. This position is often taken by national authorities of other EU member states. This may be because in some member states (e.g. Spain) there is no legally regulated institution of business trips, and employers obtain A1 certificates for all employees sent abroad. EU lawmakers also seem to recognise this understanding of “posting,” as appears from the latest draft of changes to regulations 883/2004 and 987/2009.
Thus everything would indicate that an A1 certificate should be applied for in any case of sending an employee abroad to perform work for the employer, and thus also in the case of a foreign business trip. Poland’s Social Insurance Institution (ZUS) itself appears to share this view. Moreover, this would also be justified in the face of the risk of potential inspections of workers by foreign authorities. The laws of some member states (as pointed out for example by ZUS on its website) provide for fines to be imposed on an employer for the mere fact that the employee performing work in that country does not hold an A1 certificate (this is the case for example in France). Moreover, in some instances, if there is an inspection and it is found that the employee does not have an A1 certificate, this may lead to a finding by the authorities that the employee is subject to the social security legislation of the destination country. This could give rise to an obligation on the employer’s part to pay social insurance premiums in that country (typically higher than in Poland). Sometimes criminal liability of the employer may come into play for failing to register the employee for social insurance or failing to remit social insurance contributions.
Problematic position of Polish Supreme Court
But when complying with EU rules on coordination of social security systems, employers should bear in mind the position stated by the Supreme Court of Poland (in particular in the judgment of 12 September 2018, case no. III UK 134/17) that an employee who has been issued an A1 certificate cannot be regarded by the employer as carrying out a business trip. This position was also taken in earlier rulings by the Supreme Court (e.g. judgments of 2 December 2014, case no. II UK 176/13; 13 November 2013, case no. II UK 204/13; and 19 May 2001, case no. I UK 403/10). These rulings were issued under factual circumstances where there was no basis for unequivocally regarding the employees’ travel as a business trip; nonetheless, as of this moment the Supreme Court’s position is categorical, and in every case excludes treating an employee who has been issued an A1 certificate for a given period as being on a business trip during the same period. This is part of what can be gleaned from the Supreme Court ruling deciding on the legal nature of the A1 certificate, holding that it is a declarative decision, not an “ordinary” certificate (Supreme Court resolution of 18 March 2010, case no. II UZP 2/10). Consequently, under the case law, the decision that an employee is subject to Polish social insurance legislation (i.e. the A1 certificate) is binding on the court—regardless of whether the person in question was truly a posted worker or that classification was erroneous. Therefore, without setting aside, amending or invalidating such decision, it is not possible to find that the employee performed work abroad as part of a business trip.
Insofar as the Supreme Court’s position excludes the possibility of finding that an employee was posted and during the same time was also on a business trip, it appears to be incorrect. For the reasons discussed above, there is no basis for finding that Regulation 883/2004 covers only permanent work abroad for one’s own employer. But the wording of the form under which an A1 certificate is obtained (both the prior and current versions) raises certain doubts, because there is no way to indicate in the form that the employee is being sent on a business trip. In turn, employers themselves often confuse the notion of posting (delegowanie) for purposes of Directive 96/71/EC, posting (delegowanie) for purposes of Regulation 883/2004, and the popular Polish term for a business trip—delegacja. This may lead to erroneous indication of the basis for seeking an A1 certificate, and consequently a finding by the authorities that the employee was not on a business trip. In that case, the per diem and other amounts paid to the employee for business travel will not enjoy the exemptions provided under tax law and social insurance law.
Under the current legal state, there is no clear distinction between a business trip and posting within the meaning of Art. 12 of Regulation 883/2004. It can be stated without a doubt that sending of a worker abroad meeting the conditions for posting within the meaning of Directive 96/71/EC and the conditions under Art. 12 of Regulation 883/2004 gives rise to an obligation to apply for an A1 certificate for the employee (regardless of whether it is also a business trip). Given the lack of complete compatibility of Polish law with EU law and the law of certain other member states, and also due to the controversial position of the Supreme Court of Poland, the decision on whether to apply for an A1 certificate for an employee sent on a foreign business trip (not qualifying as “posting” under Directive 96/71/EC) should be taken in each instance, under the current state of the law, after assessing the overall circumstances and analysing the law of the member state where the worker is being sent.
The problem of foreign business travel within the context of obtaining an A1 certificate has not escaped the attention of EU lawmakers. In the latest draft of changes to regulations 883/2004 and 987/2009, it is planned to introduce the notion of a “business trip” for purposes of applying Art. 12 of Regulation 883/2004. “Business trip” would be defined as “a temporary activity related to the business interests of the employer, not including the provision of services or the delivery of goods, such as attending internal and external business meetings, attending conferences and seminars, negotiating business deals, undertaking sales or marketing activities, performing internal or client audits, exploring business opportunities, or attending and receiving training.” The draft further provides that it will be not be necessary to apply for an A1 certificate for employees sent on a business trip, as so defined. This would clear up at least some of the doubts discussed above.
Agnieszka Lisiecka, Piotr Podsiadły