Written evidence submitted by the Price waterhouse Coopers (pwc) (FRE0112)



We feel it is important to note that, whilst at this point in time there is some broad agreement between both Parties, much of the detail is yet to be defined - this includes the criteria for work, study training and youth exchange programmes. We have therefore prepared our answers by reference to our experience as an adviser to a wide range of organisations across different business sectors and utilising our knowledge of the current domestic legislation and process in both the UK and the EU. We have also, unless otherwise indicated, answered on the basis that an agreement is reached.


You will also note that we make reference to the significant change that Mobility is currently experiencing due to the impact of COVID-19 and a focus on virtual/remote working by many organisations. This shift creates new mobility scenarios for organisations, such as requests to work remotely in a country that is different from the contractual location, either full time or on an agreed pattern. Current Mobility legislation is often designed for a long-term secondment arrangement, with an employee with a traditional employment relationship, and even before COVID-19 we had seen a significant shift in how organisations were utilising Mobility to support talent development. To respond to this, the final agreement should have sufficient flexibility to allow organisations to have Mobility within the region that will support this new normal. We would be happy to discuss this particular topic in more detail with you, as it is becoming increasingly important in the new world of virtual/remote working that has been accelerated by COVID 19.



Responses to Specific Questions


1.Given the two draft legal texts, what does the EU legal text cover and what does the UK legal text cover when it talks about mobility and short-term visits without the need for a visa?


Given the timeframes of this request we were unable to conduct a full review of the two legal texts but have outlined some of the key differences in our answers to the other questions. Please note all our answers are, unless otherwise indicated, answered on the basis that an agreement is reached.


We are responding on the basis of our experience as adviser to a wide range of organisations across different business sectors.


2. What are the major differences between the two positions on mobility in the negotiations? How would you explain any differences? Given the two positions, what do they appear to agree on?


Procedural requirements are not addressed in specific detail in the texts, however there is agreement that mobility must continue to be based upon non-discrimination and full reciprocity. Importantly the criteria for work, study training and youth exchange programmes is still being considered, but there is broad agreement on visa free travel for short business visits.


The major differences at the moment centre upon the following areas:


1) Fees, with the UK immigration fees being significantly higher


2) Income requirements for visas for dependants of a national of the country, with the EU applying a national minimum wage threshold vs the UK setting an above average wage threshold of £35k.


3) The UK differentiates between business visitors for establishment and general business visitors,whereas the EU text does not. Although they agree on business visitors duration of stay.


3. What could be the barriers to an agreement on mobility being negotiated this year? To what extent will the rules for British people wishing to work in the EU, be determined by an EU wide agreement or by domestic law in the UK and each Member State?


A potential barrier to any agreement is that negotiations are taking place during one of the most unprecedented times of change to mobility, due to COVID-19 and a rapid move to virtual working. For example, PwC's recent survey, of over 250 multinational companies found that:


Fast changing attitudes and expectations - 28% of respondents now think there will be a fundamental shift in how their company views workforce mobility and the need for international moves.


Increase in international remote workers43% of companies predict there will be an increase. This rises to 60% in professional services, while in financial services, only 13% of companies say they don't expect to adopt international remote working


Different working patterns  - Around half of companies are offering a change of arrangement (e.g. to commuting or remote working) to some of their upcoming and current mobile employees


Therefore, even if they are able to reach an agreement, the requirements of business are changing so rapidly that this agreement may not be fit for purpose. (Our full report can be found here: https://www.pwc.co.uk/services/human-resource-services/insights/covid-19-impact-on-global-mobility-workforce.html).


Whilst Immigration controls for third country nationals do not typically fall under the remit of EU Regulations or Directives, the EU have made a number of attempts in recent years to create harmonisation of the immigration rules and to allow for multi recognition of work permissions. However such attempts have not had the success the EU would have wished for, for example, with the EU Blue Card (which is a work and residence permit for non-EU/EEA nationals for the purpose of highly qualified employment (https://ec.europa.eu/immigration/blue-card/essential-information_en) having non uniform take up across the whole of the EU, with Germany issuing 83 % of the EU total Blue cards in 2018 (https://ec.europa.eu/eurostat/statistics-explained/pdfscache/70280.pdf).


Reciprocity has been noted by both sides as key to any agreement, and the UK have already confirmed the EU nationals will be subject to the same requirements as other third country nationals for Immigration purposes from January 2021. As the draft agreement states "This Agreement does not impose an obligation on a Party regarding its immigration measures", it is unlikely that the negotiations will result in an agreement that requires Member States to treat UK nationals more favourably than other third country nationals. It is therefore also likely that UK nationals will be subject to the Domestic laws of each Member State.


That is not to say that each Member State could not then choose to create a specific immigration category for UK nationals that allows them to have a more simplified process (Spain and Poland have indicated they may take this approach but this is not fully confirmed), but this would be Member State specific and not grant status in another Member State. It should also be noted that whilst the draft text aims to create a uniform list of permissible business visitor activities, based upon current domestic legislation, these are often high level and require interpretation to apply to specific situations and both parties can state reservations in Annex 11-A.


4. What types of economic activity, and sectors of the UK economy, currently benefit from being able to move staff between the UK and EU Member States temporarily or for longer periods?


All industries currently benefit from being able to move staff between Member States, both for short and longer periods, especially the 245,000 British businesses that trade exclusively with the EU.


You can find a report we published in 2017 (in conjunction with London First) that assesses the importance of Immigration to a number of industries including the Financial Services, Construction and Retail sectors for more details at https://www.pwc.co.uk/legal/pdf/facing-facts-the-impact-of-migrants-on-london-its-workforce-and-economy.pdf


5. Given the likely scope of a future agreement on mobility, how will this affect exports of UK services? In particular, for (a) businesses wishing to move staff between the UK and the EU, and (a) the self-employed and freelancers?


In 2019, UK exports to the EU were £300 billion (43% of all UK exports) and services accounted for 43% of the exports to the EU in 2019. To ensure the continuation of the delivery of services especially in the Financial, Legal, Research and Engineering industries, administrative burdens should be minimised where possible. Assuming that UK nationals will be subject to the domestic laws of each Member State there are a number of significant changes to how they currently operate that could affect exports.


1) Business travel: Currently UK nationals are able to perform any activity, from an Immigration perspective in the EU without requiring permission. Under the proposed changes, individuals will be subject to the business traveller rules in the agreement, which states that individuals "engaged in selling a good or a service to the general public" are not covered. Also, there is yet to be an agreed list of permitted activities. Based upon the current business visitor rules of Member States and the UK, this will most likely mean that they cannot conduct productive activities, such as on the job training or certain client meetings, even for one day without Immigration permission. UK nationals will also be subject to a limit of 90 days in every 6 months. Many of the business visitor rules do not cover freelance or self-employed individuals.


2) Work permission: UK nationals do not currently need work permission in the EU. Under the proposed agreement they will need to comply "with all other requirements of the laws of the Parties regarding entry and stay" e.g. obtain Immigration permission. Such permission on average in the EU takes 4-12 weeks to obtain and the agreement only places an obligation on the parties to process "as expeditiously as possible and within a period of 90 days from the submission of an application". Few EU countries currently have Immigration routes that allow self-employed / freelancers to be granted permission to work, and the most simple and cost effective route of an Intra-Company transfer work permission is not available to such individuals.


3) Social security: UK nationals who undertake a regular pattern of travel to the EU are currently able to obtain a Multi-State Worker A1 Certificate, which provides proof of exemption from contributions in all EU Member States for the duration of the activity. Under a new agreement (based on the proposed texts) it should still be possible to remain exempt but the precise mechanism to prove the exemption and the expected timeframes for documents to be issued is not yet clear.


Whilst the draft agreement sets out that parties must allow the "temporary entry and stay of independent professionals of the other Party" the requirements are significant, such as holding a university degree and not staying more than 12 in any 24 month period. At present the UK has no clear immigration route for self-employed/ freelancers and whilst they are considering a highly skilled route for 2021 this is likely to be limited to a maximum period of 2 years. Few EU Member States have specific routes for freelancers / self employed and may require a quasi employment relationship to be established to allow an individual to obtain work permission. Professional and other service businesses, not organised as companies, are also likely to face additional complications owing to their legal form of operation. Also, the construction industry has stated that they are facing significant skill shortages and it is common practice for construction workers and associated individuals (electricians etc) to be self employed.


For Social security there are articles in the draft text that cover self employed individuals, on a similar basis to the existing regulations. However as above, the precise mechanism is not yet clear.


6. What should businesses be doing now to prepare for the likely outcome of the negotiations on mobility and social security coordination?


Immigration: Businesses in the UK who do not currently have one, should obtain a UKVI sponsor license as soon as possible to ensure they are able to continue to hire EU nationals post the 1st of January 2021. In addition, they need to implement a robust pre-travel process to ensure individuals have the correct Immigration and Social security requirements in place pre travel. They should also ensure they have educated any travellers and any other impacted groups on the new requirements and consider how increased timelines and costs will impact business plans for 2021 and beyond. Additionally, business should ensure they have encouraged all employees who are eligible to apply for the EU Settled Scheme and the equivalents in each Member State to ensure that existing rights are retained.


Businesses may also want to consider workforce planning to understand the impact of remote working, both in terms of addressing potential mobility impacts but also the impact of remote working under the new scheme.


Social security: For social security, our view is that businesses need to plan for different outcomes.  For individuals already in a cross-border working arrangement between the UK and the EU, businesses should ensure they have A1 certificates of continuing liability to confirm where they are subject to social security.  Where the current intention/expectation is that an individual will continue in their cross-border arrangement beyond the expiry date shown on their A1 certificate, businesses should consider applying for a further A1 certificate to cover the additional period to take advantage of the provisions of the Withdrawal Agreement (please see our comments on the last question below), in case there is no agreement on continuing social security coordination beyond the transition period.


For new moves which are expected to commence after the end of the transition period, business should prepare for the possibility that there will not be continued coordination, for example:


- Seeking advice in the EU Member States from where they expect to post employees to and from the UK on whether a bilateral agreement will be available to prevent dual coverage


- If a bilateral agreement will not be available, understanding whether a social security liability will arise under the domestic law of that country


- If a liability will arise, what are the registration / payroll withholding requirements in that country and what are the risks of compliance failures


- From a UK perspective, planning on the assumption the UK may continue to impose a mandatory NIC liability for UK outbound individuals either via a future SI to unilaterally impose the EC Regulations or via existing domestic law (i.e. Regulation 146 of the Social Security Contributions Regulations 2001).


7. How might it affect those engaged in activities relating to culture, education, or science and innovation? How will it affect British people who wish to make short term visits to an EU Member State for non work-related activities? And EU citizens who wish to make similar visits to the UK? What will this mean for family visits or tourism?


Culture - The EU draft refers in the joint declarations relevant to article MobI.4 that activities potentially subject to visa restrictions (paid activities) should not include certain categories, such as artists or sports persons performing activities on an ad-hoc basis. However, the document is not very specific to this regard and ultimately states that the Parties shall provide for reciprocal conditions of entries over 90 days for the purposes of research, studies, training, etc, as defined in the Parties’ domestic legislation (Title XI, MOBI.5). The UK for reference does currently require third country national individuals, such as Artists to obtain work permission, although exemptions are made for the requirement to obtain a visa for short stays (less than 3 months).  


Education Sector / Science - These sectors focus on recruiting best talent in research and academia and do currently recruit a high number of EU nationals. Calibre and credentials of the staff recruited are critical in securing research funding as some funding is tied specifically to researchers. The research undertaken by Universities helps their rankings and in turn recruitment of international students. As an example, Switzerland has had funding from the EU reduced due to restrictions placed on immigration. EU funding is important for the education sector and if the UK Immigration controls are perceived to be hindering the mobility of researchers and academic staff, this could result in a decline in funding.


Tourism - Any other travel for less than 90 days related to unpaid activities is covered under article MOBI.4 (visa-free travel), subject to reciprocity. Both the EU and the UK have stated that nationals will retain visa exempt status. However, UK nationals will most likely need to ensure they have 6 months validity on their passports. It is also not yet defined if UK nationals will be required to obtain the new ETIAS visa for travel into the EU, when this is rolled out in 2021, although as this is styled on the US ESTA process even if UK nationals are included this should not create too much additional burden and the administration costs are nominal. https://www.schengenvisainfo.com/etias/


8. How does any agreement on mobility interact with an agreement on social security coordination? How might an agreement on social security differ to what operates at the moment? Are there any international examples that might serve as useful precedents?


Appropriate immigration permission will be required for the jurisdiction in which an individual will be conducting work or business activities. The social security coordination Regulations do not refer to immigration requirements, the provisions for determining where an individual will be subject to social security do not directly depend on an individual's immigration status. This would continue post Brexit based on the current proposals.


We expect there will be more administrative burdens for employers. Currently, when individuals from non-EU countries apply for UK immigration permission (Tier 2 ) they are often required to either; provide a UK National Insurance Number, or, confirm why a NINO is not required by attaching the relevant certificate of continuing liability confirming they are subject to their home country social security system (e.g. inbounds from the USA and Japan). It is not clear whether this will also become a requirement for individuals arriving from the EU under the new system.


Both the UK (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/886015/DRAFT_Social_Security_Coordination_Agreement.pdf) and the EU (https://ec.europa.eu/info/sites/info/files/200318-draft-agreement-gen.pdf - pages 408-434) have set out draft proposals for future coordination of social security between the two parties. The two texts differ significantly in respect of the scope of matters covered and also the categories of persons covered. The main differences between the texts and from the current arrangements, relate to the export of benefit rights and payments. For example, the UK text covers only old-age pensions and necessary healthcare, whereas the EU text covers additional benefits such as sickness, family and maternity/paternity benefits. This may affect certain individuals who could choose not to commence work abroad if their personal circumstances require that they continue to accrue entitlement to benefits in their 'home' country.


If an agreement is reached, based on the draft texts, we expect there would be limited changes in respect of payment of social security contributions, with the important principle that an individual be insured under the legislation of a single party at any one time maintained. An agreement which maintains this principle, regardless of the exact terms, would be a helpful outcome for employers who wish to continue facilitating cross border travel to meet business needs without incurring double social security charges. The need for continued coordination of contributions and a clear mechanism to demonstrate where an individual is subject to social security is becoming more necessary than ever in light of the Posted Workers Directive and Posted Workers Enforcement Directive. Many Member States already require complex registrations for incoming posted workers to demonstrate the employer is meeting the minimum employment law rights in the host country. One requirement is to retain on file evidence of either payment of local social security or proof of exemption. Such registrations may be required before the travel commences in some Member States, making it crucial that HMRC provides for the fast and efficient issuance of A1 certificates (or their equivalent under the new agreement).


A final concern if an agreement is reached is how the agreement could be affected in the future by changes to European legislation (amendments to the social security coordination regulations are currently under discussion within the European institutions), or to rulings from the ECJ. For example, a recent ruling from the ECJ on who is to be deemed the employer for the purposes of applying the Regulations (and thus determining the Member State whose legislation applies), will in our view alter the outcome for many individuals and businesses. If the UK and the EU take different positions on similar issues, it will be important for businesses to understand how the parties will reach an agreement and how such decisions will be communicated to the business community.


There are few international precedents to follow in these circumstances.  While many countries have concluded bilateral social security agreements between two states, there are few multilateral social security coordination frameworks. Two which are in place, the Gulf Cooperation Council's 'Unified Law on Insurance Protection Extension of the GCC' and the 'Ibero-American Multilateral Convention on Social Security'. The former operates very differently to the EC Regulations and the latter, whilst closer is scope to the EC Regulations has to date seen limited implementation by its constituent Member nations. The closest comparison may be the EU/Switzerland agreement on the Free Movement of Persons, which includes provisions for social security coordination (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A22002A0430%2801%29). However, the coordination facilitated by this agreement is more comprehensive than that contemplated in either the UK or EU draft texts. In effect the EU/Swiss agreement brings Switzerland within the scope of the full EC Regulations, with only minor adjustments.


We would also note that for many businesses, the existing EU framework is not perfect. Working arrangements have been evolving for some time and the changes have and will continue to accelerate as a result of COVID-19. While the regulations have been updated over time, they have not kept pace with this rapid transformation of working life. As an example, many international travel decisions are now made at very short notice, often the same day and yet obtaining relevant documents can take weeks if not months. In some cases, individuals are denied access to work sites because the appropriate paperwork has not been issued. Individuals are also seeking greater freedom of movement and in many cases are less concerned with long term benefit entitlements. The UK could achieve a competitive advantage by adjusting our domestic legislation and international agreements to more effectively cater to the categories of highly skilled, mobile individuals who are able to perform their work from any location. We would be happy to facilitate a meeting with the committee to explore these opportunities in more detail.


9. What will be the legal basis for any fall-back options on 1 January 2021 in the end of no agreement being reached on mobility and social security coordination?




Unlike Social Security (as noted below) there are no existing agreements on Immigration that could be used as a fall-back provision, other than for the UK and Ireland under the Common Travel Agreement. The UK has already passed legislation that ends Freedom of Movement for EU nationals and the wording of the Freedom of movement regulations means UK nationals are no longer covered by this once we cease to be a Member State. As such the only legislation that would prevail is Domestic legislation for Third country nationals.


There is agreement to ensure UK nationals remain visa exempt but as noted in this text from the negotiation papers this does not provide the right to work in the EU - "Recent EU preparedness legislative measures have ensured that, as of 1 January 2021, UK nationals will remain exempt from the requirement to be in possession of visas when crossing the European Union’s external borders for short-term stays (up to 90 days in any 180-day period). This visa exemption does not provide for the right to work in the Union and is subject to the reciprocity mechanism applying to third countries, i.e. it could be suspended if Union citizens would cease to be given visa-free access to the United Kingdom for short stays".


Social security


For social security coordination, in the absence of an agreement, it is important to distinguish between the outcome for individuals already in a cross-border situation at the end of the transition period and individuals who will commence a new cross border working arrangement after the transition period has ended.  The former are protected, to some degree, by the provisions of the Withdrawal Agreement, whereas for the latter the situation could be more complex. 


Those already in a cross border situation at the end of the transition period

Article 30 of the Withdrawal Agreement contains grandfathering provisions for individuals who are covered under the EC Regulations at the end of the transition period.  The broad intention of these provisions is that an individual already covered under the regulation shall continue to be covered on the same basis for as long as they continue in their cross border arrangement.  However, the wording of Article 30 appears to be somewhat ambiguous; "The persons referred... shall be covered for as long as they continue without interruption to be in one of the situations set out in that paragraph involving both a Member State and the United Kingdom at the same time."  The EU has published some broad guidance on the meaning of 'without interruption' in s3.1.3 of the Withdrawal Agreement guidance notes: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020XC0520(05)&from=FR 

However, this does not cover every scenario and we have in the past seen different approaches from Member States in respect of guidance and Administrative Council decisions.  A degree of uncertainty will remain until we see whether Member State authorities or HMRC begin challenging A1 certificates issued prior to 31 December where they deem the individuals are no longer in an uninterrupted situation.


Those commencing a new cross-border working arrangement after the end of the transition period

The default position here would be for EU Member States to cease treating the UK as falling within the scope of Regulation 883/2004 and implementing Regulation 987/2009.  In essence this would mean that individuals commencing a cross border situation between the UK and an EU Member State(s) would not be prevented from becoming liable to social security contributions in multiple countries nor would their access to benefits be protected by the aggregation provisions in those regulations.


However, there is added complexity as:


a) The UK has bilateral social security agreements with many, but not all, Member States, some of which have been concluded recently explicitly to manage Brexit related scenarios (e.g. with Switzerland and Ireland) but most of which pre-date the introduction of the EC Regulations. 

b) These bilateral social security agreements often do not facilitate continuing home country coverage for posted workers for as long as the EC Regulations currently do and also do not contain provisions for commuting/multi-state working patterns.  Several countries have also indicated that they believe their bilateral agreement with the UK is no longer valid and they would not accept a UK Certificate of coverage as proof of exemption from their social security regime (e.g. France).


c) Several Member States had previously indicated that they would consider an additional period of reciprocity where they would not seek to impose social security contributions from inbound individuals from the UK provided that the UK did the same for individuals inbound from their country.  It is unclear whether this is still the intention given the ongoing negotiations and the altered time frame from when these announcements were first made.


From a UK perspective, the EC Regulations are retained in UK law at the end of the transition period by the EU (Withdrawal) Act 2018.  The government in 2018 published a draft (and subsequently withdrawn) Statutory Instrument (The Social Security Coordination (Regulation (EC) No 883/2004, EEA Agreement and Swiss Agreement) (Amendment) (EU Exit) Regulations 2018) which aimed to unilaterally impose the provisions of the EC Regulations onto individuals in a cross border situation between the UK and the EU.  As an example, an individual temporarily posted by an employer in the UK to work in a Member State for less than 24 months would continue to be liable to UK National Insurance Contributions for the duration (assuming the relevant posting conditions as specified in the regulation were met).  This would be the case even if the host Member State did not exempt the individual from their social security regime and could mean that dual social security becomes payable for the period.  The Immigration and Social Security Coordination (EU Withdrawal) Bill 2020 again provides a power which allows an appropriate authority to modify these retained Regulations, but we are not aware of any proposed SIs which anticipate no future coordination and confirm the UK position at this stage.






August 2020