Member States’ social security agreements with India

Abstract

In a 2012 Communication, the European Commission described the current approach to social security coordination with third countries as ‘patchy’. The European Commission proposed to address that patchiness by developing a common EU approach to social security coordination with third countries whereby the Member States would cooperate more with each other when concluding bilateral agreements with third countries. This article aims to explore the policy agenda of the European Commission in that field by conducting a comparative legal analysis of the Member States’ bilateral agreements with India. The idea behind the comparative legal analysis is to determine whether (1) there are common grounds between the Member States’ approaches, and (2) based on these common grounds, it is possible to suggest a common EU approach. India is taken as a third-country case study due to its labour migration and investment potential for the European Union. In addition, there are currently 12 Member State bilateral agreements with India and no instrument at the EU level on social security coordination with India. Therefore, there is a potential need for a common EU approach to social security coordination with India. Based on the comparative legal analysis of the Member States’ bilateral agreements with India, this article ends by outlining the content of a potential future common EU approach.

Introduction

With the continuing increase in international migration, ¹ guaranteeing the social security rights of migrant workers is of the utmost importance. Social security coordination provides for a set of rules for building bridges between social security systems in order to help secure the social security rights of migrant workers.

Within the EU, social security coordination is regulated for EU citizens and their family members moving between Member States (Regulation 883/2004 ² and its implementing Regulation 987/2009) ³ as well as for third-country nationals moving between Member States (Regulation 1231/2010). ^4,5 This EU system of social security coordination is therefore solely applicable to persons moving between Member States (situation of internal mobility).

However, for persons coming from outside the EU into the EU (situation of external mobility), there is no uniform system of social security coordination. Instead, there is a patchwork of instruments adopted either by the Member States or by the EU itself that apply to the social security rights of third-country workers. As explained in the articles by Strban, Pennings and Spiegel in this Special Issue, bilateral agreements concluded by Member States with third countries are the oldest and the most common instruments on social security coordination. There are currently over 350 bilateral agreements between Member States and third countries. ⁶ Besides these national instruments, the EU has concluded some agreements with third countries on the mobility of third-country nationals, including provisions on social security. ⁷ For example, the Association Council of the Turkey-EU Association Agreement has adopted Decision 3/80 on social security coordination. ⁸ In addition, the EU has adopted unilateral measures on migration such as the Blue Card Directive ⁹ and the Seasonal Workers Directive ¹⁰ which contain provisions on equal treatment with regard to social security. ¹¹ This patchwork of instruments results in a fragmented approach to EU social security coordination with third countries. In order to improve this fragmented approach, the European Commission published a Communication in 2012 calling for a common EU approach to be developed whereby the Member States would collaborate more when concluding social security coordination agreements with third countries. ¹²

The aim of this article is to explore whether there is any possibility for Member States to collaborate more and, if there is such a possibility, what the content of a common EU approach could entail. Consequently, the research question is: ‘Is a common EU approach to social security coordination with India possible and if so, what could it contain?’. The method used to determine whether there are common grounds for cooperation is the comparative legal analysis of Member States’ Social Security Agreements (SSAs). The idea behind the comparative legal analysis is to assess whether there are common elements in the Member States’ SSAs. Those elements would then constitute the basis for a future common approach to social security coordination with third countries.

This article focuses on one third country, i.e. India, with whom Member States have concluded SSAs. The decision to choose India was guided by the existing and future potential labour migration between India and the EU ¹³ as well as the potential for Indian companies’ investment in the EU, and vice versa. ¹⁴ Currently, India has concluded social security bilateral agreements with 12 Member States: Belgium, Germany, Luxembourg, France, Denmark, Hungary, Czech Republic, Netherlands, Finland, Sweden, Austria and Portugal. In that context, there is room for improvement in achieving a common EU approach as other Member States might conclude SSAs with India in the future and the current SSAs might need to be updated.

The comparative legal analysis conducted in this article concerns the 12 SSAs concluded between the Member States and India. It focuses on the scope of the SSAs (material and personal scope), as well as on what is considered to be the five fundamental principles of social security coordination: ¹⁵ i.e. equal treatment, export of benefits, aggregation of periods of insurance, determination of the law applicable and administrative cooperation.

Based on the comparative legal analysis, this article ends with a recommendation on what a common EU approach to social security coordination with India could entail.

Comparative legal analysis of the Member State SSAs with India

Background of the bilateral agreements

To date, India has concluded bilateral agreements on social security with 12 Member States. The first SSA signed by India with a Member State was with Belgium in 2006. The most recent SSA concluded by India with a Member State was with Portugal; signed in 2013 and which entered into force on 8 May 2017. Also, it is worth noting that Germany and India signed two bilateral agreements. The first was an agreement focusing on the coordination of social security rights for posted workers only. In 2011, India and Germany signed a second agreement. That second agreement entered into force on 1 May 2017 and goes beyond the coverage of posted workers. All the SSAs analysed in this article were concluded within the same time frame which facilitates comparability.

The timing behind the conclusion of the SSAs between India and the Member States corresponds to a change in Indian legislation which entered into force on 1 October 2008. ¹⁶ This amendment to Indian legislation resulted in the creation of a new category of worker to be subject to the Indian social security system, the ‘international worker’. ¹⁷ According to this change in legislation, workers coming from outside India to work in India for an establishment employing 20 or more persons, ¹⁸ were to contribute to the Employees’ Provident Fund Scheme. Following this change in legislation, the contributions to be paid by both employees and employers for Indian workers were also to be paid by and for international workers. ¹⁹ The only difference between Indian workers and international workers was that there would be no salary cap concerning the contributions of international workers. ²⁰ Hence, both the employee coming from outside India and the employer would have to pay contributions amounting to 12 per cent of the employee’s salary. The only way to be exempted from paying those contributions would be if India and the country from where the worker was sent had concluded a bilateral agreement on social security. ²¹ Evidently, this element was a great incentive for Member States to conclude bilateral agreements with India.

Personal and material scope of the SSAs

The SSAs have very similar provisions on both personal and material scope.

The relevant criterion for falling within the personal scope of the SSAs is whether a person is or has been subject to the legislation of either of the Contracting States. ²² Also, persons deriving rights from the person subject to the legislation of either of the Contracting States are covered by the SSAs. ²³ Those persons deriving rights are to be understood as family members. ²⁴ Some Agreements such as the Hungarian and the Portuguese SSAs specify that persons deriving rights are to be understood as dependent family members and survivors. ²⁵ Concerning the personal scope of the SSAs, it is important to realise that none of them are based on nationality requirements. They cover persons on the basis of their subjection to the legislation of either Contracting States. In that manner, the SSAs comply with the Gottardo ruling of the Court of Justice when it comes to the situation of EU citizens. ²⁶ In its Gottardo judgment, the Court of Justice held that bilateral agreements concluded by Member States with third countries should be applied in light of the fundamental principle of equal treatment of EU citizens. This implies that any Member State must treat all EU citizens in the same manner as its own nationals when applying a SSA concluded with a third country. One way to avoid discrimination against EU citizens in the application of the SSAs is to have a personal scope based on the subjection to the legislation of either of the Contracting States. Furthermore, the personal scope of the SSAs entails that anyone could be covered by a SSA if that person is or has been subject to the social security legislation of either of the Contracting States. Hence, it is possible for a Chinese or an American national to be covered by the SSAs concluded between India and the EU Member States.

In relation to the material scope, the SSAs make references to the specific legislation to which they apply. Firstly, the material scope is different with regard to the Indian legislation compared to the Member States’ legislation. This difference is most notable in relation to the legislation applicable to self-employed persons. Indeed, in all the SSAs concluded by India, the Indian laws mentioned are restricted to employees. This can be explained by the fact that India does not have any social security legislation covering self-employed persons.

Secondly, all the SSAs are essentially about statutory pension rights (old-age, survivors’, and invalidity pensions). ²⁷ The Belgium-India SSA, the Netherlands-India SSA, the Luxembourg-India SSA, the Hungary-India SSA, the Czech Republic-India SSA and the Austria-India SSA mention that their social security legislation is covered only for the purpose of determining the law that is applicable. ²⁸ It means that, in those SSAs, the social security legislation of the different countries is relevant for avoiding instances of conflict of laws. However, for the rest, i.e. for equal treatment, the export of benefits, the aggregation of periods and administrative cooperation, statutory pension rights are the only benefits covered.

Equal treatment

All SSAs contain an equal treatment provision. ²⁹ This provision implies that the Contracting States should treat persons to whom the SSAs apply in the same manner as they treat their own nationals. The Belgium-India SSA, the Netherlands-India SSA, the France-India SSA, the Luxembourg-India SSA and the Portuguese-India SSA provide that equal treatment is only for persons ordinarily resident in the Contracting State granting them equal treatment. ³⁰

Export of benefits

There is a provision on the export of benefits in all the SSAs concluded by India with the Member States. ³¹ The provisions on export of benefits provide for two things.

Firstly, the provisions on the export of benefits provide that the Contracting States shall not reduce or modify benefits acquired under their legislation based on the fact that the beneficiary is residing in the territory of the other Contracting State. However, several SSAs contain exceptions to this. For example, the Austria-India SSA states that the provision on the export of benefits does not apply to compensatory supplements. ³² Also, the France-India SSA excludes non-contributory benefits from being paid abroad. ³³

Secondly, the provisions on the export of benefits include an element of equal treatment. Equal treatment here implies that the Contracting States should award the benefits to the nationals of the other Contracting State, who reside outside the territories of both Contracting States, under the same conditions and to the same extent as they are awarded to the nationals of the first Contracting State who reside outside the territories of the Contracting States. Consequently, despite the personal scope of the SSAs that cover persons on the basis of them being subject to the social security of one of the Contracting States, the equal treatment with regard to the export of benefits to a third country is restricted to the nationals of the Contracting States. Hence, for example, Indian workers are able to export benefits on the same conditions as Dutch workers when they decide to reside in a third country. Equally, Dutch workers are able to export benefits from India in the same conditions as Indian workers.

Aggregation of periods of insurance

A provision on the aggregation of periods of insurance is an important provision for migrant workers who have contributed to several national social security systems as a result of their mobility. The aggregation of periods of insurance permits insurance periods completed pursuant to the legislation of one of the Contracting State to be added to the periods completed pursuant to the legislation of another Contracting State, provided that the periods do not overlap. For example, if a Contracting State demands that a number of years of contributions should be completed to access statutory pension, the aggregation of periods of insurance ensures that contribution years completed in the other Contracting State are taken into account. It follows that aggregation of periods of insurance is relevant for the acquisition, the retention or the recovery of a benefit.

From the 12 SSAs concluded between India and the Member States, the Netherlands-India SSA is the only one that does not contain any reference to the aggregation of periods of insurance. ³⁴ Despite the fact that the other 11 SSAs provide for the aggregation of periods of insurance, there are many differences in the details of the provisions.

The Denmark-India SSA and the Belgium-India SSA do not have a general provision about the aggregation of periods of insurance. They contain instead some provisions on the consequences of the aggregation of periods of insurance for Danish or Belgian legislation and for Indian legislation. ³⁵ Similar provisions on the implications of aggregation of periods of insurance for the calculation of benefits according to Indian legislation and/or the Member State’s legislation can be found in all other SSAs, except for the Hungary-India SSA and the Portugal-India SSA. ³⁶

Another difference in the details of the aggregation of periods of insurance provisions concerns the equivalence of periods of insurance. When the legislation of a Contracting State subordinates the granting of old-age or survivors’ benefits to periods of insurance in a specific occupation, only equivalent periods of insurance completed in the other Contracting State for the same occupation are taken into account. ³⁷ In relation to that, if the periods of insurance in a given occupation do not entitle the person to benefits, the insurance periods shall are taken into account for the general scheme of employed persons. ³⁸

Finally, some SSAs also provide that periods of insurance completed in a third country, with which both Contracting States have a social security agreement, shall be taken into account for the acquisition of a benefit under the respective legislation of that Contracting State. ³⁹ Furthermore, the Germany-India SSA provides that the periods of insurance completed pursuant to Regulation 1408/71 or Regulation 883/2004 should be taken into account if the Regulations apply in a country with which India has concluded a social security agreement. ⁴⁰ For example, if an Indian national works for couple of years in Germany and then he goes to work in Belgium, a country with whom India has a social security agreement, his/her periods of insurance completed in Belgium could be taken into account by Germany on the basis of Regulation 883/2004.

Determination of the applicable law

All the SSAs have some provisions on the applicable law. In all the SSAs, there is a general rule for all workers and specific rules for workers who work in particular fields. The general rule is the lex loci labori. ⁴¹ This means that the law applicable to the social security situation of the person is the law of the country where that person works. The specific rules concern those who work in aviation, seafarers, members of the Diplomatic Service and posted workers.

First, in the international transport sector, those working for an airline which has its registered office in the territory of a Contracting State, remain subject to the legislation of that Contracting State. ⁴² For example, a Lufthansa air steward remains subject to the German legislation on social security when that steward is at New Delhi Airport.

Second, seafarers also benefit from an exemption to the lex loci labori. Here, the SSAs have different rules. The Belgium-India SSA, the Luxembourg-India SSA and the Portugal-India SSA provide that a worker employed on board a ship that flies the flag of a Contracting State shall be subject to the legislation of the Contracting State where the worker resides. ⁴³ The other SSAs, except the one with the Netherlands, provide that the legislation applicable is the legislation of the Contracting State of the flag of the ship. ⁴⁴ The Netherlands-India SSA does not provide for any specific rules concerning seafarers but rather that cases of double coverage or non-coverage should be resolved through consultations between the competent authorities of the Contracting States. ⁴⁵

Third, all SSAs provide that civil servants, diplomatic and consular staff are subject to the legislation of the Contracting State whose administration employs them. ⁴⁶ Those civil servants and diplomatic staff are in fact still considered to be resident of the Contracting State who employs them even though they are physically in the other Contracting State.

Fourthly, all SSAs include a specific rule for posted workers to whom the lex loci labori rule does not apply. ⁴⁷ The rules for posted workers are very important for the Contracting States. ⁴⁸ They provide that the person who is employed by a company in one of the Contracting States remains subject to the legislation of that State even though he moves to work in the other Contracting State. For example, an Indian worker is sent by an Indian IT company to Belgium to work on a project. He will remain subject to the Indian social security legislation even though he will be residing in Belgium. Furthermore, all the SSAs provide that the duration for which the posted worker continues to be subject to the legislation of his home country is 60 months. ⁴⁹ The only two exceptions are the Germany-India SSA which provides for 48 months initially with the possibility of extending the period to 60 months, and the Sweden-India SSA containing an initial period of 24 months to be extended by mutual agreement up to 48 months. ⁵⁰ For all the other SSAs, the period of 60 months is the initial period for which the worker remains subject to the legislation of the other Contracting State from where the company sends him/her. In the Belgium-India SSA, the Finland-India SSA, the Denmark-India SSA, the Luxembourg-India SSA, the Netherlands-India SSA, and the Portugal-India SSA, the initial period of 60 months can be extended by agreement between the Contracting States. ⁵¹ However, none of them provide for a maximum period of extension. This lack of provision regarding the extension of the period does not necessarily mean that those SSAs allow an indefinite period of exemption for posted workers. Rather, the period of extension must be seen in the context of the administrative practices of the Contracting States. For example, the national administration of social security practices in Belgium only allows for a maximum of 5 years (60 months) of exemption from contributions for posted workers. ⁵² Finally, the exemption of lex loci labori for posted workers in some SSAs applies in case a worker who is sent from one of the Contracting State to a third country and then goes to the other Contracting State. ⁵³ For example, if an IT Indian worker is sent by his company based in India to work on a project first in Hungary and then in Belgium, the period spent working in Hungary will be taken into account for the exemption of 60 months from paying contributions to the Belgian social security system.

Lastly, the situation of family members must be addressed. Only three SSAs mention the law that applies to family members who accompany a worker to whom the SSAs apply. In the Belgium-India SSA, the Denmark-India SSA and the Sweden-India SSA, family members benefit from the legal rules that are applicable for posted workers provided that they do not themselves engage in gainful employment. ⁵⁴ In addition, the Belgium-India SSA and the Sweden-India SSA mention that family members can benefit from the rules relating to civil servants and diplomatic staff, again provided that they are not engaged in gainful employment. ⁵⁵

Administrative cooperation

All the SSAs concluded between India and the Member States contain a number of provisions on administrative cooperation.

All of them, except the Hungary-India SSA, ⁵⁶ call for the inclusion of an administrative arrangement to be concluded in order to provide further details of administrative cooperation. ⁵⁷ Administrative arrangements have been concluded for that purpose and therefore complement the SSAs. ⁵⁸

In the context of the administrative collaboration between the competent authorities, all the SSAs provide that mutual assistance should be provided free of charge. ⁵⁹ Also, documents and certificates delivered by one competent authority are exempt from further certification by the competent authority of the other Contracting State and from taxes or stamp duties or any recording fees applied for documents from the other Contracting State. ⁶⁰ The Netherlands-India SSA does not contain a provision on the exemption from charges and authentication for documents from the other Contracting State.

Regarding the language of communication between the competent authorities, most of the SSAs accept the official languages of both Contracting States for the purpose of communication between the competent authorities. ⁶¹ The Portugal-India SSA, the Sweden-India SSA and the Netherlands-India SSA are the only ones that provide for English as the sole language for communication. ⁶²

All the SSAs contain a provision on the protection of data exchanged between the competent authorities. The Austria-India SSA, the Hungary-India SSA, the Germany-India SSA and the Portugal-India SSA provide for specific rules on data protection whereas all the other SSAs simply refer to their own national legislation on data protection. ⁶³

In all the SSAs, there is a provision on the equal status of applications, notices and appeals. Thanks to that provision, any claim which is submitted to a competent authority of one Contracting State should be considered as a claim submitted to a competent authority of the other Contracting State. ⁶⁴

Additionally, the Austria-India SSA, the Finland-India SSA, the France-India SSA, the Netherlands-India SSA, the Germany-India SSA and the Portugal-India SSA have a rule concerning refunds of undue payment. ⁶⁵ The rules they provide aim to facilitate the collection of undue payment by demanding that the institution of the other Contracting State deduct the amount from the payments to be made to the beneficiary and transfer the amount to the competent institution. Additionally, judgments or decisions on the adjustment of undue payments taken by a competent institution of one of the Contracting State should be recognised by the other Contracting State.

Finally, the SSAs also all include a provision regarding cooperation in case of disputes. Such a provision ensures that disputes shall be solved by the competent authorities of the Contracting States. ⁶⁶ The India-Germany SSA further specifies, however, that in the event of an unresolved dispute, a joint ad hoc commission set up by mutual agreement should settle the dispute. ⁶⁷

Conclusion: What could a common approach entail?

Based on this comparative legal analysis, it is possible to identify a common approach, as there are sufficient elements on which Member States are likely to agree. In fact, there is already a certain common approach as there are many similar elements to be found in the SSAs. Whether this common approach is the result of Member States’ cooperation or the result of the Indian side’s negotiating position is uncertain. Nonetheless, highlighting those common elements and promoting them in a common EU approach could be useful for Member States who do not have an agreement with India yet. The idea of a common EU approach would be to have minimum mandatory elements included in all SSAs that are concluded with India. Those mandatory elements can be selected on the basis of the comparative legal analysis conducted above; i.e. they represent the elements the most commonly found in the SSAs.

First, the personal scope of a common EU approach can be agreed. All the SSAs analysed had the same approach with regard to personal scope. The SSAs all apply to persons who are or have been subject to the legislation of one the Contracting State. Additionally, it is important to promote the inclusion of family members within the personal scope of SSAs as studies show that migrant workers consider the possibility of bringing their relatives and securing access to social security for those relatives as a factor influencing their mobility. ⁶⁸ In this regard, all SSAs analysed included family members within their scope.

In terms of material scope, a common EU approach could focus on statutory pension rights (old-age, survivors’ and invalidity pensions). ⁶⁹ If the material scope is restricted to statutory pension rights, the Member States might be more likely to agree to include the five fundamental principles of social security coordination in a common EU approach.

Besides provisions on personal and material scope, the comparative legal analysis of the SSAs shows that a common EU approach could include the five fundamental principles of social security coordination; i.e. equal treatment, the aggregation of periods, the export of benefits, determining the law applicable, and administrative cooperation.

It seems possible to have a common EU approach on the fact that the general rule for the law applicable to an employed or self-employed person should be the law of the Contracting State where that person is employed or self-employed (lex loci labori). The rules applicable for seafarers, civil servants and employees of international travel companies are similar. Thus, there could be a common EU approach for those provisions.

Concerning provisions on the export of benefits, all SSAs are worded in a similar manner with the exception of invalidity benefits that are sometimes excluded from export. ⁷⁰ The provision on the export of benefits in a common EU approach could specify that the Contracting States should not reduce or modify benefits acquired under its legislation based on the fact that the beneficiary is residing in the territory of the other Contracting State. It could also include a requirement that the Contracting States should award benefits to the nationals of another Contracting State, who reside outside the territories of both Contracting States, under the same conditions and to the same extent as they are awarded to the nationals of the first Contracting State who reside outside the territories of the Contracting States.

One important element of social security coordination is the inclusion of a provision on the aggregation of periods of insurance. ⁷¹ This rule is very important for enabling mobile workers to have continuity in their careers. It enables periods of insurance completed in one State to be taken into account for the purpose of acquisition of pension rights in the other State. The Netherlands-India SSA is the only SSA that does not contain a provision on the aggregation of periods of insurance. Nonetheless, due to its importance for migrant workers, a common EU approach should include a provision on the aggregation of periods of insurance.

In order to facilitate efficiency in the agreements, a common EU approach should include provisions on administrative cooperation. Concerning administrative cooperation, some SSAs provide more detail than others. ⁷² However, in general, the provisions are very similar.

Finally, there are some elements that it would be interesting to address in a common EU approach. These elements could be optional elements to be included in a common EU approach as they are not present in all the SSAs analysed. With regard to the material scope, the ILO recommends that any bilateral agreement on social security should aim at covering the nine traditional branches of social security: healthcare, sickness benefits, maternity benefits, unemployment benefits, old-age benefits, invalidity benefits, employment injury benefits, family benefits, and survivors’ benefits. ⁷³ Therefore, as an optional element, a future common EU approach could advocate the inclusion of all social security rights. However, this extended coverage should not be achieved at the expense of other elements such as the fundamental principles of social security coordination. This is why extended coverage is only an optional element and not a mandatory one. For the equal treatment provision, some SSAs restrict the application of equal treatment to persons ordinarily resident in their territories. ⁷⁴ This element could be optional in a common EU approach. Finally, concerning the rule on the law applicable to posted workers, there is no common approach in the SSAs. All of them, except the Germany-India SSA ⁷⁵ and the Sweden-India SSA, ⁷⁶ provide for an initial period of 60 months for remaining subject to the country of origin’s social security system. In addition, there are many differences in whether that initial period can be extended or not. Consequently, it is hard to recommend what a common EU approach should entail on this point. The European Commission may wish to propose an alignment of the maximum period of 24 months of social security exemption for posted workers enshrined in Regulation 883/2004. ⁷⁷ In the context of a common EU approach to social security coordination with India, Member States might agree to promote that 24-month period. However, India, which already has SSAs with Member States containing a period of 60 months, would probably not agree to have that period reduced to 24 months.

In conclusion, based on the comparative legal analysis of the SSAs adopted in this article, it can be asserted that it is possible to envisage a common EU approach on social security coordination with India. The common EU approach would ensure more coherent provisions among the different Member State agreements with India. The common EU approach is here conceived at an informal level. Formalising it, for example through the adoption of an EU instrument, would require an appropriate legal basis, ⁷⁸ in accordance with the principle of conferral. The choice of an appropriate legal basis would undoubtedly result in a difficult political process for Member States.