Assignees to be hit with post-Brexit social security bill

National Insurance cost warnings for companies sending employees on international assignments to Poland, Hungary and Czech Republic. One accountant suggests costs could more than double.

Image of calculator and stacks of Euro currency
Following the vote on the withdrawal treaty, Chris Blundell, Head of Human Capital at UK accounting firm, MHA MacIntyre Hudson, highlights the cost implications for employers posting staff abroad given the lack of bi-lateral social security arrangements with many EU states.“Employers should by now have started planning seriously for no-deal, if they haven’t already. Whichever way Brexit eventually pans out, assuming the UK does leave the EU, employers and HR departments must be ready for a more complicated and burdensome system of national insurance payments when they send employees abroad."
Related reading: 'Uncertainty reigns' for UK workers in EU

Higher assignment costs 'inevitable'

“There has been little commentary on the higher national insurance costs UK companies will face in the first year of posting employees to the newer entrant EU countries like Poland, Hungary and the Czech Republic," continued Mr Blundell. “Yet this is an inevitable consequence of the fact that the UK doesn’t have bilateral social security agreements with these countries. “Once the transition period is over in December 2020, or straight after 29 March 2019 if it’s no-deal, companies posting employees to these countries will have to pay social security costs in both the UK and the country where the employee is posted for the initial year, rather than costs in just the UK or the country of posting, as is the case currently.“This will prove to be a costly situation, for both employers and employees.

Costs likely to double

“For an employee posted to Poland from the UK after Brexit, on a salary of £40,000 per annum, there will be additional Polish social security costs of approximately £10,000 in the first year of posting as a result of the employer and employee being forced to pay Polish social security, while at the same time remaining liable for UK national insurance contributions. This will more than double the social security costs in that first year.“Brexit will make the presence of bi-lateral agreements in employment matters considerably more important, and HR departments need to prepare for the additional complexity and paperwork varying arrangements for each of the EU27 will bring.”Head to our international assignments section for more news and insight.  
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