In this article, we examine the groundbreaking decision of the district court in Poznań concerning the appeal of a construction company against the retroactive withdrawal of A1 certificates by ZUS. The case is of significant importance for all companies posting workers in the European Union, especially when revenue in Poland represents less than 25% of total activity.
Case study: retroactive withdrawal of A1 certificates after 10 years
Our client - a Polish company operating in construction industry, which posted its employees to work in Belgium between 2014 and 2020, received as much as 13 ZUS decisions revoking retroactively the A1 documents. The reason for this decision was that it had been established at the request of the Belgian authority that the entrepreneur had not achieved during the period of posting at least 25% of income in Poland, as a result of which ZUS concluded that the client did not meet the conditions for its employees to remain in the Polish social security system.
We have filed appeals against the decisions issued, vigorously contesting the findings of the Social Insurance Institution. As a result 13 cases were sent to the District Court in Poznańwhere they are currently being considered.
Criteria for assessing the performance of a posting company under EU rules
Under EU legislation, a company posting workers must keep "normal" activities in the country of origin - This means that a significant part of this activity should be carried out on Polish territory.
The criteria for assessing this activity are set out in Decision of the Administrative Commission for the Coordination of Social Security Systems No A2 of 12 June 2009. Importantly, the 25% requirement does not necessarily apply only to the company's income. When a company does not generate at least 25% of revenue in Poland, other indicators can also be taken into account:
- number of employees working in Poland and abroad
- number of contracts executed by the posting company in Poland and abroad
- the value of the turnover generated by the delegating company
In several of our proceedings, the court has decided to return of files to ZUS, pointing to the prematureness of the decision to revoke A1 certificates.
What is the A1 certificate and what is its role in the posting of workers?
A1 certificate is an official document confirming that an insured person working temporarily abroad remains subject to the social security system of the home country. This document has two key functions:
- prevents double insurance of the employee
- ensures that a person will not be subject to more than one legislation of an EU Member State
The issue of the A1 certificate is regulated by the Regulation (EC) No 883/2004 of the European Parliament and of the Council and further specified in Regulation (EC) No 987/2009.
Grounds for the return of files by the court to ZUS - breach of international cooperation procedures
In the decision we analysed, the Regional Court clearly highlighted several fundamental breaches of procedure by the Social Security Administration:
- The decision to withdraw the A1 certificate was issued prematurelywithout following the required procedural steps
- Before withdrawing a certificate, the Social Security Administration should carry out a a proper procedure for dealing with the Belgian insurance institution, which, as the sole authority empowered to determine Belgian social security legislation, should confirm whether the posted worker remains subject to the legislation of a single Member State
- The decision issued violates a fundamental principle of EU social security coordination - the rule that a citizen may not be subject to more than one legal system
The court obliged the Social Insurance Institution to supplement the evidence and remedy the procedural deficiencies that prevented the case from being heard on the merits.
Significance of the judgment for the regime of posting of workers in the EU
The court decision in question is significant for the entire posting system and highlights key aspects:
- International cooperation procedure - before the A1 certificate is withdrawn, a dialogue is required with the institution of the host country (in this case Belgium), which will determine under which legislation the person should be insured
- Legal protection of the posted worker - a fundamental principle under Regulations 883/2004 and 987/2009 is to ensure that a worker is not deprived of insurance cover as a result of an administrative error
What are the future prospects for businesses posting workers?
The court's decision sets high standards regarding administrative procedures and international cooperation in the field of social security for posted workers. The Social Insurance Institution must now complete the documentation and carry out the necessary evidentiary steps in order for the correct legal qualification and determination of the applicable legislation to take place.
This judgment may constitute an important precedent for similar cases, where the issues of determining the applicable legislation and the procedural principles of EU social security coordination are relevant. The key point is that before the A1 certificate is withdrawn, administrative authorities must comply with both national and EU requirements so as not to undermine the fundamental principle of protecting the worker through a single coherent insurance system.
The court proceedings in this case are currently at an early stage, but we reasonably hope to persuade the court that, when posting workers to other EU countries, in assessing whether the requirement to operate a at least 25% of activity in the country of establishment, it is necessary to take into account not only the income earned, but also - depending on the circumstances of the case - the following. alternative indicators such as turnover or the number of contracts concluded in the country of establishment of the posting company.
If your company is struggling with a similar problem or you need professional consultation on your obligations when posting employees to EU countries, contact our experts. We will be happy to discuss your situation and suggest optimal legal solutions.
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