Migration in the context of social security needs to be understood very broadly since it covers the persons who choose to leave one country and move permanently to another, as well as persons who live in one country, but work in one or more countries. Migration also covers persons who live in one country, work in another country and/or are self-employed in the third country. The workers posted from their employer to temporary work in another country are also considered as migrants in terms of social security. In reality, migration in a broad sense covers all situations where a person crosses the border, and the diversity of territorial nature and the variety of social security systems can create potential social security problems for migrants as well as for the national social security systems between which they move.
Migrants may be at risk of being treated differently than the nationals of the country they are going to, for example, if the country where they work does not have statutory defined payment of benefits for persons other than its nationals, and the risk related to social security territoriality can mean that persons who decide to move to another state in the long run may lose part of the social rights they have acquired in their homeland. In order to prevent problems arising from relocation and movement of people from one state to another, a system of social security coordination has been designed for the EU.
The aim of social security coordination system is to reduce some of the difficulties caused by the movement of workers from one country to another, particularly with regard to long-term benefits such as pensions. The provisions on coordination do not oblige states to change the essence of their national social security regulations but only affect migrant treatment in the sense that, for example, they oblige states not to treat migrants differently than their nationals.
The European Union (EU) provides common rules to protect the social security rights of people while moving within Europe (EU 27 + European Economic Area (EEA)). The rules on social security coordination do not replace national systems with a single European one. All countries are free to decide who is to be insured under their legislation, which benefits are granted and under what conditions.
To whom do these rules apply?
The four main principles
This principle prevents states from treating foreign citizens differently than their own. You have the same rights and obligations as the citizens of the state in which you are insured. This principle, apart from the principle of equal treatment, is also called the principle of non-discrimination.
Problems arising from positive and negative conflicts of laws can be avoided by stating that laws of only one state should apply at any time, with the establishment of rules or the system of rules to decide which laws will be applicable. After determining the relevant legislation, a migrant will pay contributions and receive benefits in accordance with that legislation.
You are covered by the legislation of one state and therefore you pay contributions only in one state. The decision on the legislation which will apply to you is made by the authorities responsible for social security and you have no choice regarding this decision.
Since a person who moves from one state to another is endangered of losing his or her benefits on account of residence or insurance periods completed in his or her former state, this principle defines that periods of residence or insurance in one state should be recognized in another state.
When you apply for benefits, the previous periods of insurance or residence completed in other states should also be taken into account.
If you are entitled to a monetary benefit from one state, you can usually receive it even if you live in another state. The principle of exportability of benefits states that if someone who already has the right or is entitled to one of the benefits covered by the coordination rules resides in another state, his or her benefits continue to be paid by his or her previous state. The amount of benefits must not be reduced or changed in any way.
Which rules apply to me?
When moving within the EU or EEA, you will always be subject to the legislation of only one state. Social security institutions will assess which legislation you are subject to in accordance with the EU rules.
You work in one of the states – According to the basic rule, you are subject to the legislation of the state in which you work as an employee or a self-employed person. It does not matter where you live or where your employer is located.
You work in one state but live in another state – If you do not live in the EU state where you work but return to your state of residence every day or at least once a week, you are a cross-border or the so-called “frontier worker”. The state in which you work is responsible for your social benefits. Special rules also apply to health care and unemployment.
You are posted to work in another state – If your employer has posted you to work in another state (or you have done it yourself if you are self-employed) for a maximum period of 24 months, you will stay insured in your country of origin. This is the case with the so-called “workers posted to work abroad” to which special provisions apply.
You work in multiple states – If you perform a significant part of your activity, at least 25%, in your country of residence, you are subject to the legislation of that country. If you do not perform a significant part of your activity in your country of residence, you are subject to the legislation of the country where your employer’s registered office or place of business is located. If you work for multiple employers whose registered offices are located in different countries, you are subject to the legislation of your country of residence, even if you do not perform a significant part of your activity there. If you are self-employed and do not perform a significant part of your activity in your country of residence, you are subject to the legislation of the country where the centre of interest of your activities is located. If you conduct employment and self-employment activities in different countries, you will be insured in the country where you are employed.
You do not work – Even if you do not work, the EU rules still apply to you.
EU Regulations on the coordination of social security systems
Council Regulation (EEC) No. 1408/71 of 14 June 1971 on the application of social security schemes to employed persons and members of their families moving within the Community was on 1 May 2010 replaced by the Regulation (EC) No. 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (abbreviated: the Basic Regulation). Regulation (EC) No. 987/2009 of the European Parliament and of the Council of 16 September 2009 laying down the procedure for implementing Regulation (EC) No. 883/2004 on the coordination of social security systems (hereinafter referred to as the “Implementing Regulation”), and Regulation (EU) No. 1231/2010 of the European Parliament and of the Council of 24 November 2010 extending Regulation (EC) No. 883/2004 and Regulation (EC) No. 987/2009 to nationals of third countries who are not already covered by these Regulations solely on the ground of their nationality, as well as all Regulations amending the said Regulations, constitute currently valid EU regulations for the coordination of social security systems.
Since 1 July 2013, or from the date of accession of the Republic of Croatia to the EU, bilateral agreements with EU Member States which were in force until then, were replaced by legal regulations on the coordination of social security systems (Regulations (EC) 883/2004, (EC) 987/2009, (EC) 988/2009, (EU) 1231/2010, (EC) 1244/2010, (EC) 465/2012) and (EU) 1224/12. These bilateral agreements existed with the following 16 countries: Austria, Belgium, Bulgaria, Czech Republic, Denmark, France, Italy, Luxembourg, Hungary, Netherlands, Germany, Poland, Slovenia, Slovakia, Sweden, United Kingdom of Great Britain and Northern Ireland.
Norway, Iceland and Liechtenstein, as members of the European Economic Area (EEA), also apply the EU regulations on the coordination of social security systems in relations with the Republic of Croatia starting on 12 April 2014, and from that date the bilateral agreement on social security concluded with Norway was replaced by these regulations, while the agreement concluded with the Swiss Confederation was replaced by the above-mentioned regulations since 1 January 2017.
EU Regulations on the coordination do not affect domestic social security regulations but coordinate these regulations with domestic regulations of other Member States. The condition for the application of these regulations is that legislation of two or more Member States were applicable to a person during his or her working life. If a person is subject to the legislation of only one Member State, then only that legislation applies, and the regulations on the coordination do not apply. In this way, the EU regulations on the coordination do not affect domestic benefits recognized only on the basis of Croatian legislation.
Benefits that fall under the coordination of social security systems in the Republic of Croatia
Pension insurance: old-age pension, rights on the basis of disability, physical impairment, survivors’ pension
Health insurance: health care, right to salary compensation in case of illness
Maternity benefits: maternity benefits, parental benefits
Benefits during unemployment: a right to cash benefits
Family benefits: child allowance
Applicable legislation: posting, working in 2 or more EU states
Injuries – short-term benefits: health care, right to salary compensation
The specificity of the Croatian social security system is that there is no single system for injuries at work and occupational diseases which would include short-term and long-term benefits on that basis, but short-term benefits (salary compensation and health care under more favourable conditions) are provided under health insurance subsystem, while long-term benefits are provided under pension insurance (disability pensions, survivors’ pensions under more favourable conditions and physical impairment benefit).
The Act on the Implementation of EU Regulations on the Coordination of Social Security Systems, published in the “Official Gazette” No. 54/13 of 7 May 2013 establishes an institutional structure for the implementation of the EU Regulations on the coordination of social security systems and defines the competent bodies in all areas of social security covered by the regulations on the coordination, as well as the competent institutions and bodies, including the powers of the tax administration in case of return of compulsory insurance contributions.
Since these regulations relate to the area of pension insurance, health insurance, insurance during unemployment and family benefits, the competent bodies for the implementation of these areas in the national legislation are also responsible for the EU regulations on the coordination of social security systems.
The Ministry of Labour, Pension System, Family and Social Policy is responsible for pension insurance and insurance during unemployment as well as for determining the legislation to be applied in certain cases, and also has the role of coordinator for the overall area of coordination of social security systems
The Ministry of Health is responsible for compulsory health insurance and health care
Central State Office of Demography and Youth is responsible for family benefits, maternity and parental benefits
Institutions competent for the implementation of the EU Regulations on the coordination of social security systems are:
The Croatian Pension Insurance Institute is the competent institution for old-age benefits, disability benefits and survivors’ benefits, as well as for benefits regarding injuries at work and occupational diseases from pension insurance based on generational solidarity and for family benefits (child allowance) and determination of the legislation applicable to persons moving across more than one EU Member State, in accordance with the regulations.
The Croatian Health Insurance Fund is the competent institution for benefits related to diseases and maternity and parental benefits, as well as for benefits regarding injuries at work and occupational diseases from compulsory health insurance
The Croatian Employment Service is the competent institution for unemployment benefits
The Central Register of Insured Persons (REGOS) is the responsible institution and a liaison body for old-age benefits, disability benefits and survivors’ benefits in the framework of pension insurance based on capitalized savings, and is also an access point for the electronic exchange of information between the competent institutions of Member States in the social security system (EU Access Point)
The Ministry of Finance – Tax Administration is the competent body for the area of compulsory insurance contributions within the framework of social security systems coordination
EU Regulations for coordination also apply to non-EU nationals (the so-called “third countries”), but only provided that the insured has completed periods in two or more EU Member States. In such cases, insurance periods completed outside the EU are not taken into account, but pensions are paid in third countries. If an insured person does not meet the conditions for granting rights under EU regulations, the EU Member State will apply bilateral agreement on social security concluded with a third country (if any). In such cases, periods completed in a third country shall also be added, if this is provided by specific bilateral agreement. In cases when a national of a Member State has completed periods in a third country with which a Member State has concluded an agreement on social security that applies only to the nationals of the contracting states, for the purpose of the implementation of such agreement, the nationality of any EU Member State will be equal to the nationality of a Member State which has concluded a bilateral agreement with a third country.
Bilateral international agreements on social security
International agreements on social security protect the rights of Croatian citizens who are employed or resident abroad, as well as members of their families, and on the basis of which they exercise their rights arising from employment or insurance abroad, including the appropriate forms of social security. According to the Constitution of the Republic of Croatia, these agreements are part of the internal legal order, and are legally superior to the law (lex specialis) and, therefore, take precedence over domestic legislation.
The Republic of Croatia applies agreements on social insurance with the following countries: Australia, Bosnia and Herzegovina, Montenegro, Canada, Canadian Province of Quebec, Macedonia, Serbia (FR Yugoslavia), Turkey.