A sick employee in a cross-border context: potential pitfalls

Choice of law: applicable employment law

The Rome I Regulation contains conflict-of-law rules that determine which employment law applies if the employment contract does not include a choice-of-law clause. In principle, the employer and employee are free to choose the applicable employment law. However, if the law that would apply under the Regulation offers the employee stronger protection, those protective provisions will still apply. Put simply: a contractual choice of law cannot leave an employee worse off than the protection provided under the Regulation.

Applicable social security law

The main rule under the Social Security Regulation is that an employee is insured in the country where the work is carried out. If the employee works in two or more countries, he or she is insured in the country of residence—provided that a substantial part of the work is performed there.

In practice

Although the system appears well structured, undesirable situations can still arise in practice. To illustrate this, consider the case of a sick employee. For cross-border workers, the obligation to continue paying wages during illness can be influenced by both employment law and social security rules. The duration of wage continuation differs significantly between countries. In the Netherlands, employers may be required to continue paying wages for up to 104 weeks, whereas in neighbouring countries this period is often limited to around 4 to 6 weeks. In addition, wage continuation in the Netherlands is also addressed in employment law and is frequently reflected in employment contracts or collective labour agreements. 

This may lead to the following situation:

A resident of Belgium has an employment contract with an employer based in the Netherlands, and the parties have agreed that Dutch employment law applies. Because the employee regularly works from home in Belgium, the employee is socially insured in Belgium. If the employee becomes ill, the employer may be required to continue paying wages for up to 104 weeks under Dutch employment law. In Belgium, the employee may become entitled to sickness benefits under social security after four weeks. This can result in income from two sources based on the same employment relationship. The reverse can also happen, creating an income gap for a prolonged period. Both outcomes are undesirable and can lead to uncertainty for both employer and employee.

How to proceed

In cross-border employment situations, it is essential to review the employment contract carefully and tailor standard clauses where needed. This helps prevent unintended double payments and reduces the risk that an employee has no income for an extended period.

More information

aaff is happy to be meaningful wherever possible. By sharing knowledge, giving advice and providing insight. Would you like to know more about this topic, or do you need support with complex cross-border employment situations? Please contact our specialist.