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07.02.18 A1 statement can be disregarded in cases of fraud (only)

February 7

As expected, the Court of Justice decided on 6 February 2018 that national courts may disapply an A1 statement in the event of fraud (case Altun a.o.). In another case, however, the advocate general reconfirmed the general binding force of the A1 statement in cases other than fraud (Alpenrind case).

A1 statements are not binding in the event of fraud (Altuna.o. judgment, C-359/16)…

In its judgment of 6 February 2018, the Court of Justice followed the opinion of the advocate general (e-zine of 13 November 2017) and considered that national courts of a host state (in this case Belgium) may disapply an A1 statement (provided by Bulgaria) if that statement was fraudulently obtained or relied on. The Belgian court can only do so in specific circumstances:

  • The Belgian social security authorities must first ask the Bulgarian social security authorities to review or withdraw the A1 statements on the basis of concrete evidence indicating fraud.
  • Taking into account this evidence, Bulgaria should review whether the statements were issued correctly. If not, Bulgaria should withdraw the A1 statements.
  • If Bulgaria does not carry out such a review within a reasonable period of time, the Belgian social security authorities may ask a Belgian court to set aside the A1 statements.
  • The right to a fair trial must be guaranteed: those accused of fraud must have the opportunity to defend themselves before the Belgian court sets aside the A1 statements.

The Court of Justice decided that this practice was followed in the Altun case, so that the Belgian judge could disregard the A1 statements.

The Court also confirmed that fraud requires objective and subjective criteria:

  • The objective criterion consists in the fact that the conditions for obtaining and relying on an A1 statement are not met.
  • The subjective criterion corresponds to the intention to evade or circumvent the conditions for the issue of that statement, with a view to obtaining the advantage attached to it.

Fraud may result either from a deliberate action (e.g. misrepresentation of the real situation of the posted worker or of the undertaking posting that worker) or from a deliberate omission (e.g. the concealing of relevant information, with the intention of evading the conditions for a valid posting of workers).

The Altun judgment is undoubtedly an important tool in the fight against fraud concerning the posting of workers, but it does not affect the strong binding force of an A1 statement. The advocate general has confirmed this in his opinion in the Alpenrind case of 31 January 2018 (C-527/16).

…but remain binding in other cases (conclusion of the advocate general in the Alpenrind Case C-527/16)

The context of the Alpenrind case can be summarized as follows:

  • Alpenrind is an Austrian company active in the sale of livestock and meat. It operates an abattoir in Salzburg.
  • From 2007 until 2012, it called upon the Hungarian company Martin-Meat for the cutting and packaging of meat. For this purpose, Martin-Meat posted workers to Alpenrind in Austria. From 1 February 2012 until 31 January 2014, Alpenrind called upon the Hungarian company Martimpex-Meat, which also posted workers to Alpenrind in Austria. Since 1 February 2014, meat cutting is again being carried out by Martin-Meat's posted workers.
  • The Hungarian social security authorities issued A1 statements to the posted Martimpex-Meat workers confirming that these workers were covered by Hungarian social security during their posting. It is important to note that the A1 statements had partially retroactive effect and were only issued after Austria had already decided that the Martimpex-Meat workers were subject to mandatory insurance in Austria under Austrian social security legislation.
  • Austria contested the validity of the A1 statements which ultimately led to the case being referred to the Administrative Commission for the Coordination of Social Security Systems. In the event of disputes over the validity of A1 statements, this commission should endeavour to find a mutually acceptable solution. The commission ruled that the A1 statements should be withdrawn because Hungary had wrongly considered that Hungarian social security legislation applied to the posted workers.

In this context, a number of preliminary questions were asked to the Court of Justice. The advocate general's conclusion reveals that the binding nature of the A1 statement (excluding cases of fraud) remains intact. The advocate general has considered as follows:

  • The A1 statement confirming that an employee is subject to the social security system of one member state (in this case Hungary) is binding on the courts of another member state (in this case Austria) as long as it has not been effectively withdrawn or declared invalid.
  • Even in the situation where the Administrative Commission has taken a decision to withdraw an A1 statement, but the issuing institution has not yet withdrawn it, the A1 statement remains binding.
  • The A1 statement confirming that a worker is affiliated with the social security system of a certain member state (in this case Hungary) is also binding if the A1 statement was issued after the worker was made subject to the social security system of the host state (in this case Austria) and if the A1 statement has retroactive effect.

The advocate general also commented on the condition for a valid posting that an employee may not be sent to replace another posted employee. The question had arisen as to whether this condition also affects the situation of a replacement in the form of a posting by another employer. In the Alpenrind case, Martimpex-Meat postings followed Martin-Meat postings.

According to the advocate general, the non-replacement condition only sought to prevent situations in which the same employer rotates its posted staff in order to circumvent the condition relating to the duration of the posting. Therefore, it does not affect successive postings by different employers. However, the advocate general has made an important caveat: if there are personnel and/or organizational links between the employers, it should be examined whether the employers are trying to circumvent the non-replacement condition. In that case, there would be fraud or abuse and, consequently, no valid posting. As confirmed on 6 February 2018 in the Altun a.o. case, the A1 statement can then be disregarded.

The conclusion of the advocate general is not binding on the Court of Justice, but in most cases the Court of Justice follows such a conclusion. To be continued.

Employment, Pensions & Benefits team