Court warns Ireland on social security

EUROPE’S top court has warned the Irish authorities to ensure that employers are paying full social security contributions for staff who work abroad.

The recent ruling by the European Court of Justice could impact on Irish companies who post employees abroad to work on short-term contracts in other EU countries.

Under EU legislation, staff sent abroad to work in another EU state for less than 12 months are allowed to continue paying social security contributions in their home country once they have obtained an E101 certificate.

However, such workers must remain directly employed by the company which posts them abroad.

The ECJ said it was “incumbent” on the Irish Government to verify that companies which issue E101 certificates to their staff are paying welfare contributions on their behalf.

Reacting to the judgement, a Department of Social and Family Affairs spokesperson said there was no major problem with employers fulfilling their obligations with regard to E101 certificates for temporary migrant workers.

However, the case casts a spotlight on the often confusing relationship between construction firms, sub-contractors and workers. The Revenue Commissioners recently expressed concern that building companies are avoiding hiring workers directly in order to avoid paying PRSI and other social welfare payments.

The ECJ ruling followed a dispute in which the Belgian authorities claimed an Irish construction firm, ICDS Constructors, was not responsible for making such payments for its staff in Belgium.

The Belgian labour court had asked the ECJ to decide on whether it had the power to determine the direct relationship that existed between ICDS and its workers.

In 1991, a Belgian firm, Herbosch-Kiere, engaged ICDS to carry out a major engineering project in Belgium. However, Belgian labour officials ruled a year later that the real employer of the Irish workers on the project was not ICDS Constructors but Herbosch-Kiere. As a result, the Belgian company was forced to pay €90,000 in social security contributions.

But following a legal challenge the Belgian authorities were ordered to repay almost €80,000 to Herbosch-Kiere.

The Belgian courts ruled that, under EU law, Irish social security legislation remained applicable to Irish employees working in Belgium. The judge said the issuing of E101 certificates to the Irish workers created the presumption that they were properly covered by the Irish social security system.

The ECJ supported that ruling by finding that the issuing of the E101 certificates meant Herbosch-Kiere was not liable for social welfare payments for the Irish workers unless they had been withdrawn or declared invalid.

The Department of Social and Family Affairs said it was satisfied that ICDS Constructors had made all the appropriate payments on behalf of its workers.